Multibank Structured Transaction 2009-1 RES-ADC 

Execution Copy 

LIMITED LIABILITY COMPANY INTEREST SALE AND ASSIGNMENT
 

AGREEMENT
 

by and among
 

RL RES 2009-1 INVESTMENTS, LLC,
 

FEDERAL DEPOSIT INSURANCE CORPORATION,
 

AS RECEIVER WITH RESPECT TO THE SEPARATE RECEIVERSHIPS FOR
 

EACH OF THE VARIOUS FAILED FINANCIAL INSTITUTIONS LISTED ON
 

SCHEDULE I HERETO
 

and
 

MULTIBANK 2009-1 RES-ADC VENTURE, LLC
 

Dated as of February 9, 2010 

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LIMITED LIABILITY COMPANY INTEREST
 

SALE AND ASSIGNMENT AGREEMENT
 

THIS LIMITED LIABILITY COMPANY INTEREST SALE AND 

ASSIGNMENT AGREEMENT (this “ Agreement”) is made as of February 9, 2010, by 

and among RL RES 2009-1 Investments, LLC, a limited liability company organized and 

existing under the laws of Delaware (the “Private Owner”), and the Federal Deposit 

Insurance Corporation (in any capacity, the “FDIC”), in its separate capacities as receiver 

with respect to the separate receiverships for each of the various failed financial 

institutions listed on Schedule I hereto (including its successors and assigns thereto) 

(collectively, the “Initial Member”), and Multibank 2009-1 RES-ADC Venture, LLC, a 

limited liability company organized and existing under the laws of Delaware (the 

“Company”). Capitalized terms used and not defined in this Agreement shall have the 

respective meanings set forth in the LLC Operating Agreement (as hereinafter defined). 

RECITALS 

WHEREAS, the FDIC has separately been appo inted receiver for each of the 

various failed financial institutions listed on Schedule I hereto (individually or 

collectively, the “Failed Bank ”); and 

WHEREAS, the Initial Member formed the Company by causing the Certificate 

of Formation of the Company to be filed with the Secretary of State of the State of 

Delaware on February 3, 2010, holds the sole limited liability company interest (as such 

term is defined in the Act) in the Company (an “ LLC Interest”), and has entered into that 

certain Agreement dated as of February 3, 2010 with the Company as the “limited 

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

“Original LLC Operating Agreement ”); and 

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

Contribut ion and Sale Agreement dated of even date hereof (the “ Contribution 

Agreement”), pursuant to which the Initial Member has contributed in part and sold in 

part to the Company all of the Initial Member’s right, title and interest in and to the Loans 

(as defined in the Contribut ion Agreement, and as so defined, the “Loans ”); and 

WHEREAS, after conducting a sealed bid sale for a forty percent (40%) LLC 

Interest (the “ Transferred LLC Interest”), the FDIC selected Rialto Capital 

Management, LLC (the “Sponsor”) as the successful bidder pursuant to the bid 

submitted by it (the “Bid”) and, in accordance with the instructions governing the sealed 

bid sale, the Sponsor has deposited $1,715,333.85 (the “Earnest Money Deposit ”) with 

the FDIC; and 

WHEREAS, following its selection as the successful bidder, the Sponsor formed 

the Private Owner as a Qualified Transferee; and 

WHEREAS, the Initial Member desires to transfer the Transferred LLC Interest to 

the Private Owner (upon which the Initial Member will retain a sixty percent (60%) LLC 

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Interest (the “Initial Member’s LLC Interest”)) and enter into the Amended and 

Restated Limited Liability Company Operating Agreement among the Company, the 

Private Owner and the Initial Member dated as of the date hereof attached hereto as 

Exhibit A (the “LLC Operating Agreement ”), and the Private Owner desires to acquire 

the Transferred LLC Interest and enter into the LLC Operating Agreement; and 

WHEREAS, the Initial Member and the Private Owner desire, as capital 

contributions to the Company pro rata in accordance their proportionate LLC Interests 

(after giving effect to the transfer of the Transferred LLC Interest), to fund the Working 

Capital Reserve with an aggregate amount of $24,000,000 (such sum, the “ WCR 

Account Deposit”); 

WHEREAS, the Initial Member’s pro rata share of such WCR Account Deposit is 

$14,400,000 (the “Initial Member WCR Account Deposit”) and Private Owner’s pro 

rata share of such WCR Account Deposit is $9,600,000 (the “Private Owner WCR 

Account Deposit ”); 

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 Initial Member, the 

Private Owner and the Company hereby agree as follows: 

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

Reserve; Closing . 

(a) Sale and Assignment. Subject to the terms and conditions of this 

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

hereby purchases from the Initial Member, all of the Initial Member’s right, title and 

interest in and to the Transferred LLC Interest for a purchase price of $171,533,385 (the 

“Transferred LLC Interest Sale Price”). On the date hereof, in satisfaction of its 

obligation to pay the Transferred LLC Interest Sale Price, the Private Owner shall (i) 

remit to the Initial Member, by wire transfer of immediately available funds, to such 

account as the Initial Member may direct in writing, an amount (the “Purchase Price 

Payment ”) equal to the positive difference (if any) between (x) the Transferred LLC 

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

Member WCR Account Deposit, and (ii) (x) remit, on behalf of the Initial Member, by 

wire transfer of immediately available funds, an amount equal to the Initial Member 

WCR Account Deposit to the Paying Agent for credit to the Working Capital Reserve 

Account, and (y) remit, on its own behalf, by wire transfer of immediately available 

funds, an amount equal to the Private Owner WCR Account Deposit to the Paying Agent 

for credit to the Working Capital Reserve Account. 

(b) Closing Procedure. Upon (i) the receipt by the Initial Member of 

(x) the Purchase Price Payment, (y) evidence of the establishment of the Working Capital 

Reserve Account in accordance with the provisions of Section 3.6 of the Custodial and 

Paying Agency Agreement, and (z) confirmation of receipt of the Initial Member WCR 

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Account Depo sit and the Private Owner WCR Account Deposit by the Paying Agent, 

(ii) the delivery of the executed LLC Operating Agreement by the parties thereto (as 

required by Section 2), (iii) the delivery of the Add itional Secur ity (as requ ired by 

Section 3), (iv) the delivery of the completed Loan Value Schedule, in the form attached 

hereto as Exhibit B allocating the Transferred LLC Interest Sale Price among the Loans 

(the “Loan Value Schedule”), which shall be appended to the Contribution Agreement 

as the Loan Value Schedule thereunder, (v) the delivery of the executed Transferee 

Acknowledgment and Certification, in the form attached hereto as Exhibit C, and (vi) the 

delivery of the executed Joinder and Consent Agreement, in the form attached hereto as 

Exhibit D, the sale and assignment of the Transferred LLC Interest to the Private Owner 

and the closing of the other transactions contemplated hereby (collectively, the 

“Closing ”) shall be effective. 

2. LLC Operating Agreement . Contemporaneously with the execut ion and 

delivery of this Agreement, the Private Owner shall execute and deliver to the Company 

and the Initial Member the LLC Operating Agreement. 

3. Additional Security . Contemporaneously with the execution of this 

Agreement and the LLC Operating Agreement, the Private Owner shall, pur suant to the 

applicable provisions in the LLC Operating Agreement and the Custodial and Paying 

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

to be delivered) to the Initial Member the Add itiona l Secur ity, in the form of a Qualifying 

Letter of Credit, in an amount not less than $5,000,000. 

4. Representations and Warranties of Private Owner . The Private Owner 

hereby represents and warrants separately to each of the Initial Member and the Company 

as follows: 

(a) The Private Owner is a “Qualified Transferee,” as such term is 

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

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

if set forth herein. 

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

its agents by or on behalf of the Private Owner or any Affiliate thereof (including the 

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

including, but not limited to, the Purchaser Eligibility Certification, the Bid Certification, 

the Structured Transaction Qualification Request, the Bidder Qualification Request and 

the Confidentiality Agreement, are true and correct in all respects as of the date hereof 

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

misleading. 

5. Exclusivity of Representations. THE TRANSFERRED LLC 

INTEREST IS SOLD “AS IS” AND “WITH ALL FAULTS,” WITHOUT ANY 

REPRESENTATION, WARRANTY, GUARANTY OR RECOURSE WHATSOEVER, 

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

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

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COLLATERAL FOR SUCH LOANS), FITNESS FOR ANY PARTICULAR 

PURPOSE, MERCHANTABILITY, FITNESS FOR A SPECIFIC PURPOSE OR ANY 

OTHER MATTER, WHETHER EXPRESS OR IMPLIED OR BY OPERATION OF 

LAW OR OTHERWISE, AND INITIAL MEMBER SPECIFICALLY DISCLAIMS 

ANY WARRANTY, GUARANTY OR REPRESENTATION, ORAL OR WRITTEN, 

PAST OR PRESENT, EXPRESS OR IMPLIED, CONCERNING THE 

TRANSFERRED LLC INTEREST, THE LOANS, OR THE COLLATERAL 

SECURING THE LOANS. 

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

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

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

Private Owner may not assign this Agreement or any of its rights, interests or obligations 

hereunder. Any purported assignment or delegation in violation of this Agreement shall 

be null and void ab initio . 

7. Beneficiaries . This Agreement shall inur e to the benefit of, and may be 

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

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

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

beneficiaries hereunder. 

8. Waivers and Amendments . No amendment or waiver of any provision 

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

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

capacity). 

9. Failure to Consummate Transaction . If for any reason, without fault of 

the Initial Member, the Private Owner fails to consummate the purchase of the 

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

Initial Member’s liquidated damages, and sole and exclusive remedy, shall be to retain 

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

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

conditions of this Agreement, the LLC Operating Agreement or any Ancillary Document 

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

be liable for any of the foregoing damages if the Private Owner is forced to withdraw its 

Bid after award as the result of a supervisory directive given by the FDIC or any other 

federal or state financial regulatory agency, provided that the Initial Member shall be 

satisfied that such supervisory directive is legally effective. In such event, the Initial 

Member shall refund the Earnest Money Deposit. 

10. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY 

AND CONSTRUED IN ACCORDANCE WITH FEDERAL LAW, BUT IF FEDERAL 

LAW DOES NOT PROVIDE A RULE OF DECISION, IT SHALL BE GOVERNED 

BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF 

NEW YORK, EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE 

THAT MIGHT REFER THE GOVERNANCE OR THE CONSTRUCTION OF THIS 

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AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. Nothing in this 

Agreement shall require any unlawful action or inaction by any party hereto. 

11. Jurisdiction; Venue and Service . 

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

behalf of itself and its Affiliates, hereby irrevocably and unconditionally: 

(i) consents to the jurisdiction of the United States District 

Court for the Southern District of New York and to the jur isdiction of the United States 

District Court for the District of Columbia for any suit, action or proceeding against it or 

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

connection with this Agreement or any Ancillary Document, and waives any right to: 

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

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

files the action, suit or proceeding) without the consent of the Initial Member; 

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

States District Court for the Southern District of New York or the United States District 

Court for the District of Columbia; or 

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

Southern District of New York or the United States District Court for the District of 

Columbia is an inconvenient forum; 

(ii) consents to the jur isdiction of the Supreme Court of the 

State of New York, County of New York, for any suit, action or proceeding against it or 

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

connection with this Agreement or any Ancillary Document (other than the LLC 

Operating Agreement), and waives any right to: 

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

any other court or dispute-resolution forum without the consent of the Initial Member); 

(B) assert that venue is improper in the Supreme Court 

of the State of New York, County of New York; or 

(C) assert that the Supreme Court of the State of New 

York, County of New York is an inconvenient forum; 

(iii) agrees to bring any suit, action or proceeding by it or any of 

its Affiliates against the Initial Member arising out of, relating to, or in connection with 

this Agreement or any Ancillary Document (other than the LLC Operating Agreement) in 

only the United States District Court for the Southern District of New York or the United 

States District Court for the District of Columbia, and waives any right to remove or 

transfer such suit, action or proceeding to any other court or dispute-resolut ion forum 

without the consent of the Initial Member, and agrees to consent thereafter to transfer of 

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the suit, action or proceeding to either the United States District Court for the Southern 

District of New York or the United States District Court for the District of Columbia at 

the option of the Initial Member; and 

(iv) agrees, if the United States District Court for the Southern 

District of New York and the United States District Court for the District of Columbia 

both lack jurisdiction to hear a suit, action or proceeding falling within Section 11(a)(iii), 

to bring that suit, action or proceeding in only the Supreme Court of the State of New 

York, County of New York, and waives any right to remove or transfer such suit, action 

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

Initial Member. 

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

behalf of itself and its Affiliates, hereby irrevocably and unconditionally agrees that any 

final judgment entered against it in any suit, action or proceeding falling within Section 

11(a) may be enforced in any court of competent jurisdiction. 

(c) Subject to the provisions of Section 11(d), each of the Private 

Owner and the Company, in each case on behalf of itself and its Affiliates, and the Initial 

Member, hereby irrevocably and unconditionally agrees that service of all writs, process 

and summonses in any suit, action or proceeding pur suant to Section 11(a) or Section 

11(b) may be effected by the mailing of copies thereof by registered or certified mail, 

postage prepaid, to it at its address for notices pursuant to Section 11 (with copies to such 

other Persons as specified therein); provided, however, that nothing contained in this 

Section 11(c) shall affect the right of any party to serve process in any other manner 

permitted by Law. 

(d) Nothing in this Section 11 shall constitute consent to jur isdiction in 

any court by the FDIC, other than as expressly provided in Section 11(a)(iii) and Section 

11(a)(iv), or in any way limit the FDIC’s right to remove, transfer, seek to dismiss, or 

otherwise respond to any suit, action, or proceeding against the FDIC in any forum. 

12. Waiver of Jury Trial. EACH OF THE PRIVATE OWNER AND THE 

COMPANY, FOR ITSELF AND ITS AFFILIATES, AND THE INITIAL MEMBER, 

HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT 

MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING OUT OF OR 

RELATING TO THIS AGREEMENT AND AGREES THAT ANY SUCH DISPUTE 

SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY. 

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

required or permitted to be given or delivered under or by reason of the provisions of this 

Agreement shall be in writing and shall be given by certified or registered mail, postage 

prepaid, by delivery by hand or by nationally recognized courier service, or by electronic 

mail, in each case mailed or delivered to the applicable address or electronic mail address 

specified in, or in the manner provided in, this Section 13 below. All such notices, 

requests, demands and other communications shall be deemed to be given or made upon 

the earlier to occur of (i) actual receipt (or refusal thereof) by the relevant party hereto 

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and (ii) (A) if delivered by hand or by nationally recognized courier service, when signed 

for (or refused) by or on behalf of the relevant party hereto; (B) if delivered by mail, 

when delivered (or refused), and (C) if delivered by electronic mail (which form of 

delivery is subject to the provisions of this paragraph), when delivered and capable of 

being accessed from the recipient’s office computer, provided that any notice, request, 

demand or other communication that is received other than during regular business hours 

of the recipient shall be deemed to have been given at the opening of business on the next 

business day of the recipient. In no event shall a voice mail message be effective as a 

notice, communication or confirmation hereunder. From time to time, any party may 

designate a new address for purposes of notice to it hereunder by notice to such effect to 

the other parties hereto in the manner set forth in this Section 13. 

If to the Initial Member, to: 

Manager, Capital Markets & Resolutions
 

Federal Deposit Insurance Corporation
 

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

Washington, D.C. 20429-0002
 

Attention: Ralph Malami
 

Email Address: RMalami@FDIC.gov
 

with a copy to: 

Senior Counsel 

FDIC Legal Division 

Litigation and Resolutions Branch, Receivership Section 

Special Issues Unit 

3501 Fairfax Drive (Room E-7056) 

Arlington, Virginia 22226 

Attention: David Gearin 

Email Address: DGearn@FDIC.gov 

If to the Private Owner or to the Company, to: 

RL RES 2009-1 Investments, LLC 

700 NW 107th Avenue 

Suite 400 

Miami, FL 33172 

Attention: Thekla Blaser Salzman 

Email Address: thekla.salzman@rialtocapital.com 

with a copy to: 

Bilzin Sumberg Baena Price & Axelrod, LLP 

200 South Biscayne Blvd 

Suite 2500 

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Miami, FL 33131

Attention: Alan Axelrod 

Email Address: aaxelrod@bilzin.com
 

14. Counterparts; Facsimile Signatures . This Agreement may be executed 

in any number of counterparts, each of which shall be an original and all of which shall 

together constitute one and the same instrument. It shall not be necessary for any 

counterpart to bear the signature of all parties hereto. This Agreement and any 

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

means, 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. 

15. Headings . Paragraph titles or captions contained in this Agreement are 

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

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

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

in this Agreement unless otherwise specified. 

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

specifically provided herein, each party to this Agreement shall, at its own cost and 

expense, obey and comply with all Laws, as they may pertain to such party’s 

performance of its obligations hereunder. Section 1.2 of the Contribut ion Agreement 

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

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 

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

executed as ofthe date first written above. 

PRIVATE QWNER: 

INITIAL MEMBER: 

FEDERAL DEPOSIT INSURANCE 

CORPORATION, IN ITS SEPARATE 

CAPACITIES AS RECEIVER WITH 

RESPECT TO THE SEPARATE 

RECEIVERSHIPS FOR EACH OF THE 

VARIOUS FAILED FINANCIAL 

INSTITUTIONS LISTED ON 

SCHEDULE I HERETO 

By:~----------­

Name: Ronald Sommers 

Title: Attorney-in-Fact 

COMPANY: 

MULTIBANK 2009-1 RES-ADC 

VENTURE, LLC 

By: Federal Deposit Insurance Corporation, 

as Receiver For Each of The Various 

Financial Institutions Listed on Schedule I 

Hereto 

By:_______________________, 

Name: Ronald Sommers 

Title: Attorney-in-Fact 

[Signature Page to Limited Liability Company Interest Sale and Assignment Agreement] 

Multibank Structured Transaction 2009-1 RES-ADC 

60866223 
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly 

executed as of the date first written above. 

PRIVATE OWNER: 

RL RES 2009-1 INVESTMENTS, LLC 

By:______________ 

Name: Jeffrey P. Krasnoff 

Title: Chief Executive Officer 

INITIAL MEMBER: 

FEDERAL DEPOSIT INSURANCE 

CORPORATION, IN ITS SEPARATE 

CAPACITIES AS RECEIVER WITH 

RESPECT TO THE SEPARATE 

RECEIVERSHIPS FOR EACH OF THE 

VARIOUS FAILED FINANCIAL 

INSTITUTIONS LISTED ON 

SCHEDULE I HERETO 

~=~.,.__..l.. Name: Ronald Sommers 

Title: Attorney-in-Fact 

COMPANY: 

MUL TIBANK 2009-1 RES-ADC 

VENTURE, LLC 

By: Federal Deposit Insurance Corporation, 

as Receiver For Each of The Various 

Financial Institutions Listed on Schedule I 

Hereto 

Name: Ronald Sommers 

Title: Attorney-in-Fact 

[Signature Page to Limited Liability Company Interest Sale and Assignment Agreement] 

Multibank Structured Transaction 2009-1 RES-AD(" 

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SCHEDULE I
 

LIST OF VARIOUS FAILED FINANCIAL INSTITUTIONS
 

RESIDENTIAL ADC
 

Bank Name City State Fund Closing Date 

Columbian Bank and Trust Topeka KS 10011 August 22, 2008 

Integrity Bank Alpharetta GA 10012 August 29, 2008 

Silver State Bank Henderson NV 10013 September 5, 2008 

Alpha Bank and Trust Alpharetta GA 10018 October 24, 2008 

Freedom Bank Bradenton FL 10019 October 31, 2008 

Security Pacific Bank Los Angeles CA 10020 November 7, 2008 

Franklin Bank, SSB Houston TX 10021 November 7, 2008 

The Community Bank Loganville GA 10022 November 21, 2008 

First Georgia Community Bank Jackson GA 10025 December 5, 2008 

Sanderson State Bank Sanderson TX 10026 December 12, 2008 

Haven Trust Bank Dulut h GA 10027 December 12, 2008 

Bank of Clark County Vancouver WA 10029 January 16, 2009 

1st Centennial Bank Redlands CA 10030 January 23, 2009 

MagnetBank Salt Lake City UT 10031 January 30, 2009 

Ocala National Bank Ocala FL 10032 January 30, 2009 

FirstBank Financial Services McDonough GA 10036 February 6, 2009 

Cornbelt Bank and Trust Pittsfield IL 10037 February 13, 2009 

Riverside Bank of the Gulf Coast Cape Coral FL 10038 February 13, 2009 

Silver Falls Bank Silverton OR 10041 February 20, 2009 

FirstCity Bank Stockbridge GA 10047 March 20, 2009 

Omni Nationa l Bank Atlanta GA 10048 March 27, 2009 

Integrity Bank Jup iter FL 10095 July 31, 2009 

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Exhibit A 

Form of LLC Operating Agreement 

Multibank Structured Transaction 2009-1 RES-ADC 

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FORM OF
 

MULTIBANK 2009-1 RES-ADC VENTURE, LLC
 

AMENDED AND RESTATED
 

LIMITED LIABILITY COMPANY OPERATING AGREEMENT
 

THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY OPERATING 

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

the terms hereof, this “Agreement”), is made and entered into as of the 9th day of February, 

2010 (the “Closing Date”), by and among the Federal Deposit Insurance Corporation (in any 

capacity, the “FDIC”), as the Receiver defined below (including its successors and assigns 

hereto, the “Initial Member”), RL RES 2009-1 Investments, LLC, a Delaware limited liability 

company (the “Private Owner”), and Multibank 2009-1 RES-ADC Venture, LLC, a Delaware 

limited liability company (the “Company ”). 

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

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

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

“Failed Bank ”); and 

WHEREAS, on February 3, 2010, the Initial Member formed the Company as a 

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

one hundred percent (100%) limited liability company interest), and the Initial Member and the 

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

as of February 3, 2010 (the “Original LLC Operating Agreement ”) as the initial “limited 

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

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

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

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

time) contributed in part to the Company, and the Company purchased from the Initial Member, 

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

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

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

Member and dated the date hereof (the “Purchase Money Notes”); and (iii) the FDIC, in its 

corporate capacity (the “Purchase Money Notes Guarantor”) guaranteed payment of principal 

on the Purchase Money Notes pursuant to the terms of a Guaranty Agreement dated the date 

hereof between the FDIC, in its corporate capacity, and the Initial Member (the “Purchase 

Money Notes Guaranty ”), and obtained a security interest in the Loans and Underlying 

Collateral under the Reimbursement, Security and Guaranty Agreement; 

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

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

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

Reserve Account; 

WHEREAS, following closing of the transactions contemplated by the Contribution 

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

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

Agreement dated of even date herewith (the “Transferred LLC Interest Sale Agreement ”), to 

sell to the Private Owner, effective as of the Closing Date an LLC Interest representing a forty 

percent (40)% equity interest in the Company; 

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

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

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

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

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

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

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

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

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

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

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

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

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

operated; 

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

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

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

ARTI CLE I 

Certain Definitions 

1.1 Definitions. This Agreement constitutes the “limited liability company 

agreement” (as such term is defined in the Act) of the Company. For purposes of this Agreement, 

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

“Acceptable Investment Rating ” shall mean any of the top three rating 

categories that may be assigned to any security, obligation or entity by the Rating Agencies. 

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

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

McGraw-Hill Companies, Inc., (ii) a rating of “Acceptable” or “Proficient” (or better) for 

construction loan servicers by Fitch, Inc., or (iii) a rating of “Approved” or “Average” (or better) 

for construction loan servicers by Moody’s Investors Service. 

“Account Control Agreement ” shall have the meaning given in the Custodial 

and Paying Agency Agreement. 

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

Company. 

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“Acquired Property ” shall mean (i) Underlying Collateral to which title is 

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

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

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

assets held directly or indirectly by the Ownership Entities. 

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

101 et seq. 

“Additional Security” shall have the meaning give in Section 3.13 . 

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

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

Year, after giving effect to the following adjustments: 

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

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

Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and 

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

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

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

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

therewith. 

“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 

(a) with respect to the Private Owner (in any capacity), in addition to the foregoing, each 

Affiliate of Rialto Capital Management, LLC, a Delaware limited liability company, shall be 

deemed to be an “Affiliate” of the Private Owner, and (b) none of the Initial Member, the 

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

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

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

Company) of any of the foregoing shall be deemed to be an “Affiliate” of the Company or of any 

Person Controlled by the Company. 

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

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“Ancillary Documents” shall mean the Contribution Agreement, the Servicing 

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

Agreement, the Private Owner Pledged Account Control Agreement, any Qualifying Letter of 

Credit, one or more Account Control Agreements, the Purchase Money Notes (and any 

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

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

Guaranty Agreement and the Transferred LLC Interest Sale Agreement, in each case once 

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

in connection with the Closing or the transactions contemplated thereby. 

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

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

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

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

with the rules set forth in Section 1.704-1(b)(2)(iv)(f) of the Treasury Regulations, except as 

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

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

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

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

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

of the Company within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Treasury Regulations; 

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

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

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

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

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

“Borrower ” shall mean any borrower with respect to any Loan. 

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

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

(consisting of Loans, including any separate REO Property or other Acquired Property into 

which any Loan is converted) that (i) are not from a single borrower relationship or (ii) otherwise 

do not involve (or are not secured by) items of REO Property that are part of the same project 

and/or physically adjacent to one another; provided however, if multiple assets are marketed and 

offered at the same time, and each such asset is marketed individually and offers are solicited 

with respect thereto individually, the transaction will not be considered a Bulk Sale if multiple 

assets are sold to a single buyer provided that the single buyer's overall price for such specific 

assets exceeds the aggregate value of the highest individual prices offered by other buyers for 

each individual asset included in that specific transaction (based on net cash proceeds to be 

received by the Company). 

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

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

Loans. 

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

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

required or authorized by Law to close. 

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

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

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

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

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

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

Member’s outstanding LLC Interests, as adjusted to account for allocations of Net Income (and 

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

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

“Capital Contribution ” shall mean a contribution to the capital of the Company 

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

Contribution Agreement, or this Agreement. 

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

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

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

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

(including through one or more Subsidiaries), at least 50.1% in value of all of the equity interests 

in the Private Owner, or (ii) any Person other than the Private Owner’s Specified Parent (and 

its/their wholly-owned subsidiaries) at any time, when considered together with all of such 

Person’s Affiliates (excluding, as applicable, the Private Owner’s Specified Parent and its/their 

wholly-owned subsidiaries), directly or indirectly acquiring or holding, of record or beneficially, 

25% in value of all of the equity interests in the Private Owner, or (iii) any Person comprising 

the Private Owner’s Specified Parent for any reason failing or ceasing to own, beneficially and of 

record, and directly or indirectly (including through one or more Subsidiaries and/or Affiliates) 

at least 50.1% of the equity interests in the Private Owner held by such Person on the Closing 

Date, or (iv) Rialto Capital Management, LLC, a Delaware limited liability company (including 

directly or indirectly through its Affiliates), for any reason ceasing to be actively engaged in the 

management and operation of the Private Owner; and (b) with respect to the Servicer, (i) the 

Servicer’s Specified Parent for any reason (x) failing or ceasing to Control the Servicer or (y) 

failing or ceasing to own, beneficially and of record, and directly or indirectly (including through 

one or more Subsidiaries), at least 50.1% in value of all of the equity interests in the Servicer, or 

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

Servicer, was) an Affiliate of the Private Owner, any Change of Control of the Private Owner. 

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

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“Closing ” shall mean the consummation of the transactions contemplated in the 

Transferred LLC Interest Sale Agreement. 

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

“Code ” shall mean the United States Internal Revenue Code of 1986, as amended. 

“Collateral Agent ” shall mean the FDIC, in its capacity as the Collateral Agent 

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

successor Collateral Agent thereunder. 

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

established and maintained at a branch of the Paying Agent (as the “Collection Account” defined 

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

Agreement. 

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

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

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

Member pursuant to the Contribution Agreement. 

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

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

performance of any other obligations described therein, including any installment land contract. 

“Contribution Agreement ” shall have the meaning given in the recitals. 

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

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

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

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

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

“Custodial and Paying Agency Agreement” shall mean, initially, the Custodial 

and Paying Agency Agreement dated as of February 9, 2010, by and between the Company, the 

Purchase Money Notes Guarantor and the initial Custodian and Paying Agent, and thereafter any 

replacement agreement entered into with a Custodian and Paying Agent pursuant to Section 3.7 . 

“Custodial Documents ” shall have the meaning given in the Custodial and 

Paying Agency Agreement. 

“Custodian” shall have the meaning given in Section 3.7. 

“Custodian and Paying Agent Report” shall have the meaning given in the 

Custodial and Paying Agency Agreement. 

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“Cut-Off Date ” shall have the meaning given in the Contribution Agreement. 

“Damages ” shall mean any and all damages, disbursements, suits, claims, 

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

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

litigation and interest on any of the foregoing. 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“Debtor Relief Laws ” shall mean Title 11 of the United States Code (11 U.S.C. 

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

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

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

effect and affecting the rights of creditors generally. 

“Determination Date ” shall have the meaning given in the Custodial and Paying 

Agency Agreement. 

“Defeasance Account ” shall have the meanings given in Custodial and Paying 

Agency Agreement 

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

has any direct ownership interest in such Person. 

“Discretionary Funding Advance” shall have the meaning given in Section 5.3. 

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

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

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

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

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

conversion of a Person into another form of Person does not constitute a Disposition. The term 

“Dispose ” shall mean to make or consummate a “Disposition.” 

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

the purpose of determining a particular amount: 

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

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

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

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

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

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

select a nationally recognized investment banking firm which shall, within 15 days of its 

appointment, select the proposed amount previously submitted by the Members pursuant to this 

procedure that in its opinion more closely reflects the amount being determined as described in 

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

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

period, then each Member shall nominate, within such seven-day period, a nationally recognized 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

entity, the termination of such entity. For the avoidance of doubt, it is understood and agreed 

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

“Dissolution Event.” 

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

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“Distribution Account ” shall mean a segregated trust or custodial account 

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

“Distribution Account” defined therein) at a branch of the Paying Agent for the sole purpose of 

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

Agreement. 

“Distribution Date ” shall have the meaning given in the Custodial and Paying 

Agency Agreement. 

“Distribution Date Report” shall have the meaning given in the Custodial and 

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

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

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

Agreement. 

“Electronic Tracking Agreement ” shall have the meaning given in the Servicing 

Agreement. 

“Embargoed Person ” shall mean any person subject to trade restrictions under 

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

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

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

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

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

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

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

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

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

directly or indirectly, is prohibited by or in violation of law. 

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

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

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

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

defined in Section 101(14) 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 pursuant to applicable Law. 

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

“Escrow Account ” shall have the meaning given in the Contribution Agreement. 

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

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

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

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

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

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

or regulation of any administrative or governmental body): 

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

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

Agreement has occurred (unless such an Event of Default has not actually so occurred); or 

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

other than as may be provided for in the definition of Insolvency Event) (i) with respect to the 

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

that such Insolvency Event under this clause (ii) (that is not otherwise an Insolvency Event under 

clause (i) hereof) shall not be an Event of Default hereunder (but shall in all events be a default 

under the applicable Servicing Agreement or Subservicing Agreement) so long as the Manager 

shall have fully replaced (or caused the replacement of) such affected Servicer or Subservicer 

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

Dissolution Event with respect to the Private Owner; or 

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

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

period of thirty (30) days after the date on which written notice of such failure requiring the same 

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

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

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

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

period of thirty (30) days after the date on which written notice of such failure requiring the same 

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

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

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

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

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

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

replace the Servicer upon the occurrence of either an Event of Default under the Reimbursement, 

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

breach of or event of default under the Servicing Agreement by the Servicer, in either case which 

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

such failure requiring the same to be remedied shall have been given by the Initial Member to the 

Manager (in any capacity); or 

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

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

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

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

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

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

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

applicable; or 

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

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

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

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

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

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

days after the occurrence of such Restricted Servicer Change of Control; or 

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

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

Agent) as and when required; or 

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

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

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

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

Security being equal to or in excess of Five Million Dollars ($5,000,000), or any failure by an 

Issuing Bank to comply with any terms, agreements or conditions of any Qualifying Letter of 

Credit. 

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

Section 5.4 . 

“Excluded Expenses” shall have the meaning given in Section 12.7(b) . 

“Existing Servicer ” shall have the meaning given in the Contribution Agreement. 

“Failed Banks ” shall have the meaning given in the preamble. 

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

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

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

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

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

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

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

the Closing Date. 

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

United States, or any successor thereto. 

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“Fannie Mae Guidelines ” shall mean those guidelines governing reimbursement 

of costs and expenses by Fannie Mae with respect to loans owned or securitized by Fannie Mae, 

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

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

“Final Distribution” shall have the meaning given in Section 6.6(f) . 

“First Incentive Threshold Event” shall have the meaning given in Section 

6.6(b)(iii) . 

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

“Funding Draw” shall mean (i) any principal advance with respect to a Loan 

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

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

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

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

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

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

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

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

Agreement, if the then outstanding unpaid principal balance of the Loan exceeds (or would, after 

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

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

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

the Loan, or that the making of the Funding Draw is in the best interests (in terms of maximizing 

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

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

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

provided, however, that if such advance would result in the principal amount of such Loan being 

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

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

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

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

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

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

in the best interests of the Company and the Initial Member in terms of maximizing the value of 

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

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

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

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

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

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

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

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

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

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so-called “soft costs” payable during construction (such as real estate taxes, ground rents and 

insurance premiums)) as would typically have been paid out of funding of the applicable Loan 

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

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

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

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

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

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

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

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

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

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

effect from time to time. 

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

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

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

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

clause (i). 

“ground lease” shall have the meaning given in Section 12.15 . 

“Group of Loans ” shall have the meaning given in the Contribution Agreement. 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

obligation. 

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

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

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

stepchildren, grandchildren and grandchildren-in-law. 

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

“Incentive Threshold Base Amount ” shall have the meaning given in 

Section 6.6(b) . 

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

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

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

Section 2.3(a)(i). 

“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 Law; 

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

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

substantial part of the specified Person’s properties; 

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

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

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

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

with respect to the Company, the Purchase Money Notes unless a 

Purchase Money Note Trigger Event (as defined in the Reimbursement, 

Security and Guaranty Agreement) has occurred and is continuing and is 

not cured within ten (10) Business Days) as they become due, or the sum 

of such specified Person’s debts is greater than all of such Person’s 

property, at a fair valuation; or 

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

any proceeding against the specified Person seeking reorganization, 

arrangement, composition, readjustment, liquidation, dissolution or similar 

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

(x) at least sixty (60) days have passed following the appointment of a 

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

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

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

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

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

appointment has not been vacated. 

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

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

“Interim Management Fee ” shall have the meaning given in the Custodial and 

Paying Agency Agreement. 

“Interim Servicing Fee ” shall have the meaning given in the Contribution 

Agreement. 

“Interim Servicing Period ” shall have the meaning given in the Contribution 

Agreement. 

“Investment Company Act ” shall mean the Investment Company Act of 1940, 

as amended from time to time. 

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

applicable issuing bank. 

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

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

Authority. 

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

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

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

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

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

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

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

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

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

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

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

Qualifying Letter of Credit. 

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

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

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

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

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

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

of three months. 

“Lien ” shall mean any mortgage, deed of trust, pledge, deed to secure debt, trust 

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

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

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

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

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

rights to share in the income, gain, loss, deductions and credits of, and the right to receive 

distributions from, the Company, (ii) all other rights, benefits and privileges enjoyed by such 

Member (under the Act, this Agreement or otherwise) in its capacity as a Member, including 

rights to vote, consent and approve, and (iii) all other rights, benefits, privileges and claims 

(whether known or unknown) of such Member under, or arising under, this Agreement. For 

purposes of clarification, references in this Agreement to the term “limited liability company 

interest” shall mean a “limited liability company interest” as such term is defined in the Act. 

“Loan” shall mean any loan, Loan Participation, Ownership Entity (including any 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Agreement). 

“Loan Documents” shall have the meaning given in the Contribution Agreement. 

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“Loan File ” shall have the meaning given in the Contribution Agreement. 

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

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

Initial Member, any Failed Bank, or the Receiver was, or the Company is, the lead or agent 

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

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

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

another Person. 

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

applicable Failed Bank or the Receiver was, or the Company is, the lead or agent financial 

depository institution or otherwise managed or held a shared credit or sold participations, or 

under which such Failed Bank or the Receiver was, or the Company is, a participating financial 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(v) any deposits or down payments forfeited by prospective purchasers or lessees of apartments 

or other units for space at any Underlying Collateral; and (vi) any interest or other earnings 

accrued and paid on any of the amounts described in the foregoing clauses (i) through (v) while 

held in the Collection Account or any other account (other than the Defeasance Account); 

provided, however, that, with respect to proceeds of any Loan Participation (including as a result 

of any sale or other disposition of such Loan Participation or of Underlying Collateral relating 

thereto), the Loan Proceeds shall exclude any amounts payable to others under the applicable 

Loan Participation Agreement. 

“Loan Schedule ” shall have the meaning given in the Contribution Agreement. 

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

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

the Manager for each Group of Loans for which the Servicing Transfer Date has occurred as of 

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

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

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

amount determined by multiplying (i) the adjusted Unpaid Principal Balance of such Group of 

Loans calculated as of the first day of such Due Period by (ii) 0.50 percent (0.50%), and by (iii) a 

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

denominator of which is 360. For purposes of clarification, in no event shall any Servicing 

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

calculation of the Management Fee, notwithstanding any provisions of the Loan Documents that 

would permit or require any such Servicing Expenses to be treated as advances (or otherwise as 

part of the principal amount of any such Loan). 

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

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

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

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

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

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

“member” as such term is defined in the Act. 

“Member Schedule” shall mean the schedule attached hereto (and hereby 

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

modified from time to time. 

“MERS ” shall mean Mortgage Electronic Registration Systems, Incorporated. 

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

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

attached as an exhibit to the Electronic Tracking Agreement). 

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

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

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

“Monthly Adjusted Annualized Yield ” is (i) for purposes of the First Incentive 

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

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

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

(1 + Annualized Yield Threshold)1/12 – 1 or (1 + 0.35)1/12 – 1, where the Annualized Yield 

Threshold is 35%. 

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

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

with Section 7.4(b) . 

“Mortgage Assignment” shall have the meaning given in the Contribution 

Agreement. 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

definition, shall be treated as deductible items. 

“Note ” shall have the meaning given in the Contribution Agreement. 

