Document:

EX-10.12.09

 

Exhibit 10.12(i)

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

January 8, 2007

     This Amended and Restated Employment Agreement (this “Agreement”), is made as of January 8,
2007, by and between CRAIG T. BOUCHARD, currently residing at
      , and WHEELING-PITTSBURGH
CORPORATION, a corporation organized under the laws of the State of Delaware (the “Company”). This
Agreement supersedes and replaces that certain Employment Agreement between the Company and
Executive effective as of December 19, 2006 (the “Effective Date”).

In consideration of the covenants and conditions herein contained and other good and valuable
consideration, receipt of which is hereby acknowledged by each party, the parties hereby agree as
follows:

1. EMPLOYMENT.

The Company shall employ the Executive commencing on the Effective Date, and the Executive hereby
accepts such employment, all upon the terms and conditions set forth herein.

2. DUTIES AND AUTHORITY.

     (a) POSITION. Executive shall serve as the President of the Company, with those
authorities, duties and responsibilities customary to that position and such other authorities,
duties and responsibilities as the Board of Directors of the Company (the “Board”) may reasonably
assign the Executive from time to time. The Executive shall use his best efforts, including the
highest standards of professional competence and integrity, and shall devote a reasonable portion
of his business time and effort, in and to his employment hereunder, and shall not engage in any
other business activity which would conflict with the rendition of his services hereunder, except
that the Executive may retain his position with Esmark Incorporated as a director, President and,
if approved by the Board, may hold directorships or related positions in charitable, educational or
not-for-profit organizations, or directorships in business organizations, including and make
passive investments, which do not unreasonably interfere with the Executive’s day-to-day acquittal
of his responsibilities to the Company.

     (b) BOARD MEMBERSHIP. Executive shall be nominated for election as a director of the
Company by the shareholders at each annual meeting during the term of this Agreement (or at each
annual meeting at which his then current term as a director would otherwise expire), and if so
elected by the shareholders, Executive shall serve as a member of the Board. The Executive
acknowledges that the election of directors is the prerogative of the shareholders, acting in their
sole discretion and, accordingly, that the failure of the shareholders to approve his nomination to
membership on the Board for any term does not constitute a violation of this Agreement. In the
event the Executive is elected as a member of the Board, any determination or action required of or
permitted to the Board under this Agreement shall exclude the vote of the Executive. In addition,
in the event the Executive is elected as a member of the Board, the Executive shall recuse himself
from any such Board’s discussion pertaining to the terms and conditions of his employment by the
Company, whether pursuant to this Agreement or

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otherwise.

3. TERM.

     (a) GENERAL. This Agreement shall have effect as of the Effective Date, and shall
remain in effect until November 30, 2007 subject to earlier termination under Section 3(b) or
Section 5 or extension as described below. The period from the Effective Date until this Agreement
shall have expired in accordance with this Section or been terminated in accordance with Section 5
is hereafter referred to as “the term hereof” or “the term of this Agreement.” The term hereof
shall be extended automatically for an additional year as of December 1, 2007 and as of each
subsequent annual anniversary of such date (each such extension date is referred to herein as a
“Renewal Date”) unless at least one hundred twenty (120) days prior to any such Renewal Date either
party shall have given notice to the other party that the term of this Agreement shall not be so
extended.

     (b) EFFECT OF POSSIBLE MERGERS. The Company has entered into a Merger Agreement dated
October 24, 2006 with Companhia Siderurgica Nacional (CSN). In addition, a merger with Esmark
Incorporated has been proposed. Notwithstanding the foregoing, if either of these proposed mergers
is consummated, the Agreement will terminate 30 days after completion of the merger.

     (c) SURVIVAL OF CERTAIN PROVISIONS. Notwithstanding anything else herein contained,
the provisions of Sections 4 through 7 hereof shall survive the termination of this Agreement and
of the Executive’s employment hereunder.

4. COMPENSATION.

In return for his services hereunder, the Executive shall be entitled to (i) the Salary as
specified below, (ii) bonuses, to the extent provided below, (iii) long-term incentive, and (iv)
certain fringe benefits, to the extent provided below.

     (a) SALARY. Starting with the Effective Date, the Company shall pay the Executive, in
accordance with the Company’s customary payroll practices for executives, salary at an annual rate
of $500,000, subject to annual review and upward adjustment at the determination of the
Compensation Committee of the Board (as so adjusted, the Executive’s “Salary”). The payments for
services through the end of 2008 shall be made by the grant of shares of Company common stock from
the 2003 Management Incentive Stock Plan or a successor plan based on the closing price of the
Company common stock on the day prior to the grant date (net of required tax withholdings). On
January 9, 2007, restricted stock will be granted for the 24-month period from January 1, 2007
through December 31, 2008 based on a salary at an annual rate of $500,000 for the entire 24-month
period. The restrictions shall lapse in equal portions on the first business day after the end of
each calendar quarter in arrears; provided that the Executive is employed on the last day of the
calendar quarter. In addition, a pro rata lapse of restrictions shall be made for the time period
between the last lapse date and the date of the involuntary termination of the employment of the
Executive without Cause or termination by the Executive for Good Reason (as defined in Section
5(b)). This grant shall not preclude a later upward adjustment of the Salary. Executive will be
taxed on his Salary as such shares of restricted stock vest and must arrange to pay the Company’s
tax withholding obligations on this income by either (i) surrendering shares of Company common
stock (the Company shall then credit the fair market value of such surrendered shares, determined
as of the date when taxes otherwise would have been withheld in cash, against such withholding
taxes), or (ii) reimbursing

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the Company in cash for the amount of such withholding taxes.

     (b) BONUS. For the period from the Effective Date until December 31, 2007, the
Executive will not be eligible to receive a bonus. In subsequent years, at the discretion of the
Compensation Committee, the Executive may participate in the Company’s existing short-term
incentive plan for executives, as the same may be amended from time to time by the Board. The Board
may also award other bonuses from time to time in its discretion.

     (c) LONG-TERM INCENTIVES. Within 30 days of the Effective Date, the Company shall make
an initial equity grant to the Executive as stated below. In all subsequent years, the Executive
shall be awarded such equity incentive awards as the Board or the Compensation Committee shall
determine from time to time in their discretion. The terms of the initial equity grant shall be as
stated below with additional terms consistent with Company practices:

     Number of restricted shares: 25,000

     Vesting schedule for restricted shares: Vest 1/3 on each of the first three anniversaries of
the Effective Date.

     Executive may be eligible to participate in other long-term incentive plans and programs as
the Board or the Compensation Committee may deem appropriate from time to time.

     (d) FRINGE BENEFITS. The Executive will be eligible for and entitled to participate in
other benefits maintained by the Company for its senior executive officers, as such benefits may be
modified from time to time for all such employees, such as its medical, dental, 401(k), accident,
disability, and life insurance benefits, on a basis not less favorable than that applicable to
other executives of the Company. Any such participation shall be subject to (i) the terms of the
applicable plan documents, (ii) generally applicable policies of the Company and (iii) the
discretion of the Board or any administrative or other committee provided for in or contemplated by
such plan, exercised in accordance with applicable law. The Executive will also be entitled to the
following:

          (i) Subject to the Company’s standard policies, four (4) weeks of vacation per calendar year
(or any longer period as shall be provided under the Company’s general vacation policies), without
reduction in Salary, to be taken at such times and intervals as shall be determined by the
Executive subject to the reasonable business needs of the Company and to Company policies as in
effect from time.

          (ii) Appropriate office space, administrative support, e.g., secretarial assistance, and such
other facilities and services as are suitable to the Executive’s position and adequate for the
performance of the Executive’s duties.

          (iii) The use of a company car. The Company shall be responsible for the purchase price or
lease payment and shall pay or reimburse all of the Executive’s expenses for gasoline for use of
the Company car, and maintenance and insurance of his Company car, subject to such reasonable
reporting requirements as may be specified by the Company and/or the Internal Revenue Service. The
Executive shall keep and submit records of his business and personal use of the automobile. The
Executive acknowledges that his personal use of the automobile will result in additional taxable
income to him.

          (iv) Up to $10,000 per annum in reimbursement of legal and personal tax

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preparation and planning assistance.

          (v) Payment or reimbursement of the cost of membership for himself and his immediate family in
one country club and one business club, and business-related use thereof.