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

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

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

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

under any completion guaranty or similar document. 

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

recitals. 

“Ownership Entity” shall mean a Single Purpose Entity that is a Subsidiary of 

the Company, whether contributed by the Initial Member on the Closing Date or formed or 

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

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

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

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

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

Closing. 

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

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

Initial Member prior to the Closing Date, one hundred percent (100%) and, with respect to the 

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

forth in Section 6.6(b)(ii) . 

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

“Permitted Investments ” shall have the meaning given in the Custodial and 

Paying Agency Agreement. 

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

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

other entity. 

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

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

Agreement. 

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

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

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

Agency Agreement. 

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

“Private Owner Obligations” shall have the meaning given in Section 3.13 . 

“Private Owner Pledged Account ” shall mean a segregated trust or custodial 

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

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

Agent for the sole purpose of holding the Qualifying Cash Collateral, which account is and 

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

the Company and the Indemnified Parties) as collateral for the Private Owner Obligations. 

“Private Owner Pledged Account Control Agreement ” shall mean that certain 

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

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

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

“Property” shall mean any property contributed to, acquired by or otherwise 

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

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

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

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“Purchase Money Notes ” shall have the meaning given in the recitals. 

“Purchase Money Notes Defeasance Date ” shall mean the date on which the 

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

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

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

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

“Purchase Money Notes Guaranty ” shall have the meaning given in the recitals. 

“Purchase Money Notes Guarantor ” shall have the meaning given in the 

recitals. 

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

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

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

and the Ancillary Documents, including the Purchaser Eligibility Certification delivered by the 

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

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

Eligibility Certification in substantially the form of the Purchaser Eligibility Certification 

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

such form of Purchaser Eligibility Certification as maintained by the FDIC. 

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

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

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

Custodian under the Custodial and Paying Agency Agreement, (iii) is qualified and licensed to 

do business in each such jurisdiction to the extent required unless and to the extent the failure to 

be so qualified or licensed will not have a material adverse effect on the Custodian or the ability 

of the Custodian to perform its obligations under the Custodial and Paying Agency Agreement, 

(iv) is not prohibited from exercising custodial powers in any jurisdiction in which the Custodial 

Documents are or will be held, (v) has combined capital and surplus of at least $50,000,000 as 

reported in its most recent report of condition, (vi) has the facilities to safeguard the Loan 

Documents and other Custodial Documents as required by the Custodial and Paying Agency 

Agreement, (vii) is not an Affiliate of the Company or the Servicer, and (viii) is acceptable to 

and approved by the Initial Member (such approval not to be unreasonably withheld, delayed or 

conditioned). 

"Qualified Issuer " shall mean any FDIC-insured depository institution that is 

“well capitalized” as defined in 12 U.S.C. § 1831o (b)(1)(A), is in the business of issuing letters 

of credit and maintains offices in either or both of New York City, NY and Washington, DC. 

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

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

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

conduct business are necessary for the servicing of the Loans and management of the Underlying 

Collateral and the Acquired Property, (ii) has the management capacity and experience to service 

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Loans of the type held by the Company, especially performing and non-performing construction 

loans secured by multi-family residential properties or commercial properties, as applicable, 

including the number and types of loans serviced, and the ability to track, process and post 

payments, and to furnish tax reports to borrowers, to monitor construction and to approve and 

disburse construction draws, (iii) either (x) has an Acceptable Rating or (y) is approved by and 

continues to be acceptable to the Initial Member in its sole discretion, and (iv) in the event any of 

the serviced Loans are (or are required pursuant to the terms hereof to be) registered on the 

MERS® System, is a member of MERS. 

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

“Qualifying Cash Collateral” shall have the meaning given in Section 3.13 . 

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

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

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

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

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

one year with automatic renewals thereafter (without amendment except for extension of the then 

current expiry date by an additional year) until the Initial Member has delivered written notice to 

the Issuing Bank to the effect that such Qualifying Letter of Credit is being released in its 

entirety. 

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

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

such other rating agencies as are nationally recognized. 

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

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

the same may be amended from time to time. 

“Reimbursable Company Administrative Expenses” shall mean (i) reasonable 

fees of outside auditors in connection with annual audits of the Company (and the Ownership 

Entities); and (ii) licensing, filing and similar fees paid to applicable authorities in connection 

with obtaining and maintaining applicable Company (or Ownership Entity) licenses or 

registrations or with the preservation (and eventual dissolution) of the Company’s (or any 

Ownership Entity’s) existence in accordance herewith (including for purposes of compliance 

with Section 4.3 hereof). For purposes of clarification, in no event shall Reimbursable Company 

Administrative Expenses include fees in connection with audits, licenses or filings of or with 

respect to the Manager, the Servicer, the Subservicer or any other Person (other than the 

Company and the Ownership Entities). 

“Reimbursement, Security and Guaranty Agreement” shall mean that certain 

Reimbursement, Security and Guaranty Agreement dated as of the Closing Date among the 

FDIC, acting in its corporate capacity and as Receiver and as Collateral Agent, the Company, 

and the guarantors party thereto. 

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“Related Agreement” shall mean (i) any agreement, document or instrument 

(other than the Note and Underlying Collateral Documents) relating to or evidencing any 

obligation to pay or securing any Loan (including any equipment lease, letter of credit, bankers’ 

acceptance, draft, system confirmation of transaction, loan history, affidavit, general collection 

information, and correspondence and comments relating to any obligation), (ii) any agreement 

relating to real property or rights in or to any real property (including leases, tenancies, 

concessions, licenses or other rights of occupancy or use and security deposits related thereto), 

(iii) any collection, contingency fee, and tax and other service agreements (including those 

referred to in Section 4.2 of the Contribution Agreement) that are specific to the Loans (or any of 

them) and that are assignable, (iv) any letter of assurance, letter of credit or similar instrument 

evidencing an obligation of any Failed Bank, the Initial Member, the Company or any 

Ownership Entity that was issued for the benefit of any Person and relates in any way to a Loan 

or the acquisition, development or construction of any project with respect to which the proceeds 

of such Loan were used or were intended to be used, and (v) any interest rate swap arrangement 

between the Borrower and any of the Failed Banks, the Initial Member or the Company (in each 

case as the applicable lender, agent or other creditor under the Loan) that relates to any Loan. 

“Related Party ” shall mean with respect to any Person, any party related to such 

Person in the manner delineated in 26 U.S.C.A. § 267(b) and the regulations promulgated 

thereunder, as such law and regulations may be amended from time to time. 

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

“Related Persons” shall have the meaning given in Section 4.5 . 

“REO Property ” shall mean any real property (and related personal property) 

included in the Acquired Property. 

“Restricted Servicer Change of Control ” shall mean any Change of Control 

with respect to the Servicer that has not been approved in writing by the Manager and the Initial 

Member (which approval shall not be unreasonably withheld). 

“Second Incentive Threshold Event” shall have the meaning given in 

Section 6.6(b)(iii) . 

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

“Securities Act ” shall mean Securities Act of 1933, as amended. 

“Servicer” shall mean have the meaning given in Section 12.3(a) . 

“Servicing Agreement” shall mean, initially, the Servicing Agreement dated as 

of the date hereof, by and between the Manager (in its individual capacity) and Quantum 

Servicing Corporation, a Delaware corporation, and thereafter any replacement agreement 

entered into between the Manager (in its individual capacity) and the Person designated as the 

Servicer therein, which servicing agreement shall satisfy the requirements of Section 12.1(b) and 

shall be acceptable to the Initial Member in all respects. 

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

fees, costs, expenses and indemnified amounts incurred (after the Closing Date) in connection 

with servicing the Loans and the Acquired Property, including (i) any and all out-of-pocket fees, 

costs, expenses and indemnified amounts which a Borrower is obligated to pay to any Person or 

to reimburse to the lender, in either case, pursuant to the applicable Note or any other Loan 

Documents, including Escrow Advances, (ii) any and all reasonable out-of-pocket expenses 

necessary to protect or preserve the value of the Underlying Collateral or the priority of the Liens 

and security interests created by the Loan Documents relating thereto, including taxes, insurance 

premiums (including forced place insurance premiums), payment of ground rent, the costs of 

prevention of waste, repairs and maintenance, foreclosure expenses and legal fees and expenses 

relating to foreclosure or other litigation with respect to the Loans, (iii) any and all direct 

expenses related to the preservation, operation, management, leasing, and sale of the Acquired 

Property (including real estate brokerage fees), (iv) Reimbursable Company Administrative 

Expenses, (v) subject to Section 4.6 (and excluding any amounts or claims the Private Owner is 

required to bear or indemnify pursuant to such Section 4.6), to the extent not covered by any of 

clauses (i) through (iv), legal fees and expenses (including judgments, settlements and reasonable 

attorneys fees) incurred by the Company (including to reimburse the Manager, including for the 

Manager’s reimbursement of the Servicer, including for the Servicer’s reimbursement of any 

Subservicer) in its (or the Manager’s, the Servicer’s or any Subservicer’s) defense of claims 

asserted against the Company (or the Manager, the Servicer or any Subservicer) that relate to one 

or more Loans or the conduct of the Business, and allege, as the basis for such claims, any act or 

omission of the Company (or the Manager, the Servicer or any Subservicer) but only if (1) such 

claims are not attributable to any act or omission of the Company, the Manager, the Servicer or 

any Subservicer in a manner inconsistent with, or in violation of, the Servicing Standard or any 

of the provisions of this Agreement or any Ancillary Document, and (2) (x) such claims are 

decided and there are final non appealable orders or judgments (unless the Initial Member has 

agreed in writing that no appeal needs to be taken) in favor of the Company (and the Manager 

and the Servicer, to the extent any such claim has been asserted against the same) or if decided 

against the Company (or the Manager or the Servicer or any Subservicer) without any finding of 

bad faith, gross negligence or willful misconduct on the part of any of the foregoing or (y) there 

is entered into a final settlement of any such claim with the prior written consent of the Initial 

Member, (vi) subject to Section 4.6 of this Agreement, (x) expenses incurred in accordance with 

Section 4.5(c) of the Contribution Agreement and (y) expenses incurred in connection with any 

litigation (including any bankruptcy action) included in the Obligations and assumed pursuant to 

Section 4.5(a) or (b) or Section 4.6 of the Contribution Agreement, (vii) any and all fees, costs 

and expenses in connection with the registration of the Purchase Money Notes as described in 

Article 2 of the Custodial and Paying Agency Agreement, including the fees for the registration 

of the Purchase Money Notes with the Depository Trust Company, and (viii) the costs of 

preparing, negotiating and recording any REO Mortgage (as defined in the Reimbursement, 

Security and Guaranty Agreement, including mortgage recording taxes) and the costs associated 

with the additional documentation required pursuant to Section 8.11 of the Reimbursement, 

Security and Guaranty Agreement, in each case pursuant to Section 8.11 of the Reimbursement, 

Security and Guaranty Agreement; provided, however, that Servicing Expenses shall not include 

any (A) Excluded Expenses or (B) costs or expenses to be funded (or which, assuming relevant 

conditions are satisfied, could be funded) using Funding Draws. For purposes of clarification, in 

connection with any reimbursement rights of the Initial Member (or any Prior Servicer) with 

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respect to the period prior to the Closing Date, Servicing Expenses shall not include any 

Corporate Advances (as defined in the Contribution Agreement) made prior to the Closing Date. 

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

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

“Servicing Transfer Date ” shall have the meaning given in the Contribution 

Agreement. 

“Single Purpose Entity ” shall mean 

(A) with respect to an Ownership Entity, a corporation or limited liability 

company that (i) is organized under the laws of any state of the United States or the District of 

Columbia, (ii) the equity of which is uncertificated, (iii) has no material assets other than 

Acquired Property, (iv) is not engaged in any business operations except in connection with the 

Acquired Property and conducted pursuant to terms of this Agreement and the Ancillary 

Documents, (v) does or causes to be done all things necessary to preserve and keep in full force 

and effect its existence, rights (charter and statutory) and franchises, (vi) at all times holds itself 

out to the public as a legal entity separate from any other Person (including any Affiliate), (vii) 

except as expressly contemplated by this Agreement, or the Ancillary Documents, does not 

commingle its assets with assets of any other Person, (viii) conducts its business in its own name 

and strictly complies with all organizational formalities to maintain its separate existence, (ix) 

maintains an arm’s length relationship with any Affiliate upon terms that are commercially 

reasonable and on terms no less favorable to it than could be obtained in a comparable arm’s 

length transaction with an unrelated Person, (x) has no Debt other than as expressly permitted by 

the Ancillary Documents and (xi) except as otherwise consented to in writing by the Initial 

Member, is a pass-through entity for tax purposes; 

(B) with respect to the Company, a limited liability company that (i) is 

organized under the laws of Delaware, (ii) the equity of which is uncertificated, (iii) has no 

material assets other than the Loans, including Underlying Collateral and Ownership Entities, 

and its rights, title and interest in, to, and under this Agreement and the Ancillary Documents, 

(iv) is not engaged in any significant business operations except in connection with the Loans, 

including the Underlying Collateral and Ownership Entities and conducted in accordance with 

the terms of this Agreement and the Ancillary Documents, (v) does or causes to be done all 

things necessary to preserve and keep in full force and effect its existence, rights (charter and 

statutory) and franchises, (vi) at all times holds itself out to the public as a legal entity separate 

from any other Person (including any Affiliate), (vii) except as expressly contemplated by this 

Agreement or by any other Ancillary Documents, does not commingle its assets with assets of 

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

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

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

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

Person other than as expressly provided by this Agreement and the Ancillary Documents, (x) has 

no Debt other than as provided in this Agreement and the Ancillary Documents and (xi) except 

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as otherwise consented to in writing by the Initial Member, is a pass-through entity for tax 

purposes; and 

(C) with respect to the Private Owner (or any Qualified Transferee thereof), a 

corporation or limited liability company that (i) is organized under the laws of any state of the 

United States or the District of Columbia, (ii) the equity of which is uncertificated, (iii) has no 

material assets other than cash and cash equivalents and its rights, title and interest in, to, and 

under this Agreement and the Ancillary Documents, (iv) is not engaged in any significant 

business operations except in connection with the performance of its obligations under this 

Agreement and the Ancillary Documents, (v) does or causes to be done all things necessary to 

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

franchises, (vi) at all times holds itself out to the public as a legal entity separate from any other 

Person (including any Affiliate), (vii) except as expressly contemplated by this Agreement or the 

Ancillary Documents, does not commingle its assets with assets of any other Person, (viii) 

conducts its business in its own name and strictly complies with all organizational formalities to 

maintain its separate existence, (ix) maintains an arm’s length relationship with any Affiliate 

upon terms that are commercially reasonable and on terms no less favorable to it than could be 

obtained in a comparable arm’s length transaction with an unrelated Person other than as 

otherwise expressly provided by this Agreement and the Ancillary Documents, (x) has no Debt 

and (xi) except as otherwise consented to in writing by the Initial Member, is a pass-through 

entity for tax purposes. 

“Specified Parent ” shall mean (i) with respect to the Private Owner, (x) unless 

clause (i)(y) is applicable, Lennar Corporation, a Delaware Corporation, and Rialto Capital 

Management, LLC, a Delaware limited liability company, including on a collective basis, or (y) 

any other Person or Persons that the Private Owner and the Initial Member may agree from time 

to time shall be designated as the “Specified Parent” for purposes of this Agreement; and (ii) 

with respect to the Servicer shall mean any Person or Persons that the Manager and the Initial 

Member may agree from time to time shall be designated as the “Specified Parent” with respect 

to the Servicer; provided, that, for any such Servicer, the Manager shall cause its initial 

Specified Parent (as approved by Manager and the Initial Member) to be expressly specified in 

the applicable Servicing Agreement. 

“Subservicers” shall have the meaning given in Section 12.3(a) . 

“Subservicing Agreement” shall have the meaning given in Section 12.3(a) . 

“Subsidiary” shall mean, with respect to any specified Person, each of (i) any 

other Person not less than a majority of the overall economic equity in which is owned, directly 

or indirectly through one of more intermediaries, by such specified Person, and (ii) without 

limitation of clause (i), any other Person who or which, directly or indirectly through one or 

more intermediaries, is Controlled by such specified Person (it being understood with respect to 

clause (i) that a pledge for collateral security purposes of an equity interest in a Person shall not 

be deemed to affect the ownership of such equity interest by the pledgor so long as such pledgor 

continues to be entitled, in all material respects, to all the income with respect to such equity 

interest). 

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

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

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

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

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

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

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

under this Agreement or any other Ancillary Document. 

“Tax ” shall mean any federal, state, county, local, or foreign tax, charge, fee, 

levy, duty, or other assessment, including any income, gross receipts, transfer, recording, capital, 

withholding, property, ad valorem, or other tax or governmental fee of any kind whatsoever, 

imposed or required to be withheld by any governmental authority having jurisdiction over the 

assessment, determination, collection, or other imposition of any Tax, including any interest, 

penalties and additions imposed thereon or with respect thereto. 

“Tax Matters Member” shall have the meaning given in Section 7.5 . 

“Third Party Claim” shall have the meaning given in Section 4.6(a) . 

“Threshold Increase Amount ” as of any Distribution Date (and determined 

separately for purposes of the First Incentive Threshold Event and the Second Incentive 

Threshold Event) shall be equal to the product of (a) the applicable Incentive Threshold as of the 

preceding Distribution Date (or, in the case of the first Distribution Date, the Closing Date) and 

(b) the applicable Monthly Adjusted Annualized Yield. 

“Transfer Documents ” shall have the meaning given in the Contribution 

Agreement. 

“Transferred LLC Interest Sale Agreement ” shall mean that certain limited 

liability company interest Sale and Assignment Agreement dated the date hereof between the 

Initial Member and the Private Owner. 

“Transferred LLC Interest Sale Price ” shall have the meaning given in the 

Transferred LLC Interest Sale Agreement. 

“Treasury Regulations ” shall mean the regulations promulgated by the United 

States Department of the Treasury pursuant to and in respect of provisions of the Code, and all 

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

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

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

whether tangible, intangible or mixed, securing or pledged to secure a Loan, including (i) any 

account, equipment, guarantee or contract right, equity, partnership or other interest that is the 

subject of any Underlying Collateral Document and (ii) as the context requires, Acquired 

Property, whether or not expressly specified. 

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

agreement, personal, corporate or other guaranty, deed of trust, deed, trust deed, deed to secure 

debt, mortgage, contract for the sale of real property, assignment, collateral agreement, stock 

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

similar to or different from those enumerated, (i) securing in any manner the performance or 

payment by any Borrower or any Obligor of its obligations or the obligations of any Borrower or 

any Obligor pursuant to any of the Loans or Notes evidencing the Loans, or (ii) evidencing 

ownership of any Acquired Property. 

“Unpaid Principal Balance” shall mean, at any time, (a) when used in 

connection with multiple Loans, an amount equal to the aggregate then outstanding principal 

balance of such Loans, and (b) when used with respect to a single Loan, an amount equal to the 

then outstanding principal balance of such Loan; provided, however, that: 

(i) with respect to any Loan Participation (and any related Acquired 

Property), the Unpaid Principal Balance of such Loan Participation shall include only the 

Company’s (or, with respect any period prior to the effectiveness of the transfer of such Loan 

Participation to the Company on the Closing Date, the Initial Member’s, the Receiver’s or the 

Failed Bank’s, as applicable) allocable share thereof in accordance with the applicable Loan 

Participation Agreement; 

(ii) with respect to any Acquired Property that is included among the Loans on 

the Closing Date, the Unpaid Principal Balance of such Acquired Property shall initially be the 

amount set forth on the Loan Schedule, as adjusted to its Adjusted Cut-Off Date Unpaid 

Principal Balance (as defined in, and determined pursuant to, the Contribution Agreement), and 

thereafter determined in the same manner as all other Acquired Property; 

(iii) in the case of a Loan for which some or all of the related Underlying 

Collateral has been converted to Acquired Property (including REO Property), until such time as 

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

Loan shall be deemed to equal the amount of the unpaid principal balance of such Loan (adjusted 

pro rata for debt forgiveness or retained indebtedness) at the time at which such Loan was 

converted to Acquired Property, plus, without duplication, any outstanding balance remaining on 

such Loan which is evidenced by a modification agreement or a replacement or successor 

promissory note executed by the borrower, less the net proceeds of any sales of any portions of 

the Acquired Property effective after such conversion. 

(iv) the Unpaid Principal Balance with respect to any Acquired Property will 

be increased by the amount of, without duplication, (A) any Funding Draws (or equivalent 

advances by the Initial Member during the Interim Servicing Period under the Contribution 

Agreement) applied with respect thereto in accordance herewith (or with the Contribution 

Agreement, as applicable), and (B) any Servicing Expenses capitalized thereto in accordance 

with applicable Law to the extent that capitalizing such Servicing Expenses would have been 

permitted under the applicable Loan Documents prior to the conversion of the Loan to the 

Acquired Property. 

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

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“Working Capital Expenses shall mean any Servicing Expenses, Pre-Approved 

Charges, Funding Draws (or permitted uses thereof, as the context may require), Management 

Fee, Interim Management Fee, Interim Servicing Fee or fees of the Custodian and Paying Agent. 

“Working Capital Reserve” has the meaning given in Section 12.11 . 

“Working Capital Reserve Account ” shall mean a segregated trust or custodial 

account established and maintained at a branch of the Paying Agent (as the “Working Capital 

Reserve Account” defined therein) for purposes of holding and disbursing the Working Capital 

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

Agreement and this Agreement. 

“Working Capital Reserve Ceiling ” shall have the meaning given in the 

Custodial and Paying Agency Agreement. 

“Working Capital Reserve Replenishment Cap ” shall have the meaning given 

in the Custodial and Paying Agency Agreement. 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

amendment, modification or replacement to such Law. 

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

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

which they refer. 

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

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

thereto and all documents, instruments or agreements issued or executed in replacement thereof, 

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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. 

ARTI CLE I I 

Organization of the Company 

2.1 Formation; Continuation and Admission of Members. 

(a) On February 3, 2010, the Receiver caused the Certificate of Formation of 

the Company, in the form attached as Exhibit A hereto (the “Certificate ”), to be filed in the office 

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

change the registered agent or office of the Company. 

(b) The Company shall continue as a limited liability company under the Act 

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

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

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

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

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

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

2.2 Name. 

(a) The name of the Company shall be Multibank 2009-1 RES-ADC Venture, 

LLC. 

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

such other name or names that comply with applicable Law as the Members may select from time 

to time. 

2.3 Organizational Contributions and Related Actions. 

(a) Prior to the execution of this Agreement, pursuant to the terms of the 

Contribution Agreement, the Initial Member: 

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(i) made a Capital Contribution to the Company in the form of certain 

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

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

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

Initial Member Capital Contribution) and assumed the Obligations (as defined in 

the Contribution Agreement) in exchange for the Purchase Money Notes. 

(b) Contemporaneously with the execution of this Agreement, pursuant to the 

terms of the Transferred LLC Interest Sale Agreement, the Private Owner is acquiring from the 

Initial Member an LLC Interest representing a forty percent (40%) equity interest for the 

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

(c) Upon the consummation of the transactions contemplated in 

Sections 2.3(a) and (b) and prior to the occurrence of the First Incentive Threshold Event as 

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

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

Interests. Following the occurrence of the First Incentive Threshold Event and prior to the 

occurrence of the Second Incentive Threshold Event as described in Section 6.6(b)(iii), the Private 

Owner shall own thirty-five percent (35%) of the issued and outstanding LLC Interests and the 

Initial Member shall own sixty-five percent (65%) of such LLC Interests. Following the 

occurrence of the Second Incentive Threshold Event, the Private Owner shall own thirty percent 

(30%) of the issued and outstanding LLC Interests and the Initial Member shall own seventy 

percent (70%) of such LLC Interests. 

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

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

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

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

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

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

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

Company’s registered agent. The chief executive office of the Company shall be located at 700 

NW 107th Avenue, Suite 400, Miami, FL 33172, or such other place as shall be determined by 

the Manager from time to time. 

2.5 Purpose; Duration. 

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

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

Persons. The Company shall not form or have any Subsidiaries other than Ownership Entities or 

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

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

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

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

Company or consistent with the furtherance thereof. 

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

perpetually. 

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

expressly permitted by this Agreement or the Ancillary Documents, the following shall govern 

for so long as the Company is in existence: 

(a) Subject to Section 9.1, the Manager shall cause the Company to do or 

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

rights (charter and statutory) and franchises, and the Manager also shall cause the Company to: 

(i) maintain financial statements separate from any Affiliate; 

provided, however, that each Ownership Entity shall be consolidated in the 

financial statements of the Company; and provided, further, that the assets, 

liabilities and results of operations of the Company may be included in the 

consolidated financial statements of its parent or ultimate parent in accordance 

with GAAP; 

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

from the Members and any other Person; 

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

and pay any taxes so required to be paid under applicable Law; 

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

segregate its assets and not commingle its assets with assets of any other Person; 

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

organizational formalities to maintain its separate legal existence; 

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

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

terms that are commercially reasonable and that are no less favorable to the 

Company than could be obtained in a comparable arm’s length transaction with an 

unrelated Person; 

(viii) subject at all times to Section 3.3, pay the salaries of its own 

employees, if any, and maintain, or cause to be maintained, a sufficient number of 

employees, if any, in light of its contemplated business operations; 

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

overhead for shared office space; 

(x) use separate stationery, invoices and checks; 

(xi) correct any known misunderstanding regarding its separate 

identity; and 

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

purpose, transactions and liabilities, if any. 

(b) Neither the Manager nor the Private Owner may cause or permit a 

Dissolution Event or an Insolvency Event to occur with respect to the Company or any of its 

Subsidiaries to which the Initial Member has not provided its written consent, and neither the 

Manager nor the Private Owner may, without the written consent of the Initial Member, cause or 

permit the Company or any of its Subsidiaries to: 

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

hold out its credit or assets as being available to satisfy the obligations of others, 

or become bound by any Guarantee of, or otherwise obligate itself with respect to, 

the Debts of any other Person, including any Affiliate; 

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

(including the Purchase Money Notes (and any promissory note reissued in 

respect thereof pursuant to Section 2.8 of the Custodial and Paying Agency 

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

Security and Guaranty Agreement), pledge its assets for the benefit of any other 

Person, make any loans or advances to any other Person, or encumber or permit 

any Lien to be placed on the Loans, the Underlying Collateral, or the proceeds 

therefrom; provided that the Company may invest its funds in interest bearing 

accounts held by any bank that is not its Affiliate and make advances in 

accordance with Article XII; 

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

Business; 

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

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

of the Custodial and Paying Agency Agreement), any Discretionary Funding 

Advance, any Excess Working Capital Advance or as otherwise expressly 

permitted hereby or by the Ancillary Documents to which the Initial Member is a 

party; 

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

own or acquire any stock or securities of, any Person (other than an Ownership 

Entity), except that the Company may invest in those investments permitted under 

the Ancillary Documents and may make any advance required or expressly 

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

Documents and permit the same to remain outstanding in accordance with such 

provisions; 

(vi) acquire any LLC Interest (or any portion of any LLC Interest); 

(vii) consolidate or merge with or into any other Person, convert into 

any other type of Person (including into a limited liability company organized 

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under the laws of a jurisdiction other than the State of Delaware), transfer, 

domesticate or continue the Company or any Subsidiary of the Company pursuant 

to Section 18-213 of the Act, or take any other action for which the consent of 

some or all of the members of a limited liability company is (unless otherwise 

provided in the limited liability company agreement of such limited liability 

company) required by the Act; 

(viii) convey or transfer its properties and assets as an entirety or 

substantially as an entirety to any Person, transfer its ownership interests, or 

engage in any dissolution or liquidation, except in each case to the extent such 

activities are expressly permitted pursuant to any provision of this Agreement or 

the Ancillary Documents (and subject to obtaining any approvals required 

hereunder or thereunder, as applicable); 

(ix) except as contemplated or permitted by this Agreement, form, 

acquire or, subject to the second proviso of the definition of Ownership Entity, 

hold any Subsidiary other than an Ownership Entity or form any trust for the 

purpose of holding Loans for the benefit of the Company; or 

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

agreements contained in any of the Ancillary Documents. 

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

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

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

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

previously approved (a) each of the Ancillary Documents, (b) the issuance of the LLC Interests, 

and (c) the taking of all action reasonably necessary to effect the foregoing approvals, including 

without limitation the execution and performance of this Agreement and the Ancillary 

Documents (the “Previously Approved Matters”). The Previously Approved Matters, and all 

actions taken by the Company in furtherance of the Previously Approved Matters, are hereby 

ratified, approved and confirmed in their entirety by each Member and the Manager is hereby 

authorized and directed to execute and deliver, for and on behalf of the Company, any and all 

documents as may now or hereafter be reasonably required in order to effect the Previously 

Approved Matters. 

AR T IC L E III 

Management and Operations of the Company 

3.1 Management of the Company’s Affairs. 

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

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

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

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

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

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

with this Agreement. The Private Owner may not resign as Manager, may not Dispose of or 

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

and shall serve as Manager until such time as (i) the Private Owner’s LLC Interest is Disposed of 

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

Company and Successor to the Private Owner, in which case the transferee Member shall, 

effective upon such Disposition, be appointed as the “Manager” to the extent the Private Owner 

held such role immediately prior to such Disposition, (ii) the Private Owner is removed as 

Manager by the Initial Member and replaced in accordance with Section 3.2 or Section 12.4 

below; or (iii) the Company is dissolved, and the business and affairs of the Company are wound 

up, in accordance with the terms of this Agreement. The Manager shall devote such time to the 

affairs of the Company as is necessary to manage the Company as set forth in this Agreement. 

Without limitation of the foregoing, the Manager shall cooperate with the Tax Matters Member in 

all respects as reasonably requested by the Tax Matters Member, from time to time, in connection 

with the Tax Matters Member’s performance of its obligations under this Agreement. Private 

Owner (and any Successor to Private Owner) hereby expressly acknowledges that (x) as it relates 

to its role as each of the Manager, this Agreement constitutes a personal services contract between 

the Private Owner and the Company, and (y) except as may be otherwise expressly specified 

herein, it shall not be entitled to any salary, fees, reimbursement of costs or expenses, or other 

compensation with respect to its service as Manager hereunder (including with respect to the 

Manager’s Loan servicing and management obligations under Article XII). 

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

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

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

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

and the officers of a corporation organized under the Delaware General Corporation Law (and not 

electing to be governed by subchapter XIV thereof). The Manager shall have no authority to take 

or authorize the taking of any action in contravention of any express term of this Agreement. 

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

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

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

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

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

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

by the Manager as to: 

(i) the identity of the Members; 

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

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

the affairs of the Company; 

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

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

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

whatsoever involving the Company or the Members. 

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

parties hereto acknowledge and agree that: 

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

behalf of the Initial Member; 

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

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

Member to the Private Owner or the Company; and 

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

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

absolute discretion, without regard to and against the interests of the Private 

Owner or the Company. 

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

hereof or pursuant to a Related Party Agreement or any Ancillary Document, the Company shall 

not be liable for, and the Manager shall not seek reimbursement from the Company or any 

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

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

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

Member consent set forth elsewhere in this Agreement, including in Sections 2.6, 3.4, 3.8, 8.1, 

8.2, 8.8(a), 9.1, 12.3(g), 12.7(b), 12.12, 12.15, 13.5 and 13.12. Any purported action by the 

Company or the Manager requiring the consent of the Initial Member under this Agreement shall 

be null and void ab initio unless and until the Initial Member’s consent is obtained. 

3.2 Removal of Manager. Upon an Event of Default (and so long as the Private 

Owner is then the Manager), the Initial Member may remove the Private Owner as the Manager 

and appoint a successor Manager in the sole discretion of the Initial Member in accordance with 

Section 12.4, whereupon such successor Manager shall immediately succeed to all, or such 

portion as the Initial Member and successor Manager agree, of the rights, powers, duties and 

obligations of the “Manager” hereunder, and the predecessor Manager shall promptly take such 

actions as may be reasonably requested by the Initial Member to facilitate the transition to such 

successor Manager. 

3.3 Employees and Services. After the Closing Date, the Manager shall cause to be 

made available to the Company and the Manager, 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 (or its applicable Affiliates’) employees, facilities and support services. If necessary 

to meet the foregoing requirements, the Manager shall enter into contractual arrangements to 

secure employees, facilities and support services from third parties (including its Affiliates); 

provided, however, that the Manager shall at all times provide for the servicing of the Loans 

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through a Servicer under contract with the Manager (in its individual capacity) in accordance 

with Article XII (and subject to applicable services retained by the Manager in accordance with 

Section 12.3) and the safekeeping of the Notes and other Loan Documents by a Custodian under 

contract with the Company in accordance with the provisions of Section 3.7 below. 

Notwithstanding anything to the contrary contained in this Section 3.3, the Company shall not 

have any employees, no employees of the Manager or any third party (including any Affiliate) 

shall be deemed to be employees of the Company, any contractual relationships entered into by 

the Manager to provide employees, facilities or support services to the Company or the Manager 

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

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

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

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

the provisions of Article XII below or is otherwise expressly set forth in this Agreement or in 

any Ancillary Documents to be an expense of the Company. 

3.4 Restrictions on Manager and Private Owner . Neither the Private Owner nor, 

notwithstanding any delegation of authority to it hereunder, the Manager may or shall in any 

event (x) do, or cause the Company to do, any act or take, or cause the Company to take, any 

action in contravention of any Law, or (y) take any of the following actions on behalf of, or with 

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

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

occurrence of the Purchase Money Notes Defeasance Date, the Purchase Money Notes 

Guarantor, which approval may be withheld or conditioned in the Initial Member’s and the 

Purchase Money Notes Guarantor’s sole and absolute discretion: 

(i) admitting additional or substitute members of the Company, except 

in accordance with Article VIII; 

(ii) changing the legal form of the Company to other than a limited 

liability company; 

(iii) taking any action that would cause the Company to be treated as 

other than a partnership for federal tax purposes; 

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

ordinary business of the Company; 

(v) conducting Bulk Sales during any of (A) the first three successive 

12-month periods after the Closing Date, or (B) any of the subsequent successive 

12-month periods thereafter until the occurrence of the Purchase Money Notes 

Defeasance Date, in each case in an aggregate amount (for such 12-month period) 

in excess of ten percent (10%) of the aggregate Unpaid Principal Balance of all 

Loans as at the beginning of such 12-month period (or, for such first 12-month 

period, as at the Cut-Off Date as indicated on the Loan Schedule); provided, that, 

for purposes of the foregoing (A) the amount of any Bulk Sale shall be 

determined (1) for Loans, or any Bulk Sale of all or substantially all of the 

remaining Underlying Collateral (including any REO Property or other Acquired 

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Property) with respect to any Loan, based on the aggregate Unpaid Principal 

Balance (including, as applicable, taking into account clauses (iii) and (iv) of the 

definition thereof) as of the time of such Bulk Sale, and (2) for Acquired Property 

(including REO Property) or any portion thereof where such Bulk Sale does not 

involve all or substantially all of the related Loan or other remaining Underlying 

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

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

including, where available, based on the most recent appraisal price or broker 

opinion, and (B) the sale or other disposition of an Ownership Entity (or any 

voting or equity interest therein) shall constitute a sale or other disposition of the 

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

such Ownership Entity; 

(vi) incurring any liability on behalf of the Company (other than 

liabilities to trade creditors in the ordinary course of the Business and such other 

liabilities as may be permitted by this Agreement or any Ancillary Document); 

(vii) possessing or transferring Company Property for other than 

Company purposes; 

(viii) taking any action that would require the Company to register as an 

“investment company” (as defined in the Investment Company Act); 

(ix) selling or otherwise transferring any Loan, Underlying Collateral 

or Acquired Property (or any portion thereof) to the Manager, the Private Owner, 

any Servicer, any Subservicer, or any Affiliate of any of the foregoing or of the 

Company; 

(x) financing the sale or other transfer of any Loan, Underlying 

Collateral or Acquired Property (or any portion thereof); 

(xi) selling any Loan, Underlying Collateral or Acquired Property (or 

any portion thereof) in a transaction that provides for any recourse against the 

Company, the Initial Member or the FDIC, in any capacity, or against the LLC 

Interest held by the Initial Member or any share of the Loan Proceeds allocable to 

the Initial Member; 

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

Capital Reserve Account or other accounts created under this Agreement, the 

Custodial and Paying Agency Agreement or any Servicing Agreement other than 

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

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

applicable Servicing Agreement and the Reimbursement, Security and Guaranty 

Agreement; 

(xiii) advancing additional funds that would increase the Unpaid 

Principal Balance of any Loan other than (A) Funding Draws or (B) Servicing 

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Expenses to the extent that capitalizing such Servicing Expenses is or would have 

been, prior to the conversion of Loan to the Acquired Property, permitted under 

the applicable Loan Documents; 

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

to any Affiliate of any of the Company, the Private Owner, the Manager, the 

Servicer or any Subservicer; 

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

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

contained herein or in any Ancillary Document (for avoidance of doubt, nothing 

in this clause (xv) shall require the Private Owner or the Manager to make any 

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

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

(xvi) taking any action for which the consent of some or all of the 

members of a limited liability company is (unless otherwise provided in the 

limited liability company agreement of such limited liability company) required 

by the Act. 

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

enter into any current or future contract, agreement, commitment, arrangement or transaction 

(including any agreement to sell Company Property, incur any Debt or become bound by any 

Guarantee of any obligations) with or for the benefit of, or pay any fee to, the Private Owner or 

any Affiliate of the Company or the Private Owner (a “Related Party Agreement”), except for 

the Purchase Money Notes or any promissory note reissued in respect thereof in accordance with 

Section 2.8 of the Custodial and Paying Agency Agreement or as may otherwise be expressly 

provided herein or in any Ancillary Document to which the Initial Member is a party or as may 

be approved by both Members. 

3.6 Real Property. The Company shall not take title in its own name to any REO 

Property, and any ownership of any such REO Property shall be governed by Section 12.13 and 

the relevant terms of the Servicing Agreement. 