          (vi) Payment or reimbursement of the cost, not covered by health insurance, of one
comprehensive physical examination during each year during the term of this Agreement.

          (vii) Special Travel Arrangements. The Company shall permit, arrange for and bear the cost
and expense of the judicious and reasonable use by the Executive of an airplane for business,
personal and family travel, including as an element of such cost and expense the federal, state and
local income tax consequences to the Executive of the use of such airplane for non-business
purposes.

Executive acknowledges that he will have no right to cash compensation in lieu of any of the
specific foregoing fringe benefits except with respect to vacation pay, and then only to the
extent, if any, allowed by the Company’s vacation pay policies as in effect from time to time.

     (e) EXPENSES. The Executive will be entitled to reimbursement of all reasonable
expenses, in accordance with the Company’s policy as in effect from time to time and on a basis not
less favorable than that applicable to other executives of the Company, including, without
limitation, telephone, travel and entertainment expenses incurred by the Executive in connection
with the business of the Company, subject to such reasonable substantiation and documentation as
may be specified by the Company.

     (f) INDEMNIFICATION. The Company shall, and the Company shall use its best efforts to
cause any subsidiaries or affiliates it may now or hereafter have to, indemnify the Executive to
the maximum extent permitted by law and regulation in connection with any liability, expense or
damage which the Executive incurs as a result of the Executive’s employment and positions with the
Company and its current or future subsidiaries as contemplated by this Agreement, provided that the
Executive shall not be indemnified with respect to any matter as to which he shall have been
adjudicated in any proceeding not to have acted in good faith in the reasonable belief that his
action was in the best interest of the Company and its subsidiaries. The Company, on behalf of
itself and its current and future subsidiaries, hereby confirms that the occupancy of all offices
and positions which in the future are or were occupied or held by the Executive in connection with
his employment under this Agreement have been so occupied or held at the request of and for the
benefit of the Company and its subsidiaries for purposes of the Executive’s entitlement to
indemnification under applicable provisions of the respective articles of organization and/or other
similar documents of the Company and its subsidiaries.

Expenses incurred by the Executive in defending a claim, action, suit, investigation or proceeding
shall be paid by the Company in advance of the final disposition thereof upon the receipt by the
Company of an undertaking by the Executive to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified hereunder. The foregoing rights are not
exclusive and shall not limit any rights accruing to the Executive under any other agreement or
contract or under applicable law.

     (g) PARACHUTE PAYMENT TAXES. Notwithstanding any other provisions of this Agreement,
in the event that any payment or benefit under this Agreement or any other agreement or arrangement
of the Company received or to be received by the Executive in

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connection with a Change in Control or the termination of the Executive’s employment (all such
payments and benefits, the “Total Payments”) is determined to be subject (in whole or part) to the
excise tax imposed by Section 4999 of the Code (together with any interest or penalties imposed
with respect to such excise tax, the “Excise Tax”), then the Executive shall be entitled to receive
an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive
of all taxes (including any interest or penalties imposed with respect to such taxes), including
without limitation any income taxes and Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount equal to the Excise Tax (and, for the avoidance of doubt, the amount of the Total
Payments). All determinations required to be made under this Section 4(g), including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to
be utilized in arriving at such determination, shall be made by the Company’s accountants or such
other certified public accounting firm reasonably acceptable to the Company as may be designated by
the Executive which shall provide detailed supporting calculations both to the Company and the
Executive.

5. TERMINATION OF EMPLOYMENT AND EFFECTS THEREOF.

     (a) TERMINATION. This Agreement and the Executive’s employment under this Agreement
may be terminated only in the following circumstances. On any termination in accordance with this
Section, the Executive (or in the event of his death, his estate) shall be entitled to his then
Salary earned but unpaid through the end of the month in which termination (including death)
occurred. The Company shall have only such further obligations to the Executive (or in the event of
his death, his estate), if any, as are specified below under the applicable termination provision.

          (i) UPON DEATH. In the event of the Executive’s death during the term hereof, the
Executive’s employment hereunder shall immediately and automatically terminate.

          (ii) AS A RESULT OF DISABILITY. In the event that the Executive becomes disabled
during the term hereof within the meaning of the Company’s then applicable long-term disability
plan, the Company may terminate the Executive’s employment without further obligation upon notice
to the Executive. In the event of such disability, the Executive will continue to receive his base
salary and benefits under Section 4 hereof until the earlier of his death or the date the Executive
becomes eligible for disability income under the Company’s then applicable long-term disability
plan or workers’ compensation insurance plan.

          (iii) BY THE COMPANY FOR CAUSE. The Company may terminate the Executive’s employment
for Cause (as defined in subsection (b) below) at any time upon notice to the Executive setting
forth in reasonable detail the nature of such Cause.

          (iv) BY THE COMPANY OTHER THAN FOR CAUSE. The Company may terminate Executive’s
employment other than for Cause upon thirty (30) days notice to the Executive (or at its option
immediately with thirty (30) days continued compensation, including then Salary and benefits, in
lieu of such notice). In the event of such termination, Executive (or in the event of his death
following termination, his estate) shall be entitled only to the additional amounts described in
subparagraph (A) below and the continuation of health insurance benefits described in subparagraph
(B) below:

          (A) Salary and Pro Rata Bonus Payment. If the Executive’s employment is terminated by
the Company without Cause, the Executive shall be entitled to a payment equal to (x) one (1) times
his annual Salary at the highest annualized rate in effect during the one year

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immediately preceding the date of the date of termination, payable in a single lump sum within
thirty (30) days of termination, plus (y) a pro rata bonus, in an amount determined under the terms
of the applicable Company bonus plan, (but not less than 100% of the Executive’s annual Salary for
the first year of this Agreement), payable at the same time as executive bonuses are paid generally
under the applicable Company bonus plan, but in no event later than March 15 of the year following
the year in which the termination occurs.

          (B) Health Care Continuation. If at his termination of employment by the Company
without Cause the Executive is eligible to and timely elects continued health coverage under
Sections 601-607 of ERISA (“COBRA Continuation”) then, for the period of such COBRA Continuation,
the Company shall also pay that share of the premium cost of Executive’s COBRA Continuation (and
that of his eligible dependents also electing COBRA Continuation) in the Company’s group health
plan as it pays for active employees of the Company and their dependents generally.

          (C) Effect of Change of Control. In the event the Company terminates the Executive’s
employment other than for Cause within one (1) year following a Change of Control (as defined in
subparagraph (b) below), the Executive shall be entitled to receive an amount equal to the greater
of (i) or (ii):

          (i) Two (2) times his annual Salary at the highest annualized rate in effect during the one
year immediately preceding the date of the Change of Control, payable in a single lump sum within
thirty (30) days of termination, in lieu of the amount described in subparagraph (A) above, COBRA
Continuation under subparagraph (B) above (but in this event, for a maximum of eighteen (18)
months), two (2) times his target bonus (which shall be 100% of the Executive’s annual Salary if
the Change of Control occurs during the first year of this Agreement), and all equity incentive
awards will be fully vested (including the award pursuant to Section 4(c)); or

          (ii)The amount payable under the following schedule.

	 	 	 
	Change of Control Date	 	Amount Payable
	Within one (1) year of Effective Date
	 	$4,000,000
	After one (1) year but less than two (2) years of Effective Date
	 	$2,000,000
	After two (2) years but less than three (3) years of Effective Date
	 	$1,000,000
	After three (3) years of Effective Date
	 	$0

          For purposes of comparing the amounts payable under (i) and (ii), the value of the vesting of
equity awards in (i) shall be the fair market value of any restricted stock that is vested and the
difference between the current fair market value of the Company’s stock and the exercise price of
any option that is vested.

          Anything in this Agreement to the contrary notwithstanding, if the Executive’s employment with
the Company is terminated other than for Cause prior to the date on which a Change of Control
occurs, and it is reasonably demonstrated that such termination (i) was at the request of a third
party who has taken steps reasonably calculated to effect a Change in Control or (ii) otherwise
arose in connection with or anticipation of a Change in Control then for all purposes of this
Agreement the date of the Change in Control shall mean the date immediately prior to the date of
such termination.

          (v) BY THE EXECUTIVE. Executive may terminate his employment and this

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Agreement for any or no reason whatsoever at any time. Except as provided in subparagraph
(B), the Executive shall give at least sixty (60) days’ advance notice of any such termination.