3.7 Custodian and Paying Agent. The Manager shall cause the Company to retain 

and enter into and, at all times, be a party to written custodial agreement with a document 

custodian (the “Custodian”) that is a Qualified Custodian and approved by the Initial Member, 

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

Custodial Documents. The Manager shall also cause the Company to retain and enter into and, 

at all times, be a party to written paying agency agreement with a paying agent selected by the 

Company (the “Paying Agent”), which Paying Agent shall receive and distribute Loan Proceeds 

in accordance with the applicable Custodial and Paying Agency Agreement. Except as may be 

determined by the Initial Member in connection with an exercise of its rights under Section 13.5 

below, the Custodian and the Paying Agent shall be the same; and the custodial and paying 

agency functions shall be performed on the terms set forth in a Custodial and Paying Agency 

Agreement that is acceptable to the Initial Member. At no time shall the Company have more 

than one Custodian or one Paying Agent. The fees and expenses paid to the Custodian and 

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Paying Agent shall be no more than market rates and the Custodian and Paying Agent shall be 

terminable by the Company upon no more than thirty (30) days notice provided by either, 

without cause under the Custodial and Paying Agency Agreement. In the event that the Manager 

removes, or causes the Company (or any Servicer) to remove, any Notes or other Custodial 

Documents from the possession of the Custodian (which shall be done only in accordance with 

the relevant Custodial and Paying Agency Agreement), (i) any loss or destruction of or damage 

to such Notes or Custodial Documents shall be the personal liability of the Manager (who, along 

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

Documents), and (ii) such Notes shall be returned to the Custodian within the time provided 

under the applicable Uniform Commercial Code to maintain the perfection of the secured party’s 

security interest therein by possession. If any Notes or other Custodial Documents are removed 

in connection with the modification or restructuring of a Loan, the modified or restructured 

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

Custodian as soon as possible following the completion of the restructuring or modification (and, 

in any event, in accordance with clause (ii) of the immediately preceding sentence). The 

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

communication given under the Custodial and Paying Agency Agreement at the time that such 

notice or other communication is given thereunder. 

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

Member, neither the Private Owner nor the Manager shall, at any time, (a) be an Affiliate of or a 

partner or joint venturer with any Borrower, (b) be an agent of any Borrower, or allow any 

Borrower to be an agent of the Manager or the Company, or (c) except as is otherwise 

contemplated by the Company’s ownership of the Loans and its right to hold Acquired Property, 

have any interest whatsoever in any Borrower, Obligor or other obligor with respect to any Loan 

or any of the Underlying Collateral. 

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

with the Ancillary Documents in accordance with their terms, and shall not, at any time, enter 

into or become a party to any agreement that would conflict with the terms of this Agreement. 

3.10 Compliance with Law. The Manager shall, and shall cause the Company to, at all 

times, comply with applicable Law in connection with the performance or exercise of its rights, 

powers, duties or obligations under this Agreement. 

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

permit the Company to: (a) file a voluntary petition for bankruptcy, (b) file a petition or answer 

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

similar relief under any Law, (c) make an assignment for the benefit of creditors, (d) seek, 

consent or acquiesce in the appointment of a trustee, receiver or liquidator or of all or any 

substantial part of its properties, (e) file an answer or other pleading admitting or failing to 

contest the material allegations of (i) a petition filed against it in any proceeding described in 

clause (a) through (d), or (ii) any order adjudging it a bankrupt or insolvent or for relief against it 

in any bankruptcy or Insolvency Proceeding, or (f) allow itself to become unable to pay its 

obligations as they become due. 

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3.12 No Liens. The Manager shall not cause the Company to place, or voluntarily 

permit to be placed, any Lien on any of the Loans, the Underlying Collateral, the Loan 

Documents, or the Loan Proceeds, except, in the case of Underlying Collateral, such Liens 

caused or permitted by the Manager (i) as permitted under the Loan Documents where the 

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

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

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

Underlying Collateral and the Loan Proceeds. 

3.13 Remedies Upon an Event of Default; Security Interest . 

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

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

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

Sections 3.2 and 12.4, (ii) remove the Private Owner as a Member, (iii) purchase (or cause a 

designee to purchase) the LLC Interest of the Private Owner pursuant to Section 3.14, 

(iv) designate itself or any applicable transferee Member as the Manager hereunder, and/or (v) 

with or without notice to or demand upon Private Owner (except as may be required by law), 

exercise any or all rights and remedies with respect to the Secured Assets and any Qualifying 

Letter of Credit, specifically including the right (A) to foreclose on the LLC Interest held by the 

Private Owner and transfer such LLC Interest to a third party (it being agreed that none of the 

Private Owner, the Manager or any of their Affiliates shall participate in any sale of the Private 

Owner’s LLC Interest without the written consent of the Initial Member); (B) to draw upon any or 

all Qualifying Letters of Credit, by presenting to the applicable Issuing Bank one or more drafts or 

demands and any other necessary documents, and to receive (in a lump sum or in several sums 

from time to time at the sole discretion of the Initial Member) any or all amounts available for 

drawing under each such Qualifying Letter of Credit, and/or (C) to exercise any rights under the 

Private Owner Pledged Account Control Agreement (or otherwise) with respect to the Private 

Owner Pledged Account, including the right to assume exclusive control over the Private Owner 

Pledged Account and to cause the funds therein to be remitted (in a lump sum or in several sums 

from time to time at the sole discretion of the Initial Member) to or at the direction of the Initial 

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

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

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

it shall have the absolute right to deduct from the proceeds of such exercise of remedies (including 

proceeds of any foreclosure sale with respect to the LLC Interests, any drawing on a Qualifying 

Letter of Credit and any receipt of funds the Private Owner Pledged Account), any Losses arising 

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

all costs and expenses (including, without limitation, attorneys' fees and disbursements) incurred 

by Initial Member in connection with enforcing its rights and remedies hereunder and under the 

Ancillary Documents; and any Private Owner Obligations then due and payable (in each case such 

order as the Initial Member may determine in its sole discretion); provided that the Initial Member 

may, in its sole discretion, hold any such proceeds as additional security for any existing or future 

Private Owner Obligations. Without limitation of the foregoing, in no event shall the Initial 

Member have any obligation (but it shall at all times have the right in its sole discretion) to use or 

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apply any proceeds of the Secured Assets toward payment of any Private Owner Obligations 

owing to the Company (whether or not the same are due and payable), and the Private Owner shall 

remain fully obligated to pay and perform all such Private Owner Obligations owing to the 

Company notwithstanding any such election by the Initial Member to so refrain from applying 

such proceeds toward payment of the same; and, in the event that, for any reason any such 

proceeds of the Secured Assets are used for payment of any Private Owner Obligations owing to 

the Company, any and all rights of the Private Owner to payments, reimbursements or 

distributions from the Company on account of any such payment to the Company (including rights 

to any repayment of any deemed Excess Working Capital Advances, to the extent any such 

proceeds are used to fund the same), shall be considered as part of the Secured Assets and shall, to 

the extent paid or payable by the Company, be paid directly to the Initial Member (and the Initial 

Member shall have the right to direct the Paying Agent to so remit to the Initial Member any 

applicable distributions or payments by the Paying Agent with respect thereto) to be held and 

applied by the Initial Member as part of the proceeds of the Secured Assets (as collateral for the 

Private Owner Obligations). Any Secured Assets or proceeds thereof as held by the Initial 

Member may be commingled with the Initial Member’s own funds, without any need to pay 

interest or income thereon. Upon indefeasible payment and performance in full all of the Private 

Owner Obligations (following the dissolution of the Company), any remaining unapplied proceeds 

(from an exercise of remedies by the Initial Member against the rights of the Private Owner to the 

Secured Assets or any Qualifying Letter of Credit) so held by the Initial Member, shall be released 

to the Private Owner (or such other Person as may have applicable rights therein in accordance 

with applicable law). In any event, the Private Owner shall remain liable for any deficiency in 

payment of the Private Owner Obligations. 

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

Law for the benefit of the Initial Member and, in furtherance thereof, the Private Owner (in all of 

its capacities) and the Company (as applicable) shall be deemed to have granted, and each does 

hereby grant, to the Initial Member, for itself (and its assignees) and for the benefit of the 

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

interest in all of the Private Owner’s right, title and interest in, to and under, the Secured Assets, 

whether now owned or existing, or hereafter acquired and arising in, to and under the Secured 

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

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

duties, liabilities and obligations under this Agreement and the Ancillary Documents and the 

compliance by the Private Owner (including as Manager and Tax Matters Member) with the terms 

and conditions of this Agreement and the Ancillary Documents (collectively, the “Private Owner 

Obligations”). For the avoidance of doubt, the parties acknowledge that the Secured Assets are 

not, pursuant to the foregoing, collateral for the separate payment obligations of the Company 

except to the extent that, pursuant to this Agreement or the Ancillary Documents, the Private 

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

such obligations (an in such case, such Secured Assets secure such obligations of the Private 

Owner to the Company and, if applicable, the Initial Member and the Indemnified Parties only, 

and not any such separate obligations of the Company to any other Persons), such that the Secured 

Assets do not secure the Company’s payment obligations under the Purchase Money Notes. For 

purposes of this Agreement, the term “Secured Assets” shall mean (x) all right, title and interest 

of the Private Owner in and to the Private Owner Pledged Account (and all funds therein and 

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related rights thereto as more specifically described in the Private Owner Pledged Account 

Control Agreement), (y) the LLC Interest held by Private Owner and all other rights of the Private 

Owner (in any capacity) under this Agreement and the Ancillary Documents (including rights to 

any distributions or payments on account of any Excess Working Capital Advances or 

Discretionary Funding Advances made by or on behalf of the Private Owner), and (z) all proceeds 

of any of the foregoing at any time (including distributions thereon or other income in respect 

thereof). 

(d) As additional security for the Private Owner Obligations (and, as 

applicable, as part of the Secured Assets), the Private Owner shall deliver on the Closing Date and 

at all times thereafter cause to be maintained additional collateral (the “Additional Security”) 

consisting of either (i) cash and any interest earned thereon (and Permitted Investments with 

respect thereto) in the Private Owner Pledged Account in an aggregate amount at least equal to 

Five Million Dollars ($5,000,000) (“Qualifying Cash Collateral”) or (ii) undrawn (and available) 

amounts under one or more Qualifying Letters of Credit in an aggregate amount at least equal to 

Five Million Dollars ($5,000,000). In the event that the Private Owner determines to fulfill its 

obligation to provide the Additional Security by issuance of a Qualifying Letter of Credit, the 

Private Owner shall cause the issuance and delivery to the Initial Member, on the Closing Date, of 

a single Qualifying Letter of Credit in the full amount of such Additional Security. The Initial 

Member shall have the unilateral right to draw on any such Qualifying Letter of Credit and to 

provide instructions to the Paying Agent for the disposition of the Qualifying Cash Collateral in 

the Private Owner Pledged Account, in each case without any requirement for any further consent, 

confirmation or instructions from the Private Owner; provided, however, that as between the 

Initial Member and the Private Owner (and without creating any right or obligation of the Paying 

Agent or any Issuing Bank to refuse to honor, or inquire as to the accuracy or sufficiency of, any 

applicable instructions from the Initial Member), the Initial Member agrees that (i) it shall not 

exercise such rights to so draw on any such Qualifying Letter of Credit unless there shall have 

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

Reissuance/Extension Failure (with respect to such Qualifying Letter of Credit), and (ii) it shall 

not exercise such rights to so unilaterally direct the disposition of the Qualifying Cash Collateral 

from the Private Owner Pledged Account unless there shall have occurred an Event of Default. 

(e) On the Closing Date (and whether or not the Private Owner has elected to 

provide Additional Security in the form of Qualifying Cash Collateral), the Private Owner shall 

establish the Private Owner Pledged Account with the Paying Agent for the exclusive purpose of 

holding Qualifying Cash Collateral (including in the form of any proceeds from a drawing on a 

Qualifying Letter of Credit at any time deposited in the Private Owner Pledged Account in 

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

therein) shall be subject to the security interest granted herein pursuant to the terms of this 

Agreement, the Custodial and Paying Agency Agreement and the Private Owner Pledged Account 

Control Agreement. Funds in the Private Owner Pledged Account may be invested at the 

direction of the Private Owner from time to time in Permitted Investments in accordance with the 

Custodial and Paying Agency Agreement; provided, that all such Permitted Investments shall 

remain in the Private Owner Pledged Account as Qualifying Cash Collateral, and in no event shall 

the Private Owner have any right or authority to withdraw any funds from such Private Owner 

Pledged Account. 

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

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

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

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

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

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

only so long as (i) there shall not have occurred any Event of Default (other than such LC 

Reissuance/Extension Failure), (ii) the Private Owner Pledged Account shall then be and remain 

open and subject to the Private Owner Pledged Account Control Agreement, and (iii) upon such 

deposit in the Private Owner Pledged Account (of the funds received by the Initial Member from 

such draw), the aggregate amount of the Additional Security (disregarding such affected 

Qualifying Letter of Credit) shall be in an amount not less than Five Million Dollars ($5,000,000), 

it being understood that, in the event the foregoing conditions are not satisfied, the Initial Member 

shall have the right to hold and apply such funds pursuant to Section 3.13(b) above. 

(g) The Private Owner hereby authorizes the filing by Initial Member and its 

assignees of such financing or continuation statements in such jurisdictions as Initial Member or 

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

first priority lien and security interest with respect to the Secured Assets. The Private Owner shall 

deliver to Initial Member an assignment and assumption agreement with respect to the LLC 

Interest held by it, in the form attached hereto as Exhibit C, endorsed in blank, and executed by 

the Private Owner. Initial Member may use the assignment and assumption agreement to effect 

the assignment of the LLC Interest held by the Private Owner at any time if an Event of Default 

occurs and is continuing. 

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

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

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

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

Agreement. 

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

Ancillary Document or otherwise are cumulative and may be exercised singularly (and in such 

order as the Initial Member may determine in its sole discretion) or concurrently. Neither any 

failure nor delay on the part of Initial Member to exercise any other right or remedy shall operate 

as a waiver thereof, nor shall any single or partial exercise of any right or remedy preclude any 

other or further exercise thereof or of any other right or remedy howsoever arising. In no event 

shall the Initial Member have any obligation to seek or exhaust any particular remedy prior to 

exercising any other remedy, and the Private Owner hereby waives any and all right to require the 

marshalling of assets in connection with any exercise by the Initial Member of its remedies 

hereunder or under any Ancillary Document. Under no circumstances shall Initial Member be 

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

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

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

and executed by a duly authorized representative of Initial Member. A waiver of any right or 

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remedy on any one occasion shall not operate as a waiver of such right or remedy on any future 

occasion or as a waiver of any other right or remedy. 

3.14 Purchase Right of Initial Member. Without prejudice to the rights of the Initial 

Member to foreclose on the LLC Interest of the Private Owner in accordance with Section 3.13: 

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

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

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

for an amount, payable in cash, equal to (x) the fair market value of such LLC Interest 

(determined, if necessary, in accordance with Section 3.14(b)(iv)) as of a date (the “Buy-Out 

Valuation Date”) selected by the Initial Member in its discretion between the date of the Buy-Out 

Notice and the closing of such purchase (the “Buy-Out Closing”), less (y) any amounts owed by 

the Private Owner pursuant Section 3.14(b)(v), and less (z) any distributions paid by the Company 

to or for the account of the Private Owner between the date of the Buy-Out Valuation Date and the 

Buy-Out Closing. 

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

shall be consummated as follows: 

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

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

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

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

parties may agree (the “Buy-Out Closing Date ”). 

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

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

Private Owner’s LLC Interest for the consideration set forth in Section 3.14(a), 

and against delivery of such consideration, the Private Owner shall deliver all 

such documents and instruments as are necessary to transfer to the Initial Member 

(and/or its designee(s)), and in any event shall be deemed to have transferred, and 

to have represented and warranted to the Initial Member (and/or its designee(s)) 

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

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

entire LLC Interest of the Private Owner, free and clear of all Liens other than 

those created by this Agreement. 

(iii) The Private Owner shall obtain all material consents, approvals or 

waivers (including expiration or termination of a specified waiting period) of any 

Governmental Authority or Person that may be required in connection with the 

purchase and sale of the Private Owner’s LLC Interest (other than any such 

consent, approval or waiver which has, if permitted by law, been waived by the 

Initial Member). 

(iv) In the event of the delivery of a Buy-Out Notice, the Members 

shall attempt to agree on the fair market value of the Private Owner’s LLC 

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

such value within 15 days after the date of delivery of the Buy-Out Notice (or, if 

sooner, by the Buy-Out Closing Date), then such value shall be determined 

immediately thereafter in accordance with the Dispute Resolution Procedure, and, 

if applicable, the Buy-Out Closing Date shall be delayed until such date (after 

completion of the applicable valuation) as may be selected by the Initial Member. 

For the avoidance of doubt, in no event shall the right under this Section 3.14 or 

any valuation resulting from a Dispute Resolution Procedure create any obligation 

with respect to, or otherwise limit the rights of the Initial Member in connection 

with, any concurrent or subsequent foreclosure (or sale) of the Private Owner’s 

LLC Interest pursuant to Section 3.13 and/or exercise of relevant rights under the 

Uniform Commercial Code or otherwise, and the Private Owner acknowledges 

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

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

for the LLC Interest that is significantly lower than a Buy-Out Purchase Price 

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

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

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

the sale of the LLC Interest of the Private Owner (including fees of any 

investment banking firm retained in connection with the Dispute Resolution 

Procedure and legal fees and expenses incurred in connection with obtaining any 

necessary consents, approvals or waivers (including expiration or termination of a 

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

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

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

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

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

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

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

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

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

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

(e) Any distributions payable by the Company to the Private Owner after the 

Buy-Out Valuation Date shall, at the option of the Initial Member, be paid to and held by the 

Initial Member (or, if permitted by the Paying Agent, held by the Paying Agent in the Distribution 

Account) and, at the Buy-Out Closing or a reasonable time thereafter, be released by to the Private 

Owner less, without duplication, any amounts owed by the Private Owner pursuant to this 

Agreement (including costs and expenses pursuant to Section 3.14(b)(v)). For the avoidance of 

doubt, neither the Initial Member nor the Paying Agent shall have any obligation to segregate, or 

pay interest or other income in respect of, any sums held pursuant to this Section 3.14(e). 

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3.15 No ERISA Plan Assets. The Manager shall use its reasonable best efforts to 

ensure that the Company’s assets are not deemed to be “plan assets” within the meaning of 

Section 3(42) of ERISA and the Plan Asset Regulation. 

ARTI CLE I V 

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

4.1 General. The membership of the Company shall consist of the Members listed 

from time to time in the Annex I (the Member Schedule), and such substituted Members as may 

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

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

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

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

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

of notice of any change of name or address of a Member. 

4.2 LLC Interests. 

(a) Creation and Issuance. The Company is only authorized to issue the LLC 

Interests that exist as of the date hereof, and the Company may not hereafter create or issue any 

limited liability company interest, provided that nothing in this sentence restricts the Disposition 

of any outstanding LLC Interest by any Member (which matter is governed by Article VIII). The 

Company’s LLC Interests shall be uncertificated. The LLC Interests shall have the relative rights, 

powers, duties and obligations specified in this Section 4.2 . As of the Closing Date, LLC Interests 

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

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

respects to each other outstanding LLC Interest. 

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

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

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

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

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

interests. 

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

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

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

the Act. Except as expressly set forth elsewhere in this Agreement (including Section 3.1 and 

Section 3.4), the voting rights of each holder of LLC Interests shall be based on such holder’s 

Percentage Interest. 

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

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

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

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

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continue the existence or qualification of the Company as a limited liability company in the State 

of Delaware or as a foreign limited liability company in all other jurisdictions in which the 

Company may, or may desire to, conduct business or own Company Property, (b) any 

amendment to the Certificate or any instrument described in clause (a) required because of, or in 

order to effectuate, an amendment to this Agreement, or any change in the membership of the 

Company, in accordance with the terms hereof, (c) all certificates, documents and other 

instruments (including conveyances and a certificate of cancellation) that the Manager deems 

necessary or appropriate to reflect the dissolution and liquidation of the Company pursuant to the 

terms of this Agreement, and (d) such other certificates, documents and other instruments as are 

required by Law or by any Governmental Authority to be executed by them in connection with 

the Business as conducted or proposed to be conducted by the Company from time to time. As 

soon as reasonably practical after the date hereof, the Manager shall cause the Company to apply 

for, and thereafter use its reasonable best efforts to obtain, as quickly as possible, and maintain, 

all such licenses as are required to conduct the Business, including qualifications to conduct 

business in jurisdictions other than Delaware and licenses to purchase, own or manage the Loans, 

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

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

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

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

Collateral securing or otherwise realize the full value of any Loan or Acquired Property. 

4.4 Certain Restrictions and Requirements. 

(a) No Member may use or possess Company Property other than for a 

Company purpose, except as provided under license or other contractual arrangements. No 

Member shall have authority to bind, or otherwise to act on behalf of, the Company except 

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

accordance with the terms hereof. 

(b) From and after the Closing Date, no Person may or shall be admitted as a 

member of the Company except pursuant to and in accordance with Article VIII hereof. 

(c) Each Member, other than the Initial Member, shall at all times meet the 

qualifications of a Qualified Transferee. 

4.5 Liability of Initial Member. Neither the Initial Member nor any of its Affiliates, 

nor any officer, director, stockholder, member, manager, employee, agent or assign of the Initial 

Member or any of its Affiliates (all of the foregoing, collectively, the “Related Persons”), shall 

be liable, responsible or accountable, whether directly or indirectly, in contract or tort or 

otherwise, to the Company, any other Person in which the Company has a direct or indirect 

interest or any Member (or any Affiliate of any of the foregoing), for any Damages asserted 

against, suffered or incurred by the Company, any Person in which the Company has a direct or 

indirect interest or any Member (or any Affiliate of any of the foregoing) arising out of, relating 

to or in connection with any act or failure to act pursuant to this Agreement or otherwise with 

respect to: 

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(a) the management or conduct of the business and affairs of the Company or 

any Person in which the Company has a direct or indirect interest or any of their respective 

Affiliates (including, without limitation, actions taken or not taken by any Related Person as an 

officer or director of any Person in which the Company has a direct or indirect interest or any 

Affiliates of such Person); 

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

(including the LLC Interests) or the issuance of Purchase Money Notes; and 

(c) the management or conduct of the business and affairs of any Related 

Person insofar as such business or affairs relate to the Company or any Person in which the 

Company has a direct or indirect interest or to any Member in its capacity as such, including, all: 

(i) activities in the conduct of the Business, and 

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

Related Person which might involve a conflict of interest vis-à-vis the Company 

or any Person in which the Company has a direct or indirect interest or any 

Member (or any of their respective Affiliates) or in which any Related Person 

realizes a profit or has an interest; 

except, in each case, Damages resulting from acts or omissions of such Related Person which 

were taken or omitted which constituted fraud, gross negligence, willful misconduct, or an 

intentional material breach of this Agreement or any Ancillary Document. 

4.6 Indemnification. 

(a) The Private Owner shall indemnify and hold harmless the Initial Member 

and the Initial Member’s Affiliates, and their respective officers, directors, employees, partners, 

principals, agents and contractors (all of the foregoing, collectively, the “ Indemnified Parties”), 

from and against any losses, Damages, liabilities, costs and expenses (including reasonable 

attorneys’ fees and litigation and similar costs, and other out-of-pocket expenses incurred in 

investigating, defending, asserting or preparing the defense or assertion of any of the foregoing), 

deficiencies, claims, interest, awards, judgments, penalties and fines (collectively, “Losses”), 

arising out of or resulting from (i) any breach after the Closing Date, by (x) the Company (during 

any period when the Private Owner is the Manager, and subject to the clarification set forth below 

in this Section 4.6(a)), the Private Owner (in any capacity, including as Manager) or any of their 

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

principals, agents or contractors of any Person described in sub-clause (x), of the obligations of 

the Company or the Private Owner (in any capacity, including as the Manager) under, or any other 

covenants, agreements or other terms and conditions contained in, this Agreement or any 

Ancillary Document (including Losses relating to (1) the Company’s obligations with respect to 

litigation referred to in Section 4.5 of the Contribution Agreement to the extent provided therein, 

(2) the Company’s obligations under Section 3.1 and 3.2 of the Contribution Agreement 

(including all costs and expenses of the Initial Member in completing any applicable transfers 

pursuant to exercise of rights under such section), and (3) any claim asserted by the Initial 

Member against the Company or the Private Owner (in any capacity, including as the Manager) to 

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enforce its rights hereunder or by any third party), or any third-party allegation or claim based 

upon facts alleged that, if true, would constitute such a breach; (ii) any gross negligence, bad faith 

or willful misconduct (including any act or omission constituting theft, embezzlement, breach of 

trust or violation of any Law) on the part of any Person described in sub-clause (i)(x) or (i)(y); or 

(iii) any Losses with respect to which Initial Member was released, or with respect to which the 

Company should have obtained a release from the applicable Borrowers or other Obligors, in 

accordance with Section 4.17(b) of the Contribution Agreement. Such indemnity shall survive the 

termination of this Agreement. In order for an Indemnified Party to be entitled to any 

indemnification provided for under this Agreement in respect of, arising out of or involving a Loss 

or a claim or demand made by any Person against the Indemnified Party (a “Third Party 

Claim”), such Indemnified Party shall deliver notice thereof to the Private Owner promptly after 

receipt by such Indemnified Party of written notice of the Third Party Claim, describing in 

reasonable detail the facts giving rise to any claim for indemnification hereunder, the amount of 

such claim (if known) and such other information with respect thereto as is available to the 

Indemnified Party and as the Private Owner may reasonably request. The failure or delay to 

provide such notice, however, shall not release the Private Owner from any of its obligations 

under this Section 4.6 except to the extent that it is materially prejudiced by such failure or delay. 

The Private Owner acknowledges and agrees that it shall have no recourse against the Company 

for any amounts the Private Owner is required to pay pursuant to this Section 4.6. For the 

purposes of this Section 4.6, the term “Initial Member” shall be deemed to include any Person at 

any time constituting the “Initial Member” hereunder (other than for purposes of this Section 4.6) 

and (without limitation of the foregoing) any Person at any time holding all or any portion of the 

LLC Interest initially held by the Initial Member immediately after the Closing, in each case even 

if such Person has since ceased to be a member of the Company or to hold any limited liability 

company interest in the Company. For purposes of clarification, with respect solely to the 

obligations of the Private Owner under this Section 4.6(a) in connection with a breach by the 

Company (during any period when the Private Owner is the Manager), the Private Owner shall not 

be responsible for any Losses arising out of or resulting from any failure by the Company to pay 

its separate payment obligations (including such payment obligations under the Purchase Money 

Notes), to the extent that all of the following are satisfied: (1) such failure is the result of the 

Company having insufficient available funds notwithstanding the servicing of the Loans and 

management of the Company by the Manager (and, as applicable, the Servicer and any 

Subservicers) in accordance with this Agreement and the Ancillary Documents (including through 

exercise of any discretionary authority with respect to incurrence of payment obligations and 

maintenance and application of applicable reserves in a manner so as to reasonably avoid any such 

breach), (2) such failure and resulting Losses are not attributable in whole or in part to any breach 

(or other action or omission in violation of the Servicing Standard or any provision of this 

Agreement or any Ancillary Document) by the Private Owner (in any capacity, including as 

Manager) or any of its Affiliates (other than the Company), or by any of the respective officers, 

directors, employees, partners, principals, agents or contractors of any of the foregoing, and (3) 

the Private Owner (in any capacity) is not required to pay (or advance applicable funds to the 

Company for payment of) or otherwise bear such payment obligations pursuant to the terms of 

this Agreement or any Ancillary Document. 

(b) If for any reason the indemnification provided for herein is unavailable or 

insufficient to hold harmless the Indemnified Parties, the Private Owner shall contribute to the 

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amount paid or payable by the Indemnified Parties as a result of the Losses of the Indemnified 

Parties in such proportion as is appropriate to reflect the relative fault of the Indemnified Parties, 

on the one hand, and the Private Owner (in any capacity, including as the Manager) (including any 

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

such Losses. 

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

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

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

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

own expense and by the Private Owner’s own counsel, which counsel must be reasonably 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Claim. 

(d) Notwithstanding anything contained herein to the contrary, the Private 

Owner shall not be entitled to control (and if the Indemnified Party so desires, it shall have sole 

control over) the defense, settlement, adjustment or compromise of (but the Private Owner shall 

nevertheless be required to pay all Losses incurred by the Indemnified Party in connection with 

such defense, settlement or compromise): (i) any Third Party Claim that seeks an order, injunction 

or other equitable relief against the Indemnified Party or any of its Affiliates; (ii) any action in 

which both the Private Owner (in any capacity, including as the Manager) or any Affiliate of the 

Private Owner, on one hand, and the Indemnified Party, on the other hand, are named as parties 

and either the Private Owner (or such Affiliate) or the Indemnified Party determines with advice 

of counsel that there may be one or more legal defenses available to it that are different from or 

additional to those available to the other party or that a conflict of interest between such parties 

may exist in respect of such action; and (iii) any matter that raises or implicates any issue relating 

to any power, right or obligation of the FDIC under any Law. If the Private Owner elects not to 

assume the compromise or defense against the asserted liability, fails to timely and properly notify 

the Indemnified Party of its election as herein provided, or, at any time after assuming such 

defense, fails to diligently defend against such Third Party Claim in good faith, the Indemnified 

Party may pay, compromise or defend against such asserted liability (but the Private Owner shall 

nevertheless be required to pay all Losses incurred by the Indemnified Party in connection with 

such defense, settlement or compromise). In connection with any defense of a Third Party Claim 

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(whether by the Private Owner or the Indemnified Party), all of the parties hereto shall, and shall 

cause their respective Affiliates to, cooperate in the defense or prosecution thereof and to in good 

faith retain and furnish such records, information and testimony, and attend such conferences, 

discovery proceedings, hearings, trials and appeals, as may be reasonably requested by a party 

hereto in connection therewith. 

(e) In the event the Company is reimbursed for or uses the Working Capital 

Reserve or Excess Working Capital Advances to pay costs or expenses of the type referred to in 

clause (v) or (vi) of the definition of Servicing Expenses and it is subsequently determined that the 

Company was not entitled to reimbursement for (or to use the Working Capital Reserve or Excess 

Working Capital Advances to pay) all or any portion of such costs and expenses because the 

Company did not satisfy the requirements of Section 4.6(c) or clause (v) of the definition of 

Servicing Expenses (such costs and expenses, the “Unreimbursable Expenses ”), the Manager 

shall, in addition to any other Losses for which the Manager may be liable with respect to the 

claim to which such costs and expenses relate, reimburse the cost of such Unreimbursable 

Expenses to each Member based on such Member’s Percentage Interest as set forth below, except 

to the extent such Unreimbursable Expenses were funded through Excess Working Capital 

Advances that remain outstanding (in which case the portion of any such outstanding Excess 

Working Capital Advance that was so used for Unreimbursable Expenses shall itself become 

unreimbursable and be deemed forgiven with no further right of Manager to collect or receive the 

same). Any such reimbursement by the Manager pursuant to the foregoing shall be as follows: 

within ten (10) Business Days after written demand therefor from either Member, the Manager 

shall pay each Member by wire transfer of immediately available funds to an account specified by 

each Member an amount equal to such Member’s Percentage Interest (as of the later of (x) the 

date of such demand or (y) the date of such payment) multiplied by the amount of all such 

Unreimbursable Expenses. 

(f) The Company shall indemnify and hold harmless each Member and each 

Member’s respective officers, directors, employees and members (all of the foregoing 

collectively, the “ Covered Persons”) for any Losses incurred by such Covered Person by reason 

of a Third Party Claim relating to any act or omission by or of such Covered Person in connection 

with the exercise or performance of the rights, powers, responsibilities and obligations of such 

Covered Person (or, if such Covered Person is other than a Member, of the Member in respect of 

which such Covered Person so constitutes a Covered Person) regarding the Company except for 

(i) any Third Party Claim or Loss resulting from fraud, gross negligence, willful misconduct or an 

intentional breach of this Agreement or any Ancillary Document by such Covered Person (or if 

such Covered Person is other than a Member, by the Member in respect of which such Covered 

Person so constitutes a Covered Person), and (ii) in the case of the Private Owner (in any capacity, 

including as the Manager), (x) any claim or demand by any Servicer or Subservicer (or, for the 

avoidance of doubt, any Loss arising out of or related to such claim or demand) and (y) any Third 

Party Claim or Loss that is in whole or in part covered by or subject to an indemnification 

obligation of the Private Owner (in any capacity, including as the Manager) under any provision 

of this Agreement or any Ancillary Document, including the foregoing provisions of Section 

4.6(a). 

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(g) Tax Liability of Ownership Entity. Notwithstanding anything to the 

contrary contained herein, if any Ownership Entity is not a pass-through entity with no entitylevel income tax obligations, distributions to the Initial Member pursuant to Section 6.6 (including 

for the purposes of Section 9.2(c)) shall be allocated before accrual or payment of any income tax 

payable by such Ownership Entity, and the Private Owner (or its successors or assigns) shall 

indemnify and hold harmless the Initial Member from and against any liability for any income 

taxes payable by the Ownership Entity; provided , however, that the foregoing special allocation 

and indemnity shall not apply if (i) the Private Owner (and each of its successors and assigns) has 

taken all steps necessary to secure pass-through treatment of the Ownership Entity and (ii) the 

liability for income taxes payable by the Ownership Entity arises solely as a result of a change in 

law applicable to pass-through entities occurring after the date hereof and not as a result of action 

(or inaction) by the Private Owner (or its successors or assigns). 

(h) Offsets. Without limiting any other rights of the Initial Member 

hereunder, in the event the Initial Member exercises any rights or remedies as a result of or in 

connection with a breach hereunder or the occurrence of an Event of Default (including relating to 

a breach of Section 4.6), all costs and expenses (including reasonable attorneys’ fees and litigation 

and similar costs, and other out-of-pocket expenses incurred in investigating, defending, asserting 

or preparing the defense or assertion of any claim) incurred by the Initial Member with respect 

thereto may be offset by the Initial Member against any payment or distribution otherwise payable 

to the Private Owner (including any Interim Management Fee or Management Fee), whether in its 

capacity as a Member or as the Manager (in each case except to the extent such breach or Event of 

Default is attributable exclusively to a Manager having been appointed by the Initial Member 

following removal of the Private Owner in such capacity, or to any applicable Servicer (and its 

Subservicers) having been engaged by the Initial Member, the Company or the applicable 

replacement Manager following such removal of the Private Owner as Manager, in each case that 

is not an Affiliate of the Private Owner). For the avoidance of doubt, the effects of any of this 

Section 4.6(h) and Section 4.6(g) above shall be disregarded for purposes of calculations with 

respect to the First Incentive Threshold Event and the Second Incentive Threshold Event. 

ARTI CLE V 

Capital Contributions; Discretionary Funding Advance; Excess Working Capital Advance 

5.1 Capital Contributions. 

(a) Members’ Contribution. Pursuant to the Contribution Agreement, the 

Initial Member made a Capital Contribution to the Company in an amount equal to the Initial 

Member Capital Contribution. In connection with the Transferred LLC Interest Sale Agreement, 

Private Owner acquired from the Initial Member the Transferred LLC Interest representing a 

forty percent (40)% equity interest in the Company in exchange for the Transferred LLC Interest 

Sale Price. After giving effect to the foregoing transactions, (and to the Capital Contributions 

referenced in Section 5.2 below), the respective Capital Accounts of the Initial Member and the 

Private Owner as of the Closing Date are as set forth in the Annex I (the Member Schedule). 

(b) From and after the Closing Date (and except as provided in Section 5.2 

below), the Members shall have no obligation to make any additional Capital Contributions to the 

Company. 

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5.2 Working Capital Reserve. On the Closing Date, the Initial Member and the 

Private Owner shall fund, as Capital Contributions to the Company, the Working Capital 

Reserve Account in accordance with the provisions of Section 12.11 hereof and Section 1 of the 

Transferred LLC Interest Sale Agreement, which funds shall be used for payment of Working 

Capital Expenses in accordance with the provisions in such Section 12.11 and as otherwise 

permitted pursuant to the Custodial and Paying Agency Agreement. 

5.3 Discretionary Funding Advance. 

(a) In the event there are insufficient funds in the Collection Account and also 

insufficient funds in the Working Capital Reserve Account to make Funding Draws with respect 

to specific Loans (and related Acquired Property), the Manager may, in its discretion, make an 

advance to the Company (the “ Discretionary Funding Advance ”), which Discretionary Funding 

Advance shall be reimbursable (and shall accrue interest as set forth herein) only to the extent 

used exclusively for the applicable Funding Draws for specified Loans (or related Acquired 

Property). In no event may Discretionary Funding Advances be used for payment of any Working 

Capital Expenses other than Funding Draws. The proceeds of Discretionary Funding Advances 

shall be deposited into the Collection Account for disbursement therefrom for the making of the 

applicable Funding Draws. All Discretionary Funding Advances, together with a detailed 

statement of the sources and uses thereof (which shall be broken out by the reimbursable and 

unreimbursable portions thereof) and description of the allocation to the Loans for which such 

Discretionary Funding Advance was made, shall be reflected in the Monthly Report with respect 

to the calendar month during which the relevant Discretionary Funding Advance was made. 

(b) Discretionary Funding Advances shall bear interest on the outstanding 

principal amount thereof at a rate per annum equal to the LIBOR Rate in effect from time to time, 

plus 3.0%. Interest shall be calculated on the basis of a 360 day year and actual days elapsed. 

Interest shall accrue on each Discretionary Funding Advance for the day on which the 

Discretionary Funding Advance is made, and shall not accrue on a Discretionary Funding 

Advance, or any portion thereof, for the day on which the Discretionary Funding Advance or such 

portion is paid. Each Discretionary Funding Advance, including interest accrued with respect 

thereto, shall be repaid in accordance with Sections 3.1 and 5.1 of the Custodial and Paying 

Agency Agreement, it being agreed that, as to any specific amounts to be so applied to the 

repayment of one or more Discretionary Funding Advances relating to the same Loan, such 

amounts shall be applied first to outstanding interest on such Discretionary Funding Advances (on 

a pro rata basis as among such Discretionary Funding Advances, if applicable) and then to the 

principal amount (on a pro rata basis as among such Discretionary Funding Advances, if 

applicable). The Manager may not assign, sell, transfer, participate, pledge, or hypothecate, in 

whole or in part, its interest in any Discretionary Funding Advances without the consent of the 

Initial Member, and until the Purchase Money Notes Defeasance Date, the Purchase Money Notes 

Guarantor. 