          (A) Good Reason. In the event the Executive gives such notice for and within sixty
(60) days of having Good Reason, on the effective date of his resignation he shall be entitled to
receive an amount equal to one (1) times his annual Salary at the highest annualized rate in effect
during the one year immediately preceding the date of the date of termination, payable in a single
lump sum within thirty (30) days of termination, COBRA Continuation under subparagraph (B) of
paragraph (iv) above and a pro rata bonus under subparagraph (A) of paragraph (iv) above.

          (B) Effect of Change of Control. In the event the Executive gives notice to terminate
employment within six (6) months after a Change of Control event occurs without having Good Reason
to terminate employment, he shall receive the benefits provided under Section 5(a)(iv)(C)(i) above.
In the event that at any time within one (1) year following a Change of Control the Executive
gives notice to terminate employment for Good Reason (with such notice given within sixty (60) days
of having Good Reason), he shall receive the greater of the benefits provided under Section
5(a)(iv)(C)(i) or (ii) above. Anything in this Agreement to the contrary notwithstanding, if the
circumstances constituting Good Reason occur prior to the date on which a Change of Control occurs,
and it is reasonably demonstrated that such circumstances (i) occurred at the request of a third
party who has taken steps reasonably calculated to effect a Change in Control or (ii) otherwise
arose in connection with or anticipation of a Change in Control then for all purposes of this
Agreement the date of the Change in Control shall mean the date immediately prior to the occurrence
of such circumstances.

          (C) Resignation without Good Reason. In the event the Executive resigns other than in
the circumstances described in subparagraphs (A) and (B) above, he shall not be entitled to any
additional Salary or COBRA Continuation or pro rata bonus. The Company may at its sole option
waive the requirement of advance notice and decline to accept the Executive’s service for any
period following its receipt of notice, but in that event, Executive shall be entitled to continued
compensation in accordance with Section 4 for the entirety of the otherwise applicable notice
period (and will be deemed to be an employee for such period) as well as Salary and COBRA
Continuation and pro rata bonus in accordance with this paragraph if applicable.

          (vi) EXPIRATION. In the event that the Company or the Executive gives a Termination
Notice under Section 3(a), then upon the expiration of the term of this Agreement, if the Executive
is then employed, the Executive shall be entitled to receive an amount equal to (x) one (1) times
his annual Salary at the highest annualized rate in effect during the one year immediately
preceding the date of termination, plus (y) a pro rata bonus under subparagraph (A) of paragraph
(iv) above, payable in a single lump sum within thirty (30) days of the expiration of the term of
this Agreement, and COBRA Continuation under subparagraph (B) of paragraph (iv) above. The Salary
benefit provided by this paragraph (vi) shall be reduced (but not below zero) by the amount of any
other cash severance benefit to which the Executive may then be entitled under any general
severance plan or policy of the Company.

     (b) DEFINITIONS. For these purposes:

          (i) “Cause” means the Executive has: (A) been convicted of, or has pled guilty or nolo
contendere to any felony, or any misdemeanor involving moral turpitude under the laws of the United
States or any state or political subdivisions thereof; (B) committed a breach of

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duty of loyalty which is materially detrimental to the Company; (C) materially violated any
provision of Section 6 of this Agreement; (D) failed to perform or adhere to explicitly stated
duties or guidelines of employment or to follow the directives of the Board (which are not unlawful
to perform or to adhere to or follow and which are within the scope of Executive’s duties)
following a written warning that if such failure continues it will be deemed a basis for a “For
Cause” dismissal; or (E) acted with gross negligence or willful misconduct in the performance of
the Executive’s duties. No act, or failure to act, on the Executive’s part shall be deemed
“willful” unless done, or omitted to be done, by the Executive not in good faith and without
reasonable belief that the Executive’s act, or failure to act, was in the best interest of the
Company. Following a Change of Control, subsection (D) above shall be deleted from this definition
of “Cause.”

          (ii) “Change of Control” means the occurrence of any of the following: (A) a merger or
consolidation of the Company or Wheeling-Pittsburgh Steel Corporation (“WPSC”) with or into another
person or the sale, transfer, or other disposition of all or substantially all of the Company’s or
WPSC’s assets to one or more other persons in a single transaction or series of related
transactions, unless securities possessing more than 50% of the total combined voting power of the
survivor’s or acquirer’s outstanding securities (or the securities of any parent thereof) are held
by a person or persons who held securities possessing more than 50% of the total combined voting
power of the Company immediately prior to that transaction; (B) any person or group of persons
(within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended and in
effect from time to time), other than the Company, WPSC or an affiliate, directly or indirectly
acquires beneficial ownership (determined pursuant to Securities and Exchange Commission Rule 13d-3
promulgated under the said Exchange Act) of securities possessing more than 50% of the total
combined voting power of the Company’s outstanding securities pursuant to a tender or exchange
offer made directly to the Company’s stockholders; or (C) over a period of 36 consecutive months or
less from the Effective Date, there is a change in the composition of the Board such that a
majority of the members of the Board (rounded up to the next whole number, if a fraction) ceases to
be composed of individuals who either (1) have been members of the Board continuously since the
beginning of the 36-month period referred to above or (2) have been elected or nominated for
election as Board members during such period by at least a majority of the members Board described
in the preceding clause (1) who were still in office at the time that election or nomination was
approved by the Board, provided, however, that a Change of Control shall be deemed to have occurred
in any event if, by reason of one or more actual or threatened proxy contests for the election of
directors or otherwise, a majority of the Board shall consist of individuals, other than directors
referred to in clause (1) above, whose election as members of the Board occur within such 36-month
period at the request or on behalf of the same person or group of persons (within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended and in effect from time to
time). Notwithstanding the foregoing, a Change of Control shall not be deemed to have occurred if
the merger of the Company with Companhia Siderurgica Nacional (CSN) contemplated in the Merger
Agreement dated October 24, 2006 is consummated or a change-of-control transaction (including a
merger) of the Company with Esmark Incorporated is consummated.

          (iii) “Good Reason” means (A) the assignment to the Executive of any duties inconsistent with
the Executive’s status as a senior executive officer of the Company or a meaningful alteration,
adverse to the Executive, in the nature or status of the Executive’s responsibilities (other than
reporting responsibilities); (B) permanent relocation of his principal place of employment to a
location more than seventy-five miles distant from his principal place of employment as of the
Effective Date; (C) a reduction by the Company in the Executive’s annual base salary as in effect
on the date hereof or as the same may be increased from time to

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time except for across-the-board salary reductions similarly affecting all senior executives
of the Company and all senior executives of any person in control of the Company; (D) the failure
by the Company to continue in effect any compensation plan in which the Executive participates
which is material to the Executive’s total compensation, or the failure by the Company to continue
the Executive’s participation therein on a basis not materially less favorable, both in terms of
the amount of benefits provided and the level of the Executive’s participation relative to other
participants; or (E) the failure by the Company to continue to provide the Executive with benefits
substantially similar to those enjoyed by the Executive under any of the Company’s pension, life
insurance, medical, health and accident, or disability plans at any time subsequent to the
Effective Date, or the taking of any action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive the Executive of any material fringe benefit
enjoyed by the Executive at any time subsequent to the Effective Date. Notwithstanding the
foregoing, the events described in (D) and (E) above shall not constitute “Good Reason” where they
are the direct result of the elimination or modification of benefit plans or arrangements by the
Company with respect to employees generally.

     (c) CESSATION OF AUTHORITY ON TERMINATION. Immediately upon the Executive terminating
or being terminated from his position with the Company for any reason or no reason, the Executive
will stop serving the functions of the terminated or expired position, or any other positions with
any affiliate, and shall be without any of the authority of or responsible for any position. On
request of the Board, at any time following his termination of employment for any reason or no
reason, the Executive shall resign from the Board if then a member and the board of directors of
any subsidiary of the Company of which he is then a member.

     (d) NO OBLIGATION TO MITIGATE. Executive shall not be required to seek other
employment or income to reduce any amounts payable to the Executive by the Company under this
Section. Further, the amount of any payment or benefit provided for by this Section shall not be
reduced by any compensation earned by the Executive as the result of employment by another
employer, retirement benefits, by offset against any amount claimed to be owed by the Executive to
the Company, or otherwise.

     (e) RELEASE OF CLAIMS. Notwithstanding the foregoing, the Executive shall not be
entitled to any payments under this Section unless within twenty-one (21) days following his
termination he shall have executed and delivered to the Company a general release of claims in the
form attached hereto as Exhibit A.

     (f) SECTION 409A. Notwithstanding the foregoing provisions of this Agreement to the
contrary, if the Company determines that any amounts to be paid to the Executive under this
Agreement are subject to Section 409A of the Code, then the Company shall in good faith adjust the
form and the timing of such payments as it reasonably determines to be necessary or advisable to be
in compliance with Section 409A. If such a payment must be delayed to comply with Section 409A,
then the deferred payments shall be paid at the earliest practicable date permitted by Section
409A.

6. PROVISIONS RELATING TO EXECUTIVE CONDUCT AND TERMINATION OF EMPLOYMENT.

     (a) CONFIDENTIALITY. The Executive recognizes and acknowledges that certain assets of
the Company constitute Confidential Information. The term “Confidential Information” as used in
this Agreement shall mean all information which is known only to the Executive or the Company,
other employees or others in a confidential relationship with the Company and any

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persons controlling, controlled by or under common control with the Company (each, an
“Affiliate”) and their respective employees, officers and partners), and relating to the Company’s
or any Affiliate’s business (including, without limitation, information regarding clients,
customers, pricing policies, methods of operation, proprietary computer programs, sales, products,
profits, costs, markets, key personnel, formulae, product applications, technical processes, and
trade secrets), as such information may exist from time to time, which the Executive acquired or
obtained by virtue of work performed for the Company, or which the Executive may acquire or may
have acquired knowledge of during the performance of said work. The Executive agrees that at all
times during his employment and thereafter (including periods after the term of this Agreement), he
will keep and maintain all Confidential Information and all of the affairs of the Company and its
Affiliates confidential, and will not, except (1) as necessary for the performance of his
responsibilities hereunder or (2) as required by judicial process and after three days prior notice
to the Company unless required earlier by a court order or a legal requirement, disclose to any
person for any reason or purpose whatsoever, directly or indirectly, all or any part of the
Confidential Information of the Company and its Affiliates. The Executive is not bound by the
restrictions in this paragraph with respect to any information that becomes public other than as a
consequence of the breach by the Executive of his confidentiality obligations hereunder or is
disclosed without an obligation of confidentiality. The Executive can disclose all information to
his personal advisors subject to becoming liable for any violation by them of Executive’s
confidentiality obligations.

     (b) RETURN OF MATERIALS. The Executive agrees that on the termination of his
employment, however such termination may occur, the Executive will promptly return to the Company
all materials and other property from time to time held by the Executive and proprietary to the
Company including without limitation any documents incorporating, reflecting or reproducing in
whole or in part any Confidential Information, credit cards, and the like.

     (c) NON-SOLICITATION AND NON-COMPETE. The Executive agrees that,

          (i) except as agreed to by the board of directors, during the term hereof, he will not,
directly or indirectly, either as a principal, agent, employee, employer, stockholder, co-partner
or in any other capacity whatsoever, engage in any outside activity, whether or not competitive
with the business of the Company, that could foreseeably give rise to a conflict of interest or
otherwise interfere with his duties and obligations to the Company;

          (ii) during the term hereof and for twelve (12) months after the term, he will not, directly
or indirectly, either as a principal, agent, employee, employer, stockholder, co-partner or in any
other capacity whatsoever, solicit, hire or attempt to hire, or assist others in soliciting, hiring
or attempting to hire, any individual employed by the Company at any time while the Executive was
also so employed, or encourage any such individual to terminate his or her relationship with the
Company ; provided, however, that nothing in this Section 6(c) shall be deemed to
prohibit Executive from: (i) making general solicitations of employment published in newspapers,
trade journals or other publications of general circulation; or (ii) employing individuals who have
terminated their employment with the Company;

          (iii) during the term hereof and for twelve (12) months after the term, he will not, directly
or indirectly, either as a principal, agent, employee, employer, stockholder, co-partner or in any
other capacity whatsoever, engage in or undertake any planning for any activity which is
competitive with the business of the Company, as conducted or under consideration at any time
during his employment by the Company; and

10

 

          (iv) for purposes of this section, Executive’s employment now or in the future or other
affiliation with Esmark Incorporated (including its successors, assigns or at any time before,
during or after its affiliation with one or more steel production facilities) shall not be a
conflict of interest, prohibited or constitute activity which is competitive with the business.

     (d) REASONABLENESS OF RESTRICTIONS. The restrictions against activities set forth in
subsection (c) above are considered by the parties to be reasonable for the purposes of protecting
the business of the Company. If any restriction is found by a court of competent jurisdiction to be
unenforceable because it extends for too long a period of time, over too broad a range of
activities or in too large a geographic area, that restriction shall be interpreted to extend only
over the maximum period of time, range of activities or geographic area as to which it may be
enforceable.

     (e) NONINTERFERENCE. In the event of any dispute under this Agreement or otherwise
relating to the Executive’s relationship with the Company, any Affiliate of the Company, or their
respective principals or management, whether or not during the term of this Agreement, the
Executive agrees not to bring any legal proceeding or take any legal action to seek to enjoin or
otherwise impede the purchase, sale, financing, refinancing, development, establishment or
operation of any business venture or entity in which any of such persons or entities has any
interest.

7. MISCELLANEOUS.

     (a) FREEDOM TO CONTRACT. The Executive represents that he is free to enter into this
Agreement and carry out his obligations hereunder without any conflict with any prior agreements,
and that he has not made and will not make any agreement in conflict with this Agreement.

     (b) ENTIRE AGREEMENT. This Agreement represents the entire and only understanding
between the parties on the subject matter hereof and supersedes any other agreements or
understandings between them on such subject matter.

     (c) SPECIFIC ENFORCEMENT. The parties acknowledge and agree that the Executive’s
breach of the provisions of Sections 6 and 7 of this Agreement may cause irreparable harm to the
Company, that the remedy of damages will not be adequate for the enforcement of such provisions,
and that such provisions may be enforced by equitable relief, including injunctive relief, which
relief shall be cumulative and in addition to any other relief to which the Company may be
entitled.

     (d) BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the heirs, executors, administrators, successors and assigns of the
respective parties. Without the express written consent of the other party, neither the Company nor
the Executive may assign any duties or right or interest hereunder or right to receive any money
hereunder and any such assignment shall be void; provided, however, that without the Executive’s
consent the Company may assign its rights and obligations hereunder in their entirety to any
successor to all or substantially all of its business, whether affected by merger or otherwise. The
preceding sentence, however, shall not prevent the transfer of any right or interest to receive any
money hereunder by the Executive by way of testamentary disposition or intestate succession. The
Company shall require any successor or assign (whether direct or indirect, by purchase, merger,
reorganization, consolidation, acquisition or property or stock, liquidation or otherwise) to all
or a significant portion of the assets of the

11

 

Company, by agreement in form and substance satisfactory to the Executive, to expressly assume
and agree to perform this Agreement in the same manner and to the same extent that the Company
would be required to perform if no such succession had taken place. Regardless of whether such
agreement is executed by a successor, this Agreement shall continue to be binding upon the Company
and any successor and assign shall be deemed the “Company” for purposes of this Agreement.

     (e) SEVERABILITY. In the event any provision of this Agreement shall be determined in
any circumstances to be invalid or unenforceable, such determination shall not affect or impair any
other provision of this Agreement or the enforcement of such provision in other appropriate
circumstances.

     (f) NOTICES. All notices and other communications hereunder shall be in writing or by
written telecommunication, and shall be deemed to have been duly given if delivered personally or
if sent by overnight courier or by certified mail, return receipt requested, postage prepaid or
sent by written telecommunication or telecopy, to the relevant address set forth below, or to such
other address as the recipient of such notice or communication shall have specified to the other
party hereto in accordance with this Section 7(f):

If to the Company, to:

Wheeling-Pittsburgh Corporation

1134 Market Street

Wheeling, WV 26003

Attention: Chief Executive Officer

Telecopy: 304-234-2690

with a copy to the Company’s General Counsel at the same address.

If to the Executive, at his last residence shown on the records of the Company.

Any such notice shall be deemed to have been received (i) if delivered personally, when received,
(ii) if sent by overnight courier, when sent, (iii) if mailed, two (2) days after being mailed as
described above and (iv) in the case of facsimile transmission, when confirmed by facsimile machine
report.