5.4 Excess Working Capital Advances. In the event there are insufficient funds in the 

Collection Account and also insufficient available funds in the Working Capital Reserve 

Account (including, as applicable, by a permitted release of such funds to the Collection Account 

or as otherwise permitted in the Custodial and Paying Agency Agreement) to (a) pay any 

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Working Capital Expenses other than (i) Funding Draws or (ii) the Management Fee, Interim 

Management Fee or Interim Servicing Fee, or (b) fund the Defeasance Account by such amount 

as may be required to cure a Purchase Money Notes Trigger Event (as defined in the 

Reimbursement, Security and Guaranty Agreement), then the Manager (x) shall, except as 

otherwise provided in Section 12.6, make an advance of its own funds to the Company to be 

used by the Company for payment of such permitted (or required, as applicable) Working 

Capital Expenses and (y) may (but shall not have an obligation to) make an advance of its own 

funds to the Company to be used by the Company for such funding of the Defeasance Account 

(any such advance to the Company pursuant to this sentence, an “Excess Working Capital 

Advance”). In no event may Excess Working Capital Advances be used for the making of any 

Funding Draws. No Excess Working Capital Advance shall accrue any interest thereon. Excess 

Working Capital Advances shall be repaid in accordance with Section 5.1 of the Custodial and 

Paying Agency Agreement. The proceeds of Excess Working Capital Advances for payment of 

Working Capital Expenses shall be deposited into the Collection Account for disbursement 

therefrom for the payment of such permitted Working Capital Expenses. The proceeds of any 

Excess Working Capital Advance for an applicable funding of the Defeasance Account shall be 

deposited into (and the Manager shall remit such proceeds to the Paying Agent for such deposit 

into) the Defeasance Account. To the extent multiple Working Capital Expenses (payment of 

which is permitted to be made using such Excess Working Capital Advance) are outstanding, 

any funding or use by the Manager of Excess Working Capital Advances for payment of all or 

any of the same shall follow the relevant priorities as set forth in the Priority of Payments and in 

Section 3.1 of the Custodial and Paying Agency Agreement, as applicable. All Excess Working 

Capital Advances, together with a detailed statement of the sources and uses thereof (which shall 

be broken out by the reimbursable and unreimbursable portions thereof), shall be reflected in the 

Monthly Report with respect to the calendar month during which the relevant Excess Working 

Capital Advance was made. The Manager may not assign, sell, transfer, participate, pledge, or 

hypothecate, in whole or in part, its interest in any Excess Working Capital Advances without 

the consent of the Initial Member. 

ARTI CLE VI 

Capital Accounts; Allocations; Priority of Payments; Distributions 

6.1 Capital Accounts. A Capital Account shall be established and maintained for 

each Member to which shall be credited the Capital Contributions made by such Member and 

such Member’s allocable share of Net Income (and items thereof), and from which shall be 

deducted distributions to such Member of cash or other Property and such Member’s allocable 

share of Net Loss (and items thereof). As to the Private Owner, the initial Capital Account shall 

correspond to that portion of the Capital Account of the Initial Member that is attributable to the 

Transferred LLC Interest (as defined in the Transferred LLC Interest Sale Agreement) acquired 

by the Private Owner pursuant to the Transferred LLC Interest Sale Agreement. A Member’s 

Capital Account also shall be adjusted for items specially allocated to such Member under this 

Article VI. The Capital Accounts of the Members generally shall be adjusted and maintained in 

accordance with Treasury Regulations Section 1.704-1(b)(2)(iv); provided, however, that such 

adjustments to, and maintenance of, the Capital Accounts shall not adversely affect the manner 

in which distributions are to be made to the Members under Section 6.6. 

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6.2 Allocations to Capital Accounts. Allocation of Net Income and Net Loss shall be 

made as provided in this Article VI. 

(a) Except as otherwise provided in this Agreement, Net Income and Net Loss 

(and, to the extent necessary, individual items of income, gain, loss, deduction or credit) of the 

Company shall be allocated among the Members in a manner such that, after giving effect to the 

special allocations set forth in Section 6.2(b), the Capital Account balance of each Member, 

immediately after making such allocation, is, as nearly as possible, equal to (i) the distributions 

that would be made to such Member pursuant to Section 6.6 if the Company were dissolved, its 

affairs wound up and its assets sold for cash equal to their Book Value, all Company liabilities 

were satisfied (limited with respect to each nonrecourse liability to the tax bases of the assets 

securing such liability), and the net assets of the Company were distributed, in accordance with 

Section 9.2(c), to the Members immediately after making such allocation, minus (ii) such 

Member’s share of “partnership minimum gain” and “partner nonrecourse debt minimum gain” 

(as such terms are used in Treasury Regulations Section 1.704-2), computed immediately prior to 

the hypothetical sale of assets. 

(b) Allocations in Special Circumstances. The following special allocations 

shall be made in the following order: 

(i) Minimum Gain Chargeback. Notwithstanding any other provision 

of this Article VI, if there is a net decrease in minimum gain (as it corresponds to 

the definition of “partnership minimum gain” in Treasury Regulations 

Section 1.704-2(b)(2) and (d)) during any Fiscal Year, the Members shall be 

specially allocated items of Company income and gain for such Fiscal Year (and, 

if necessary, subsequent Fiscal Years) in an amount equal to the portion of such 

Member’s share of the net decrease in minimum gain, determined in accordance 

with Treasury Regulations Section 1.704-2(f) and (g). This Section 6.2(b)(i) is 

intended to comply with the “minimum gain chargeback” requirement in such 

section of the Treasury Regulations and shall be interpreted consistently 

therewith. 

(ii) Member Minimum Gain Chargeback. Notwithstanding any other 

provision of this Article VI other than 6.2(b)(i), if there is a net decrease in 

minimum gain attributable to a Member nonrecourse debt (as it corresponds to the 

definition of “partnership nonrecourse debt minimum gain” in Treasury 

Regulations Section 1.704-2(i)) during any Fiscal Year, each Member shall be 

specially allocated items of Company income and gain for such Fiscal Year (and, 

if necessary, subsequent Fiscal Years) in an amount equal to the portion of such 

Member’s share of the net decrease in such minimum gain attributable to such 

Member’s nonrecourse debt, determined in accordance with Treasury Regulations 

Section 1.704-2(i). This Section 6.2(b)(ii) is intended to comply with the “partner 

minimum gain chargeback” requirement in such section of the Treasury 

Regulations and shall be interpreted consistently therewith. 

(iii) Qualified Income Offset. In the event any Member, for any reason, 

whether expected or not, has an Adjusted Capital Account Deficit, items of 

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Company income and gain shall be specially allocated to each such Member in an 

amount and manner sufficient to eliminate, to the extent required by the Treasury 

Regulations, such Adjusted Capital Account Deficit as quickly as possible, 

provided that an allocation pursuant to this Section 6.2(b)(iii) shall be made only 

if and to the extent that such Member would have such Adjusted Capital Account 

Deficit after all other allocations provided for in Section6.2 have been tentatively 

made as if this Section 6.2(b)(iii) were not in this Agreement. This 

Section 6.2(b)(iii) is intended to comply with the “qualified income offset” 

provisions in Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be 

interpreted consistently therewith. 

(iv) Nonrecourse Deductions. Any nonrecourse deductions attributable 

to a Member nonrecourse debt (as described in Treasury Regulations 

Section 1.704-2(i)) shall be allocated to the Member who bears the economic risk 

of loss with respect to such nonrecourse debt. Otherwise, nonrecourse deductions 

shall be allocable in accordance with the Members’ respective Percentage 

Interests. 

(v) Loss Allocation Limitation. No allocation of Net Loss (or any item 

thereof) shall be made to any Member to the extent that such allocation would 

create or increase a Member’s Adjusted Capital Account Deficit. If, in the 

allocation of Net Loss (or any item thereof), less than all Members would have an 

Adjusted Capital Account Deficit as a result of such allocation, then any Net Loss 

(or item thereof) not allocable to any such Member(s) as a result of such 

limitation shall be allocated (subject to such limitation) to the other Member so as 

to allocate the maximum permissible Net Loss to each Member under Treasury 

Regulation Section 1.704-1(b)(2)(ii)(d). 

(vi) Curative Allocations. The allocation provisions of this 

Section 6.2(b) are intended to comply with certain requirements of the Treasury 

Regulations. Notwithstanding any other provisions of this Article VI, any 

allocation effected pursuant to this Section 6.2(b) shall be taken into account in 

allocating Net Income and Net Loss among the Members such that the cumulative 

effect of all such allocations achieves the fundamental purpose of Sections 6.2(a), 

so that the Capital Account balances correspond to the amounts distributable to 

the Members. 

(c) Transfer of or Change in LLC Interests. The Tax Matters Member is 

authorized to adopt any convention or combination of conventions likely to be upheld for federal 

income tax purposes regarding the allocation of items of Company income, gain, loss, deduction 

and expense with respect to a transferred LLC Interest. A transferee of an LLC Interest in the 

Company shall succeed to the Capital Account of the transferor Member to the extent it relates to 

the transferred LLC Interest. 

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6.3 Tax Allocations. 

(a) General Rules. Except as otherwise provided in Section 6.3(b), for each 

Fiscal Year, items of Company income, gain, loss, deduction and expense shall be allocated, for 

federal, state and local income tax purposes among the Members in the same manner as the Net 

Income (and items thereof) or Net Loss (and items thereof) of which such items are components 

were allocated pursuant to Section 6.2. 

(b) Section 704(c) of the Code . Income, gains, losses and deductions with 

respect to any property (other than cash) contributed or deemed contributed to the capital of the 

Company shall, solely for income tax purposes, be allocated among the Members so as to take 

account of any variation between the adjusted basis of such property to the Company for federal 

income tax purposes and its Fair Market Value at the time of the contribution or deemed 

contribution in accordance with Section 704(c) of the Code and the Treasury Regulations 

promulgated thereunder. Such allocations shall be made in such manner and utilizing such 

permissible tax elections as determined in good faith by the Tax Matters Member, following 

consultation with the Initial Member. In the event of a revaluation of Property pursuant to the 

definition of Book Value, subsequent allocations of income, gains, losses or deductions with 

respect to such Property shall take account of any variation between the Book Value and Fair 

Market Value of such Property, as so determined from time to time, in accordance with 

Section 704(c) of the Code and the Treasury Regulations promulgated thereunder. Such 

allocations shall be made in such manner and utilizing such permissible tax elections as 

determined in good faith by the Tax Matters Member, following consultation with the Initial 

Member. For the avoidance of doubt, any losses recognized by the Company that are attributable 

to property acquired by the Company pursuant to the Contribution Agreement and that are 

deferred pursuant to Section 707(b)(1) or Section 267(a) of the Code shall, solely for income tax 

purposes, be allocated to the Initial Member. 

(c) Capital Accounts Not Affected. Allocations pursuant to this Section 6.3 

are solely for federal, state and local tax purposes and shall not affect, or in any way be taken into 

account in computing, any Member’s Capital Account or allocable share of Net Income (or items 

thereof) or Net Loss (or items thereof). 

(d) Tax Allocations Binding. The Members acknowledge that they are aware 

of the tax consequences of the allocations made by this Section 6.3 and hereby agree to be bound 

by the provisions of this Section 6.3 in reporting their respective shares of items of Company 

income, gain, loss, deduction and expense. 

6.4 Determinations by Tax Matters Member. All matters concerning the computation 

of Capital Accounts, the allocation of items of Company income, gain, loss, deduction and 

expense and the adoption of any accounting procedures not expressly provided for by the terms 

of this Agreement shall be determined by the Tax Matters Member in good faith, following 

consultation with the Initial Member. Following such consultation, such determinations shall be 

final and conclusive as to all the Members. Without in any way limiting the scope of the 

foregoing, if and to the extent that, for income tax purposes, any contribution to or distribution 

by the Company or any payment by any Member or by the Company is recharacterized, the Tax 

Matters Member may, in good faith following consultation with the Initial Member, specially 

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allocate items of Company income, gain, loss, deduction or expense and/or make correlative 

adjustments to the Capital Accounts of the Members in a manner so that the net amount of 

income, gain, loss, deduction and expense realized by each relevant party (after taking into 

account such special allocations) and the net Capital Account balances of the Members (after 

taking into account such special allocations and adjustments) shall, as nearly as possible, achieve 

the fundamental purpose of Sections 6.2(a) , such that the Capital Account balances correspond to 

the amounts distributable to the Members, as if such recharacterization had not occurred. 

6.5 Priority of Payments. Each calendar month the amounts deposited in the 

Distribution Account under the Custodial and Paying Agency Agreement shall be distributed by 

the Paying Agent in the order of the Priority of Payments; provided, however, that for the 

avoidance of doubt, to the extent amounts are available for distribution to the Members with 

respect to their respective LLC Interests (such available amounts, the “Distributable Cash”), 

such Distributable Cash shall be distributed to the Members in accordance with Section 6.6 

below. 

6.6 Distributions. 

(a) No Right to Withdraw . No Member shall have the right to withdraw 

capital or demand or receive distributions or other returns of any amount in its Capital Account, 

except as expressly provided in this Agreement. 

(b) Ordinary Distributions . 

(i) Timing. Distributable Cash, if any, shall be distributed to the 

Members on a monthly basis by the Paying Agent out of the Distribution Account 

in the manner set forth in the Custodial and Paying Agency Agreement; provided, 

however, that the Manager shall instruct the Paying Agent as to how such 

distributions are to be allocated as between the Initial Member and the Private 

Owner based on Section 6.6(b)(ii) below (which instructions shall be included in 

one or more reports to be provided to Paying Agent in accordance with 

Section 7.4(b) ). 

(ii) Distributions of Distributable Cash. Each distribution of 

Distributable Cash shall be made to the Members as follows: 

(A) first, sixty percent to the Initial Member and forty percent 

to the Private Owner, until the time at which the First Incentive Threshold 

Event occurs; and 

(B) thereafter, sixty-five percent to the Initial Member and 

thirty-five percent to the Private Owner, until the time at which the Second 

Incentive Threshold Event occurs; and 

(C) thereafter, seventy percent to the Initial Member and thirty 

percent to the Private Owner. 

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For the avoidance of doubt, distributions to the Members occurring on the 

Distribution Date on which any of the First Incentive Threshold Event or the 

Second Incentive Threshold Event occurs shall, (x) with respect to all 

distributions up to the amount required for reaching such First Incentive 

Threshold Event or Second Incentive Threshold Event, as applicable, be allocated 

without regard to the occurrence of such First Incentive Threshold Event or 

Second Incentive Threshold Event, as applicable, and (y) with respect to all 

remaining distributions on such Distribution Date, be allocated taking into 

account the occurrence of such First Incentive Threshold Event or Second 

Incentive Threshold Event, as applicable. 

(iii) Incentive Threshold Events. The “First Incentive Threshold 

Event” shall occur as of a Distribution Date if (A) the aggregate distributions 

made to the Private Owner pursuant to Section 6.6(b)(ii) as of such Distribution 

Date is equal to or greater than the product of two (2.0) and the Incentive 

Threshold Base Amount, and (B) the Incentive Threshold as of such Distribution 

Date (determined based on the Threshold Increase Amount for the First Incentive 

Threshold Event) is equal to zero. The “Second Incentive Threshold Event” 

shall occur as of a Distribution Date if (A) the aggregate distributions made to the 

Private Owner pursuant to Section 6.6(b)(ii) as of such Distribution Date is equal 

to or greater than the product of two and one-half (2.5) and the Incentive 

Threshold Base Amount, and (B) the Incentive Threshold as of such Distribution 

Date (determined based on the Threshold Increase Amount for the Second 

Incentive Threshold Event) is equal to zero. 

(iv) Incentive Threshold. The “Incentive Threshold ” shall be 

determined as follows: 

(A) as of the Closing Date, the Incentive Threshold shall be 

equal to the sum of (x) Transferred LLC Interest Sale Price and (y) the 

amount funded by the Private Owner into the Working Capital Reserve 

Account pursuant to Section 12.11(b) (the “Incentive Threshold Base 

Amount ”); and 

(B) as of any Distribution Date, the Incentive Threshold (as 

determined separately with respect to each of the First Incentive Threshold 

Event and the Second Incentive Threshold Event) shall be an amount 

equal to (1) the sum of (i) the applicable Incentive Threshold as of the 

preceding Distribution Date (or, in the case of the first Distribution Date, 

the Closing Date), and (ii) the applicable Threshold Increase Amount, 

minus (2) the aggregate distributions made to the Private Owner pursuant 

to Section 6.6(b)(ii) as of such Distribution Date; provided, that, if, as of 

any Distribution Date, the amount referred to in clause (B)(2) of 

Section 6.6(b)(iv) is greater than the amount referred to in clause (B)(1) of 

Section 6.6(b)(iv), then the applicable Incentive Threshold shall be 

deemed to be zero for such Distribution Date and all subsequent 

Distribution Dates. 

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(c) Restrictions on Distributions. The foregoing provisions of this Article VI 

to the contrary notwithstanding, no distribution shall be made if such distribution would violate 

any contract or agreement to which the Company is then a party or any Law or directive of any 

Governmental Authority then applicable to the Company. 

(d) Withholding. Notwithstanding any other provision of this Agreement, the 

Manager is authorized to take any action that it determines to be necessary or appropriate to cause 

the Company to comply with any foreign or United States federal, state or local withholding 

requirement with respect to any allocation, payment or distribution by the Company to any 

Member or other Person. All amounts so withheld shall be treated as distributions to the 

applicable Members under the applicable provisions of this Agreement. If any such withholding 

requirement with respect to any Member exceeds the amount distributable to such Member under 

the applicable provisions of this Agreement, or if any such withholding requirement was not 

satisfied with respect to any amount previously allocated or distributed to such Member, such 

Member and any successor or assignee with respect to such Member’s LLC Interest hereby agrees 

to indemnify and hold harmless the Manager and the Company for such excess amount or such 

withholding requirement, as the case may be. 

(e) Record Holders. Any distribution of Property, whether pursuant to this 

Article VI or otherwise, shall be made only to Persons that, according to the books and records of 

the Company, were the holders of record of LLC Interests on the date determined by the Manager 

as of which the Members are entitled to any such distribution. 

(f) Final Distribution. The final distribution following dissolution of the 

Company (the “Final Distribution”) shall be made in accordance with the provisions of 

Section 9.2 . 

ARTI CLE VI I 

Accounting, Reporting and Taxation 

7.1 Fiscal Year. The books and records of the Company shall be kept on an accrual 

basis and the fiscal year of the Company shall commence on January 1 and end on December 31 

(the “Fiscal Year ”). 

7.2 Maintenance of Books and Records. 

(a) Maintenance of Books and Records. At all times during the continuance 

of the Company, the Manager shall cause to be kept and maintained (including by the Servicer 

and any Ownership Entity and including records transferred by Receiver to the Company in 

connection with its conveyance of the Loans to the Company under the Contribution Agreement), 

at all times, at the Company’s chief executive office referred to in Section 2.4, a complete and 

accurate set of files, books and records regarding the Loans and the Underlying Collateral, and the 

Company’s and the relevant secured parties’ interests in the Loans and the Underlying Collateral, 

including records relating to the Collection Account, the Escrow Accounts, the Working Capital 

Reserve Account, any liquidity reserve account (if permitted), the Defeasance Account, and the 

disbursement of all Loan Proceeds. This obligation to maintain a complete and accurate set of 

records shall encompass all files in the Manager’s or Company’s custody, possession or control 

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pertaining to the Loans and the Underlying Collateral, including (except as required to be held by 

the Custodian pursuant to the Custodial and Paying Agency Agreement) all original and other 

documentation pertaining to the Loans and the Underlying Collateral, all documentation relating 

to items of income and expense pertaining to the Loans and the Underlying Collateral, and all of 

the Manager’s (and each Servicer’s and Subservicer’s) internal memoranda pertaining to the 

Loans and the Underlying Collateral. The books of account shall be maintained in a manner that 

provides sufficient assurance that: (a) transactions of the Company are executed in accordance 

with the general or specific authorization of the Manager consistent with the provisions of this 

Agreement; and (b) transactions of the Company are recorded in such form and manner as will: 

(i) permit preparation of federal, state and local income and franchise tax returns and information 

returns in accordance with this Agreement and as required by Law; (ii) permit preparation of the 

Company’s financial statements in accordance with GAAP and as otherwise set forth herein and 

the provisions of the reports required to be provided hereunder; and (iii) maintain accountability 

for the Company’s assets. 

(b) Retention of Books and Records. The Manager shall cause all such books 

and records to be maintained and retained until the date that is the later of ten (10) years after the 

Closing Date and three (3) years after the date on which the Final Distribution is made. All such 

books and records shall be available during such period for inspection by the Initial Member, the 

FDIC or any of their respective representatives (including any Governmental Authority) and 

agents at the Company’s chief executive office referred to in Section 2.4 at all reasonable times 

during business hours on any Business Day (or, in the case of any such inspection after the term 

hereof, at such other location as is provided by notice to the Initial Member and the FDIC), in 

each instance upon two (2) Business Days’ prior notice to the Manager. Upon request by Initial 

Member or the FDIC, the Manager shall promptly send copies (the number of copies of which 

shall be reasonable) of such books and records to such requesting Person or its designee. The 

Manager shall provide the Initial Member and the FDIC with reasonable advance notice of the 

Manager’s intention to destroy or dispose of any documents or files relating to the Loans and, 

upon the request of the Initial Member or the FDIC, shall allow such requesting Person to recover 

the same (or copies thereof) from the Company and in the case both the Initial Member and the 

FDIC so request the same, the FDIC shall have the right to recover such documents or files, but 

the Initial Member shall have the right to make copies of such applicable documents or files so 

long as such copies are made while such documents files remain with the Manager or the 

Company (and prior to recovery of the same by the FDIC). The Manager shall also maintain 

complete and accurate records reflecting the status of taxes, ground leases or other recurring 

charges which could become a Lien on any Underlying Collateral. Any expense incurred by 

Initial Member or the FDIC and any reasonable out-of-pocket expense incurred by the Company 

in connection with the exercise by Initial Member or the FDIC of its respective rights in this 

Section 7.2(b) to recover or make (or otherwise receive) copies of books, records, documents or 

files shall be borne by such Person so exercising such rights; provided, however, that any expense 

incident to the exercise of such rights pursuant to this Section 7.2(b) as a result of or during the 

continuance of an Event of Default shall in all cases be borne by the Private Owner (except to the 

extent such Event of Default is attributable exclusively to a Manager having been appointed by 

the Initial Member following removal of the Private Owner in such applicable capacity, or to any 

applicable Servicer (and its Subservicers) having been engaged by the Initial Member, the 

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Company or the applicable replacement Manager following such removal of the Private Owner as 

Manager, in each case that is not an Affiliate of the Private Owner). 

7.3 Financial Statements. 

(a) Annual Financial Statements. As soon as practicable following, but no 

later than ninety (90) days immediately after, the end of each Fiscal Year (commencing with 

respect to the 2010 Fiscal Year), the Manager shall prepare and deliver to Initial Member an 

audited consolidated balance sheet of the Company and the Ownership Entities as at the end of 

such Fiscal Year, and audited consolidated statements of operations and cash flow of the 

Company and the Ownership Entities for such Fiscal Year, each prepared in accordance with 

GAAP and accompanied by the Accountants’ report thereon, which shall be certified in the 

customary manner by the Accountants. 

(b) Quarterly Financial Information. As soon as practicable following, but no 

later than thirty (30) days immediately after, the end of each quarter of each Fiscal Year (other 

than the last quarter of such Fiscal Year, and commencing with the calendar quarter ending on or 

about June 30, 2010), the Manager shall prepare and deliver to Initial Member unaudited 

consolidated balance sheet of the Company and the Ownership Entities as at the end of such 

calendar quarter, and unaudited consolidated statements of operations and cash flow of the 

Company and the Ownership Entities for such calendar quarter (and, for the first such report, also 

covering the period from the Closing Date through the end of such calendar quarter), each 

prepared in accordance with GAAP. 

7.4 Additional Reporting and Notice Requirements. 

(a) Manager’s Duty to Initial Member and Secured Parties; Delivery of 

Certain Notices. In addition to such other reports and access to books, records and reports as are 

required to be provided under this Agreement, the Manager shall cause to be delivered to the 

Initial Member and the Purchase Money Notes Guarantor such information as is specified in 

Exhibit B (in addition to the Monthly Report) and such other information relating to the Loans, 

the Underlying Collateral, the Company, the Servicers and any Subservicers as Initial Member or 

the Purchase Money Notes Guarantor may reasonably request from time to time and, in any case, 

shall ensure that Initial Member and the Purchase Money Notes Guarantor are promptly advised, 

in writing, of any matter of which the Manager, any Servicer or any Subservicer becomes aware 

relating to the Loans, the Underlying Collateral, the Collection Account, the Escrow Accounts, the 

Working Capital Reserve Account, the Defeasance Account, or any Borrower or Obligor that 

materially and adversely affects the interests of Initial Member hereunder or of any secured party 

under the Reimbursement, Security and Guaranty Agreement. Without limiting the generality of 

the foregoing, the Manager shall cause to be delivered to Initial Member information indicating 

any possible Environmental Hazards with respect to any Underlying Collateral. To the extent that 

the Initial Member requests information which is dependent upon obtaining such information from 

a Borrower, Obligor or other third party, the Manager shall cause to be made commercially 

reasonable efforts to obtain such information but it shall not be a breach by the Manager of this 

Agreement if the Manager fails to cause such information to be provided to Initial Member 

because a Borrower, Obligor or other Person has failed to provide such information after such 

efforts have been made. 

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(b) Monthly Reports . On or prior to the Distribution Date for each month, 

commencing on the Distribution Date following the calendar month in which the Closing Date 

occurs, the Company shall deliver or cause the Manager to deliver to the Paying Agent, the Initial 

Member and the Purchase Money Notes Guarantor the Monthly Report with respect to the 

relevant Due Period, which Monthly Report shall include the Distribution Date Report specifying 

the amounts and recipients of all funds to be distributed by the Paying Agent on such Distribution 

Date; provided however, that (unless the Company and the Initial Member agree otherwise) the 

Initial Member will prepare and deliver to the Paying Agent and the Purchase Money Notes 

Guarantor the Monthly Report (including the Distribution Date Report) on behalf of the Company 

for all Due Periods ending on or before March 31, 2010. Following receipt by the Paying Agent 

of the Monthly Report (including the Distribution Date Report) with respect to a given Due 

Period, the Paying Agent shall prepare and deliver the Custodian and Paying Agent Report with 

respect to such Due Period in accordance with the terms of the Custodial and Paying Agency 

Agreement. Each Monthly Report (including the Distribution Date Report) prepared and 

delivered by the Manager shall be certified by the chief financial officer (or an equivalent officer) 

of the Manager. Each Monthly Report prepared and delivered by the Manager shall also include a 

certification of the Manager that all withdrawals by the Manager from the Collection Account 

during such Due Period were made in accordance with the terms of this Agreement and the 

Custodial and Paying Agency Agreement. 

(c) Annual Compliance Certificates. The Manager shall, and shall cause each 

Servicer and Subservicer to, deliver to Initial Member and the Purchase Money Notes Guarantor, 

on or before March 15 of each year, commencing in the year 2011, an officer’s certificate stating, 

as to the signer thereof, that (i) a review of such party’s (in the case of the Manager, for the 

avoidance of doubt, in any capacity under this Agreement) activities during the preceding calendar 

year (or other applicable period as set forth below in this Section 7.4(b)) and of its performance 

under this Agreement (or, as applicable, the Servicing Agreement or any Subservicing 

Agreement) has been made under such officer’s supervision, and (ii) to the best of such officer’s 

knowledge and belief, based on such review, such party (in the case of the Manager, for the 

avoidance of doubt, in any capacity under this Agreement) has fulfilled all of its obligations under 

this Agreement (or, as applicable, the Servicing Agreement or Subservicing Agreement) in all 

material respects throughout such year (or other applicable period as set forth below in this 

Section 7.4(b)) or, if there has been a failure to fulfill any such obligation in any material respect, 

specifying each such failure and the nature and status thereof. The first such officer’s certificate 

shall, with respect to any Loan, shall cover the period commencing on the Closing Date (and with 

respect to each Loan, including relevant information with respect thereto for the period 

commencing on the Servicing Transfer Date for such Loan) and continuing through the end of the 

2010 calendar year. In the event a Servicer or any Subservicer was terminated, resigned or 

otherwise performed in such capacity for only part of a year (or other applicable period, as the 

case may be, with respect to the period commencing, with respect to any Loan, on the applicable 

Servicing Transfer Date through the end of the 2010 calendar year), such party shall provide an 

officer’s certificate pursuant to this Section 7.4(b) with respect to such portion of the year (or 

other applicable period). 

(d) Annual Compliance Report. On or before March 15 of each year, 

commencing in the year 2011, the Manager shall cause each Servicer and Subservicer to provide 

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to each of the Paying Agent, the Initial Member and the Purchase Money Notes Guarantor the 

annual reports (including the independent accountant report) for the prior Fiscal Year (or other 

applicable period as set forth below) required under Section 1122 of Regulation AB (regardless of 

whether any such requirements apply, by their terms, only to companies registered or required to 

file reports with the Securities and Exchange Commission) with respect to the relevant servicing 

criteria provisions of Section 1122(d)(1) of Regulation AB that are applicable to the servicing 

being conducted under this Agreement (and the Servicing Agreement) pursuant to Section 12.3(d) 

below. The first such reports shall cover the period commencing on the Closing Date (and for 

each Loan, covering the period from the applicable Servicing Transfer Date) and continuing 

through the end of the 2010 Fiscal Year. 

(e) Audits. Until the later of the date that is ten (10) years after the Closing 

Date and the date that is three (3) years after the Final Distribution, the Manager shall, and shall 

cause each Servicer and Subservicer to, (i) provide any representative of Initial Member 

(including any Governmental Authority), during normal business hours and on reasonable notice, 

with access to all of the books of account, reports and records relating to the Loans or any 

Underlying Collateral, the Servicing Obligations, the Collection Account, the Escrow Accounts, 

the Working Capital Reserve Account, any account created under the Servicing Agreement, the 

Defeasance Account, disbursements under the Custodial and Paying Agency Agreement, 

distributions hereunder or any other matters relating to this Agreement or the rights or obligations 

hereunder or under the Ancillary Documents; (ii) permit such representatives to make copies of 

and extracts from the same, (iii) allow Initial Member to cause such books to be audited by 

accountants selected by Initial Member, and (iv) allow Initial Member’s representatives to discuss 

the Company’s, Manager’s and any Servicer’s and any Subservicer’s affairs, finances and 

accounts, as they relate to the Loans, the Underlying Collateral, the Servicing Obligations, the 

Collection Account, the Escrow Accounts, the Working Capital Reserve Account, the Defeasance 

Account, or any other matters relating to this Agreement, the Ancillary Documents, or the rights 

or obligations hereunder and thereunder, with its officers, directors, employees, accountants (and 

by this provision the Company and Manager hereby authorizes such accountants to discuss such 

affairs, finances and accounts with such representatives), Servicers and Subservicers, and 

attorneys. Any expense incurred by Initial Member and any reasonable out-of-pocket expense 

incurred by the Company in connection with the exercise by Initial Member of its rights in this 

Section 7.4(e) shall be borne by the Initial Member; provided, however, that any expense incident 

to the exercise by Initial Member of its rights pursuant to this Section 7.4(e) as a result of or 

during the continuance of an Event of Default shall in all cases be borne by the Private Owner 

(except to the extent such Event of Default is attributable exclusively to a Manager having been 

appointed by the Initial Member following removal of the Private Owner in such capacity, or to 

any applicable Servicer (and its Subservicers) having been engaged by the Initial Member, the 

Company or the applicable replacement Manager following such removal of the Private Owner as 

Manager, in each case that is not an Affiliate of the Private Owner). 

(f) In addition to the foregoing, the Manager shall provide or cause to be 

provided to the Initial Member, all reports, information (financial or otherwise), certificates and 

other documents required to be provided by the Company pursuant to the Reimbursement, 

Security and Guaranty Agreement, and by the Servicer under the Servicing Agreement. 

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(g) The rights afforded to the Members under this Section 7.4 are in addition 

to, and not in limitation of, the rights of the Members under Section 18-305(a) of the Act. Section 

18-305(c) of the Act shall not apply in relation to the Initial Member. 

7.5 Designation of Tax Matters Member. The Private Owner is hereby designated as 

the “Tax Matters Member ” under Section 6231(a)(7) of the Code and under other similar Laws 

of other relevant jurisdictions, to manage, in consultation with the Initial Member, administrative 

tax proceedings conducted at the Company level by the Internal Revenue Service or other tax 

authorities with respect to Company matters. Each Member expressly consents to such 

designation and agrees that, upon the request of the Tax Matters Member, it will execute, 

acknowledge, deliver, file and record at the appropriate public offices such documents as may be 

necessary or appropriate to evidence such consent. The Tax Matters Member is specifically 

directed and authorized to take whatever steps the Tax Matters Member in its sole and absolute 

discretion deems necessary or desirable to perfect such designation, including, without 

limitation, filing any forms or documents with the Internal Revenue Service (or other tax 

authorities) and taking such other action as may from time to time be required under the Code, 

Treasury Regulations or other Laws. The Tax Matters Member shall keep the other Members 

fully informed as to any tax audits of the Company, including promptly providing the other 

Members with copies of any correspondence from any taxing authority and permitting the other 

Member to participate in any conferences or meetings with any taxing authority and in any 

subsequent administrative or judicial proceedings. The Tax Matters Member shall have the 

authority, following consultation with the Initial Member, to make any tax elections on behalf of 

the Company permitted to be made, including the election pursuant to Section 754, under any 

section of the Code or the Treasury Regulations promulgated thereunder or under other Laws. In 

the event the Company may be deemed to be a “small partnership” as described in 

Section 6231(a)(1)(B), each Member consents to the Company’s electing to be treated as a 

partnership to which the provisions of Code Section 6221 et. seq. apply (thereby electing to have 

Code Section 6231(a)(1)(B)(i) not apply). The Initial Member may, at any time following the 

occurrence and during the continuation of an Event of Default, remove the Private Owner as the 

Tax Matters Member, appoint itself (or any other willing Member at the time) as the Tax Matters 

Member, and serve (or cause such other Member to so serve) in such capacity; provided that 

such removal shall not relieve the Private Owner as Tax Matters Member of any obligations or 

liabilities under this Agreement or any Ancillary Document arising, relating to, occurring, or 

required to have been paid or performed by, the Private Owner as Tax Matters Member in its 

capacity as such. 

7.6 Tax Information. Within ninety (90) days after the end of each Fiscal Year, the 

Tax Matters Member shall send, or cause to be sent to, each Person who was a Member at any 

time during the Fiscal Year then ended a Schedule K-1 and such Company tax information as the 

Tax Matters Member reasonably believes shall be necessary for the preparation by such Person 

of its United States federal, state and local tax returns in accordance with any Law. Such 

information shall include a statement showing such Person’s share of distributions, income, gain, 

loss, deductions and expenses and other relevant items of the Company for such Fiscal Year. 

Promptly upon the request of any Member (or any former Member, for tax years during which 

such Person was a Member), the Tax Matters Member will furnish to such Member (or former 

Member): 

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(a) United States federal, state and local income tax returns or information 

returns, if any, filed by the Company; and 

(b) at the sole cost and expense of the requesting Member, such other 

information as such Member may reasonably request for the purpose of applying for refunds of 

withholding taxes. 

7.7 Business Plans. As promptly as possible, but in no event later than July 15, 2010 

(and, as applicable, with current information as of June 30, 2010) the Manager shall deliver to 

the Initial Member written plans (each, a “Business Plan”) detailing the strategy to be used by it 

in managing and disposing of the assets of the Company in respect of all of the Loans for 

achieving the Company’s purposes with respect thereto, in conformance with the Servicing 

Standard, based, to the extent appropriate, on information gathered by the Company with respect 

to the Loans, which shall include (i) individual Business Plans for each of the ten (10) largest 

Loans based on their Unpaid Principal Balance as of the Cut-Off Date (as set forth on the Loan 

Schedule), and (ii) a consolidated Business Plan covering all Loans (a “Consolidated Business 

Plan”). With respect to the first such Business Plans and Consolidated Business Plan, the 

Manager shall meet with the Initial Member as reasonably requested by the Initial Member from 

time to time during the thirty (30) Business Days following the Initial Member’s receipt of the 

same, to review and discuss such Business Plans and Consolidated Business Plan, including 

changes thereto suggested by the Initial Member. Within thirty (30) Business Days following 

expiration of such review period, the Manager will deliver to the Initial member a final version 

of such Business Plans and Consolidated Business Plan reflecting such changes as the Manager 

considers to be appropriate in light of its discussions with the Initial Member during such review 

period. The Manager shall thereafter review and revise each Business Plan and Consolidated 

Business Plan as the circumstances may require, and in any event provide periodic updates to 

such Business Plans (and for each such update, the same shall cover the ten (10) largest Loans 

based on their Unpaid Principal Balance as of the time of such update) and Consolidated 

Business Plan to the Initial Member, in January (current as of December 31 of the immediately 

preceding year) and July (current as of June 30 of such year) of each year, commencing in 

January 2011, with each such periodic update to de delivered as part of the Monthly Reports due 

at such time pursuant to Section 7.4(b), Upon reasonable notice by the Initial Member, the 

Company shall make its personnel who are familiar with such Business Plans and Consolidated 

Business Plans available during normal business hours for the purposes of discussing such 

Business Plans and Consolidated Business Plans with representatives of the Initial Member and 

responding to questions therefrom. 

(a) Each Business Plan and Consolidated Business Plan will set forth a 

strategy for the disposition of the Loans addressed thereby which strategy may consist of one or 

more of the following: (i) the pay-off of Loans at a discount; (ii) modifications of the related note 

and/or mortgage, including reductions in the mortgage loan interest rate, reductions in the 

principal balance and rescheduling principal payments; (iii) foreclosure upon the related 

Underlying Collateral (or acquisition thereof by deed in lieu of foreclosure) and subsequent sale 

thereof; (iv) assumptions of Loans by new borrowers; (v) repairs to and, if applicable, completion 

of construction of the related Underlying Collateral, with a view towards selling such Underlying 

Collateral or the Loan secured thereby; (vi) sale of a Loan, either singly or in pools, before or after 

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restructuring; and (vii) any other method of work-out, rehabilitation and disposition consistent 

with the Servicing Standard and other general duties of the Company specified in this Agreement. 