     (g) ARBITRATION OF CLAIMS. The parties hereto agree that except as provided in Section
7(c) above any dispute hereunder, or otherwise relating to the Executive’s relationship with the
Company, whether or not arising during the term of this Agreement, shall be resolved by submission
to final and binding arbitration held in Pittsburgh, Pennsylvania or as otherwise mutually agreed
under the National Rules for the Resolution of Employment Disputes of the American Arbitration
Association then existing, and judgment on any arbitration award may be entered in any court of
competent jurisdiction. Any cause of action or matter in dispute is hereby waived unless
arbitration proceedings are initiated by the complaining party within one (1) year from the later
of the accrual of the cause of action or the date on which the cause of action should reasonably
have been discovered. The Executive and the Company agree any such arbitrator shall not be
empowered to amend or modify this Agreement or any other relevant agreement in any respect and
further agree that the arbitrator shall not have the jurisdiction to award punitive damages and
shall be without the authority to award relief other than monetary damages. Executive and the
Company understand and agree that the Company shall bear the arbitrator’s fee and any other type of
expense or cost that Executive would not be required to

12

 

bear if Executive were free to bring the dispute or claim in court as well as any other
expense or cost that is unique to arbitration. Except as provided in Section 7(i) below, Executive
and the Company shall each pay their own attorneys’ fees incurred in connection with an
arbitration, and the arbitrator will not have authority to award attorneys’ fees unless a statute
or contract at issue in the dispute authorizes the award of attorneys’ fees to the prevailing
party, in which case the arbitrator shall have the authority to make an award of attorneys’ fees as
required or permitted by applicable law. If there is a dispute as to whether Executive or the
Company is the prevailing party, the arbitrator will decide this issue. Any cause of action or
matter in dispute is hereby waived unless arbitration proceedings are initiated by the complaining
party within one (1) year from the later of the accrual of the cause of action or the date on which
the cause of action should reasonably have been discovered.

     (h) JURY & PUNITIVE DAMAGES WAIVER. EACH PARTY EXPRESSLY WAIVES ANY AND ALL RIGHTS
THAT HE OR IT MAY HAVE TO HAVE ANY DISPUTE (WHETHER OR NOT ARISING DURING THE TERM OF THIS
AGREEMENT) HEREUNDER OR OTHERWISE RELATING TO THE EXECUTIVE’S RELATIONSHIP WITH THE EMPLOYER OR ANY
AFFILIATE TRIED BEFORE OR DETERMINED BY A JURY OR TO CLAIM OR RECOVER PUNITIVE DAMAGES.

     (i) REIMBURSEMENT OF LEGAL FEES. In the event that it shall be necessary or desirable
for the Executive to retain legal counsel or incur other costs and expenses in connection with the
enforcement of any or all of his rights under Agreement, and provided that the Executive
substantially prevails in the enforcement of such rights, the Company shall pay (or the Executive
shall be entitled to recover from the Company, as the case may be) the Executive’s reasonable
attorneys’ fees and costs and expenses in connection with the enforcement of his rights, including
the enforcement of any arbitration award, up to $50,000 in the aggregate.

     (j) AMENDMENT. This Agreement may be modified only by an instrument in writing
executed by the parties hereto.

     (k) INTERPRETATIVE MATTERS; COUNTERPARTS. The headings of sections of this Agreement
are for convenience of reference only and shall not affect its meaning or construction. The
language used in this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rule of strict construction will be applied against any party. Except
as provided in Section 7(g), no delay or omission by either party hereto in exercising any right,
power or privilege hereunder shall impair such right, power or privilege, nor shall any single or
partial exercise of any such right, power or privilege preclude any further exercise thereof or the
exercise of any other right, power or privilege. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. In making proof of this Agreement it shall not be necessary to produce
or account for more than one such counterpart.

     (l) GOVERNING LAW. This Agreement is to be governed and construed according to the
internal substantive laws of the Commonwealth of Pennsylvania.

     (m) CONFLICTS. To the extent that this Agreement conflicts with any provision, in any
handbook, policy manual, rule or regulation, the provisions of this Agreement shall take precedent.

13

 

     (n) CONSULTATION WITH COUNSEL. The Executive acknowledges that he has had a full and
complete opportunity to consult with counsel or other advisers of his own choosing concerning the
terms, enforceability and implications of this Agreement, and that the Company has made any
representations or warranties to the Executive concerning the terms, enforceability and
implications of this Agreement other than as are reflected in this Agreement.

     (o) WITHHOLDING. Any payments provided for in this Agreement shall be paid net of any
applicable tax withholding required under federal, state or local law, or shall be subject to
Executive’s reimbursement obligations under Section 4(a) hereof..

     (p) REGISTRATION RIGHTS. If any Company common stock issued to the Executive under
this Agreement is not registered under the Securities Act of 1933, at the request of the Executive,
the Company shall file with the Securities and Exchange Commission a registration statement on the
applicable form, relating to the resale by the Executive of all of the common stock, and the
Company shall use its commercially reasonable best efforts to cause such registration statement to
be declared effective.

[Remainder of the page intentionally left blank]

 

 

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date and year first
above written.

	 	 	 	 	 
	 	 	WHEELING-PITTSBURGH CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	/s/ David A. Luptak
	 

	 	 	 	 
	 

	 	Title:
	 	Secretary
	 
	 	 	 	 
	 	 	EXECUTIVE:
	 
	 	 	 	 
	 	 	     /s/ Craig T. Bouchard
	 	 	 
	 	 	Craig T. Bouchard

 

 

EXHIBIT A

RELEASE OF CLAIMS

In exchange for the severance pay and other benefits set forth in my 2006 Employment Agreement with
Wheeling-Pittsburgh Corporation (the “Company”) effective as of December 1, 2006 (as amended
through the date hereof, the “Employment Agreement”), I forever give up, waive and release any and
all claims, charges, complaints, grievances or promises of any and every kind I may have up to the
date of this Release against the Company, Wheeling-Pittsburgh Steel Corporation (“WPSC”), and other
affiliates and its and their directors, officers and employees, and related persons, including,
without limitation, my rights under Title VII of the Civil Rights Act of 1964, as amended by the
Civil Rights Act of 1991, the Employee Retirement Income Security Act (“ERISA”), the Equal Pay Act,
the Americans with Disabilities Act (“ADA”), the Age Discrimination in Employment Act (“ADEA”) and
other federal and state statutes prohibiting discrimination on the basis of age, sex, race, color,
handicap, religion and national origin and any common law claims, including without limitation,
claims for defamation, intentional infliction of emotional distress, intentional interference with
contract, negligent infliction of emotional distress, personal injury, breach of contract, unpaid
wages or compensation, or claims for unreimbursed expenses. This release shall not extend to any
claim to amounts due me in accordance with the terms of my Employment Agreement after termination
of my employment or to claims to indemnity I may have under the terms of my Employment Agreement,
applicable law, or the Company’s or WPSC’s articles of organization or bylaws for having served as
a director, officer or employee of the Company, WPSC or any affiliate. I acknowledge that I have
been advised of my right to consult an attorney before I sign this Release and that I have
twenty-one (21) days to consider whether to sign this Release. If the Release is not received by
the Company at the end of the twenty-one (21) day period, it will be considered expired and
withdrawn and the Company’s severance obligations under my Employment Agreement void. If I execute
this Release prior to the end of the twenty-one (21) day period that has been provided for me to
consider it, I agree and acknowledge that the prior execution was a knowing and voluntary waiver of
my right to consider this Release for a full twenty-one (21) days, and was due to my conclusion
that I had ample time in which to consider and understand this Release, and in which to review this
Release with my counsel.

Nothing in this Release shall be construed to affect the Equal Employment Opportunity Commission’s
(“Commission”) independent right and responsibility to enforce the law. I understand, however,
that, while this Release does not affect my right to file a charge or participate in an
investigation or proceeding conducted by the Commission, it does bar any claim I might have to
receive monetary damages in connection with any Commission proceeding concerning matters covered by
this Release.

I understand I have the right to revoke this Release within seven (7) days of signing it. I
understand that to revoke this Release, I must notice the Company in writing in accordance with the
notice procedures set forth in my Employment Agreement.

	 	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	          Executive
	Dated:exv4w1

 

Exhibit 4.1

IMH SECURED LOAN FUND, LLC

RESTATED LIMITED LIABILITY COMPANY OPERATING AGREEMENT

i

 

TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE 1 – ORGANIZATION OF THE LIMITED LIABILITY COMPANY
	 	 	6	 
	1.1 Formation
	 	 	6	 
	1.2 Name
	 	 	6	 
	1.3 Place of Business
	 	 	6	 
	1.4 Purpose
	 	 	6	 
	1.5 Articles of Organization
	 	 	6	 
	1.6 Term of Existence
	 	 	7	 
	1.7 Power of Attorney
	 	 	7	 
	1.8 Nature of Power of Attorney
	 	 	7	 
	ARTICLE 2 – DEFINITIONS
	 	 	7	 
	2.1 Acquisition and Investment Evaluation Expenses
	 	 	8	 
	2.2 Acquisition and Investment Evaluation Fees
	 	 	8	 
	2.3 Administrator
	 	 	8	 
	2.4 Affiliate
	 	 	8	 
	2.5 Agreement
	 	 	8	 
	2.6 Capital Account
	 	 	8	 
	2.7 Capital Contribution
	 	 	9	 
	2.8 Capital Transaction
	 	 	9	 
	2.9 Code
	 	 	9	 
	2.10 Company
	 	 	9	 
	2.11 Deed(s) of Trust
	 	 	9	 
	2.12 Delaware Statutes
	 	 	9	 
	2.13 Direct Expenses
	 	 	9	 
	2.14 Earning Asset Base
	 	 	9	 
	2.15 Fiscal Year
	 	 	9	 
	2.16 Front-End Fees
	 	 	9	 
	2.17 Gross Asset Value
	 	 	10	 
	2.18 Independent Expert
	 	 	10	 
	2.19 Interests
	 	 	10	 
	2.20 Majority
	 	 	10	 
	2.21 Manager
	 	 	10	 
	2.22 Member
	 	 	11	 
	2.23 Members’ Equity
	 	 	11	 
	2.24 Memorandum
	 	 	11	 
	2.25 Mortgage Investment(s)
	 	 	11	 
	2.26 Mortgage Loans
	 	 	11	 
	2.27 NASAA Guidelines
	 	 	11	 
	2.28 Net Distributable Earnings
	 	 	11	 
	2.29 Net Proceeds
	 	 	11	 
	2.30 Offering
	 	 	11	 
	2.31 Organization and Offering Expenses
	 	 	11	 
	2.32 Person
	 	 	11	 
	2.33 Plan
	 	 	11	 
	2.34 Profits and Losses
	 	 	11	 
	2.35 Program
	 	 	12	 

ii

 

	 	 	 	 	 
	2.36 Purchase Price
	 	 	12	 
	2.37 Real Property
	 	 	12	 
	2.38 Regulations
	 	 	12	 
	2.39 Reinvested Distributions
	 	 	12	 
	2.40 Roll-Up
	 	 	12	 
	2.41 Roll-Up Entity
	 	 	12	 
	2.42 Sponsor
	 	 	13	 
	2.43 Subscription Agreement
	 	 	13	 
	2.44 Units
	 	 	13	 
	2.45 Writedown
	 	 	13	 
	2.46 Writedown Amount
	 	 	13	 
	ARTICLE 3 – THE MANAGER
	 	 	13	 
	3.1 Control by Manager
	 	 	13	 
	3.2 Limitations on Manager’s Authority
	 	 	14	 
	3.3 Right to Purchase Receivables and Loans
	 	 	15	 
	3.4 Extent of Manager’s Obligation and Fiduciary Duty
	 	 	16	 
	3.5 Liability and Indemnification of Manager
	 	 	16	 
	3.6 Payment of Expenses by Manager
	 	 	17	 
	3.7 Assignment by the Manager
	 	 	17	 
	3.8 Removal of Manager
	 	 	18	 
	3.9 Right to Rely on Manager
	 	 	18	 
	3.10 Transfer of the Control of the Manager
	 	 	18	 
	3.11 Amendment to the Manager’s Duties
	 	 	18	 
	ARTICLE 4 – INVESTMENT AND OPERATING POLICIES
	 	 	19	 
	4.1 Commitment of Capital Contributions
	 	 	19	 
	4.2 Investment Policy
	 	 	19	 
	ARTICLE 5 - CAPITAL CONTRIBUTIONS; LOANS TO COMPANY
	 	 	19	 
	5.1 Capital Contribution by Manager
	 	 	19	 
	5.2 Contributions of Other Members
	 	 	19	 
	5.3 Interest
	 	 	19	 
	5.4 Loans
	 	 	19	 
	ARTICLE 6 – VOTING AND OTHER RIGHTS OF MEMBERS
	 	 	19	 
	6.1 No Participation in Management
	 	 	19	 
	6.2 Rights and Powers of Members
	 	 	20	 
	6.3 Meetings
	 	 	20	 
	6.4 Limited Liability of Members
	 	 	21	 
	6.5 Access to Books and Records
	 	 	21	 
	6.6 Representation of Company
	 	 	21	 
	ARTICLE 7 – PROFITS AND LOSSES; CASH DISTRIBUTIONS
	 	 	21	 
	7.1 Allocation of Profits and Losses
	 	 	21	 
	7.2 Net Distributable Earnings
	 	 	22	 
	7.3 Net Proceeds
	 	 	22	 
	7.4 Cash Distributions Upon Dissolution
	 	 	22	 
	7.5 Special Allocation Rules
	 	 	22	 
	7.6 Code Section 704(c) Allocations
	 	 	23	 
	7.7 Intent of Allocations
	 	 	24	 

iii

 

	 	 	 	 	 
	7.8 Quarterly Review of Assets
	 	 	24	 
	ARTICLE 8 – DISTRIBUTION REINVESTMENT PLAN
	 	 	24	 
	8.1 Members’ Reinvested Distributions
	 	 	24	 
	8.2 Purchase of Additional Units
	 	 	24	 
	8.3 Statement of Account
	 	 	25	 
	8.4 Continued Suitability Requirements
	 	 	25	 
	8.5 Changes or Termination of the Plan
	 	 	25	 
	ARTICLE 9 – BOOKS AND RECORDS, REPORTS AND RETURNS
	 	 	25	 
	9.1 Books and Records
	 	 	25	 
	9.2 Annual Statements
	 	 	26	 
	9.3 Filings
	 	 	26	 
	9.4 Suitability Requirements
	 	 	26	 
	9.5 Fiscal Matters
	 	 	26	 
	ARTICLE 10 – TRANSFER OF COMPANY INTERESTS
	 	 	27	 
	10.1 Interests of Manager
	 	 	27	 
	10.2 Transfer of Member’s Interest
	 	 	27	 
	10.3 Further Restrictions on Transfers
	 	 	28	 
	ARTICLE 11 – DEATH, LEGAL INCOMPETENCY, OR WITHDRAWAL OF A MEMBER, WITHDRAWAL OF THE MANAGER
	 	 	28	 
	11.1 Effect of Death or Legal Incompetency of a Member on the Company
	 	 	29	 
	11.2 Rights of Personal Representative
	 	 	29	 
	11.3 Withdrawal of Members Other than Managers
	 	 	29	 
	11.4 Withdrawal by Manager
	 	 	30	 
	11.5 Payment to Terminated Manager
	 	 	30	 
	ARTICLE 12 – DISSOLUTION OF THE COMPANY
	 	 	30	 
	12.1 Events Causing Dissolution
	 	 	30	 
	12.2 Winding Up
	 	 	31	 
	12.3 Order of Distribution of Assets
	 	 	31	 
	12.4 No Recourse to Manager
	 	 	31	 
	12.5 Compliance With Timing Requirements of Regulations
	 	 	31	 
	ARTICLE 13 – ROLL-UPS
	 	 	31	 
	13.1 Roll-Up Transactions: Appraisal
	 	 	31	 
	13.2 Members’ Rights in a Roll-Up
	 	 	32	 
	13.3 Limitations on Roll-Ups
	 	 	32	 
	ARTICLE 14 – COMPENSATION TO THE MANAGER AND ITS AFFILIATES
	 	 	32	 
	ARTICLE 15 - MISCELLANEOUS
	 	 	33	 
	15.1 Covenant to Sign Documents
	 	 	33	 
	15.2 Notices
	 	 	33	 
	15.3 Right to Engage in Competing Business
	 	 	33	 
	15.4 Amendment
	 	 	33	 
	15.5 Entire Agreement
	 	 	34	 
	15.6 Waiver
	 	 	34	 
	15.7 Severability
	 	 	34	 
	15.8 Application of Delaware Law
	 	 	34	 
	15.9 Captions
	 	 	34	 
	15.10 Number and Gender
	 	 	34	 
	15.11 Counterparts
	 	 	34	 

iv

 