(b) Each Business Plan and Consolidated Business Plan will set forth a 

strategy for the disposition of each related Acquired Property which strategy may consist of one or 

more of the following: (i) the sale or leasing of the Acquired Property in whole or in parts, or in 

pools; (ii) making repairs to and, if applicable, completion of construction the Acquired Property 

or making changes to the Acquired Property so that it may be used for uses other than its current 

use, with a view toward selling the Acquired Property; (iii) rehabilitation or improvement and, if 

applicable, completion of construction of the Acquired Property, with a view toward selling the 

Acquired Property; (iv) continued leasing or sales activity with respect to the Acquired Property 

available for leasing or sale (in whole or in part) at the time it is transferred to a Ownership Entity; 

and (v) maintenance, landscaping and general upkeep of the Acquired Property. 

(c) Each Business Plan or Consolidated Business Plan shall contain the 

Company's estimate of the present value of the net amount that is recoverable with respect to each 

related Loan and projected Working Capital Expenses with respect thereto, and, in reasonable 

detail, the manner of calculation of such estimates. The Consolidated Business Plan shall include 

projected financials including statements of income, assets, and cash flows for the Company. 

Such cash flow projections shall, for the Consolidated Business Plan and each update thereto, 

include an Excel model of projected cash flows by month, as of June 30 and December 31 of each 

year (or, in the case of the initial Consolidated Business Plan, as of the date of preparation and 

delivery thereof) and covering a period not less than the upcoming 6 months, including projected 

monthly cash inflows on the Loans and REO, projected Excess Working Capital Advances and/or 

Discretionary Funding Advances, projected outflows of Servicing Expenses, projected Funding 

Draws, projected Working Capital Reserve levels, projected net monthly cash available for 

deposit into the Defeasance Account, and the amount and allocation of any projected distributions 

to Initial Member and Private Owner. 

AR T IC L E VIII 

Restrictions on Disposition of LLC Interests 

8.1 Limitations on Disposition of LLC Interests. Except as otherwise provided in this 

Article VIII, the Private Owner shall not, directly or indirectly, Dispose of or permit to be 

Disposed of, all or any part of its LLC Interest or any of its rights or interests under this 

Agreement, except only that the Private Owner may make a direct, outright transfer of its entire 

(but not less than its entire) LLC Interest if, and only if, (a) (i) the transferee is a single Person 

that is a Qualified Transferee, (ii) such transferee delivers to the Initial Member a Purchaser 

Eligibility Certification and the representations and warranties made by such transferee therein 

shall be true and correct both before and after giving effect to such transfer of the LLC Interest, 

and (iii) the Private Owner first obtains the prior written consent of the Initial Member and, until 

the Purchase Money Notes Defeasance Date, the Purchase Money Notes Guarantor to such 

transfer, or (b) such Disposition is done by or at the direction of the Initial Member pursuant to 

Sections 3.13 or 3.14. The Private Owner may not under any circumstances Dispose of less than 

all of its LLC Interest. Transfers by the Private Owner satisfying the foregoing criteria are 

hereinafter referred to as “Permitted Dispositions.” 

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8.2 Change of Control. The Private Owner will not permit any Change of Control to 

occur with respect to the Private Owner unless (i) it first obtains the prior written consent of the 

Initial Member, and (ii) following such Change of Control, the Private Owner would be a 

Qualified Transferee. Without limitation of the preceding sentence, the Private Owner will 

provide the Initial Member with immediate notice at the address specified in Section 13.6 of the 

occurrence of any Change of Control with respect to the Private Owner. 

8.3 Additional Provisions Relating to Permitted Dispositions. Except as otherwise 

expressly provided in this Section 8.3, the following provisions shall apply to each Permitted 

Disposition under this Article VIII: 

(a) In the event the Private Owner proposes to make a Permitted Disposition, 

the Private Owner shall be required to pay any and all filing and recording fees, fees of counsel 

and accountants and other out-of-pocket costs and expenses reasonably incurred by the Initial 

Member and/or the Company in connection with such Permitted Disposition. 

(b) The transferee in a Permitted Disposition shall deliver to the Company, 

with a copy to the Initial Member, an agreement, in form and substance reasonably satisfactory to 

the Initial Member, by which such transferee shall (i) agree to become a party to and be bound by 

this Agreement as the “Private Owner,” agree (if the transferor Member, prior to such transfer, 

also was the Manager) to be appointed as the “Manager”, and without limitation of the generality 

of the foregoing, agree to be bound by the other terms of Section 8.4 hereof, (ii) assume and agree 

to perform when due all of the obligations of the Private Owner and the Manager (if the transferor 

Member, prior to such transfer, also was the Manager) under this Agreement, and (iii) represent 

and warrant that it complies with the requirements set forth in Article X . 

(c) In connection with each Permitted Disposition, the Private Owner and the 

transferee shall deliver to the Company and the Initial Member such other documents and 

instruments as the Initial Member reasonably may request and which are required to effect the 

Permitted Disposition and substitute the transferee as a Member. 

8.4 Effect of Permitted Dispositions. 

(a) Upon consummation of any Permitted Disposition: 

(i) the transferee shall be admitted as a member of the Company and 

be deemed to be a party to this Agreement as the “Private Owner” and, if the 

transferor Member, prior to such transfer, also was the Manager, such transferee 

shall be appointed as the Manager (in the place of the transferor Member); 

(ii) the transferred LLC Interest shall continue to be subject to all the 

provisions of this Agreement, and the transferee Member shall have the same 

status as the Private Owner had at the time of consummation of such Permitted 

Disposition and, without limiting the generality of the foregoing, any outstanding 

breach, misrepresentation, violation or default (with respect to this Agreement or 

any 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 

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deemed to constitute an outstanding breach, misrepresentation, violation or 

default as the case may be, by the transferee Member; 

(iii) subject to Section 8.4(b) and the last sentence of Section 13.8, the 

transferor Member shall cease to be a member of the Company (and accordingly, 

except as expressly otherwise provided in Section 8.4(b) or the last sentence of 

Section 13.8, shall cease to be responsible for the payment or performance of any 

of the obligations or liabilities under this Agreement of the Private Owner, in any 

capacity hereunder). 

(b) No Permitted Disposition (and no resulting withdrawal or resignation of 

the transferor Member from the Company) shall: 

(i) relieve the transferor Member of any of the obligations or 

liabilities of the transferor Member, in any capacity, under this Agreement or any 

Ancillary Document required to have been paid or performed prior to the 

consummation of such Permitted Disposition (or of any liability it may have 

arising out of any breach, misrepresentation, violation or default by the transferor 

Member prior to such consummation); 

(ii) result in the termination of, relieve the transferor Member (or any 

of its Affiliates) of, or otherwise affect, any of the obligations or liabilities of the 

transferor Member, in any capacity, or its Affiliates under, any Related Party 

Agreement (such Related Party Agreements to continue in effect in accordance 

with their respective terms), except to the extent expressly provided in such 

Related Party Agreement; or 

(iii) dissolve the Company. 

8.5 Effect of Prohibited Dispositions. Any attempted or purported Disposition of the 

LLC Interest of the Private Owner (or any portion thereof) not strictly in accordance with the 

terms of this Agreement shall be void ab initio and of no force or effect whatsoever. The Private 

Owner shall not be entitled, and hereby specifically waives any right, to receive Company 

distributions during (i) the period between any attempted or purported Disposition of the LLC 

Interest of the Private Owner (or any portion thereof) not strictly in accordance with the terms of 

this Agreement and the express rescission of such attempted or purported Disposition by the 

Private Owner and (ii) during any period when a Member is in violation of Section 8.2, provided 

that all such omitted Company distributions shall (subject to Section 8.6) be made to the Private 

Owner (without interest) forthwith after the end of the relevant suspension period. 

8.6 Distributions After Disposition . Distributions with respect to an LLC Interest 

made on or after the effective date of the Permitted Disposition of such LLC Interest shall be 

made to the transferee Member with respect to such LLC Interest, regardless of when such 

distributions accrued on the books of the Company. 

8.7 Transfers By Initial Member. Notwithstanding anything to the contrary contained 

in this Agreement, except as provided by applicable Law, there shall be no restriction on the 

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Initial Member’s ability to Dispose of the LLC Interest held by it, directly or indirectly, to any 

Person and the Private Owner shall have no right to purchase or right-of-first-refusal in 

connection with any such sale; provided, that, the Initial Member may not assign the consent and 

voting rights associated with its LLC Interest in the Company to more than one Person (for the 

avoidance of doubt, except as expressly provided above, the foregoing restriction shall not 

otherwise limit the Initial Member’s right to Dispose of any interest associated with its LLC 

Interest in the Company) and provided, further, that in the event the Initial Member determines 

to sell the LLC Interest held by it through an auction process, the Private Owner shall be entitled 

to participate in such auction on the same terms that apply generally to other participants in the 

auction. At the election of the Person then constituting the “Initial Member” under this 

Agreement, the transferee in any direct Disposition of any portion of the LLC Interest of the 

Initial Member shall, upon delivery to the Company, with a copy to the Private Owner, of an 

agreement by which such transferee shall agree to become a party to and be bound by this 

Agreement as the “Initial Member,” be admitted as a member of the Company and be deemed to 

be a party to this Agreement as the “Initial Member”, and thereupon, subject to last sentence of 

Section 13.8, the transferor Member shall cease to be a member of the Company (and 

accordingly, except as expressly otherwise provided in last sentence of Section 13.8, shall cease 

to be responsible for the payment or performance of any of the obligations or liabilities under 

this Agreement of the Initial Member). 

8.8 Resignation; Dissolution. 

(a) Private Owner may not withdraw or resign from the Company, except 

(i) in connection with a Permitted Disposition made in accordance with the applicable provisions 

of this Article VIII or (ii) with the prior written consent of the Initial Member. 

(b) The Private Owner covenants that it shall not allow a Dissolution Event to 

occur with respect to itself. 

(c) Section 18-304 of the Act shall not apply to the Company. Nothing in this 

Section 8.8(c) shall limit the terms of Section 9.1 hereof. 

(d) Except as is otherwise expressly provided in this Agreement, no Member 

shall be entitled to receive any payment pursuant to Section 18-604 of the Act. 

8.9 Applicable Law Withdrawal. If, as a result of applicable Law, the ownership of 

an LLC Interest by a Member becomes illegal or is likely to become illegal or the applicable 

Law more likely than not requires divestiture of such Member’s LLC Interest, or the applicable 

Law would require the Company to register as an investment company under the Investment 

Company Act, then the Manager and the Member shall use their respective commercially 

reasonable efforts to avoid a violation of any such applicable Law by a Member or the need for 

the Company to register as an investment company. These steps may include, depending on the 

provisions of such applicable Law, (i) arranging for the sale of the Member’s LLC Interest to a 

third party upon terms reasonably satisfactory to the Member in a transaction that complies with 

Articles VIII and X; (ii) making any appropriate applications to the relevant Governmental 

Authority, (iii) prohibiting such Member from making further Capital Contributions, and 

converting its LLC Interest into a special interest with no voting or similar rights but with only 

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an economic right (identical to its prior rights as a Member), or (iv) permitting the Member to 

withdraw from the Company for a “payment” to such Member equal to the value of its LLC 

Interest at the time of withdrawal, such value to be determined by a third party appraiser 

mutually agreeable to the Manager and all Members. The aforesaid “payment” shall be made in 

cash unless the Manager determines that the payment in cash would be economically detrimental 

to the Company, in which case such payment may be made in kind, subject to the applicable 

Law. The timing of any such withdrawal must be mutually agreeable to the Member and the 

Manager taking proper account of the effective date of the applicable Law or registration 

requirement that is the basis for the withdrawal or other remedy provided herein and the need of 

the Manager for a reasonable period of time to find a solution to the illegality or requirement for 

divestiture. Such illegality or registration requirement must be established by (x) an opinion of 

counsel (which counsel shall be reasonably satisfactory to the Manager and the Initial Member) 

substantially to the effect that the ownership of the LLC Interest more likely than not will result 

in such illegality or requirement for registration or divestiture or (y) upon a ruling or order from 

a Governmental Authority. 

ARTI CLE I X 

Dissolution and Winding-Up of the Company 

9.1 Dissolution. A dissolution of the Company shall take place upon the first to occur 

of the following: 

(a) the agreement by all Members to dissolve the Company (it being 

understood and agreed that neither Member, acting alone, shall have the right unilaterally to 

dissolve the Company); 

(b) the sale of all or substantially all of the Company Property (other than 

cash and cash equivalent instruments), including as an entirety or substantially as an entirety; or 

(c) notice to such effect to the Private Owner from the Initial Member at any 

time after the occurrence of a Dissolution Event or an Insolvency Event with respect to the Private 

Owner or any Person that Controls the Private Owner; or 

(d) exercise of the Clean-Up Call and liquidation of all remaining Loans and 

Acquired Property of the Company in accordance with Section 12.17 . 

9.2 Winding-Up Procedures. If a dissolution of the Company pursuant to Section 9.1 

occurs, subject to the Company’s compliance with its obligation under the other agreements to 

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 the Members as 

hereinafter provided. 

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(b) The Company shall comply with Section 18-804(b) of the Act. 

(c) Distributions of the assets of the Company after a dissolution of the 

Company shall be conducted as follows: 

(i) first, to creditors, but excluding Members who are creditors (other 

than the Initial Member (to the extent it continues to hold the Purchase Money 

Notes)), to the extent otherwise permitted by Law (and, to the extent permitted, in 

accordance with the Priority of Payments), in satisfaction of liabilities of the 

Company (whether by payment or the making of reasonable provision for 

payment thereof); 

(ii) second, to Members or former Members who are creditors, to the 

extent otherwise permitted by Law, in satisfaction of liabilities of the Company 

(whether by payment or the making of reasonable provision for payment thereof) 

other than liabilities for which reasonable provision for payment has been made 

and liabilities for distributions to Members and former Members under 

Section 18-601 of the Act; 

(iii) third, to Members and former Members in satisfaction of liabilities 

(if any) for distributions under Section 18-601 of the Act; and 

(iv) finally, to the Members in the manner set forth in Section 6.6(b) . 

(d) Upon dissolution, the Manager, may, with the consent of all Members, 

(i) liquidate all or a portion of the Company assets and apply the proceeds of such liquidation in 

the manner set forth in Section 9.2(c) and/or (ii) hire independent appraisers to appraise the value 

of Company assets not sold or otherwise disposed of or determine the Fair Market Value of such 

assets, and allocate any unrealized gain or loss determined by such appraisal to the Members’ 

respective Capital Accounts as though the properties in question had been sold on the date of 

distribution and, after giving effect to any such adjustment, distribute said assets in the manner set 

forth in Section 9.2(c), provided that the Manager shall in good faith attempt to liquidate sufficient 

Company assets to satisfy in cash the debts and liabilities described in Section 9.2. If a Member 

shall, upon the advice of counsel, determine that there is a reasonable likelihood that any 

distribution in kind of an asset would cause such Member to be in violation of any Law, such 

Member and the Manager shall each use its best efforts to make alternative arrangements for the 

sale or transfer into an escrow account of any such distribution on mutually agreeable terms. 

9.3 Termination of the Company. 

Upon the dissolution of the Company and the completion of the winding up 

process set forth in Section 9.2, the Manager (or such other Person or Persons as the Act may 

require or permit) shall cause the cancellation of the Certificate and any filings made as provided 

in clause (c) of Section 4.3 and shall take (or cause to be taken) such other actions as may be 

necessary to terminate the Company. 

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ARTI CLE X 

Qualified Transferees 

10.1 Qualified Transferees. Each Member, other than the Initial Member (including, 

for the avoidance of doubt, its Successors and transferees), shall at all times be in compliance 

with the following (and any proposed transferee of any LLC Interest in compliance with the 

following shall be deemed a “Qualified Transferee ”): 

(a) Organization; Good Standing; Licenses. Such Member (i) is a Single 

Purpose Entity duly organized, validly existing and in good standing under the Laws of the state 

of its organization, (ii) has qualified or will qualify to do business as a foreign corporation, 

partnership or other entity and will remain so qualified, and is and will remain in good standing, in 

each jurisdiction in which the character of its properties or the nature of its activities makes such 

qualification necessary and in which failure to so qualify would have a material adverse effect 

upon such Member or its ability to perform its obligations hereunder, (iii) has full power to own 

its property, to carry on its business as presently conducted, and to enter into and perform its 

obligations under this Agreement, (iv) has all licenses or other governmental approvals necessary 

to perform its obligations hereunder; and (v) in the case of the Private Owner, as of the Closing 

Date, is (x) directly or indirectly, at least 50.1% owned by its Specified Parent, and (y) Controlled 

by its Specified Parent. 

(b) Authorization; No Violation. The execution and delivery by such Member 

of this Agreement and the consummation of the transactions contemplated hereby have been duly 

and validly authorized by all necessary action. Neither the execution and delivery of this 

Agreement, nor the consummation of the transactions herein contemplated, nor compliance with 

the provisions hereof, will conflict with or result in a breach of, or constitute a default under, 

(i) any of the provisions of any Law binding on such Member or its properties, (ii) the constituent 

documents of such Member, or (iii) any of the provisions of any indenture, mortgage, contract or 

other instrument to which such Member is a party or by which it is bound or result in the creation 

or imposition of any Lien upon any of its property pursuant to the terms of any such indenture, 

mortgage, contract or other instrument. 

(c) Governmental Approvals . All actions, approvals, consents, waivers, 

exemptions, variances, franchises, orders, permits, authorizations, rights and licenses required to 

be taken, given or obtained, as the case may be, by or from any Governmental Authority or 

agency that are necessary in connection with the execution and delivery by such Member of this 

Agreement and the consummation of the transactions contemplated hereby and the performance of 

its obligations hereunder, have been duly taken, given or obtained, as the case may be, are in full 

force and effect, are not subject to any pending proceedings or appeals (administrative, judicial or 

otherwise) and either the time within which any appeal therefrom may be taken or review thereof 

may be obtained has expired or no review thereof may be obtained or appeal therefrom taken. 

(d) No Litigation. On the date such Member becomes a party to this 

Agreement, there is no action, suit, proceeding or investigation pending or threatened against such 

Member before any Governmental Authority. 

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(e) No Violation of Orders, Decrees, etc . Such Member is not in default with 

respect to any order or decree of any Governmental Authority or any Law. 

(f) Third Party Consents . No consents, approvals, waivers or notifications of 

stockholders, creditors, lessors or other nongovernmental persons are required to be obtained by 

such Member in connection with the execution and delivery of this Agreement and the 

consummation of all the transactions herein contemplated and the performance of its obligations 

hereunder. 

(g) Owners Accredited Investors . All of the equity owners of such Member 

are “accredited investors,” as that term is defined in Rule 501 under the Securities Act. 

(h) Knowledge and Experience . Such Member, either by itself or through its 

advisers and principals, has such knowledge and experience in the origination, servicing, sale 

and/or purchase of performing and non-performing or distressed loans, including construction 

loans and loans secured by residential and commercial properties, as well as financial and 

business matters, as to enable such Member to utilize the information made available to it with 

respect to the LLC Interest acquired by it and the Loans to evaluate the merits and risks of a 

purchase of the LLC Interest acquired by it and, indirectly, the Loans, and to make an informed 

decision with respect thereto. 

(i) Economic Risks. Such Member acknowledges, understands and 

represents that it is able to bear the economic risks associated with the acquisition and ownership 

of the LLC Interest acquired by it and, indirectly, the Loans, including the risk of a total loss of its 

investment in the Company and, indirectly, the Loans and/or the risk that it may be required to 

hold the LLC Interest and, indirectly, the Loans for an indefinite period of time. 

(j) No Representations. Such Member hereby acknowledges that, except as is 

otherwise expressly provided in this Agreement, the Transferred LLC Interest Sale Agreement, or 

the Contribution Agreement, none of the Initial Member or the FDIC or any Affiliate of either, or 

any of their respective officers, directors, employees, agents or contractors, makes or has made 

any representation or warranty regarding the Company, the LLC Interest or the Loans or the value 

of any Underlying Collateral. 

(k) Due Diligence . Such Member acknowledges and agrees that, whether or 

not information is available with respect to the LLC Interest or the Loans and whether or not it 

chooses to review any information that is or was made available to it regarding the LLC Interest 

or the Loans, such Member, by itself or through its advisers or principals, has the ability and shall 

be responsible for making its own independent investigation and evaluation of the LLC Interest 

and the Loans and the economic, credit or other risks involved in an acquisition of the LLC 

Interest and, indirectly, the Loans. Except as is otherwise expressly provided in this Agreement, 

none of the Initial Member or the FDIC or any Affiliate of either, or any of their respective 

officers, directors, employees, agents or contractors, makes or has made any representation or 

warranty as to the completeness or accuracy of any information provided. 

(l) No Securities. Such Member acknowledges and agrees that (i) neither the 

offer nor the sale of the LLC Interest (and, indirectly, the Loans) is intended to constitute an offer 

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or sale of a “security” within the meaning of the Securities Act or any applicable federal or state 

securities Laws, (ii) no inference that any of the LLC Interest or the Loans is a “security” under 

such federal or state securities Laws shall be drawn from any of the certifications, representations 

or warranties made by any Person in this Agreement, (iii) it is not contemplated that any filing 

will be made with the Securities and Exchange Commission or pursuant to the “Blue Sky” or 

securities Laws of any jurisdiction, and (iv) if any of the LLC Interest or the Loans is a security, 

such may not be resold or otherwise transferred by such Member except in accordance with any 

and all applicable securities and Blue Sky Laws. 

(m) Resales. Such Member is acquiring the LLC Interest (and, indirectly, the 

Loans) for its own account and not with a view toward resale in a distribution within the meaning 

of the Securities Act. 

(n) Resales in Compliance with Law. Such Member will not (i) offer, pledge, 

sell or otherwise dispose of the LLC Interest (or any interest therein) or any Loan (or any interest 

therein or evidence thereof) to, or (ii) solicit any offer to buy or accept a transfer, pledge or other 

disposition of the LLC Interest (or any interest therein) or any Loan (or any interest therein or 

evidence thereof) from, or (iii) otherwise approach or negotiate with respect to the LLC Interest 

(or any interest therein) or any Loan (or any interest therein or evidence thereof) with, any person 

or entity in any manner, or take any other action, that would (A) not comply with Article VIII, or 

(B) render the transfer to such Member of the LLC Interest or any interest in any Loan a violation 

of any Law relating to the issuance, regulation, registration or disposition of securities, nor will it 

so act, nor will it authorize any person or entity to so act, in any manner with respect to the LLC 

Interest (or any interest therein) or any Loan (or interest therein or evidence thereof). 

(o) Acquisition in Compliance with Law. Such Member’s acquisition of the 

LLC Interest and the resulting investment in the Loans will comply with all applicable Laws, 

including any and all Laws and/or restrictions imposed on resale of the LLC Interest and the 

Loans by federal and state securities or Blue Sky Laws. 

(p) Independent Evaluation . Such Member has made an independent 

evaluation of the Company and its assets (including the Loans and related Loan files and/or any 

electronic data made available to it pertaining to the Loans held by the Company). Such Member 

also has conducted such other investigations as it deems appropriate, including searches of 

Uniform Commercial Code, title, court, bankruptcy and other public records. Such Member 

agrees and represents that it is entering into this Agreement solely on the basis of its own 

investigations and its judgment as to the value of the LLC Interest and the nature, validity, 

enforceability, collectability and value of the Loans and all other facts material to their ownership, 

including to the legal matters and risks relating to the collection and enforcement, and the 

performance of any obligations under any of the Loans in any jurisdiction. Such Member further 

acknowledges that no officer, director, employee, agent, representative or contractor of the Initial 

Member or any of its Affiliates has been authorized to make any statements or representations 

other than those specifically contained in this Agreement or the Contribution Agreement. 

(q) Embargoed Person. Such Member certifies, represents and warrants that 

(i) no consideration that such Member or any of its Affiliates contributes hereunder or under the 

Ancillary Documents in connection with any transaction regarding any assets will have been 

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derived from or related to any activity that is deemed criminal under United States law; (ii) neither 

it nor any of its Affiliates or Direct Owners is an Embargoed Person; (iii) neither it nor any of its 

Affiliates or Direct Owners engages in any dealings or transactions, or is otherwise “associated 

with” (as defined in 31 C.F.R. 594.101, et seq.), any Embargoed Person; and (iv) if and to the 

extent such Member or any of its Affiliates are required by law to maintain an anti-money 

laundering compliance program under applicable anti-money laundering laws and regulations, 

including without limitation, the Uniting and Strengthening America by Providing Appropriate 

Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56)) such 

compliance programs are currently being maintained. For purposes of the foregoing certifications, 

representations and warranties, such certifications, representations and warranties shall be based 

upon a due inquiry and investigation; provided, however, that for purposes of determining 

whether any of the same with respect to indirect ownership are true, the undersigned shall not be 

required to make an investigation into the ownership of publicly-traded securities (including 

securities of open-end investment companies registered under the Investment Company Act of 

1940, as amended) or the ownership of assets by a collective investment fund that holds assets for 

employee benefit plans or retirement arrangements. 

(r) ERISA Plan Asset. The assets of such Member (including any successor to 

or transferee of such Member) are not deemed to be “plan assets” within the meaning of Section 

3(42) of the Employee Retirement Income Security Act of 1974 (as amended) (“ERISA”)) and 

the “plan asset” regulations set forth in 29 C.F.R. Section 2510.3-101 as promulgated under 

ERISA, modified to the extent applicable by Section 3(42) of ERISA (the “Plan Asset 

Regulation”). 

(s) Purchase Eligibility. Each of such Member and any person that, together 

with its Affiliates, directly or indirectly holds 25% or more of the equity interests of such Member 

is and remains capable of truthfully making the representations and warranties in the Purchaser 

Eligibility Certification. 

ARTI CLE XI 

Manager Liability 

11.1 Liability of Manager. 

(a) Except as otherwise specifically provided in this Agreement (including in 

the other subsections of this Section 11.1), the duties (including fiduciary duties) and obligations 

owed to the Company and Initial Member by the Manager shall be as provided in Section 3.1(b) 

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 

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that the Manager reasonably believes to be within such Person’s professional or expert 

competence shall be conclusively presumed to have been done or omitted in good faith and in 

accordance with such opinion. 

(d) The Manager shall not be liable to the Company or the Members for its 

good faith reliance on the provisions of this Agreement. 

(e) The limitations and exculpation afforded by each provision of this 

Section 11.1 are cumulative and not exclusive. Nothing in this Section 11.1 is intended, or shall 

be deemed, to permit conduct that would otherwise constitute misappropriation of a trade secret of 

the Company under applicable Law or conduct that, even disregarding the terms hereof otherwise 

would be actionable by the Company or any Member. 

ARTI CLE XI I 

Servicing of Loans 

12.1 Servicing. 

(a) Appointment and Acceptance as Servicer. Effective as of the Closing 

Date, but subject to Section 3.3 of the Contribution Agreement (with which the Manager agrees to 

comply), the Manager is hereby appointed (and hereby accepts the appointment) with full 

authority and responsibility, in its own name, to act as the servicer for the Loans and any 

Underlying Collateral. Until such time as the Company is dissolved and liquidated pursuant to 

Article IX, and except as otherwise provided in Section 12.4 and subject to the interim servicing 

being provided by the Initial Member pursuant to Section 3.3 of the Contribution Agreement, the 

Manager shall, with respect to each Loan or Group of Loans, from and after the Servicing 

Transfer Date with respect thereto, be responsible for (and hereby assumes responsibility for) 

servicing, administering, managing and disposing of the Loans and the Underlying Collateral in 

accordance with the standards (collectively, the “Servicing Standard”) set forth in Section 12.2 

(such obligations referred to collectively herein as the “Servicing Obligations”) and the other 

provisions of this Article XII, including the provisions of Section 12.3 (which require that 

servicing be performed through one or more Qualified Servicers). Without in any way limiting 

the foregoing, but subject to Section 3.3 of the Contribution Agreement, the Manager shall cause 

the Loans (including, for all purposes under this Article XII, the related Underlying Collateral) to 

be serviced as follows: (a) such Loan shall, except as provided in the immediately following 

subsection (b), be serviced by the Servicer(s) appointed in accordance with Section 12.3 below, 

and (b) following the replacement of Servicer as a result of an Event of Default, the Loans shall be 

serviced by the Servicer appointed by the Initial Member in accordance with Section 12.4 below. 

All servicing of Loans following the Closing Date shall be performed in accordance with the 

terms of the Contribution Agreement and this Article XII. 

(b) Servicing and Subservicing Agreement Requirements. Except as is 

otherwise agreed in writing by Initial Member, each Servicing Agreement (and any Subservicing 

Agreement with any Subservicer) shall, among other things, 

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(i) provide for the servicing of the Loans and management of the 

Underlying Collateral by the Servicer (or Subservicer) in accordance with the 

Servicing Standard and the other terms of this Agreement; 

(ii) be terminable upon no more than thirty (30) days prior notice if an 

Event of Default or any default under the Servicing Agreement (or Subservicing 

Agreement) has occurred; 

(iii) provide that the Manager (in its individual capacity) and the Initial 

Member (and, in the case of any Subservicing Agreement, the Servicer) shall be 

entitled to exercise termination rights under the relevant Servicing Agreement or 

Subservicing Agreement (it being understood that the Initial Member shall only 

exercise such termination rights as contemplated or permitted in this Agreement); 

(iv) provide that the Servicer (or any Subservicer) and the Manager (in 

its individual capacity) acknowledge that the Servicing Agreement (or 

Subservicing Agreement) constitutes a personal services agreement between the 

Manager (in its individual capacity) and the Servicer (or between the Servicer and 

the Subservicer, as applicable); 

(v) provide that (A) each of the Company, the Purchase Money Notes 

Guarantor, and the FDIC are third party beneficiaries thereunder to the extent of 

any rights expressly granted to such Person under the Servicing Agreement or 

Subservicing Agreement and is entitled to enforce the Servicing Agreement or 

Subservicing Agreement, as applicable, with respect to such rights, (B) the Initial 

Member and, in the case of any Subservicing Agreement, the Manager (in its 

individual capacity) is a third party beneficiary thereunder; and further provide 

that in no event shall any amendment or waiver to any such Servicing Agreement 

or Subservicing Agreement limit or affect any rights of any such third party 

beneficiary thereunder without the express written consent of such third party 

beneficiary; 

(vi) provide that (A) upon the removal of the Private Owner as the 

Manager or the occurrence of an Event of Default, the Initial Member (and any 

successor Manager) may exercise all of the rights of the Manager thereunder and 

cause the termination or assignment of the same to any other Person, without 

penalty or payment of any fee, and (B) upon the occurrence of any default under 

the Servicing Agreement, the Initial Member (and any successor Manager) may 

exercise all of the rights of (1) the Manager under such Servicing Agreement and 

cause the termination or assignment of the same to any other Person, without 

penalty or payment of any fee, and (2) the Servicer under the Subservicing 

Agreement and cause the termination or assignment of the Subservicing 

Agreement to any other Person, without penalty or payment of any fee (it being 

understood that the Initial Member shall only exercise the foregoing rights as 

contemplated or permitted in this Agreement); 

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(vii) provide that the Initial Member, the Manager, the Purchase Money 

Notes Guarantor and the Company (and each of their respective representatives) 

shall each have access to and the right to review, copy and audit the books and 

records of each Servicer and any Subservicers and that all Servicers and all 

Subservicers shall make available their respective officers, directors, employees, 

accountants and attorneys to answer Initial Member’s, the Manager’s , the 

Purchase Money Notes Guarantor’s and the Company’s (and each of their 

respective representatives’) questions or to discuss any matter relating to the 

Servicer’s or Subservicer’s affairs, finances and accounts, as they relate to the 

Loans, the Underlying Collateral, the Collection Account or any other accounts 

established or maintained pursuant to this Agreement, the Custodial and Paying 

Agency Agreement, the Servicing Agreement or any Subservicing Agreement, or 

any matters relating to the Servicing Agreement or any Subservicing Agreement 

or the rights or obligations thereunder; 

(viii) provide that all Loan Proceeds are to be deposited into the 

Collection Account on a daily basis (without reduction or setoff) within two 

Business Days of receipt and that under no circumstances are funds, other than 

Loan Proceeds and interest and earnings thereon and the proceeds of Excess 

Working Capital Advances and Discretionary Funding Advances, to be 

commingled in the Collection Account; 

(ix) provide that the Servicer or Subservicer shall not sell, transfer or 

assign its rights under the Servicing Agreement or Subservicing Agreement, as 

applicable, other than Servicer’s rights to delegate to Subservicers certain 

responsibilities thereunder as and to the extent permitted by this Agreement, and 

that any prohibited sale, transfer or assignment shall be void ab initio; 

(x) provide that (A) the Servicer or Subservicer consents to the 

immediate termination of the Servicer or Subservicer, as applicable, upon the 

occurrence of a termination event under the Servicing or Subservicing 

Agreement, as applicable, and upon the occurrence of any Insolvency Event with 

respect to the Servicer or Subservicer or any of their respective Related Parties, as 

applicable, and (B) the occurrence of any Restricted Servicer Change of Control 

with respect to the Servicer or of any Insolvency Event with respect to the 

Servicer or Subservicer or any Related Party thereof constitutes a default under 

the Servicing or Subservicing Agreement, as applicable; provided, that, in the 

case of the Servicing Agreement, the occurrence of an Insolvency Event with 

respect to a Subservicer or Related Party thereof (which is not an Related Party of 

the Servicer) may, at the election of the Manager, be subject to a cure period of 

not more than thirty (30) days for replacement of the affected Subservicer (in a 

manner that will permit the Manager to comply with its obligations hereunder); 

(xi) provide that there shall be no right of setoff on the part of the 

Servicer or Subservicer against the Loan Proceeds (or the Company); 

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(xii) provide for such other matters as are necessary or appropriate to 

ensure that the Servicer or Subservicer is obligated to comply with the Servicing 

Obligations of the Manager hereunder; 

(xiii) provide a full release and discharge of the Initial Member, the 

Company, the Existing Servicers, the FDIC, in relation to any particular Loan, the 

relevant Failed Bank and any predecessor-in-interest thereof, any Ownership 

Entities existing as of the applicable Servicing Transfer Date, and all of their 

respective officers, directors, employees, agents, attorneys, contractors and 

representatives, and all of their respective successors, assigns and Affiliates (but 

excluding, in all cases, the Manager (in its individual capacity)) (any such Person, 

a “Prior Servicer” and collectively, the “Prior Servicers ”), from any and all 

claims (including any counterclaim or defensive claim), demands, causes of 

action, judgments or legal proceedings and remedies of whatever kind or nature 

that the Servicer had, has or might have in the future, whether known or 

unknown, which are related in any manner whatsoever to the servicing of the 

Loans by the Prior Servicers prior to the applicable Servicing Transfer Date (other 

than due to gross negligence, violation of law or willful misconduct of such Prior 

Servicer); 

(xiv) provide that, to the extent required under Section 12.3(g) hereof, 

all Loans registered on the MERS® System shall remain registered unless default, 

foreclosure or similar legal or MERS requirements dictate otherwise; 

(xv) provide that the Servicer or Subservicer shall immediately notify 

the Manager and the Initial Member upon becoming aware of any Subservicer or 

any Affiliate of the Servicer or of any Subservicer at any time, (A) being or 

becoming a partner or joint venturer with any Borrower or Obligor, (B) being or 

becoming an agent of any Borrower or Obligor, or allowing any Borrower or 

Obligor to be an agent of such Servicer or any Subservicer or of any Affiliate of 

the Servicer or any Subservicer, or (C) having any interest whatsoever in any 

Borrower or Obligor; 

(xvi) provide that the Servicer shall immediately notify the Manager and 

the Initial Member of the occurrence of any Change of Control with respect to the 

Servicer; and 

(xvii) not conflict with the Servicing Standard or any other terms or 

provisions of this Agreement, the Custodial and Paying Agency Agreement or any 

of the other Ancillary Documents insofar as such other terms or provisions hereof 

or thereof are required to be imposed by the Manager (in its individual capacity) 

on the Servicer (or Subservicers) in the Servicing Agreement (or Subservicing 

Agreements). Nothing contained in any Servicing Agreement or any 

Subservicing Agreement shall alter any obligation of the Manager under this 

Agreement and, in the event of any inconsistency between the Servicing 

Agreement (or any Subservicing Agreement) and the terms of this Agreement, 

among the Parties to this Agreement the terms of this Agreement shall control. 