	 	 	 	 	 
	15.12 Waiver of Action for Partition
	 	 	34	 
	15.13 Defined Terms
	 	 	34	 
	15.14 Binding on Assignees
	 	 	34	 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

v

 

RESTATED OPERATING AGREEMENT

OF

IMH SECURED LOAN FUND, LLC

A DELAWARE LIMITED LIABILITY COMPANY

     THIS OPERATING AGREEMENT (this “Agreement”) was made and entered into as of the
15th day of May, 2003, as restated as of the 30th day of March, 2006, by and
among Investors Mortgage Holdings, Inc., an Arizona corporation (the “Manager” and, in its capacity
as a member of the Company, the “Initial Member”), and all Persons who may become members of the
Company from time to time in accordance herewith, (the “Members”), and IMH Secured Loan Fund, LLC,
a Delaware limited liability company (the “Company”).

WITNESSETH

     WHEREAS, the Company was formed pursuant to a Certificate of Formation, which was executed by
the Manager and filed in the office of the Secretary of State of the State of Delaware on May 14,
2003, and an Operating Agreement, dated May 15, 2003;

     WHEREAS, pursuant to Section 15.4 of the Operating Agreement, the Manager possesses the power
to amend the Operating Agreement provided such amendment does not adversely affect the rights of
the Members; and

     WHEREAS, the Manager deems it advisable to restate the Operating Agreement in accordance with the
terms and conditions set forth herein;

     NOW, WHEREFORE, in consideration for the mutual agreements, covenants and premises set forth
herein, the Operating Agreement is hereby adopted:

ARTICLE 1

ORGANIZATION OF THE LIMITED LIABILITY COMPANY

     1.1 Formation. The Initial Member caused the formation of the Company on May 14, 2003 under
the provisions of the Delaware Statutes.

     1.2 Name. The name of the Company is IMH Secured Loan Fund, LLC.

     1.3 Place of Business. The principal place of business of the Company is located at 11333 N.
Scottsdale Road, Suite 160, Scottsdale, Arizona 85254, until the Manager changes it after giving
the Members notice. In addition, the Company may maintain such other offices and places of business
in the United States as the Manager may deem advisable. The Manager will file all necessary or
desirable documents to permit the Company to conduct its business lawfully in any state or
territory of the United States.

     1.4 Purpose. The primary purpose of the Company is to generate earnings and cash flow and to
distribute the same to the Members. The Company will invest in or purchase Mortgage Investments,
and do all things reasonably related thereto, including developing, managing and either holding for
investment or disposing of real property acquired through foreclosure, either directly or through
general partnerships or other joint ventures, all as further provided for in this Agreement.

     1.5 Certificate of Formation. The Company’s Certificate of Formation, has been duly executed,
acknowledged and filed with the Office of the Secretary of State of the State of Delaware under the

6

 

provisions of the Delaware Statutes. The Manager is authorized to execute and cause to be filed
additional Certificates of Amendment of the Certificate of Formation whenever required by the
Delaware Statutes or this Agreement.

     1.6 Term of Existence. The Company’s existence began on May 14, 2003 and is perpetual, unless
earlier terminated under the provisions of this Agreement or by operation of law.

     1.7 Power of Attorney. Each of the Members irrevocably constitutes and appoints the Manager
as his true and lawful attorney-in-fact, with full power and authority for him, and in his name,
place and stead, to execute, acknowledge, publish and file:

	 	1.7.1	 	This Agreement, the Certificate of Formation, as well as any
and all amendments thereto required under the laws of the State of Delaware or
of any other state, or which the Manager deems advisable to prepare, execute
and file;
	 
	 	1.7.2	 	Any certificates, instruments and documents, including,
without limitation, fictitious business name statements, as may be required to
be filed by the Company by any governmental agency or by the laws of any state
or other jurisdiction in which the Company is doing or intends to do business,
or which the Manager deems advisable to file; and
	 
	 	1.7.3	 	Any documents which may be required to effect the continuation
of the Company, the admission of an additional or substituted Member, or the
dissolution and termination of the Company, provided that the continuation,
admission, substitution or dissolution or termination, as applicable, is in
accordance with the terms of this Agreement.

     1.8 Nature of Power of Attorney. The grant of authority in Section 1.7:

	 	1.8.1	 	Is a Special Power of Attorney coupled with an interest, is
irrevocable, survives the death of the Member and shall not be affected by the
subsequent incapacity of the Member;
	 
	 	1.8.2	 	May be exercised by the Manager for each member by a facsimile
signature of or on behalf of the Manager or by listing all of the members and
by executing any instrument with a single signature of or on behalf of the
Manager, acting as attorney-in-fact for all of them; and
	 
	 	1.8.3	 	Shall survive the delivery of an assignment by a Member of the
whole or any portion of his Interests; except that where the assignee thereof
has been approved by the Manager for admission to the Company as a substituted
Member, the Special Power of Attorney shall survive the delivery of the
assignment for the sole purpose of enabling the person to execute, acknowledge,
and file any instrument necessary to effect the substitution.

ARTICLE 2

DEFINITIONS

     The terms set forth in this Article 2 shall, for all purposes of this Agreement, have the
following meanings:

7

 

     2.1 Acquisition and Investment Evaluation Expenses means expenses including but not limited
to legal fees and related expenses, travel, communication, appraisal, accounting fees and expenses,
title company charges, and other expenses related to the evaluation, selection and acquisition of
Mortgage Investments, whether or not acquired.

     2.2 Acquisition and Investment Evaluation Fees means the total of all fees and commissions
paid by any Person when purchasing or investing in Mortgage Investments. Included in the
computation of these fees or commissions shall be any selection fee, mortgage placement fee,
non-recurring management fee, and any evaluation fee, loan fee, or points paid by borrowers to the
Manager, or any fee of a similar nature, however designated.

     2.3 Administrator means the agency or official administering the securities law of a state in
which units are registered or qualified for offer and sale.

     2.4 Affiliate means, with respect to any Person, (a) any person directly or indirectly
controlling, controlled by or under common control with the Person, (b) any other Person owning or
controlling ten percent (10%) or more of the outstanding voting securities of the Person, (c) any
officer, director or Member of the Person, or (d) if the other Person is an officer, director or
Manager, any company for which the Person acts in any similar capacity.

     2.5 Agreement means this Operating Agreement, as amended from time to time.

     2.6 Capital Account means, for any Member, the Capital Account maintained for the Member in
accordance with the following provisions:

	 	2.6.1	 	The Manager shall credit to each Member’s Capital Account the Member’s Capital Contribution,
the Member’s distributive share of Profits (Net Distributable Earnings), any items in the
nature of income or gain that are specially allocated to a Member, and the amount of any
Company liabilities that are assumed by the Member or that are secured by any Company property
distributed to the Member.

	 	2.6.2	 	The Manager shall debit from each Member’s Capital Account the
amount of cash and the Gross Asset Value of any Company property distributed to
the Member under any provision of this Agreement, the Member’s distributive
share of Losses, and any items in the nature of expenses or losses that are
specially allocated to a Member and the amount of any liabilities of the Member
that are assumed by the Company or that are secured by any property contributed
by the Member to the Company.

     If the Gross Asset Value of a Company asset is adjusted as a result of a Writedown, the
Manager shall concurrently adjust the Capital Accounts of all Members to reflect the aggregate net
adjustment that would have occurred if the Company had recognized Losses equal to the Writedown
Amount and the Losses were allocated under Article 7.

     If any interest in the Company is transferred in accordance with Section 10.2 of this
Agreement,
the transferee shall succeed to the Capital Account of the transferor to the extent it relates to
the transferred interest.