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12.2 Servicing Standard. The Manager shall perform the Servicing Obligations: (i) in 

the best interests and for the benefit of the Initial Member and the Company, (ii) in accordance 

with the terms of the Loans (and related Loan Documents), (iii) in accordance with the terms of 

this Agreement and the other Ancillary Documents, (iv) in accordance with all applicable Law, 

and (v) to the extent consistent with the foregoing terms, in the same manner in which a prudent 

servicer would service and administer similar loans and in which a prudent servicer would 

manage and administer similar properties for its own portfolio or for other Persons, whichever 

standard is higher, but using no less care and diligence than would be customarily employed by a 

prudent servicer following customary and usual standards of practice of prudent mortgage 

lenders, loan servicers and asset managers servicing, managing and administering similar loans 

and properties on an arms’ length basis, provided that, with respect to each Loan and related 

Underlying Collateral, in the absence of a customary and usual standard of practice, the 

Company shall comply with the applicable Fannie Mae Guidelines, if any, with respect to similar 

loans and properties in similar situations. The Manager shall cause its Servicing Obligations 

with respect to the Loans and the Underlying Collateral to be performed without regard to (w) 

any relationship that the Company, the Manager, or any Servicer or Subservicer, or any of their 

respective Affiliates may have to any Borrower, Obligor or other obligor, or any of their 

respective Affiliates, including any other banking or lending relationship, (x) the Company’s, the 

Manager’s, or any Servicer’s or Subservicer’s, obligation to make disbursements and advances 

with respect to the Loans and Underlying Collateral, (y) any relationship that the Servicer or any 

Subservicer may have to each other or to the Company, the Manager or any of their respective 

Affiliates, or any relationship that any of their respective Affiliates may have to the Company, 

the Manager or any of their respective Affiliates (other than the contractual relationship 

evidenced by this Agreement or the Servicing Agreement or any Subservicing Agreement), and 

(z) the Manager’s, or any Servicer’s or Subservicer’s, right to receive compensation (including 

the Management Fee and any Interim Management Fee) for its services under this Agreement, 

the Servicing Agreement or any Subservicing Agreement. Without limiting the generality of the 

foregoing, the Manager’s Servicing Obligations hereunder shall include the following: 

(a) discharging in a timely manner each and every obligation which the Loan 

Documents provide is to be performed by the lender thereunder, on its own behalf and on behalf 

of the Company and the Initial Member and in the case of REO Property, which the Loan 

Documents that were applicable to the Underlying Collateral before it became REO Property 

provided were to be performed by the borrower thereunder in respect of such Underlying 

Collateral (not including payment of debt service under the applicable Loan Documents), together 

with such additional obligations as are required of the Company under this Agreement or the 

Servicing Agreement in respect of such REO Property; 

(b) incurring costs (including Servicing Expenses and Pre-Approved 

Changes) in accordance with the provisions of the Loan Documents, and in the case of REO 

Property, in accordance with the Loan Documents that were applicable to the REO Property 

before it became and REO Property (not including payment of debt service under the applicable 

Loan Documents) and otherwise in accordance with the Reimbursement, Security and Guaranty 

Agreement; 

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(c) causing to be maintained for the Underlying Collateral (including any 

Acquired Property) with respect to each Loan with respect to which an Ownership Entity or the 

Borrower has failed to maintain required insurance with extended coverage as is customary in the 

area in which the Underlying Collateral is located and in such amounts and with such deductibles 

as the Manager may, in the exercise of its reasonable discretion, determine are prudent and as 

required under this Agreement and the Reimbursement, Security and Guaranty Agreement; 

(d) ensuring compliance with the terms and conditions of each insurer under 

any hazard policy and preparing and presenting claims under any policy in a timely fashion in 

accordance with the terms of the policy; 

(e) supervising and coordinating the construction, ownership, management, 

leasing and preservation of the Acquired Property as well as all other matters involved in the 

administration, preservation and ultimate disposition of the Acquired Property as would be taken 

by a prudent asset manager managing properties similar to the Acquired Property and as required 

of the Company under this Agreement, and the Reimbursement, Security and Guaranty 

Agreement; 

(f) administering the making of advances to Borrowers under Loans pursuant 

to and in accordance with the provisions herein and in the Custodial and Paying Agency 

Agreement governing the making of Funding Draws; 

(g) to the extent consistent with the foregoing, seeking to maximize the timely 

and complete recovery of principal and interest on the Loans and otherwise to maximize the value 

of the Loans and the Underlying Collateral; 

(h) except as otherwise set forth in this Agreement, making decisions under, 

and enforcing and performing in accordance with, the Loan Documents all loan administration, 

inspections, review of financial data and other matters involved in the servicing, administration 

and management of the Loans and the Underlying Collateral; 

(i) ensuring that all filings required to maintain perfection in any Underlying 

Collateral remain up to date and in force, including Uniform Commercial Code financing 

statements; and 

(j) ensuring that each Borrower (or in the case of REO Property, the 

applicable Ownership Entity) is diligently performing all applicable construction work using all 

commercially reasonable efforts in accordance with the requirements of the applicable Loan 

Documents (in the case of REO Property) and herein; and 

(k) providing the Servicers and Subservicers with copies of such Ancillary 

Documents (or portions thereof) as are necessary for the Servicers or Subservicers to be familiar 

with in order to perform their respective obligations provided for in this Agreement, the Servicing 

Agreements or the Subservicing Agreements, as applicable. 

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12.3 Servicing of Loans. 

(a) Appointment of Servicers. The Manager (in its individual capacity) has 

entered into one or more Servicing Agreements dated the date hereof to provide for the servicing 

and administration and management of the Loans and Underlying Collateral by one or more 

Qualified Servicers named therein (each, together with other Qualified Servicers, a “Servicer”). 

Each Servicer, at all times during which it acts as Servicer, shall continue to satisfy the definition 

of Qualified Servicer. Subject, with respect to the Interim Servicing Period, to the provisions of 

Section 3.3 of the Contribution Agreement, (x) each Loan shall at all times be serviced (and any 

Underlying Collateral managed) by or through at least one Servicer (including any subservicers 

engaged by the Servicer (“Subservicers”) as permitted hereunder), it being understood that the 

relevant servicing functions not delegated to the Servicer by the Manager pursuant to the 

Servicing Agreement shall be duly performed by the Manager (including through its applicable 

Affiliates pursuant to Section 3.3 hereof) in accordance with the Servicing Standard and the 

provisions herein and in the Ancillary Documents, and (y) the performance of all day-to-day 

Servicing Obligations of the Manager shall be conducted by or through one or more Servicers 

(including any Subservicers permitted hereunder). Subject to the other terms and conditions of 

this Agreement, any Servicer may be an Affiliate of the Private Owner or of the Manager. Each 

Servicer may engage or retain one or more Subservicers, including Affiliates of the Private Owner 

or of the Manager, to perform certain of its duties under the Servicing Agreement, as it may deem 

necessary and appropriate, by entering into a subservicing agreement with each such Subservicer 

(“Subservicing Agreement”), provided that any Subservicer meets (and at all times continues to 

meet) the requirements set forth in the definition of Qualified Servicer and the terms of the 

applicable Subservicing Agreement comply with the terms of this Agreement and the applicable 

Servicing Agreement. The costs and fees of the Servicers (and any Subservicers) shall be borne 

exclusively by the Manager in its individual capacity without any right of reimbursement from the 

Company or the Initial Member (it being understood that the Manager will receive the Interim 

Management Fee and Management Fee in accordance with Section 12.5 hereof). Under no 

circumstances shall the Manager transfer, or permit to be transferred, to any Servicer or any other 

Person any ownership interest in the servicing to the Loans or any right to transfer or sell the 

servicing to the Loans (other than in connection with the sale of any Loan), and no Servicer shall 

be permitted to assign, pledge or otherwise transfer to any Subservicer or other Person or purport 

to assign, pledge or otherwise transfer any interest in the servicing to the Loans (other than in 

connection with the sale of any Loan), and any purported assignment, pledge or other transfer in 

violation of this provision shall be void ab initio and of no effect. 

(b) Manager Liable for Servicer and Subservicers. Notwithstanding anything 

to the contrary contained herein, the use of any Servicer (or any Subservicer) shall not release the 

Manager from any of its Servicing Obligations or other obligations under this Agreement, and the 

Manager shall remain responsible and liable for all acts and omissions of each Servicer (and each 

Subservicer of each Servicer) as fully as if such acts and omissions were those of the Manager. 

All actions of each Servicer (or any Subservicer) performed pursuant to the Agreement (or any 

Subservicing Agreement) shall be performed as an agent of the Manager (or, in the case of 

Subservicers, the Servicer). 

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(c) Copies of Servicing and Subservicing Agreements. Copies of all fully 

executed Servicing Agreements and Subservicing Agreements, including all supplements and 

amendments thereto, shall be provided to the Initial Member and the Purchase Money Notes 

Guarantor. 

(d) Regulation AB Requirements. The Manager shall use commercially 

reasonable efforts to confirm, where applicable, that each Servicer (and any Subservicer) has in 

place policies and procedures to (i) comply with the relevant servicing criteria provisions of 

Section 1122(d)(1) of Regulation AB that are applicable and relate to the servicing being 

conducted under this Agreement, and (ii) provide to the Manager, at the Servicer’s (and any 

Subservicer’s) expense the annual reports (including the independent accountant report) required 

pursuant to Section 7.4(d) above; provided that the following Regulation AB criteria shall not be 

deemed relevant to the servicing being conducted under this Agreement (or the Servicing 

Agreement): Section 1122(d)(1)(iii) regarding backup servicer requirements; Sections 

1122(d)(3)(i-iv) regarding paying agent requirements; and Section 1122(d)(4)(xv) regarding 

external credit enhancement. 

(e) Servicer and Subservicer Fees. No Servicer or Subservicer shall be paid 

any fees or indemnified out of any Loan Proceeds (or funds in the Collection Account, the 

Working Capital Reserve Account or any other Company account), it being understood that all 

fees and related costs of liabilities of the Servicers and Subservicers shall be the sole 

responsibility of the Manager (without any right of reimbursement from the Company or the 

Initial Member). 

(f) Fidelity Bond; E&O Insurance. The Servicer and each Subservicer shall 

maintain each of the following types of insurance coverage having such limits as described below: 

(i) Errors & Omissions Liability with limits of not less than 

$10,000,000 per claim and $10,000,000 in the aggregate. The Manager shall be 

notified immediately upon the reduction of or potential reduction of 50% of the 

limits. The Manager may require that the Servicer and each Subservicer purchase 

additional limits to provide back to the required limits as stated above. “Potential 

reduction of 50%” shall mean any knowledge by the Servicer or Subservicer, as 

applicable, that a claim or the sum of all claims, current or initiated after effective 

date of policy which would reduce the limits by 50%. 

(ii) Directors & Officers Liability with limits of not less than 

$10,000,000 each claim and $10,000,000 in the aggregate. 

(iii) Crime Insurance or a Fidelity Bond in an amount of not less than 

$10,000,000 covering employee theft, forgery & alteration, wire/funds transfer, 

computer fraud, client coverage. Such coverage shall insure all employees or any 

other persons authorized by Servicer or Subservicer to handle any funds, money, 

documents and papers relating to any Loan, and shall protect the Servicer or 

Subservicer, as applicable, against losses arising out of theft, embezzlement, 

fraud, misplacement, and other similar causes. The Manager and the Company 

shall each be named as a loss payee with respect to claims arising out of assets 

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handled under this Agreement or any applicable Servicing Agreement or 

Subservicing Agreement. 

(iv) General Liability with limits of not less than $1,000,000 each 

occurrence, $2,000,000 in the aggregate, including coverage for 

products/completed operations, advertising and personal injury. The Manager 

and the Company shall each be named as additional insured. Policy shall include 

a Waiver of Subrogation in favor of the Manager and the Company. 

(v) Auto Liability with a combined single limit of not less than 

$1,000,000 to provide coverage for any owned, hired, or non-owned vehicles. 

(vi) Workers Compensation in such amount as required by the states in 

which the Servicer or Subservicer, as applicable, operates, including coverage for 

Employer’s Liability in an amount not less than, $1,000,000. Policy shall include 

a Waiver of Subrogation in favor of the Manager and the Company. 

(vii) Umbrella Liability in an amount of not less than $10,000,000 each 

occurrence and in the aggregate. 

All such policies shall be written with carriers having a minimum insurer rating of A- VIII 

from A.M. Best and A from Standard & Poor’s. All such policies shall have a minimum 

notice of cancellation of thirty (30) days, except for non-payment of premium whereby a ten 

(10) day notice of cancellation is acceptable. Certificates shall show each of the Manager 

and the Company as certificate holder, or as otherwise designated by the language in clauses 

(i)-(vii) above. 

The Manager shall provide (or shall cause each Servicer and Subservicer to provide) the 

Purchase Money Notes Guarantor, and the Initial Member with certificates evidencing all 

such policies on the Closing Date (and, with respect to each Loan, on or before the applicable 

Servicing Transfer Date with respect thereto) and each anniversary of the Closing Date 

thereafter, and otherwise upon request of the Purchase Money Notes Guarantor, or the Initial 

Member. Copies of fidelity bonds and insurance policies required to be maintained pursuant 

to this Section 12.3(f) shall be made available to the Purchase Money Notes Guarantor, and 

the Initial Member or their respective representative on the Closing Date (and, with respect to 

each Loan, on or before the applicable Servicing Transfer Date with respect thereto), and 

shall otherwise be made available to any of the Purchase Money Notes Guarantor, and the 

Initial Member and their respective representative upon request. 

(g) MERS Requirements. In the event that any of the Loans are registered on 

the MERS® System, and unless and until no Loan so remains registered on the MERS® System 

in accordance herewith, (i) the Manager shall cause each applicable Servicer to be (or become) a 

member of MERS on or before the initial Servicing Transfer Date, and maintain itself as a MERS 

member in good standing (including paying all dues and other fees required to maintain its 

membership and complying with MERS policies and procedures), and (ii) the Servicer shall 

maintain (or register, as applicable) such Loan on the MERS® System and execute and deliver on 

behalf of the Company (including, as applicable, on behalf of the Manager, in turn on behalf of 

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the Company) any and all instruments of assignment and other comparable instruments with 

respect to such assignment or re-recording of a mortgage securing a Loan in the name of MERS, 

solely as nominee for the Company and its successors and assigns. With respect to each Loan that 

is registered on the MERS® System, (x) the Servicer shall be designated as the “servicer” and the 

“investor” with respect to such Loan, and, if applicable, the Manager may cause or permit an 

applicable Subservicer to be designated as the “subservicer” with respect to such Loan (provided, 

that the Manager may, as determined in accordance with the Servicing Standard and so long as 

each applicable designee is and remains a MERS member in good standing, (1) designate the 

Company as the “investor” with respect to any such Loan, and (2) designate the Manager as the 

“servicer” with respect to any such Loan, in which case the Servicer shall be designated as the 

“subservicer” with respect thereto), and (y) no other Person shall be identified on the MERS® 

System as having any interest in such Loan unless otherwise consented to by the Initial Member 

(or required pursuant to the Electronic Tracking Agreement). All Loans registered on the 

MERS® System shall remain registered on the MERS® System unless default, foreclosure or 

similar legal or MERS requirements dictate otherwise; provided, however, that if the Manager 

determines, in accordance with the Servicing Standard and other applicable provisions herein and 

in the Ancillary Documents, to remove any or all such Loans so registered with MERS from the 

MERS® System, the Manager shall have the right to cause such removal so long as, with respect 

to any such Loan to be so removed, (A) the applicable mortgage (or other Underlying Collateral 

Document) and rights to Underlying Collateral for such Loan that are so registered in the name of 

MERS are duly transferred and assigned to the Company (with all applicable recordings or filings 

with respect thereto being duly made) so as to cause the Company to have the full benefit of its 

applicable security (or other) interest in all such Underlying Collateral, (B) for any such removal 

occurring on or before the applicable Servicing Transfer Date, the same is accomplished in 

accordance with the applicable requirements (and delivery of the applicable notice) in Section 

3.1(c) of the Contribution Agreement, and (C) for any such removal prior to the Purchase Money 

Notes Defeasance Date, the Company shall have duly delivered to the Collateral Agent such 

documents and otherwise taken such actions (including execution and recordation of applicable 

assignments in accordance with the Reimbursement, Security and Guaranty Agreement), in each 

case so as to cause all such Underlying Collateral to be and remain subject to the first priority 

security interest granted under the Reimbursement, Security and Guaranty Agreement. The 

Servicer shall provide the Manager and the Initial Member with such reports from the MERS® 

System as the Manager or the Initial Member, from time to time, may request, including to allow 

the Manager and the Initial Member to verify the Persons identified on the MERS® System as 

having any interest in any of the Loans and to confirm that the Loans required to be registered on 

the MERS® System are so registered. For so long as any Loans remain registered with MERS, 

the same shall be subject to an Electronic Tracking Agreement in the form of Exhibit B to the 

Servicing Agreement, and, to the extent any such Loans are so registered with MERS as of the 

Closing Date, the Servicer, the Manager, the Collateral Agent and the Initial Member shall 

execute such Electronic Tracking Agreement on the Closing Date and deliver the same to MERS. 

Without limiting the foregoing, upon the request of the Manager or the Initial Member, the 

Servicer shall cause MERS to run a query with respect to any and all specified fields on the 

MERS® System with respect to any or all of the Loans registered on the MERS® System and 

provide the results to the Manager and the Initial Member and, if requested by the Manager or the 

Initial Member (and subject to any applicable provisions of the Electronic Tracking Agreement), 

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shall cause MERS to change the information in such fields, to the extent MERS will do so in 

accordance with its policies and procedures, to reflect its instructions. 

12.4 Removal of Servicer. 

(a) Removal of Servicer. Upon the occurrence of an Event of Default, in 

addition to any other rights it may have pursuant to this Agreement, any Ancillary Document or 

applicable Law (including the Uniform Commercial Code), whether at law or in equity and 

whether pursuant to statute or regulation or otherwise, the Initial Member shall have the right to 

take, at the Initial Member’s option and the Manager’s expense, one or more of the following 

actions: (i) upon notice in writing to the Manager (effective at such time as is specified in such 

notice), to act on behalf of the Manager (in its individual capacity) to terminate the existing 

Servicer (and any Subservicers) and to cause the Manager (in its individual capacity) to enter into 

a new Servicing Agreement with a servicer (a “successor Servicer”) selected by Initial Member 

(in its sole and absolute discretion), and (ii) upon notice in writing to the Manager (effective at 

such time as is specified in such notice), to remove the Private Owner as the Manager and appoint 

a successor Manager (which successor Manager may be the Initial Member) in the sole discretion 

of the Initial Member, whereupon (without limitation of Section 13.5), such successor Manager 

shall immediately succeed to all, or such portion as the Initial Member and successor Manager 

agree, of the rights and obligations of the Private Owner as the Manager of the Company, and, in 

such case, the Initial Member shall further have the right (A) to terminate the Servicer (in its sole 

and absolute discretion), and cause or permit the successor Manager selected by the Initial 

Member (and/or the Company directly, as determined by the Initial Member in its sole discretion) 

to enter into a Servicing Agreement with a successor Servicer, such Servicing Agreement to be 

between the applicable successor Manager (and/or the Company) and the successor Servicer 

chosen by Initial Member, or (B) to retain the existing Servicer and cause or permit the successor 

Manager (and/or the Company directly, as determined by the Initial Member in its sole discretion) 

to enter into a new Servicing Agreement between such successor Manager (and/or the Company) 

and the Servicer (or to effect an assignment of the existing Servicing Agreement from the existing 

Manager (in its individual capacity) to such successor Manager (and/or the Company). None of 

the Initial Member, any successor Manager or the Company shall have any obligation to assume 

any obligations or liabilities of the removed Manager (in its individual capacity) under or in 

connection with any Servicing Agreement. Notwithstanding the foregoing, the Initial Member 

shall not exercise its right to terminate a Servicer that is not an Affiliate of the Manager or of the 

Private Owner in the absence of (1) an Event of Default attributable in whole or in part to the 

failure by the Servicer or any of its Subservicers to perform any material obligation under its 

applicable Servicing Agreement or Subservicing Agreement, (2) an Event of Default as described 

in clause (b) or clause (g) of the definition thereof with respect to the Servicer or any Related 

Party thereof or any of its Subservicers or any Related Party thereof, (3) an Event of Default 

resulting from the failure of the Servicer or any of its Subservicers at any time to meet the criteria 

of a Qualified Servicer, (4) an Event of Default as described in clause (e) of the definition thereof, 

to the extent relating to such Servicer or any of its Subservicers, or (5) any other Event of Default 

that consists of a breach of a servicing obligation under this Agreement. Subject to the foregoing, 

the Manager hereby consents to the immediate termination of the Servicer upon the occurrence of 

any Event of Default. For the avoidance of doubt, the rights of the Initial Member in this Section 

12.4 are in addition to, and can be exercised independently of the rights of the Initial Member in 

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Sections 3.2, 3.13, and 3.14; and in any event all rights and remedies of the Initial Member under 

this Agreement with respect to or following an Event of Default shall be cumulative, and any or 

all thereof may be exercised instead of or in addition to each other or any other remedies available 

to the Initial Member, whether under this Agreement, any Ancillary Document or otherwise. 

(b) Appointment of Successor Servicer. If Initial Member exercises its right 

to act on behalf of the Manager (in its individual capacity) to appoint a successor Servicer, the 

costs and expenses associated with such successor Servicer (including any servicing fees) shall be 

borne by the Manager (and not the Company or the Initial Member), and no termination or other 

fee shall be due to the Manager or the Servicer or any Subservicer in connection with or as a result 

of any such action; provided, that, if the Initial Member has also exercised its right to remove the 

Manager (such that such removed Manager no longer has rights to the Management Fee), then, 

with respect to servicing fees of such successor Servicer (but not costs and expenses in connection 

with the replacement of the Servicer with such successor Servicer) such removed Manager shall 

be responsible only for the portion of such fees that, as of any particular Distribution Date, are in 

excess of the Management Fee payable to the successor Manager on such Distribution Date. 

(c) Removal of Manager; Management Fee. If the Initial Member exercises 

its right pursuant to this Section 12.4 to remove the Private Owner as the Manager and appoint a 

successor Manager, (i) the successor Manager selected by the Initial Member shall immediately 

succeed to all, or such portion as the Initial Member and successor Manager agree, of the rights 

and obligations of the Private Owner as the Manager of the Company, and all references in this 

Agreement to the Private Owner, in its capacity as Manager of the Company, shall be deemed to 

be references to the successor Manager so appointed by the Initial Member, (ii) without limitation 

of Section 13.5, the Initial Member shall have the right to determine, in its sole discretion, the 

extent, terms and conditions of the appointment of any such successor Manager, including as to 

compensation (whether from the Initial Member or the Company), indemnification by the 

Company, term of appointment and removal rights, in each case without the necessity for any 

consent from the Private Owner or any other Person, and (iii) the successor Manager appointed by 

the Initial Member shall be entitled to be paid the Management Fee (or, in each case, such portion 

thereof as the Initial Member and the successor Manager agree) in accordance with the terms of 

this Agreement and the Custodial and Paying Agency Agreement. The removal of the Private 

Owner as the Manager shall not relieve the Private Owner of (x) any of the liabilities and/or 

obligations of the Private Owner as Manager to the extent required under the terms of this 

Agreement to have been paid and/or performed prior to such removal or (y) any liability the 

Private Owner may have arising out of any act or omission by the Private Owner as Manager. No 

successor to the Private Owner as Manager shall have any liability or obligation for any of the 

matters described in clause (x) or (y) of the preceding sentence, except as may be otherwise 

specified pursuant to any modification to this Agreement pursuant to Section 13.5. In connection 

with any such removal of the Manager, the Initial Member and any successor Manager selected by 

the Initial Member are each hereby authorized and empowered, as attorney-in-fact or otherwise, to 

execute and deliver, on behalf of and at the expense of the removed Manager (in its individual 

capacity), any and all documents and other instruments and to do or take any and all acts 

necessary or appropriate to effect the termination and replacement of such Manager and the 

Servicer and, in the event the Initial Member decides to retain a new Servicer, to enter into a new 

Servicing Agreement between the successor Manager (and/or the Company) and the Servicer or to 

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effect an assignment of the existing Servicing Agreement from the removed Manager (in its 

individual capacity) to the successor Manager (and/or the Company). 

(d) Cooperation To Facilitate Transfer. In the event any of the Manager, a 

Servicer or a Subservicer is terminated pursuant to the provisions of this Article XII, the Manager 

(in its individual capacity) shall, and shall cause any Servicer (and any Subservicer) to, provide 

the Initial Member and any successor Manager or Servicer in a timely manner with all documents, 

records and data (including electronic documents, records and data) requested by the Initial 

Member or any successor Manager or Servicer to enable such Person to assume the 

responsibilities as Manager under this Agreement and any applicable Servicing Agreement, and to 

cooperate with the Initial Member in effecting the termination of any Servicer (or Subservicer) or 

the Manager’s rights as “Manager” under this Agreement, including, in each case subject to 

applicable requirements in the Custodial and Paying Agency Agreement and the Reimbursement, 

Security and Guaranty Agreement, (x) the transfer within one (1) Business Day to such account as 

the Initial Member may specify of all cash amounts which, at the time, shall be or should have 

been credited to the Collection Account or are thereafter received with respect to any Loans or 

Acquired Property, and (y) the transfer of all lockbox accounts with respect to which payments or 

other amounts with respect to the Loans are directed or the redirection of all such payments and 

other amounts to such account as the Initial Member may specify, and (z) the assignment to the 

Initial Member (or the applicable successor Manager or Servicer as indicated by the Initial 

Member) of the right to access all such lockbox accounts, the Collection Account, any Defeasance 

Account, and any other account into which Loan Proceeds or Borrower escrow payments are 

deposited or held. The Manager (in its individual capacity) shall be liable for all costs and 

expenses incurred by the Initial Member or the Company (x) associated with the complete transfer 

of the servicing data, (y) associated with the completion, correction or manipulation of servicing 

data as may be required to correct errors or insufficiencies in the servicing data to enable the 

Initial Member and any successor Manager and successor Servicer (and Subservicers) to service 

the Loans and Acquired Property properly and effectively, and (z) to retain and maintain the 

services of a successor Manager and/or successor Servicer (and any Subservicers), it being 

understood that, as to the compensation to be paid to the successor Manager (and servicing fees 

due and payable to any Servicer or Subservicer engaged by or through such successor Manager), 

the removed Manager shall be responsible only for the portion of such compensation and fees that, 

as of any particular Distribution Date, are in excess of the Management Fee payable to the 

successor Manager on such Distribution Date. Within a reasonable time after receipt of a written 

request of the Manager (in its individual capacity) for the same, the Initial Member shall provide 

reasonable documentation evidencing such costs and expenses, but the Initial Member’s right to 

reimbursement of such costs and expenses (and to exercise offset rights under Section 4.6(h) on 

account thereof) shall not be subject to or contingent upon the provision of such documentation. 

(e) Power of Attorney. The Company hereby irrevocably constitutes and 

appoints the Initial Member and any officer or agent thereof, with full power of substitution, as its 

true and lawful attorney-in-fact for the purposes of this Agreement and allowing the Initial 

Member to perfect, preserve the validity, perfection and priority of, and enforce any Lien granted 

by this Agreement and, after the occurrence and during the continuance of any Event of Default, 

to exercise its rights, remedies and powers and privileges under this Agreement. This appointment 

as attorney-in-fact is irrevocable and coupled with an interest until this Agreement is terminated 

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and the security interests created hereby are released. Without limiting the generality of the 

foregoing, but subject at all times to the rights of a secured party under the Reimbursement, 

Security and Guaranty Agreement, the Initial Member shall be entitled under this Section 12.4(e) 

to do any of the following if an Event of Default has occurred and is continuing: (i) ask, demand, 

collect, sue for, recover, receive and give receipt and discharge for amounts due and to become 

due under and in respect of any or all of the Loans; (ii) file any claims or take any action or 

proceeding in any court of law or equity that the Initial Member may reasonably deem necessary 

or advisable for the collection or other enforcement of all or any part of the Loans, defend any 

suit, action or proceeding brought against the Company with respect to any Loan, and settle, 

compromise or adjust any such suit, action or proceeding; (iii) execute, in connection with any 

sale or disposition of the Loans, any endorsements, assignments, bills of sale or other instruments 

of conveyance or transfer with respect to all or any part of the Loans; (iv) enforce the rights of the 

Company under any provision of any Servicing Agreement to the extent permitted thereunder and 

under the terms of this Agreement; (v) pay or discharge taxes and Liens levied or placed on the 

Loans; (vi) generally, sell, transfer, pledge and make any agreement with respect to or otherwise 

deal with any of the Loans as fully and completely as though the Initial Member were the absolute 

owner thereof for all purposes; and (vii) do, at the Initial Member’s option and the Company’s 

expense, at any time and from time to time, all acts and things that the Initial Member reasonably 

deems necessary to protect, preserve, or realize upon the Loans and the Initial Member’s security 

interests in any Secured Assets and to effect the intent of this Agreement, all as fully and 

effectively as the Company might do. Anything in this Section 12.4(e) to the contrary 

notwithstanding, the Initial Member agrees that it shall not exercise any right under the power of 

attorney provided for in this Section 12.4(e) unless an Event of Default shall have occurred and be 

continuing. 

12.5 Interim Management Fee and Interim Servicing Fee; Management Fee. For each 

Due Period commencing on or after the Closing Date (and as determined separately for each 

Group of Loans), (a) with respect to any Group of Loans for which the Servicing Transfer Date 

has not occurred as of the first day of such Due Period, the Company shall pay the Interim 

Management Fee to the Manager and the Interim Servicing Fee to the Initial Member, and (b) for 

each Group of Loans for which the Servicing Transfer Date has occurred as of (or occurs on) the 

first day of such Due Period, the Company shall pay the Management Fee to the Manager. Each 

such payment of any Interim Servicing Fee, Interim Management Fee and Management Fee shall 

be made in the manner described in the Custodial and Paying Agency Agreement (and, as 

applicable, on the Distribution Date with respect to the applicable Due Period). In the event the 

Manager is removed and replaced by the Initial Member in accordance with Section 12.4 above, 

the Management Fee and Interim Management Fee shall thereafter be payable to the Initial 

Member or successor Manager, as determined by the Initial Member pursuant to such Section 

12.4. 

12.6 Servicing Expenses. Subject to Section 3.3 of the Contribution Agreement (with 

respect to the Interim Servicing Period), from and after the Closing Date (and, with respect to 

each Loan, from and after the Servicing Transfer Date with respect thereto), the Manager shall 

cause the Company to pay, from available Company funds (in the Collection Account, the 

Working Capital Reserve Account or any other applicable Company account the funds of which 

may be used for such purpose or otherwise through Excess Working Capital Advances funded by 

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the Manager) all amounts due as Servicing Expenses (or, as applicable, Pre-Approved Charges) 

in a timely manner, and in each case in accordance to applicable requirements set forth in the 

Custodial and Paying Agency Agreement (and, as applicable, the Contribution Agreement); 

provided, however, that anything to the contrary herein or in any Ancillary Document 

notwithstanding, the Manager shall not have an obligation to fund Excess Working Capital 

Advances for purposes of the payment by the Company of (i) any Pre-Approved Charges, or (ii) 

any specific Servicing Expense relating to a Loan to the extent that the Manager has reasonably 

determined in accordance with the Servicing Standard that such Servicing Expense, if so paid, 

when combined with all unreimbursed previous Servicing Expenses, Funding Draws and PreApproved Charges with respect to such Loan (and any remaining amounts owing to the Initial 

member with respect to its servicing of such Loans during the Interim Servicing Period pursuant 

to Sections 2.3, 2.4 and 3.1 of the Contribution Agreement), would not ultimately be recoverable 

from the Loan Proceeds for such Loan. All Servicing Expenses (and Excess Working Capital 

Advances for the funding of the same) shall be reimbursed in accordance with the Custodial and 

Paying Agency Agreement. 

12.7 Use of Loan Proceeds. 

(a) Permitted Payments. Subject to Section 12.7(b), each month the Loan 

Proceeds shall be utilized and distributed in the manner set forth in the Custodial and Paying 

Agency Agreement following receipt by the Paying Agent from the Manager of the Distribution 

Date Report required to be provided under Section 7.4(b) . 

(b) Costs That Are Not Reimbursable. Notwithstanding anything else to the 

contrary contained herein or in any Ancillary Document, without the prior written consent of the 

Initial Member (which may be withheld in the Initial Member’s sole and absolute discretion), in 

no event may the Manager deduct, from the Loan Proceeds, or otherwise use Loan Proceeds to 

reimburse itself or any Servicer or Subservicer or pay for, any of the following (all of which shall 

be borne by the Manager in its individual capacity) (collectively, the “Excluded Expenses”): 

(i) any expenses or costs that are not incurred in accordance with the 

Servicing Standard or, to the extent applicable, the Fannie Mae Guidelines; 

(ii) any expenses or costs that are paid to any Affiliate of the Manager 

or the Company, or any Affiliate of any Servicer or any Subservicer; provided, 

Excluded Expenses under this clause (ii) do not include amounts payable to the 

Servicer pursuant to the Servicing Agreement or to any Subservicer pursuant to 

any Subservicing Agreement that would be deemed Excluded Expenses under this 

clause (ii) solely as a result of such Servicer or Subservicer being an Affiliate of 

the Manager or the Company, so long as such amounts would otherwise constitute 

Servicing Expenses but for application of this clause (ii) ; 

(iii) any fees or other compensation to or expenses of financial 

advisers, except to the extent the same are incurred as brokerage fees or sales 

commissions incurred (x) to market or sell the Loans or any Acquired Property in 

a Bulk Sale, the terms of which Bulk Sale (including the financial adviser’s or 

broker’s fees) are approved in advance by the Initial Member); and (y) in 

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connection with the marketing or sale of any Acquired Property (including any 

REO Property) or any portion thereof on an individual basis; 

(iv) any fine, tax or other penalty, late fee, service charge, interest or 

similar charge, costs to release Liens or any other costs or expenses (including 

legal fees and expenses) incurred by or on behalf of the Company or any Manager 

(in its capacity as such or in its individual capacity) as a result of the Company’s 

or any Manager’s or the Servicer’s or any Subservicer’s failure to service any 

Loan or Underlying Collateral properly in accordance with the applicable Loan 

Documents, this Agreement, the Servicing Agreement, any Subservicing 

Agreement or otherwise, or failure to make a payment in a timely manner, or 

failure otherwise to act in a timely manner; 

(v) any interest on any amounts paid by any Person with respect to any 

Servicing Expenses or Pre-Approved Charges; 

(vi) any overhead or administrative costs (whether or not attributable to 

the servicing or management of any Loan) incurred by the Company, any 

Manager or any other Person (including any travel expenses and any expenses 

incurred by any Manager, the Company or any Servicer or Subservicer to comply 

with Section 4.3, Section 7.2, Section 7.3, Section 7.4 and Section 7.7), in each 

case other than Reimbursable Company Administrative Expenses; 

(vii) any servicing, management or similar fees paid to the Servicer, any 

Subservicer or any other Person; 

(viii) any expenses incurred by the Company, the Manager or any other 

Person (x) to become a MERS member or to maintain the Company, the Manager 

or such other Person as a MERS member in good standing, or (y) to remove any 

Loan from the MERS® System in connection with any voluntary removal by or at 

the direction of the Manager (as permitted in Section 12.3(g) hereof), it being 

understood that any such removal dictated by default, foreclosure or similar legal 

or MERS requirements shall not be considered a voluntary removal for purposes 

of this clause; or 

(ix) any amounts subject to the indemnity obligations of the Private 

Owner under Section 4.6 of this Agreement or of the Servicer under Section 8.2 

of the Servicing Agreement. 

12.8 Collection Account. On the Closing Date, the Manager shall cause the Company 

to establish and maintain the Collection Account with the Paying Agent in accordance with the 

Custodial and Paying Agency Agreement. The Collection Account (and all funds therein) shall 

be subject to the security interest granted under the Reimbursement, Security and Guaranty 

Agreement and to the Account Control Agreement under the Custodial and Paying Agency 

Agreement. 

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12.9 Distribution Account . On the Closing Date, the Manager shall cause the 

Company to establish the Distribution Account with the Paying Agent in accordance with the 

Custodial and Paying Agency Agreement. The Distribution Account (and all funds therein) shall 

be subject to the security interest granted under the Reimbursement, Security and Guaranty 

Agreement and to the Account Control Agreement under the Custodial and Paying Agency 

Agreement. 

12.10 Defeasance Account. On the Closing Date, the Manager shall cause the Company 

to establish the Defeasance Account with the Paying Agent in accordance with the Custodial and 

Paying Agency Agreement. The Defeasance Account (and all funds therein) shall be subject to 

the security interest granted under the Reimbursement, Security and Guaranty Agreement. 

12.11 Working Capital Reserve Account. 

(a) Establishment of Working Capital Reserve Account. On the Closing Date, 

the Manager shall cause the Company to establish the Working Capital Reserve Account with the 

Paying Agent for the exclusive purpose of holding a reserve (the “Working Capital Reserve ”) to 

cover Working Capital Expenses to the same extent, and in the same order of priority, as are 

applicable to Loan Proceeds in accordance with the terms hereof and the Custodial and Paying 

Agency Agreement (and, as of any date of determination, the amount of the Working Capital 

Reserve shall be deemed to be the amount of the funds in such Working Capital Reserve 

Account). The Working Capital Reserve Account (and all funds therein) shall be subject to the 

security interest granted under the Reimbursement, Security and Guaranty Agreement and to the 

Account Control Agreement under the Custodial and Paying Agency Agreement. 

(b) Funding Working Capital Reserve. On the Closing Date, the Initial 

Member and the Private Owner shall fund the Working Capital Reserve in an initial principal 

amount of $24,000,000 as follows: the Initial Member shall deposit cash in the amount of 

$14,400,000 (an amount equal to 60% of the initial principal amount of the Working Capital 

Reserve Account) into the Working Capital Reserve Account, and the Manager shall deposit cash 

in the amount of $9,600,000 (an amount equal to 40% of the initial principal amount of the 

Working Capital Reserve Account) into the Working Capital Reserve Account. The Company 

may fund the Working Capital Reserve Account with Loan Proceeds in accordance with the terms 

of the Custodial and Paying Agency Agreement and must maintain certain deposit amounts to 

comply with the Working Capital Reserve Replenishment Cap and Working Capital Reserve 

Ceiling established under the Custodial and Paying Agency Agreement 

(c) Use of Working Capital Reserve. The Manager or (in relation to its 

interim servicing obligations) the Initial Member may direct the Company to withdraw funds from 

the Working Capital Reserve Account (including, as applicable, through release of such funds into 

the Collection Account) only to cover Working Capital Expenses in accordance with Section 3.6 

of the Custodial and Paying Agency Agreement. The Manager shall not permit withdrawals from 

the Working Capital Reserve Account for any other purpose; provided, that, to the extent 

expressly permitted in the Custodial and Paying Agency Agreement, the Manager may cause the 

release of funds from the Working Capital Reserve Account (including for purposes of 

distributions to the Members) in accordance with, and subject to, the terms of the Custodial and 

Paying Agency Agreement. With respect to any Loan, on the Servicing Transfer Date, the Initial 

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Member shall be reimbursed from the Working Capital Reserve Account for an amount equal to 

all Working Capital Expenses (and any advance of the Initial Member that is reimbursable 

pursuant to the Contribution Agreement) paid by it at any time after the Cut-Off Date and on or 

before such Servicing Transfer Date (to the extent the same have not been otherwise reimbursed 

pursuant to the Contribution Agreement or Custodial and Paying Agency Agreement). 

(d) Permitted Investments. The Working Capital Reserve shall be invested in 

Permitted Investments in accordance with the Custodial and Paying Agency Agreement. 

12.12 Certain Servicing and Loan Administration Decisions . The Manager shall have 

full power and authority, acting alone or through any Servicer or Subservicer, to cause to be done 

any and all things in connection with the servicing and administration of the Loans that the 

Manager may deem necessary or desirable, and cause to be made all servicing decisions in its 

reasonable discretion, subject to its obligation to comply with the Servicing Standard and other 

applicable provisions herein and in the Ancillary Documents. Upon the occurrence of an event 

of default under any of the Loan Documents, but subject to the other terms and conditions of this 

Agreement (including the Servicing Standard), the Manager shall cause to be determined the 

response to such default and course of action with respect to such default, including (i) the 

selection of attorneys to be used in connection with any action, whether judicial or otherwise, to 

protect the interests of the Company in the Loan and the Underlying Collateral, (ii) the 

declaration and recording of a notice of such default and the acceleration of the maturity of the 

Loan, (iii) the institution of proceedings to foreclose the Loan Documents securing the Loan 

pursuant to the power of sale contained therein or through a judicial action, (iv) the institution of 

proceedings against any Obligor, (v) the acceptance of a deed in lieu of foreclosure, (vi) the 

purchase of the real property Underlying Collateral at a foreclosure sale or trustee’s sale or the 

purchase of the personal property Underlying Collateral at a Uniform Commercial Code sale, 

and (vii) the institution or continuation of proceedings to obtain a deficiency judgment against 

such Borrower or any Obligor. Notwithstanding any provision to the contrary herein, the 

Manager shall not, and shall not cause any Servicer or Subservicer to, take any action that is 

inconsistent with or prohibited by the terms of the Reimbursement, Security and Guaranty 

Agreement or the Custodial and Paying Agency Agreement without the prior written consent of 

the Initial Member. 

12.13 Management and Disposition of Underlying Collateral . Subject to the other terms 

and conditions of this Agreement (including the Servicing Standard), and the Reimbursement, 

Security and Guaranty Agreement, the Manager shall have full power and authority, acting alone 

or through any Servicer and any Subservicer, to cause to be done any and all things in connection 

with the Manager’s management of any Underlying Collateral or Acquired Property, that the 

Manager may deem necessary or desirable, and cause to be made all asset management decisions 

in its reasonable discretion. 

12.14 Acquisition of Underlying Collateral. 

(a) If title to any Underlying Collateral that constitutes real property is to be 

acquired by foreclosure, by deed in lieu of foreclosure, by power of sale or by sale pursuant to the 

Uniform Commercial Code, or otherwise, title to such REO Property shall be taken and held in the 

name of an Ownership Entity; provided, however, that for any REO Property with respect to 

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which there exists any Environmental Hazard, the Ownership Entity that holds such REO Property 

may hold title only to the relevant REO Property with respect to which the Environmental Hazard 

exists. 

(b) Nothing in this Article XII or anything else in this Agreement shall be 

deemed to affirmatively require the Manager to cause the Company to acquire all or any portion 

of any REO Property with respect to which there exists any Environmental Hazard. Prior to 

acquisition of title to any REO Property (whether by foreclosure, deed in lieu of foreclosure, by 

power of sale or by sale pursuant to the Uniform Commercial Code, or otherwise), the Manager 

shall cause to be commissioned with respect to such REO Property either (i) a Transaction Screen 

Process consistent with ASTM Standard E 1528-06, by an environmental professional or (ii) such 

other site inspections and assessments by a Person who regularly conducts environmental audits 

using customary industry standards as would customarily be undertaken or obtained by a prudent 

lender in order to ascertain whether there are any actual or threatened Environmental Hazards (a 

“Site Assessment ”), and the cost of such Site Assessment shall be deemed to be a Servicing 

Expense as long as the costs for such Site Assessment were not paid to any Affiliate of the 

Manager, or any Affiliate of the Servicer or any Subservicer. 

(c) The Company shall be the sole member of any Ownership Entity. The 

purposes of each Ownership Entity shall be to hold the REO Property pending sale, to complete 

construction of such Underlying Collateral and to operate the Underlying Collateral as efficiently 

as possible in order to minimize financial loss to the Company, and the Purchase Money Notes 

Guarantor and to sell the REO Property as promptly as practicable in a way designed to minimize 

financial loss to the Company, and the Note Guarantor. 

12.15 Administration of REO Properties. The following terms and conditions shall be 

binding on the Company and the Ownership Entities (and on the Manager’s performance of its 

obligations hereunder) with respect to any REO Properties, in addition to any other terms and 

conditions concerning the same subject matter set forth in this Agreement and any of the other 

Ancillary Documents: 

(a) Insurance. With respect to each REO Property, the Manager shall cause 

the applicable Ownership Entity to maintain, with financially sound and reputable insurers, 

insurance (including, as applicable, public liability insurance, property insurance, flood 

insurance, boiler and machinery insurance, business interruption or rent insurance and other 

insurance), in such amounts, with such deductibles, covering such risks and otherwise on such 

terms and conditions, in each case as are customarily maintained by property owners for other 

real property and buildings similar to such REO Property in the area in which such REO 

Property is located, all as determined by the Manager in accordance with the Servicing Standard 

and the provisions of this Agreement and the Ancillary Documents. All insurance policies shall 

name the Collateral Agent, the Manager and the Company as an additional insured, loss payee or 

mortgagee thereunder, as applicable, as its interest may appear. Each policy shall provide that 

such policy may not be cancelled or materially changed except upon thirty (30) days’ prior 

written notice to the Company and to the Collateral Agent, and shall further provide that no act 

or thing done by the applicable Ownership Entity shall invalidate any policy as against the 

Collateral Agent. 

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(b) Leasing Covenants . With respect to each REO Property, the Manager 

shall cause the applicable Ownership Entity to (i) perform the obligations that such Ownership 

Entity is required to perform under the leases to which it is a party in all material respects and (ii) 

enforce, in accordance with commercially reasonable practices for properties similar to the 

applicable REO Property, the material obligations to be performed by the tenants under such 

leases. 

(c) Zoning. The Manager shall not permit any Ownership Entity to initiate or 

consent to any zoning reclassification of any portion of the REO Property owned by such 

Ownership Entity, or use or permit the use of any portion of an REO Property in any manner that 

could result in such use (taking into account any applicable variance obtained in accordance with 

the Servicing Standard) becoming a non-conforming use under any zoning ordinance or any 

other applicable land use law, rule or regulation, without the prior consent of the Initial Member 

and the Collateral Agent. 

(d) No Joint Assessment. The Manager shall not permit any Ownership 

Entity to suffer, permit or initiate the joint assessment of REO Property (i) with any other real 

property constituting a tax lot separate from such REO Property, and (ii) with any portion of an 

REO Property which may be deemed to constitute personal property, or any other procedure 

whereby the lien of any taxes which may be levied against such personal property shall be 

assessed or levied or charged to such REO Property. 

(e) Maintenance, Repairs and Alterations. From and after the completion of 

any buildings or other improvements at an REO Property, the Manager shall cause the applicable 

Ownership Entity to maintain such REO Property in a good and safe condition and repair 

(subject to such alterations as the Manager may from time to time determine to be appropriate in 

accordance with the Servicing Standard and applicable requirements herein and in the Ancillary 

Documents) and in accordance with applicable Law. 

(f) Property Management . All property managers with respect to any REO 

Property shall, in their respective property management agreements or by separate agreement, 

subordinate their rights under such agreements (including their right to receive management fees) 

to the rights and interest of the Collateral Agent under the applicable REO Mortgage (as defined 

in the Reimbursement, Security and Guaranty Agreement). 

(g) Ground Leases. With respect to any REO Property that is leased under a 

ground or other lease (in each case, a “ground lease”), the Manager shall cause the applicable 

Ownership Entity to (i) pay all rents and other sums required to be paid by the tenant under and 

pursuant to the provisions of the applicable ground lease as and when such rent or other charge is 

payable, and (ii) diligently and timely perform and observe all of the terms, covenants and 

conditions binding on the tenant under the ground lease. The Manager shall not permit the 

applicable Ownership Entity to subordinate or consent to the subordination of any ground lease 

to any mortgage, lease or other interest on or in the ground lessor’s interest in the applicable 

REO Property without the prior consent of the Collateral Agent unless such subordination is 

required under the provisions of such ground lease. 

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(h) Additional Construction Covenants. In the event the Manager elects to 

fund the construction of the REO Property (pursuant to Funding Draws for such purpose), then 

the Manager shall cause each Ownership Entity to pursue with diligence the construction of the 

REO Property owned by such Ownership Entity (i) in accordance with the construction, 

construction management (if any) and all other material contracts relating to such construction, 

and all requirements of Law, all restrictions, covenants and easements affecting such REO 

Property, and all applicable governmental approvals, (ii) in substantial compliance with the plans 

and specifications therefor as in existence on the Closing Date and as thereafter modified by the 

Manager in its business judgment exercised in accordance with the Servicing Standard and 

applicable provisions in this Agreement and the Ancillary Documents, (iii) in a good and 

workmanlike manner and free of defects, (iv) in a manner such that such REO Property remains 

free from any Liens, claims or assessments (actual or contingent) for any material, labor or other 

item furnished in connection therewith and (v) in conformance with the requirements for 

Funding Draws. 

(i) REO Property Generally. Notwithstanding any other provision of this 

Section 12.15 to the contrary, (i) in operating, managing, leasing or disposing of any REO 

Property, the Manager shall act in the best interests of the Company, and the members and 

creditors of the Company (including the FDIC in its various capacities) and in accordance with 

the Servicing Standard, and (ii) without relieving the Manager of any obligation elsewhere in this 

Agreement or any Ancillary Document, the Manager shall not be required to act in accordance 

with a specific provision of this Section 12.15 if such action is (A) not in the best interests of 

Company and the members and creditors of the Company (including the FDIC in its various 

capacities), as determined by the Manager in the exercise of its reasonable discretion, or (B) not 

in accordance with the Servicing Standard. 

(j) Reports . The Manager shall furnish to the Initial Member and the 

Collateral Agent such reports regarding the construction, leasing and sales efforts of or relating 

to the REO Property as the Initial Member or the Collateral Agent shall reasonably request. 

12.16 Releases of Underlying Collateral. Manager is authorized to cause the release or 

assignment of any Lien granted to or held by the Company on any Underlying Collateral upon 

payment of any Loan in full and satisfaction in full of all of the secured obligations with respect 

to a Loan, upon receipt of a discounted payoff as payment in full of a Loan, or upon a sale of the 

Loan to any Person, in each case as and to the extent permitted hereunder and under the 

Reimbursement, Security and Guaranty Agreement 

12.17 Clean-Up Call Rights. 

(a) If, and only if, all amounts owing under the Purchase Money Notes have 

paid in full, and all reimbursement and other obligations to the FDIC under the Reimbursement, 

Security and Guaranty Agreement have been satisfied in full, the Initial Member shall have the 

right, exercisable in its sole and absolute discretion, to require the liquidation and sale, for cash 

consideration, of any remaining Loans and Acquired Property held by the Company or any 

Ownership Entity (the “ Clean-Up Call”) at any time after the earlier to occur of (i) the seventh 

(7th) anniversary of the Closing Date and (ii) the date on which the then Unpaid Principal Balance 

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is ten percent (10%) or less of the Unpaid Principal Balance as of the Cut-Off Date as set forth on 

the Loan Schedule. 

(b) In order to exercise its rights under this Section 12.17, Initial Member 

shall give notice in writing to the Manager, setting forth the date by which the remaining Loans 

and Acquired Property are to be liquidated by the Company, which date shall be no less than 150 

calendar days after the date of such notice. 

(c) The Manager shall proceed expeditiously to cause to be commenced the 

liquidation of the remaining Loans and Acquired Property by means of sealed bid sales to Persons 

other than Affiliates of the Company, the Servicer or any Subservicer, or Affiliates of the Servicer 

or any Subservicer. The selection of any financial adviser or other Person, broker or sales agent 

retained for the liquidation of the remaining Loans and Acquired Property pursuant to this 

Section 12.17 shall be subject to the prior approval of Initial Member, such approval not to be 

unreasonably withheld, delayed or conditioned as long as the fees to be charged by such financial 

adviser or other Person, broker or sales agent are reasonable and such Person is not an Affiliate of 

the Manager or any Servicer or Subservicer. In the event the remaining Loans and Acquired 

Property are not liquidated by the date specified in the notice provided by Initial Member pursuant 

to Section 12.17(b), Initial Member shall be entitled to liquidate the remaining Loans and 

Acquired Property in its discretion and Manager shall, and shall cause the Company to, cooperate 

and assist with such liquidation to the extent reasonably requested by Initial Member. In the event 

the Manager or any Affiliate thereof desires to bid to acquire the remaining Loans and Acquired 

Property, then Initial Member shall be entitled to liquidate the remaining Loans and Acquired 

Property in its discretion. In the event Initial Member undertakes to liquidate the remaining Loans 

and Acquired Property pursuant to this Section 12.17(c), all costs and expenses incurred by it shall 

be deducted from the Loan Proceeds and retained by Initial Member and the remaining Loan 

Proceeds shall be distributed in accordance with Section 9.2. 

12.18 Certain Transfer Obligations . Without limitation of other obligations of Manager 

with respect to the Contribution Agreement, Manager agrees to cause the Company to comply 

with its obligations under the Contribution Agreement with respect to preparing, furnishing, 

executing and recording transfer documents with respect to the Loans (including special 

warranty deeds to convey the real property subject to any contract for deed and any Acquired 

Property to the Company). Any title curative work with respect to such real property, if 

required, shall be at the Manager’s sole cost and expense. 

AR T IC L E XIII 

Miscellaneous 

13.1 Waiver of Rights of Partition and Dissolution. Each Member (other than the 

Initial Member) hereby irrevocably waives all rights it may have at any time to maintain any 

action for division or sale of the Company Property as now or hereafter permitted under any 

applicable Law. Each Member (other than the Initial Member) hereby waives and renounces its 

rights to seek a court decree of dissolution or to seek the appointment of a court receiver for the 

Company as now or hereafter permitted under any applicable Law. 

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13.2 Entire Agreement; Other Agreements. 

(a) This Agreement, together with the Annexes and Exhibits hereto and the 

Ancillary Documents (and any other agreements expressly contemplated hereby or thereby), 

constitutes the entire agreement and understanding, and supersedes all other prior agreements and 

understandings, both written and oral, between the Members or their respective Affiliates or any 

of them and the Company with respect to the subject matter hereof; provided, that any 

Confidentiality Agreement between the FDIC and the Private Owner or any Affiliates of the 

Private Owner (including by way of joinder) with respect to the transaction that is the subject of 

this Agreement and the Ancillary Documents shall remain in full force and effect to the extent 

provided therein, except that the Company’s rights under Article VI of the Contribution 

Agreement shall not be deemed a repurchase option for purposes of Section 2 of any such 

Confidentiality Agreement. The Members acknowledge that certain agreements or other 

instruments are being (or were) executed by the Company, the Members and/or Affiliates of the 

Members simultaneously or otherwise in connection with the execution of this Agreement and 

that notwithstanding anything to the contrary contained in the foregoing sentence of this 

Section 13.2, such agreements shall be effective and binding on the parties thereto in accordance 

with the terms thereof. 

(b) By executing this Agreement, the Manager agrees to be bound by the 

terms of the Ancillary Documents pursuant to which the Manager is expressly required to take or 

omit from taking certain actions, as in each case, with the same effect as if the Manager were a 

party to such Ancillary Document. 

13.3 Third Party Beneficiaries. Each of the FDIC and the Purchase Money Notes 

Guarantor, is hereby constituted an express third party beneficiary of this Agreement with 

respect to those provisions of this Agreement which expressly grant rights to such Person, and, 

as such, each is entitled to enforce such provisions of this Agreement as if such Person were a 

party hereto; provided that, upon occurrence of the Purchase Money Notes Defeasance Date (and 

subject to any rights of the Purchase Money Notes Guarantor that, by their terms or nature, 

survive such date), the Purchase Money Notes Guarantor shall cease to have any of the specified 

rights set forth herein with respect to consents/approvals, exercise remedies following an Event 

of Default and receipt of reports and other information with respect to the continued operation of 

the Business, in each case (i) to the extent relating exclusively to the period following such 

Purchase Money Notes Defeasance Date, and (ii) except as to any rights or remedies relating to 

(or the exercise or non-exercise of which rights or remedies would affect) the Defeasance 

Account or the repayment of the Purchase Money Notes in accordance with the terms hereof and 

of the Ancillary Documents, as determined by the Purchase Money Notes Guarantor in its sole 

discretion. Each Person ceasing to constitute the “Initial Member” under this Agreement (as a 

result of a Disposition of its LLC Interest) shall remain a third-party beneficiary of this 

Agreement with respect to Section 4.6 and, as such is entitled to enforce Section 4.6 as if such 

Person remained a party hereto. For the avoidance of doubt, in furtherance and without 

limitation of the preceding sentence, each Person comprising the “Initial Member” pursuant to 

the last sentence of Section 4.6(a) may enforce the provisions of Section 4.6 with respect to itself 

and/or any other Indemnified Party(ies) in relation to itself (in its own name and/or in the name 

of and/or otherwise on behalf of such other Indemnified Party(ies)). Subject to Section 11.1 and 

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to the immediately preceding sentence, (i) this Agreement is for the benefit solely of, and shall 

inure solely to the benefit of, the Members and the Company, and (ii) this Agreement is not 

enforceable by any Person (including any creditor of the Company or of any Member) other than 

the Members and the Company. 

13.4 Expenses. Except as may otherwise be expressly provided herein or in any 

Ancillary Document, each Member shall pay its own expenses (including legal, accounting 

investment banker, broker or finder’s fees) incident to the negotiation and execution of this 

Agreement and the Ancillary Documents, the consummation of the transactions contemplated by 

Section 2.3 hereof and the performance of its obligations hereunder. 

13.5 Waivers and Amendments. 

(a) This Agreement may be amended or modified, and the terms hereof may 

be waived, only by a written instrument signed by all Members, provided, that, following an 

Event of Default, from time to time this Agreement may be amended or modified and/or the terms 

hereof may be waived, in each case, by a written instrument signed only by the Initial Member as 

long as such amendment, modification or waiver would not (i) adversely affect the Private 

Owner’s or the Company’s limited liability status; (ii) adversely affect the Private Owner’s share 

of the Company’s distributions, income, gains or losses; (iii) impose on the Private Owner any 

additional obligations or (iv) amend Section 3.13 or this Section13.5; provided further, that in no 

event shall any amendment, modification or waiver limit or otherwise adversely affect the rights 

expressly granted in this Agreement to (x) any Person comprising the “Initial Member” pursuant 

to the last sentence of Section 4.6(a) (and/or any other Indemnified Party(ies) in relation to such 

Person) without the express written consent of such Person so comprising the “Initial Member” or 

(y) a third party beneficiary of this Agreement (to the extent such third party beneficiary is, and 

remains, a third party beneficiary pursuant to Section 13.3 above) without the express written 

consent of such third party beneficiary. Except where a specific period for action or inaction is 

provided herein, no failure on the part of a Member to exercise, and no delay on the part of a 

Member in exercising, any right, power or privilege hereunder shall operate as a waiver thereof; 

nor shall any waiver on the part of such Member of any such right, power or privilege, or any 

single or partial exercise of any such right, power or privilege, preclude any other or further 

exercise thereof or the exercise of any other right, power or privilege. 

(b) Notwithstanding anything to contrary contained elsewhere in this 

Agreement (including without limitation the foregoing Section 13.5(a)) or in any Ancillary 

Document, but subject to the restrictions in Section 8.4 of the Contribution Agreement and 

Section 2.8 of the Custodial and Paying Agency Agreement, as applicable), in order to facilitate 

any restructuring or sale of the Purchase Money Notes (or any reissuance, restructuring or sale of 

any such Purchase Money Notes to be issued pursuant to Section 2.8 of the Custodial and Paying 

Agency Agreement), the FDIC, without the consent of the Private Owner or the Company, may at 

any time that the FDIC is the holder of 100 percent of any Purchase Money Note or beneficial 

interest therein cause the Company to replace or reissue such Purchase Money Note (or any 

promissory note reissued in respect thereof) and make related changes, modifications or 

amendments to this Agreement and the Ancillary Documents, in each case subject to the 

applicable limitations set forth in Section 8.4 of the Contribution Agreement and Section 2.8 of 

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the Custodial and Paying Agency Agreement, as the case may be; provided, however, no such 

change, amendment or modification shall adversely affect in any material respect (i) the amount 

or timing of any payments or distributions to the Private Owner or any permitted successor or 

assign pursuant to the Priority of Payments (or its share of the Company’s distributions, income, 

gains or losses in accordance herewith), or (ii) any other rights or obligations of, or the need for 

any advances, contributions or payments from, the Private Owner or its Affiliates or any permitted 

successor or assign pursuant to this Agreement or any Ancillary Document or otherwise. Prior to 

effecting any such changes, amendments or modifications, the FDIC shall notify each of the 

Private Owner and the Company of any such contemplated changes, amendments or 

modifications, and each of the Private Owner and the Company agrees that it will cooperate in 

good faith with the FDIC in effecting all such changes, amendments or modifications. 

(c) Notwithstanding anything to contrary contained elsewhere in this 

Agreement (including without limitation the foregoing Section 13.5(a)) or in any Ancillary 

Document), this Agreement may be amended or modified by a written instrument signed only by 

the Initial Member to the extent determined by the Initial Member in good faith to be necessary or 

desirable in order to facilitate any Disposition by the Initial Member of only a portion of its 

Interest, or a Disposition by the Initial Member of its entire Interest to more than one Person, 

including to provide for more than two Persons being members of the Company, provided that no 

such amendment or modification shall (i) adversely affect the Private Owner’s or the Company’s 

limited liability status; (ii) adversely affect the Private Owner’s share of the Company’s 

distributions, income, gains or losses; (iii) impose on the Private Owner any additional obligations 

or (iv) amend Section 3.13 (other than to the extent that such amendment or modification amends 

or modifies which member or members of the Company shall constitute the “Initial Member” 

hereunder) or this Section 13.5. 

13.6 Notices. All notices, requests, demands and other communications required or 

permitted to be given or delivered under or by reason of the provisions of this Agreement shall 

be in writing and shall be given by certified or registered mail, postage prepaid, by delivery by 

hand or by nationally recognized courier service, or by electronic mail (followed up by a hard 

copy delivered through an alternate manner permitted under this Section 13.6), in each case 

mailed or delivered to the applicable address or electronic mail address specified in, or in the 

manner provided in, this Section 13.6. All such notices, requests, demands and other 

communications shall be deemed to be given or made upon the earlier to occur of (i) actual 

receipt (or refusal thereof) by the relevant party hereto and (ii) (A) if delivered by hand or by 

nationally recognized courier service, when signed for (or refused) by or on behalf of the 

relevant party hereto, and (B) if delivered by electronic mail (which form of delivery is subject to 

the provisions of this paragraph), when delivered and capable of being accessed from the 

recipient’s office computer, provided that any notice, request, demand or other communication 

that is received other than during regular business hours of the recipient shall be deemed to have 

been given at the opening of business on the next business day of the recipient. In no event shall 

a voice mail message be effective as a notice, communication or confirmation hereunder. From 

time to time, any party may designate a new address for purposes of notice to it hereunder by 

notice to such effect to the other parties hereto in the manner set forth in this Section 13.6. 

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If to the Company, to: 

Multibank 2009-1 RES-ADC Venture, LLC 

700 NW 107th Avenue 

Suite 400 

Miami, FL 33172 

Attention: Thekla Blaser Salzman 

Email Address: thekla.salzman@rialtocapital.com 

with a copy to: 

Bilzin Sumberg Baena Price & Axelrod, LLP 

200 South Biscayne Blvd 

Suite 2500 

Miami, FL 33131 

Attention: Alan Axelrod 

Email Address: aaxelrod@bilzin.com 

If to the Initial Member, to: 

Manager, Capital Markets & Resolutions 

c/o Federal Deposit Insurance Corporation 

550 17th Street, NW (Room F-7014) 

Washington, D.C. 20429-0002 

Attention: Ralph Malami 

Email Address: RMalami@FDIC.gov. 

with a copy to: 

Senior Counsel 

FDIC Legal Division 

Litigation and Resolutions Branch, Receivership Section 

Special Issues Unit 

3501 Fairfax Drive (Room E-7056) 

Arlington, VA 22226 

Attention: David Gearin 

Email Address: DGearin@FDIC.gov. 

If to the Private Owner (including in its role as Manager and/or Tax Matter 

Member), to: 

RL RES 2009-1 Investments, LLC 

700 NW 107th Avenue 

Suite 400 

Miami, FL 33172 

Attention: Thekla Blaser Salzman 

Email Address: thekla.salzman@rialtocapital.com 

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with a copy to: 

Bilzin Sumberg Baena Price & Axelrod, LLP
 

200 South Biscayne Blvd
 

Suite 2500
 

Miami, FL 33131
 

Attention: Alan Axelrod
 

Email Address: aaxelrod@bilzin.com
 

13.7 Counterparts; Facsimile Signatures. 

(a) This Agreement may be executed in any number of counterparts, each of 

which shall be an original and all of which shall together constitute one and the same instrument. 

It shall not be necessary for any counterpart to bear the signature of all parties hereto. 

(b) This Agreement and any amendments hereto, to the extent signed and 

delivered by facsimile or other electronic means, shall be treated in all manner and respects as an 

original agreement and shall be considered to have the same binding legal effect as if it were the 

original signed version thereof delivered in person. No signatory to this Agreement shall raise the 

use of a facsimile machine or other electronic means to deliver a signature or the fact that any 

signature or agreement was transmitted or communicated through the use of a facsimile machine 

or other electronic means as a defense to the formation or enforceability of a contract and each 

such Person forever waives any such defense. 

13.8 Successors and Assigns. Except as otherwise specifically provided in this 

Agreement (including in Article VIII), this Agreement shall be binding upon and inure to the 

benefit of the Members and the Company and their respective Successors and assigns. Without 

limitation of Section 8.4, this Agreement, as in effect on the date that any particular Person shall 

cease to be Member, shall continue to bind such Person in relation to the period during which it 

was Member. 

13.9 Compliance With Law; Severability. 

(a) Compliance With Law. Except as otherwise specifically provided herein, 

each party to this Agreement shall obey and comply with all applicable Laws, as they may pertain 

to such party’s performance of its obligations hereunder. 

(b) Severability. Any provision of this Agreement which is prohibited or 

unenforceable in any jurisdiction shall be ineffective, but such ineffectiveness shall be limited as 

follows: (i) if such provision is prohibited or unenforceable in such jurisdiction only as to a 

particular Person or Persons and/or under any particular circumstance or circumstances, such 

provision shall be ineffective, but only in such jurisdiction and only with respect to such particular 

Person or Persons and/or under such particular circumstance or circumstances, as the case may be; 

(ii) without limitation of clause (i), such provision shall in any event be ineffective only as to such 

jurisdiction and only to the extent of such prohibition or unenforceability, and such prohibition or 

unenforceability in such jurisdiction shall not invalidate or render unenforceable such provision in 

any other jurisdiction; and (iii) without limitation of clauses (i) or (ii), such ineffectiveness shall 

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not invalidate any of the remaining provisions of this Agreement. Without limitation of the 

preceding sentence, it is the intent of the parties to this Agreement that in the event that in any 

court proceeding, such court determines that any provision of this Agreement is prohibited or 

unenforceable in any jurisdiction (because of the duration or scope (geographic or otherwise) of 

such provision, or for any other reason) such court shall have the power to, and shall, (x) modify 

such provision (including without limitation, to the extent applicable, by limiting the duration or 

scope of such provision and/or the Persons against whom, and/or the circumstances under which, 

such provision shall be effective in such jurisdiction) for purposes of such proceeding to the 

minimum extent necessary so that such provision, as so modified, may then be enforced in such 

proceeding and (y) enforce such provision, as so modified pursuant to clause (x), in such 

proceeding. Nothing in this Section 13.9(b) is intended to, or shall, limit (1) the ability of any 

party to this Agreement to appeal any court ruling or the effect of any favorable ruling on appeal 

or (2) the intended effect of Section 13.11. 

13.10 Power of Attorney. 

(a) The Private Owner does hereby constitute and appoint the Manager as its 

true and lawful representative and attorney-in-fact, in its name, place and stead to make, execute, 

sign, acknowledge, deliver or file any certificate, document or other instrument that the Private 

Owner is required to execute and deliver pursuant to clause (a), (b), (c) or (d) of Section 4.3 

hereof. The foregoing notwithstanding, the Manager shall not have any right, power or authority 

to amend or modify this Agreement. The power of attorney granted hereby is coupled with an 

interest and shall (i) survive and not be affected by the subsequent death, incapacity, disability, 

dissolution, termination or bankruptcy of the Private Owner granting the same or the transfer of all 

or any portion of the Private Owner’s LLC Interest and (ii) extend to the Private Owner’s 

Successors, assigns and legal representatives. 

(b) The Company hereby grants to the Manager a limited power of attorney to 

execute all documents on its behalf in accordance with the Servicing Standard set forth above and 

as may be necessary to effectuate the Manager’s obligations under Article XII until such time as 

the Company revokes said limited power of attorney. Revocation of the limited power of attorney 

shall take effect upon (i) the receipt by the Manager of written notice thereof from the Initial 

Member, or (ii) removal of the Manager in accordance with the terms of this Agreement; 

provided, however, in the event of such removal, the power of attorney granted hereunder shall 

thereafter automatically be vested in the successor or replacement Manager appointed in 

accordance with this Agreement. 

13.11 Governing Law. THIS AGREEMENT IS GOVERNED BY AND SHALL BE 

CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE, 

EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER 

THE GOVERNANCE OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW 

OF ANOTHER JURISDICTION. In the event of a direct conflict between the provisions of this 

Agreement and any mandatory, non-waivable provision of the Act, such provision of the Act 

shall control to the extent necessary to eliminate such direct conflict. Nothing in this Agreement 

shall require any unlawful action or inaction by any Person. 

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13.12 Jurisdiction; Venue and Service. 

(a) Each of the Private Owner (for the avoidance of doubt, in any capacity, 

including as a Member and/or as the Manager) and the Company, in each case on behalf of itself 

and its Affiliates, hereby irrevocably and unconditionally: 

(i) consents to the jurisdiction of the United States District Court for 

the Southern District of New York and to the jurisdiction of the United States 

District Court for the District of Columbia for any suit, action or proceeding 

against it (in the case of the Private Owner and for the avoidance of doubt, in any 

capacity, including as a Member and/or as the Manager) or any of its Affiliates 

commenced by the Initial Member arising out of, relating to, or in connection 

with this Agreement or any Ancillary Document, and waives any right to: 

(A) remove or transfer such suit, action or proceeding to any 

other court or dispute-resolution forum (other than the Court in which the 

Initial Member files the action, suit or proceeding) without the consent of 

the Initial Member; 

(B) assert that venue is improper in either the United States 

District Court for the Southern District of New York or the United States 

District Court for the District of Columbia; or 

(C) assert that the United States District Court for the Southern 

District of New York or the United States District Court for the District of 

Columbia is an inconvenient forum. 

(ii) consents to the jurisdiction of the Chancery Court of the State of 

Delaware for any suit, action or proceeding against it (in the case of the Private 

Owner and for the avoidance of doubt, in any capacity, including as a Member 

and/or as the Manager) or any of its Affiliates commenced by the Initial Member 

arising out of, relating to, or in connection with this Agreement or any Ancillary 

Document, and waives any right to: 

(A) remove or transfer such suit, action or proceeding to any 

other court or dispute-resolution forum without the consent of the Initial 

Member); 

(B) assert that venue is improper in the Chancery Court of the 

State of Delaware; or 

(C) assert that the Chancery Court of the State of Delaware is 

an inconvenient forum. 

(iii) agrees to bring any suit, action or proceeding by it (in the case of 

the Private Owner and for the avoidance of doubt, in any capacity, including as a 

Member and/or as the Manager) or any of its Affiliates against the Initial Member 

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arising out of, relating to, or in connection with this Agreement or any Ancillary 

Document in only the United States District Court for the Southern District of 

New York or the United States District Court for the District of Columbia, and 

waives any right to remove or transfer such suit, action or proceeding to any other 

court or dispute-resolution forum without the consent of the Initial Member, and 

agrees to consent thereafter to transfer of the suit, action or proceeding to either 

the United States District Court for the Southern District of New York or the 

United States District Court for the District of Columbia at the option of the Initial 

Member; and 

(iv) agrees, if the United States District Court for the Southern District 

of New York and the United States District Court for the District of Columbia 

both lack jurisdiction to hear a suit, action or proceeding falling within 

Section 13.12(a)(iii), to bring that suit, action or proceeding in only the Chancery 

Court of the State of Delaware, and waives any right to remove or transfer such 

suit, action or proceeding to any other court or dispute-resolution forum without 

the consent of the Initial Member. 

(b) Each of the Private Owner (in any capacity, including as a Member and/or 

as the Manager) and the Company, in each case on behalf of itself and its Affiliates, hereby 

irrevocably and unconditionally agrees that any final judgment entered against it in any suit, 

action or proceeding falling within Section 13.12(a) may be enforced in any court of competent 

jurisdiction; 

(c) Subject to the provisions of Section 13.12(d), each of the Private Owner 

(in any capacity, including as a Member and/or as the Manager) and the Company, in each case on 

behalf of itself and its Affiliates, and the Initial Member, hereby irrevocably and unconditionally 

agrees that service of all writs, process and summonses in any suit, action or proceeding pursuant 

to Section 13.12(a) or Section 13.12(b) may be effected by the mailing of copies thereof by 

registered or certified mail, postage prepaid, to it at its address for notices pursuant to Section 13.6 

(with copies to such other Persons as specified therein); provided, however, that nothing contained 

in this Section 13.12(c) shall affect the right of any party to serve process in any other manner 

permitted by Law; 

(d) Nothing in this Section 13.12 shall constitute consent to jurisdiction in any 

court by the FDIC (in any capacity, including as the Initial Member), other than as expressly 

provided in Section 13.12(a)(iii) and Section 13.12(a)(iv), or in any way limit the FDIC’s (in any 

capacity, including as the Initial Member) right to remove, transfer, seek to dismiss, or otherwise 

respond to any suit, action, or proceeding against it (in any capacity, including as the Initial 

Member) in any forum. 

13.13 Waiver of Jury Trial. EACH OF THE PRIVATE OWNER AND THE 

COMPANY, FOR ITSELF AND ITS AFFILIATES, AND THE INITIAL MEMBER, HEREBY 

IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A 

TRIAL BY JURY OF ANY DISPUTE ARISING OUT OF OR RELATING TO THIS 

AGREEMENT OR THE ANCILLARY DOCUMENTS AND AGREES THAT ANY SUCH 

DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY. 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by 

their respective officers or agents thereunto duly authorized on the date first above written. 

FEDERAL DEPOSIT INSURANCE 

CORPORATION, IN ITS SEPARATE 

CAPACITIES AS RECEIVER WITH 

RESPECT TO THE SEPARATE 

RECEIVERSHIPS FOR EACH OF THE 

VARIOUS FAILED FINANCIAL 

INSTITUTIONS LISTED ON SCHEDULE I 

HERETO 

By: 

Name: Ronald Sommers 

Title: Attorney-in-Fact 

MULTIBANK 2009-1 RES-ADC VENTURE, 

LLC 

By:	 Federal Deposit Insurance Corporation, in 

its separate capacities as receiver with 

respect to the separate receiverships for each 

of the various failed financial institutions 

listed on Schedule I hereto 

By: 

Name: Ronald Sommers 

Title: Attorney-in-Fact 

RL RES 2009-1 INVESTMENTS, LLC 

By: 

Name: Jeffrey P. Krasnoff 

Title: Chief Executive Officer 

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Annex I

Member Schedule

Member Percentage Interests Capital 

Contributions to 

Working Capital 

Reserve Account 

Other Capital 

Contributions1 

Initial Member 60% $14,400,000.00 $257,300,077.50 

Private Owner 40% $9,600.000.00 $171,533,385.00 

1. The amounts listed in this column do not include capital contributions made to the Working Capital Reserve 

Account. 

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EXHIBIT A 

FORM OF 

CERTIFICATE OF FORMATION
 

OF
 

MULTIBANK 2009-1 RES-ADC VENTURE, LLC
 

Pursuant to and in accordance with the provisions of Section 18-201 of the 

Delaware Limited Liability Company Act, the undersigned hereby certifies that: 

FIRST, the name of the limited liability company is Multibank 2009-1 RES-ADC 

Venture, LLC (the “Company ”). 

SECOND, the address of the registered office of the Company in the State of 

Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of 

New Castle. The name of the registered agent at such address is The Corporation Trust 

Company. 

IN WITNESS WHEREOF, the undersigned has executed this Certificate of 

Formation of the Company on this 3rd day of February, 2010. 

By: 

Name: Ronald Sommers 

Title: Authorized Person 

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EXHIBIT B
 

INFORMATION; FORM OF MONTHLY REPORT
 

[ See Attached] 

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EXHIBIT B - FORM OF MONTHLY REPORT 

DISTRIBUTION DATE REPORT 

TOTAL 

COLLECTIONS 

(+) Principal collections -

(+) Interest collections -

(+) Loan sale proceeds, including short sales -

(+) Mortgage insurance claim proceeds -

(+) REO liquidation proceeds -

(+) Servicing Expenses Recovered -

(+) Other Loan Proceeds (including late fees and penalties) -

(+) Any indemnity payments made under Section 13.1(c) of Custodial 

and Paying Agency Agreement ("Custodial Agreement") -

(+) Interest and earnings from Collection Account -

GROSS COLLECTIONS -

Other deposits to Collection Account 

(+) Transferred from Working Capital Reserve Account -

(+) Excess Working Capital Advances made by Manager -

(+) Discretionary Funding Advances made by Manager -

-

 GROSS FUNDS AVAILABLE -

Less authorized disbursements from Collection Account 

(-) Repayment of Discretionary Funding Advances made by Manager - (1) 

(-) Servicing Expenses paid -

(-) Pre-Approved Charges -

(-) Funding Draws -

-

 TOTAL FUNDS AVAILABLE - TO DISTRIBUTION ACCOUNT -

5.1(b) 

Distributions pursuant to Priority of Payments in the Custodial 

Agreement 

(i) Custodian and Paying Agent Fees and Expenses (and any indemnity 

payments under Section 13.1(a) of Custodial Agreement) -

(ii)(A)(1) Interim Servicing Fee to Initial Member, net of servicing fees paid - (2) 

(ii)(A)(2) Interim Management Fee to Manager - (2) 

(ii)(B) Management Fee to Manager - (3) 

(iii) Repayment of Excess Working Capital Advances to Manager -

(iv) Replenishment of Working Capital Reserve -

(v) Deposit to Defeasance Account (until Purchase Money Notes 

Defeasance Date) -

(vi) Reimbursements due under Reimbursement, Security and Guaranty 

Agreement for prior payments under Purchase Money Note Guaranty -

 TOTAL DISTRIBUTIONS DUE -

(vii) NET DISTRIBUTABLE CASH TO MEMBERS $ -

DISTRIBUTION TO MEMBERS

 Distribution to Initial Member (at proportionate LLC interest) $ -

 Distribution to Private Owner (at proportionate LLC interest) -

 TOTAL DISTRIBUTIONS TO MEMBERS $ -
 

 

 

 

 

Calculation of amounts payable for items in Section 5.1 (b)(1) through (vii) ­

Custodial and Paying Agency Agreement 

INTERIM SERVICING FEE CALCULATION 

UPB, beginning of Due Period (with respect to any Group of Loans for 

which Servicing Transfer Date has not occurred as of first date in Due 

Period) 

Times interim servicing fee rate 0.25% 

Times number of days in Due Period/360 -

 Interim Servicing Fee due to Initial Member+B105 $ -

INTERIM MANAGEMENT FEE CALCULATION 

UPB, beginning of Due Period (with respect to any Group of Loans for 

which Servicing Transfer Date has not occurred as of first day in Due 

Period) $ -

Times Management Fee rate 0.25% 

Times number of days in Due Period/360 -

 Interim Management Fee due to Manager $ -

MANAGEMENT FEE CALCULATION 

UPB, beginning of Due Period (with respect to any Group of Loans for 

which Servicing Transfer Date has occurred as of first day in Due 

Period) $ -

Times Management Fee rate 0.50% 

Times number of days in Due Period/360 -

 Management Fee due to Manager $ -

WORKING CAPITAL RESERVE REPLENISHMENT RESTRICTIONS 

Minimum Replenishment Amount 

Working Capital Reserve balance $ -

Working Capital Reserve Floor -

Mandatory Replenishment of Working Capital Reserve (if 

negative) $ -

Maximum Replenishment Amount 

Working Capital Reserve Replenishment Cap $ -

Working Capital Reserve balance -

Maximum Discretionary Replenishment of Working Capital 

Reserve (if positive) $ -

(1) Repayment only to the extent of Loan Proceeds from the Loan with respect to which the Advance was made. 

(2) Applicable only to the Interim Servicing Period with respect to a Group of Loans. 

(3) Applicable to Due Periods following the Interim Servicing Period with respect to a Group of Loans. 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 


 


 


 

Loan & REO Monthly Rollforward Report 

October-09 

LOANS 

Unpaid principal balance, 10/1/09 

(-) 

(-) 

(-) 

(-) 

(-) 

(+) 

(+) 

(-) 

Payments received (regular and curtailments) 

Paid-in-full loans 

Short sale proceeds 

Mortgage insurance proceeds 

UPB, transfers to REO 

Balance capitalized on loan modifications 

Commitments funded 

Principal charge-offs 

Unpaid principal balance, 10/31/09 

REO 

UPB of REO properties, 10/1/09 

(+) UPB on REO transfers in
 

(+)
 Capitalized post-acquisition costs 

(-) Net liquidation proceeds
 

(+/-)
 Realized Gain (Losses) 

UPB of REO properties, 10/31/09 

For the Period from 

10/1/09 - 10/31/09 

# ASSETS 

-

-

-

-

-

-

-

-

-

AMOUNT 

$ ­

-

-

-

-

-

-

-

-

$ ­

$ -

-

-

-

-

$ -
 

 

 

Servicing Expenses 

Monthly Roll Forward 

October-09 

(1) 

Other Total 

Escrow Servicing Servicing 

Advances Expenses Expenses 

Balance, 10/1/09 $ - $ - $ -

(+) Payments/Advances - - -

(-) Advance Recoveries - - -

- - -

Balance, 10/31/09 $ - $ - $ -

(2) (2) 

(1) Servicing Expenses, as defined in the LLC Operating Agreement, are authorized to be paid by 

withdrawal of funds from the Collection Account. For reporting purposes, Servicing Expenses 

may be broken out into additional and/or different fields at the discretion of the Manager, sufficient 

to determine the appropriateness of the payments under the definition of Servicing Expenses. 

(2) Loan servicing system should include fields to capture and report balances in each category, 

and the category totals should agree to asset-level detail tapes provided by the Manager 

as of each month-end. 
 

 

 

 

 

 

 

 

Working Capital Reserve

Monthly Roll Forward 

October-09 

Balance, beginning of Due Period $ - (1) 

Transfers in from Cash Flow: 

(+) Replenishment of W orking Capital Reserve -

Transfers to Collection Account: 

(-) Payment of W orking Capital Expenses -

(-) Payment of Funding Draws -

(-) Release at discretion of Manager pursuant to Section 3.6 of

 the Custodial Agreement -

Balance, end of Due Period $ -

W orking Capital Reserve Floor $ - (2) 

W orking Capital Reserve Replenishment Cap $ - (3) 

(1) The Initial Deposit in the W orking Capital Reserve account will be made by the Initial Member 

and Private Owner in accordance with their proportionate LLC interests. 

(2) If the W orking Capital Reserve falls below the Working Capital Reserve Floor at any time 

prior to the Notes Defeasance Date, it shall be replenished to not less than the W orking Capital 

Reserve Floor pursuant to the Custodial Agreement. 

(3) If the W orking Capital Reserve falls below the Working Capital Reserve Replenishment Cap, 

the Manager may in its discretion replenish the Reserve to an amount not in excess of the 

W orking Capital Reserve Replenishment Cap. 
 

 

 

 

 

 

 

 

 

 

 

 

Excess Working Capital Advances 

Monthly Roll Forward 

October-09 

Balance, beginning of Due Period $ -

Advanced by Manager to Collection Account for 

payments: 

(+) Servicing Expenses -

(+) Pre-Approved Charges -

(+) Custodian and Paying Agent Fees -

(-) Reimbursements from Cash Flow -

Balance, end of Due Period $ -

Discretionary Funding Advances 

Monthly Roll Forward 

October-09 

Total - Detail Advances by Loan Number 

All Advances Loan A Loan B Loan C 

Balance, beginning of Due Period $ - $ - $ - $ -

(+) Funding Draws Advanced by Manager to Collection 

Account - - - -

(+) Interest Due (90-day LIBOR + 3.00%, actual/360) - - - -

(-) Reimbursements from Cash Flow (1) - - - -

Balance, end of Due Period $ - $ - $ - $ -

(1) Repayment only to the extent of Loan Proceeds from the Loan with respect to which 

the Advance was made. 

Funding Draws 

Monthly Report 

October-09 

Amount funded 

Amount of Current Unfunded Date of by Discretionary 

Loan Number / Purpose of Funding Draw Funding Draw UPB Commitment Draw Funding Advance 

$ -

-

-

-

Total Funding Draws, month ended 10/31/09 $ -
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase Money Notes and Defeasance Account 

Monthly Roll Forward 

October-09 

Total ­

All Purchase Money Notes [Purchase Money Note A] [Purchase Money Note B] [Purchase Money Note C] 

Purchase Money Notes Monthly Roll 

(+) Original Aggregate Principal Amount $ - $ - $ - $ -

(+) Guaranty Fee - - - -

(-) Payment from Defeasance Account - - - -

Purchase Money Notes balance, end of Due Period $ - $ - $ - $ -

Defeasance Account Monthly Roll 

(+) Balance, beginning of Due Period $ -

(+) Additions from Cash Flow -

(+) Investment Income -

(-) Release to Purchase Money Note -

Defeasance Account balance, end of Due Period $ -

Note Guarantor Payments 

(+) Balance, beginning of Due Period $ -

(+) Draws, current month -

(-) Repayments, current month -

Balance, end of Due Period $ -

Purchase Money Note Trigger Event 

A Purchase Money Note Trigger Event will be deemed to have occurred if, as of any of the dates defined below, 

(a) the total amount then on deposit in the Defeasance Account, plus the sum of the aggregate amount from 

the Defeasance Account previously paid by the Company to all Holders to repay any Purchase Money 

Note and the aggregate reimbursements to the Purchase Money Notes Guarantor, divided by 

(b) the original aggregate principal amount of the Purchase Money Notes as of the Closing Date, is less than: 

- 3 Years from the Closing Date: 25% 

- 4 Years from the Closing Date: 40% 

- 5 Years from the Closing Date: 50% 

- 6 Years from the Closing Date: 75% 

- 7 Years from the Closing Date: 100% 
 

 

 

 

 

 

 

 

Incentive Threshold Tracking Report 

October-09 

Aggregate Cash Distributions to Private Owner, as of preceding Distribution Date $ -

(+) Current month distribution to Private Owner in respect of its LLC Interest - (1) 

Aggregate Cash Distributions to Private Owner, as of the current Distribution Date $ -

Incentive Threshold Base Amount 

Transferred LLC Interest Sale Price $ -

Funded to W orking Capital Reserve by Private Owner -

$ -

FIRST INCENTIVE THRESHOLD EVENT 

Occurs as of a Distribution Date if: 

(a) the aggregate distributions made to the Private Owner in respect of its LLC interest 

are equal to or greater than 2 times the Incentive Threshold Base Amount and 

(b) the Incentive Threshold (for First Incentive Threshold Event) is equal to zero. 

Aggregate cash distributions to Private Owner $ -

Incentive Threshold Base Amount * 2 -

Distributions Remaining to First Incentive Threshold Event $ -

Incentive Threshold (for First Incentive Threshold Event), as of the preceding 

Distribution Date $ -

(+) Threshold Increase Amount (1.8769% per month) -

(-) Current month distribution to Private Owner in respect of its LLC Interest -

Incentive Threshold (for First Incentive Threshold Event), as of the current 

Distribution Date $ - (2) 

First Incentive Threshold Event met? Y/N 

SECOND INCENTIVE THRESHOLD EVENT 

Occurs as of a Distribution Date if: 

(a) the aggregate distributions made to the Private Owner in respect of its LLC interest 

are equal to or greater than 2.5 times the Incentive Threshold Base Amount and 

(b) the Incentive Threshold (for Second Incentive Threshold Event) is equal to zero. 

Aggregate cash distributions to Private Owner $ -

Incentive Threshold Base Amount * 2.5 -

Distributions Remaining to Second Incentive Threshold Event $ -

Incentive Threshold (for Second Incentive Threshold Event), as of the preceding 

Distribution Date $ -

(+) Threshold Increase Amount (2.5324% per month) -

(-) Current month distribution to Private Owner in respect of its LLC Interest -

Incentive Threshold (for Second Incentive Threshold Event), as of the current 

Distribution Date $ - (2) 

Second Incentive Threshold Event met? Y/N 

(1) Excludes Management Fees and repayments of Discretionary Funding Advances 

and Excess W orking Capital Advances. 
(2) The Return Threshold can never be less than zero. 
 

 

 

 

Equity Commitment Letter Report 

Calculation of Outstanding and Undrawn Equity Commitment under a Satisfactory Equity 

Commitment Letter ("Equity Commitment") 

Amount Date 

Equity Commitment at beginning of Due Period 

(-) Amount and date of any capital contribution under the Equity Commitment 

(-) Amount and date of any other reduction of Equity Commitment 

(+) Amount and date of any increases to Equity Commitment during Due Period 

Equity Commitment at end of Due Period $ ­

Amended and Restated LLC Operating Agreement: Section 10.1(a) Calculation 

Assets of Private Owner 

Cash and/or cash equivalents at the end of the Due Period in the Private 

Owner Designated Account -

(+) Equity Commitment at the end of Due Period -

TOTAL $ -

Does TOTAL equal or exceed $5,000,000? Yes / No 

If answer above is No, on what date did TOTAL fall below $5,000,000? [insert date, if applicable] 

Amended and Restated LLC Operating Agreement: Section 10.2(a) Calculation 

Assets of Private Owner Guarantor 

Cash and/or cash equivalents at the end of the Due Period (including cash 

and/or cash equivalents in the Private Owner Designated Account) -

(+) Equity Commitment at the end of Due Period -

TOTAL $ -

Does TOTAL equal or exceed $5,000,000? Yes / No 

If answer above is No, on what date did TOTAL fall below $5,000,000? [insert date, if applicable] 
If an additional reduction was made, please explain reason for reduction. 

[insert explanation here, if applicable] 
Other Reports 

Withdrawals from Collection Account 

Manager hereby certifies that all withdrawals by the Manager from the Collection Account during the 

relevant Due Period were made in accordance with the terms of the Amended and Restated Limited 

Liability Company Operating Agreement and the Custodial Agreement: Y / N 

Delinquency Report 

# and $ by delinquency classification: Current, < 30, 30-60 days, 61-90 days, > 90 days, in foreclosure, 

in bankruptcy, REO 

Breakout of > 60 day delinquencies by collateral type, # and $ 

Breakout of > 60 day delinquencies by state, # and $ 

REO Report 

Listing of REO properties held to include original loan number, date of ownership, description, collateral 

type, address, UPB (of the loan prior to foreclosure), net book value, listing date, estimated sale date, 

appraisal amount, original list price, current list price, cumulative Servicing Expenses allocable, broker 

name, and comments 

Modification Report 

Listing of loans modified, to include borrower name, loan balance and terms before modification, loan 

balance and terms after modification. Show amounts of principal forgiven, if any, and principal 

forbearance amounts, if any. 

Liquidation Report 

Listing of loans and REO properties liquidated, to include borrower name, UPB, net liquidation proceeds, 

cumulative Servicing Expenses, realized loss amount 

Short Sale Report 

Listing of loans for which short sales were accepted, to include borrower name, UPB, payoff accepted, 

realized loss amount 

Judgment Report 

Listing of Judgments obtained, to include borrower name, Judgment amount, current month and 

cumulative payments received, remaining balance 
 

 

Significant Litigation Report 

Company and/or Servicer with respect to assets subject to this Agreement, the actions taken to defend 

such claim, and an estimate of the projected exposure for: a) any claim in which the Company or Servicer 

expects to incur more than $10,000 in Servicing Expenses to defend such claim, b) any claim in which 

multiple plaintiffs have joined in filing an action against the Company and/or Servicer or the same law 

firm has filed individual claims on behalf of more than one plaintiff, and c) any claim(s) regardless of the 

dollar amount naming: (i) any Failed Bank, or (ii) FDIC (in any capacity) as defendant(s). Activity 

should be updated quarterly. 

Environmental Exposure Report 

Provide a report identifying any assets in which the Site Assessment identified an Environmental Hazard 

together with information on the nature of the hazard, additional tests performed, and the cost of 

correcting the hazard identified in the Site Assessment. 

MONTHLY LOAN-LEVEL DETAIL REPORTS 

Monthly Loan Trial Balance and Activity Report 

PROVIDE A MONTHLY LOAN-LEVEL REPORT

 IN EXCEL WITH THE FOLLOWING FIELDS: 

Current Loan Number 

Prior Servicer Loan Number 

P&I Constant 

Note Rate 

Next Due or Paid-Thru Date 

Payoff Date (if applicable) 

Principal Balance, end of prior month 

Principal collections - regular 

Principal collections - payoffs 

Principal proceeds – loan sales 

Principal Write-Off Amount 

Other Non-Cash Principal Adjustment 

Transfer to REO 

Principal Balance, end of current month 

Escrow balance 

Other Advances Balance 

Interest collections - regular 

Interest collections - payoffs 

Interest collections – loan sales 

Non-Cash Interest Adjustment 

Late Charges

 Pre-Payment Penalty Paid 

 Other Fee Income 

Servicing System Data Download – To Initial Member 
Provide a monthly loan-level data download in Excel format with every field populated in the Servicer’s 

loan servicing system. This requirement may be modified in the future by the Initial Member to include 

only certain specified fields. 

SEMIANNUAL REPORT – TO INITIAL MEMBER (in January and July of each year, commencing 

January 2011) 

Business Plan 

Updated Consolidated Business Plan and individual Business Plans for 10 largest Loans, as required 

pursuant to Section 7.7 of the Amended and Restated Limited Liability Company Agreement. 

Projected Cash Flows 

Excel model of projected cash flows by month, as of June 30 and December 31 of each year, as required 

pursuant to Section 7.7(c) of the Amended and Restated Limited Liability Company Agreement. 

AS AVAILABLE – TO INITIAL MEMBER 

Custodial Report or an updated Loan Schedule and Exception List (in each case as defined in the 

Custodial Agreement) from the Custodian/Paying Agent, as provided to the Company. 
 

 

 

 

 

 

 

EXHIBIT C 

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT 

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Agreement”) is 

made and entered into as of ____________, 20__ by and between RL RES 2009-1 Investments, 

LLC, a Delaware limited liability company (“Transferor”), and ______________________, a 

___________________ (“Transferee ”). 

RECITALS 

WHEREAS, the Transferor, is the owner of a limited liability company membership 

interest (the “LLC Interest”) in Multibank 2009-1 RES-ADC Venture, LLC, a Delaware limited 

liability company (the “Company ”); 

WHEREAS, the LLC Interest represents a ___________ percent (___%) “Percentage 

Interest” in the Company (as defined in that certain Amended and Restated Limited Liability 

Company Operating Agreement, effective as of February 9, 2010, by and among the Federal 

Deposit Insurance Corporation, in its capacity as receiver for Failed Banks defined therein (the 

“Initial Member”), Transferor and the Company (the “LLC Operating Agreement ”)); 

WHEREAS, the ownership and other rights associated with the LLC Interest are set forth 

in the LLC Operating Agreement; 

WHEREAS, pursuant to Section 3.13 of the LLC Operating Agreement, Transferor 

granted the Initial Member a first priority security interest in the LLC Interest in order to secure 

certain obligations of Transferor as more fully described in the LLC Operating Agreement; 

WHEREAS, an Event of Default (as defined in the LLC Operating Agreement) has 

occurred and is continuing, and the Initial Member has elected, pursuant to the LLC Operating 

Agreement, to foreclose on its security interest in the LLC Interest and effect the assignment 

contemplated hereby; 

NOW THEREFORE, in consideration of the mutual agreements contained herein and in 

the LLC Operating Agreement, and for other good and valuable consideration, the receipt and 

sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the 

parties hereto agree as follows: 

1. Assignment and Assumption . Transferor hereby assigns and transfers the LLC 

Interest to Transferee, and Transferee hereby accepts and assumes the LLC Interest and agrees to 

be bound by the LLC Operating Agreement, as amended from time to time, to the extent it 

relates to such LLC Interest. 

2. Counterparts. This Agreement may be executed in two or more counterparts, all 

of which shall be considered one and the same agreement and shall become effective when one 

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_______________________ 


 


 


 

or more counterparts have been signed by each of the parties and delivered (including by 

telecopy) to the other party. 

3. No Third Party Beneficiaries . This Agreement shall inure to the benefit of the 

parties hereto and their respective successors and permitted assigns. This Agreement is not 

intended to confer upon any other person any rights or remedies hereunder. 

4. Governing Law . The laws of the State of Delaware will govern the validity, 

performance and enforcement of this Agreement, without giving effect to the principles of 

conflict of laws of the State of Delaware or any other jurisdiction. 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement 

effective as of the date first above written. 

TRANSFEROR: 

RL RES 2009-1 INVESTMENTS, LLC 

By: ___________________ 

Name: Jeffrey P. Krasnoff 

Title: Chief Executive Officer 

TRANSFEREE: 

By: ______________________
 

Name:
 

Title:
 

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EXHIBIT D 

FORM OF LETTER OF CREDIT 

(Bank Letterhead Stationary) 

Federal Deposit Insurance Corporation, in its capacity as Initial Member (as defined below) 

Manager, Capital Markets & Resolutions 

c/o Federal Deposit Insurance Corporation 

550 17th Street, NW (Room F-7014) 

Washington, D.C. 20429-0002 

Attention: Ralph Malami 

Email Address: RMalami@FDIC.gov 

Tel: ________ 

Fax: ________] 

RE: Irrevocable Transferable Letter of Credit No. __________ for 

U.S.$__________, Dated ____________________. 

Gentlemen: 

We hereby issue our irrevocable transferable Letter of Credit No. _________________ 

(this “Letter of Credit”) in favor of Federal Deposit Insurance Corporation (in any capacity, 

including as receiver for the failed banks referenced in the LLC Agreement defined below, in its 

corporate capacity or otherwise, the “FDIC”), as the Initial Member under the LLC Operating 

Agreement defined below (including its successors, and its assigns as provided herein, the 

“Initial Member”) (such Initial Member being the beneficiary of this Letter of Credit), for the 

account of RL RES 2009-1 Investments, LLC (the "Private Owner"). 

We understand that this Letter of Credit is issued pursuant to the Amended and Restated 

Limited Liability Company Operating Agreement dated as of February 9, 2010 (as amended or 

otherwise modified from time to time, the “LLC Operating Agreement”), by and among 

Multibank 2009-1 RES-ADC Venture, LLC (the “Company”), the Private Owner and the Initial 

Member. 

We undertake to honor from time to time your draft or drafts presented to us in accordance 

herewith not exceeding in the aggregate Five Million U.S. Dollars (U.S.$5,000,000.00). All 

drafts hereunder (i) must be marked "Drawn under irrevocable transferable Letter of Credit No. 

__________, dated ____________________", (ii) must be accompanied by a typewritten 

statement signed by a purportedly authorized representative of the Initial Member stating that an 

“Event of Default” or “LC Reissuance/Extension Failure” has occurred under (and as defined in) 

the LLC Operating Agreement (a “Drawing Request”), and (iii) shall, unless payment is to be 

made at sight, include the wire transfer instructions for remittance by us of the amount of such 

draft. 

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Presentation of drafts drawn hereunder, together with the required statement and applicable 

wire transfer instructions, may be made at any time on or before the expiry date hereof (i) by 

physical presentation of such draft at, or overnight delivery of such draft to, our offices located at 

______________________________ [include address in either New York City or Washington, 

D.C.], provided, that any such documents presented on the Expiration Date (as defined below) 

must be received on or prior to 5:00 P.M. (New York, New York time). If we receive such 

documents at such office, all in conformity with the terms and conditions of this Letter of Credit, 

we will honor your draft on the second (2nd) Business Day (as defined below) after receipt of 

such Drawing Request. The original Letter of Credit, any amendments thereto and the originally 

signed Drawing Request on the Initial Member’s letterhead must be included in the documents 

presented hereunder in connection with any draft, it being agreed that such original Letter of 

Credit and all such amendments thereto so presented shall be promptly returned to you (or, if 

presented in person, shall remain with you after we have made a copy thereof at such time of 

presentation) in connection with any partial draw hereunder. 

This Letter of Credit shall expire at 5:00 p.m. (New York, New York time) on the date that 

occurs one year after the date hereof (or, if such date is not a Business Day, the immediately 

succeeding Business Day) (the “Expiration Date”); provided, however, that this Letter of Credit 

will be automatically extended without amendment for additional periods of one year each (in 

each case commencing from the expiry date hereof as then in effect), unless we elect not to 

extend this Letter of Credit and deliver to the Initial Member written notice of such election at 

least sixty (60) days prior to any such Expiration Date. Any such notice shall be in writing and 

shall be delivered in hand with receipt acknowledged, or by certified mail (return receipt 

requested), to the Initial Member at its address set forth above (or to such other address for any 

such notices which Initial Member may hereafter specify in a written notice delivered to the 

undersigned). “Business Day” means any date other than a Saturday, Sunday or a day on which 

banks in the [State of New York] [District of Columbia]2 are authorized or required by law to be 

closed, and a day on which payments can be effected on the Fedwire system (or any replacement 

thereto). 

Partial and multiple drafts are permitted, and the amount of this Letter of Credit will be 

reduced by each such draft honored. 

All our charges (including wire transfer fees in connection with any payments by us 

hereunder and transfer charges in connection with a transfer of this Letter of Credit by the FDIC 

(in any capacity), as Initial Member, to a transferee thereof) are for the account of the Private 

Owner, and in no event shall any such charges reduce the amount of any draft or payment 

hereunder; provided, however, transfer charges in connection with a transfer of this Letter of 

Credit by any Initial Member other than the FDIC (in any capacity) to a transferee thereof shall 

be for the account of such Initial Member and/or transferee. 

2. Select based on location of presentation 

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We agree that we shall have no duty or right to inquire as to the basis upon which Initial 

Member has determined to present to us any draft under this Letter of Credit. 

This Letter of Credit is transferable in whole but not in part to any transferee who has 

succeeded you as the Initial Member under the LLC Operating Agreement, and may be 

successively transferred. Any transfer request must be effected by presenting to us the attached 

form of Attachment I signed by the transferor and the transferee together with the original Letter 

of Credit. Upon our endorsement of such transfer, the transferee instead of the transferor shall, 

without necessity of further action, be entitled to all the benefits of and rights under this Letter of 

Credit in the transferor’s place; provided that, in such case, any drafts of the Initial Member to be 

provided hereunder shall be signed by one who states therein that he is a duly authorized officer 

or agent of the transferee. For purposes of clarification, internal transfers within the FDIC 

(where following such transfer, the FDIC, in any capacity is to remain as the beneficiary of the 

Letter of Credit) shall be effective without the need for notice or execution and delivery of any 

such request for transfer in the form of Attachment I hereto. 

Except as otherwise expressly stated herein, this Letter of Credit is subject to the 

International Standby Practices, International Chamber of Commerce Publication No. 590, 

including any amendments, modifications or revisions thereof (the “ISP 98”) (provided, that, 

with respect to application of Rule 3.14 of the ISP 98 (with respect to extension of the final day 

for presentation in certain circumstances), the reference therein to “thirty calendar days” shall, as 

applied herein, be limited to “ten calendar days”, such that, if on the last Business Day for 

presentation the place for presentation stated herein is for any reason closed and presentation is 

not timely made because of such closure, then the last day for presentation is automatically 

extended to the day occurring ten calendar days after the place of presentation reopens for 

business). As to matters not covered by the ISP 98, and to the extent not inconsistent with the 

ISP 98, this Letter of Credit shall be governed by and construed in accordance with the laws of 

the State of New York, including without limitation the Uniform Commercial Code as in effect 

in the State of New York, without regard to principals of conflict of laws. 

All of the terms and conditions of this Letter of Credit are contained herein and shall not be 

altered except by reduction in the amount of this Letter of Credit due to corresponding payments 

in like amount in compliance with the aforementioned terms. Except as otherwise expressly set 

forth herein, there are no conditions to this Letter of Credit. 

Very truly yours, 

By: _________________________ 

Name:_______________________ 

Title: ________________________ 

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ATTACHMENT I TO LETTER OF CREDIT
 

REQUEST FOR TRANSFER
 

[Insert Bank Name and Address] 

RE: Irrevocable Transferable Letter of Credit No. [__________] for 

U.S.$[__________], Dated [____________________]. 

Gentlemen: 

Reference is made to that certain irrevocable transferable Letter of Credit No. 

[_________________], dated _________ (the “Letter of Credit”), issued by you in favor of 

[__________] (the “Transferor”), for the account of RL RES 2009-1 Investments, LLC (the 

"Private Owner"). 

The Transferor has transferred and assigned (and hereby confirms to you said transfer and 

assignment) all of its rights in and under the Letter of Credit to [name of Transferee] (the 

“Transferee”) and confirms that the Transferor no longer has any rights under or interest in the 

Letter of Credit. 

The Letter of Credit is returned herewith and we request that you issue an irrevocable 

transferable letter of credit in the name of the Transferee and providing for notices to be sent to 

the Transferee at the address set forth below and in all other respects identical to the Letter of 

Credit. 

Transferee hereby certifies that it is a duly authorized transferee under the terms of the Letter of 

Credit and is accordingly entitled, upon presentation of the drafts (and applicable items) called 

for therein, to receive payment thereunder. 

Notices under the Letter of Credit should be sent to the Transferee as follows: [Name], 

[Address], [Attention:_______], Email: [______], Fax: [________], Tel: [________]. 

[NAME OF TRANSFEROR] 

By_________________________
 

[Name and Title of Authorized
 

Representative of Transferor]
 

[NAME OF TRANSFEREE] 

By_________________________
 

[Name and Title of Authorized
 

Representative of Transferee]
 

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SCHEDULE I

LIST OF VARIOUS FAILED FINANCIAL INSTITUTIONS
 

RESIDENTIAL ADC
 

Bank Name City State Fund Closing Date 

Columbian Bank and Trust Topeka KS 10011 August 22, 2008 

Integrity Bank Alpharetta GA 10012 August 29, 2008 

Silver State Bank Henderson NV 10013 September 5, 2008 

Alpha Bank and Trust Alpharetta GA 10018 October 24, 2008 

Freedom Bank Bradenton FL 10019 October 31, 2008 

Security Pacific Bank Los Angeles CA 10020 November 7, 2008 

Franklin Bank, SSB Houston TX 10021 November 7, 2008 

The Community Bank Loganville GA 10022 November 21, 2008 

First Georgia Community Bank Jackson GA 10025 December 5, 2008 

Sanderson State Bank Sanderson TX 10026 December 12, 2008 

Haven Trust Bank Duluth GA 10027 December 12, 2008 

Bank of Clark County Vancouver WA 10029 January 16, 2009 

1st Centennial Bank Redlands CA 10030 January 23, 2009 

MagnetBank Salt Lake City UT 10031 January 30, 2009 

Ocala National Bank Ocala FL 10032 January 30, 2009 

FirstBank Financial Services McDonough GA 10036 February 6, 2009 

Cornbelt Bank and Trust Pittsfield IL 10037 February 13, 2009 

Riverside Bank of the Gulf Coast Cape Coral FL 10038 February 13, 2009 

Silver Falls Bank Silverton OR 10041 February 20, 2009 

FirstCity Bank Stockbridge GA 10047 March 20, 2009 

Omni National Bank Atlanta GA 10048 March 27, 2009 

Integrity Bank Jupiter FL 10095 July 31, 2009 

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Exhibit B 

Form of Loan Value Schedule 

OMITTED

60866223-7
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit C 

[FORM OF TRANSFEREE ACKNOWLEDGMENT AND CERTIFICATION] 

TRANSFEREE ACKNOWLEDGMENT AND CERTIFICATION 

Reference is made to the Limited Liability Company Interest Sale and 

Assignment Agreement dated February 9, 2010 (the “Tran sferred LLC Interest Sale 

Agreement”) by and among RL RES 2009-1 Investments, LLC, a Delaware limited 

liability company (the “Private Owner”), the Federal Deposit Insurance Corporation, as 

receiver for the various failed financial institutions listed on Schedule I hereto (including 

its successors and assigns thereto, the “Initial Member”), and Multibank 2009-1 RESADC Venture, LLC (the “Company ”). Capitalized terms used, and not otherwise 

defined, in this Transferee Acknowledgement and Certification have the meanings given 

in the Transferred LLC Interest Sale Agreement. 

The undersigned, the Private Owner, hereby acknowledges and certifies to the 

Initial Member that it has read and understands, and is prepared to cause the Company to 

comply with, the obligations imposed upo n the Company under the Contribut ion 

Agreement and the Ancillary Documents (as defined in the Contribut ion Agreement). 

Without limiting the foregoing, and subject to the provisions of the Contribut ion 

Agreement and the Ancillary Documents, the Private Owner is aware of and prepared to 

cause the Company to comply with the obligations as specified in the Contribut ion 

Agreement (i) to remove the Initial Member and the Failed Bank as a party to any 

litigation or actions with respect to the Loans (as defined in the Contribut ion Agreement) 

(including without limitation the actions on the List (as defined below)), and to substitute 

the Company as the real party-in-interest in any such litigation or actions and (ii) to take 

all actions necessary to file (x) proofs of claims in pending bankruptcy cases involving 

any Loans for which the Initial Member or the Failed Bank has not already filed a proof 

of claim, and (y) all documents required by Rule 3001 of the Federal Rules of 

Bankruptcy Procedure and to take all such similar actions as may be required in any 

relevant jurisdiction in any pending bankruptcy or insolvency case or proceeding in such 

jurisdiction involving any Loans in order to evidence and assert the Company’s rights. 

Attached hereto as Schedule II is a list of litigation made available with respect to 

the Loans (the “List ”). The undersigned acknowledges that the Initial Member make s no 

representation or warranty as to the completeness or accuracy of the List or the 

information contained or referred to therein and that (without limitation of the foregoing) 

there may be additional litigation or bankruptcy actions pending against the Failed Bank 

with respect to the Loans or with respect to other parties with respect to the Loans. 

RL RES 2009-1 INVESTMENTS, LLC, a 

Delaware limited liability company 

By: ________________________________ 

Name: Jeffrey P. Krasnoff 

Title: Chief Executive Officer 

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SCHEDULE I TO TRANSFEREE ACKNOWLEDGEMENT AND 

CERTIFICATION 

LIST OF VARIOUS FAILED FINANCIAL INSTITUTIONS
 

RESIDENTIAL ADC
 

Bank Name City State Fund Closing Date 

Columbian Bank and Trust Topeka KS 10011 August 22, 2008 

Integrity Bank Alpharetta GA 10012 August 29, 2008 

Silver State Bank Henderson NV 10013 September 5, 2008 

Alpha Bank and Trust Alpharetta GA 10018 October 24, 2008 

Freedom Bank Bradenton FL 10019 October 31, 2008 

Security Pacific Bank Los Angeles CA 10020 November 7, 2008 

Franklin Bank, SSB Houston TX 10021 November 7, 2008 

The Community Bank Loganville GA 10022 November 21, 2008 

First Georgia Community Bank Jackson GA 10025 December 5, 2008 

Sanderson State Bank Sanderson TX 10026 December 12, 2008 

Haven Trust Bank Dulut h GA 10027 December 12, 2008 

Bank of Clark County Vancouver WA 10029 January 16, 2009 

1st Centennial Bank Redlands CA 10030 January 23, 2009 

MagnetBank Salt Lake City UT 10031 January 30, 2009 

Ocala National Bank Ocala FL 10032 January 30, 2009 

FirstBank Financial Services McDonough GA 10036 February 6, 2009 

Cornbelt Bank and Trust Pittsfield IL 10037 February 13, 2009 

Riverside Bank of the Gulf Coast Cape Coral FL 10038 February 13, 2009 

Silver Falls Bank Silverton OR 10041 February 20, 2009 

FirstCity Bank Stockbridge GA 10047 March 20, 2009 

Omni Nationa l Bank Atlanta GA 10048 March 27, 2009 

Integrity Bank Jup iter FL 10095 July 31, 2009 

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SCHEDULE II TO TRANSFEREE ACKNOWLEDGEMENT AND 

CERTIFICATION 

LIST OF LITIGATION
 

OMITTED

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Exhibit D 

[FORM OF JOINDER AND CONSENT AGREEMENT] 

JOINDER AND CONSENT AGREEMENT 

THIS JOINDER AND CONSENT AGREEMENT, dated as of February 9, 2010, is 

delivered pursuant to Section 1(b) of the Limited Liability Company Interest Sale and 

Assignment Agreement, dated as of February 9, 2010, by and among RL RES 2009-1 

Investments, LLC, a limited liability company organized and existing under the laws of 

Delaware (the “Private Owner”), the Federal Deposit Insurance Corporation (in any capacity, 

the “FDIC”), in its separate capacities as receiver with respect to the separate receiverships for 

each of the various failed financial institutions listed on Schedule I hereto (including its 

successors and assigns thereto) (collectively, the “Initial Member”), and Multibank 2009-1 

RES-ADC Venture, LLC, a limited liability company organized and existing under the laws of 

Delaware (the “Company”) (the “Transferred LLC Interest Sale Agreement ”). Capitalized 

terms used herein without definition are used as defined in the Transferred LLC Interest Sale 

Agreement. 

By executing and delivering this Joinder and Consent Agreement, the Private Owner 

hereby becomes a party to the Loan Contribut ion and Sale Agreement, dated as of the date of this 

Joinder and Consent Agreement, by and between the Initial Member and the Company (the 

“Contribution Agreement ”) with the same force and effect as if originally named as a party to 

the Contribut ion Agreement and, without limiting the generality of the foregoing, consents to 

and assumes all obligations and liabilities imposed upon the Private Owner pursuant to the 

Contribut ion Agreement. The Private Owner hereby agrees to be bound for all intents and 

purposes as a party to the Contribution Agreement. 

(remainder of page blank) 

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IN WITNESS WHEREOF, the Private Owner has caused this Joinder and Consent 

Agreement to be duly executed and delivered as of the date first above written. 

RL RES 2009-1 INVESTMENTS, LLC 

By: ______________________________________ 

Name: Jeffrey P. Krasnoff 

Title: Chief Executive Officer 

ACKNOWLEDGED AND AGREED as of the date 

first above written: 

FEDERAL DEPOSIT INSURANCE 

CORPORATION, as receiver for Various Failed 

Financial Institutions listed on Schedule I hereto, as 

the Initial Member 

By: ______________________________________ 

Name: Ronald Sommers 

Title: Attorney-in-Fact 

MULTIBANK 2009-1 RES-ADC VENTURE, LLC, as the Company 

By:	 Federal Deposit Insurance Corporation as 

Receiver for Various Failed Financial 

Institutions Listed on Schedule 1 Hereto, as 

Sole Member and Manager 

By: ________________________________
 

Name: Ronald Sommers
 

Title: Attorney-in-Fact
 

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SCHEDULE I TO JOINDER AND CONSENT AGREEMENT

LIST OF VARIOUS FAILED FINANCIAL INSTITUTIONS
 

RESIDENTIAL ADC
 

Bank Name City State Fund Closing Date 

Columbian Bank and Trust Topeka KS 10011 August 22, 2008 

Integrity Bank Alpharetta GA 10012 August 29, 2008 

Silver State Bank Henderson NV 10013 September 5, 2008 

Alpha Bank and Trust Alpharetta GA 10018 October 24, 2008 

Freedom Bank Bradenton FL 10019 October 31, 2008 

Security Pacific Bank Los Angeles CA 10020 November 7, 2008 

Franklin Bank, SSB Houston TX 10021 November 7, 2008 

The Community Bank Loganville GA 10022 November 21, 2008 

First Georgia Community Bank Jackson GA 10025 December 5, 2008 

Sanderson State Bank Sanderson TX 10026 December 12, 2008 

Haven Trust Bank Dulut h GA 10027 December 12, 2008 

Bank of Clark County Vancouver WA 10029 January 16, 2009 

1st Centennial Bank Redlands CA 10030 January 23, 2009 

MagnetBank Salt Lake City UT 10031 January 30, 2009 

Ocala National Bank Ocala FL 10032 January 30, 2009 

FirstBank Financial Services McDonough GA 10036 February 6, 2009 

Cornbelt Bank and Trust Pittsfield IL 10037 February 13, 2009 

Riverside Bank of the Gulf Coast Cape Coral FL 10038 February 13, 2009 

Silver Falls Bank Silverton OR 10041 February 20, 2009 

FirstCity Bank Stockbridge GA 10047 March 20, 2009 

Omni Nationa l Bank Atlanta GA 10048 March 27, 2009 

Integrity Bank Jup iter FL 10095 July 31, 2009 

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