     The foregoing provisions and the other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Regulation Section 1.704-1(b), and
shall be interpreted and applied in a manner consistent with the Regulation. If the Manager
determines that it is prudent to modify the manner in which the Capital Accounts, or any debits or
credits thereto, are computed in order

8

 

to comply with the then existing Regulations, the Manager
may make the modification, provided that it is not likely to have a material effect on the amounts
distributable to any Member under Articles 7 and 12 of this Agreement. The Manager shall adjust the
amounts debited or credited to Capital Accounts for (a) any property contributed to the Company or
distributed to the Manager, and (b) any liabilities that are secured by the contributed or
distributed property or that are assumed by the Company or the Manager, if the Manager determines
the adjustments are necessary or appropriate under Regulation 1.704-1(b)(2)(iv). The Manager shall
make any appropriate modification if unanticipated events might otherwise cause this Agreement not
to comply with Regulation 1.704-1(b) as provided for in Sections 7.7 and 15.4.

     2.7 Capital Contribution means the total contributions to the capital of the Company made by
a Member (i) in cash, or (ii) by way of automatic reinvestment of Company distributions (or deemed
distributions). “Initial Capital Contribution” means the amount paid in cash by each Member with
his original subscription for an acquisition of units of the Company under the Memorandum plus, in
the case of the Manager, any amount contributed pursuant to Section 5.1.

     2.8 Capital Transaction means (i) the repayment of principal or prepayment of a Mortgage
Investment, including deemed repayments of Mortgage Investments or other dispositions thereof, to
the extent classified as a return of capital under the Code, (ii) the foreclosure, sale, exchange,
condemnation, eminent domain taking or other disposition under the Code of a Mortgage Investment or
Real Property subject to a Mortgage Investment, or (iii) the payment of insurance or a guarantee
for a Mortgage Investment.

     2.9 Code means the Internal Revenue Code of 1986, as amended from time to time, and
corresponding provisions of subsequent revenue laws.

     2.10 Company means IMH Secured Loan Fund, LLC, the Delaware limited liability company to
which this Agreement pertains.

     2.11 Deed(s) of Trust means the lien(s) created on the Real Property of borrowers securing
their respective obligations to the Company to repay Mortgage Investments, whether in the form of a
deed of trust, mortgage or otherwise.

     2.12 Delaware Statutes means the Delaware laws with respect to limited liability companies, as
amended from time to time, unless indicated to the contrary by the context.

2.13 Direct Expenses means IMH management fees, activity in the loan loss reserve account,
and costs associated with defaulted loans, foreclosure activities, and property we have
acquired through foreclosure.

     2.14 Earning Asset Base means the Mortgage Investments held by the Fund and property acquired
through foreclosure, upon which income is being accrued under generally accepted accounting
principles.

     2.15 Fiscal Year means, subject to the provisions of Section 706 of the Code and Section
9.5.1, (i) the period commencing on the date of formation of the Company and ending on December 31,
2003 (ii) any subsequent 12-month period on January 1 and ending on December 31 and (iii) the
period commencing January 1 and ending on the date on which all Company assets are distributed to
the Members under Article 12.

     2.16 Front-End Fees means any fees and expenses paid by any party for any services rendered
to organize the Company and to acquire assets for the Company, including Organization and Offering

9

 

Expenses, Acquisition and Investment Evaluation Expenses and Acquisition and Investment Evaluation
Fees, and any other similar fees, however designated by the Company.

     2.17 Gross Asset Value means, for any Company asset, the following:

	 	2.17.1	 	The initial Gross Asset Value of any Company asset at the time that it is
contributed by a Member to the capital of the Company shall be an amount equal
to the fair market value of the Company asset (without regard to Code Section
7701(g)), as determined by the contributing Member and the Manager;
	 
	 	2.17.2	 	The Gross Asset Value of any Company asset acquired other than by being
contributed by a Member shall be the amount paid or invested by the Company in
exchange for the asset;
	 
	 	2.17.3	 	The Gross Asset Values of all Company assets distributed to a Member shall be
adjusted, as determined by the distributee Member and the Manager, to equal
their respective fair market values upon the distribution to a Member by the
Company of more than a de minimis amount of Company assets (other than money),
unless all Members simultaneously receive distributions of undivided interests
in the distributed Company assets in proportion to their respective Capital
Accounts;
	 
	 	2.17.4	 	The Gross Asset Values of all Company assets shall be adjusted to equal their
respective fair market values (as determined by the Manager, in its reasonable
discretion) upon the termination of the Company for Federal income tax purposes
under Code Section 708(b)(1)(B); and
	 
	 	2.17.5	 	The Gross Asset Value of a Company asset shall be adjusted in the case of a
Writedown of the Company asset in accordance with Sections 2.45, 2.46 and 7.8.

     2.18 Independent Expert means a Person with no material current or prior business or personal
relationship with the Manager, who is engaged to a substantial extent in the business of rendering
opinions regarding the value of assets of the type held by the Company, and who is qualified to
perform the services.

     2.19 Interests means the interests of a Member in the Company as a member, representing such
Member’s rights, powers and privileges as specified in this Agreement. A
Member’s Interests may be expressed as a number of Units.

     2.20 Majority means any group of Members who together hold more than 50% of the total
outstanding Interests of the Company as of a particular date (or if no date is specified, as of the
beginning of the first day of the then current calendar month).

     2.21 Manager means Investors Mortgage Holdings, Inc., an Arizona corporation, in that
capacity, or any Person replacing Investors Mortgage Holdings, Inc. under this Agreement. Investors
Mortgage Holdings, Inc., in its capacity as the Initial Member, is a distinct entity from the
Manager for purposes of this Agreement unless the context should indicate to the contrary.

10

 

     2.22 Member means an owner of units in the Company who has acquired the units and become a
member or substitute member pursuant to Section 5.2 or Article 10 of this Agreement, or as the
Initial Member.

     2.23 Members’ Equity means the excess of total assets over total liabilities as determined by
generally accepted accounting principles.

     2.24 Memorandum means the May 2003 Private Placement Memorandum of the Company offering the
units for sale, or as updated from time to time.

     2.25 Mortgage Investment(s) means the Mortgage Loan(s) or an interest in the Mortgage Loans.

     2.26 Mortgage Loans means notes, bonds and other evidences of indebtedness or obligations
that are negotiable or non-negotiable and secured or collateralized by Deeds of Trust on Real
Property.

     2.27 NASAA Guidelines means the Mortgage Program Guidelines of the North American Securities
Administrators Association, Inc. adopted on September 10, 1996, as amended from time to time unless
indicated to the contrary by the context.

     2.28 Net Distributable Earnings means net income computed in accordance with generally
accepted accounting principles, adjusted for activity in the loan loss reserve account.

     2.29 Net Proceeds means the net cash proceeds (or deemed net proceeds) from any Capital
Transaction.

     2.30 Offering means the offer and sale of units of the Company made under the Memorandum.

     2.31 Organization and Offering Expenses means those expenses incurred in connection with the
Offering of units in the Company pursuant to the Memorandum and paid or owed to a non-related third
party. Such Organization and Offering Expenses include fees paid to attorneys, brokers,
accountants, and any other charges incurred in connection with the Offering pursuant to the
Memorandum and will be paid by the Manager.

     2.32 Person means any natural person, partnership, corporation, unincorporated association or
other legal entity.

     2.33 Plan means the Reinvestment Plan described in Article 8 of this Agreement.

     2.34 Profits and Losses mean, for each Fiscal Year or any other period, an amount equal to
the Company’s taxable income or loss for the Fiscal Year or other given period, determined in
accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss, or
deduction required to be stated separately under Code Section 703(a)(1) shall be included in
taxable income or loss), with the following adjustments (without duplication):

	 	2.34.1	 	Any income of the Company that is exempt from federal income tax and not
otherwise taken into account in computing Profits or Losses under this section
shall be added to the taxable income or loss;
	 
	 	2.34.2	 	Any expenditures of the Company described in Section 705(a)(2)(B) of the Code
or treated as Section 705(a)(2)(B) of the Code expenditures under Regulation
1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits
or Losses under this section, shall be subtracted from the taxable income or
loss.

11

 

	 	2.34.3	 	In the event the Gross Asset Value of any Company asset is adjusted as
required by the definition of Gross Asset Value, the amount of that adjustment
shall be taken into account as gain or loss from the disposition of that asset
(assuming the asset was disposed of just prior to the adjustment) for purposes
of computing Profits or Losses in the Fiscal Year of adjustment;
	 
	 	2.34.4	 	Gain or loss resulting from any disposition of Company property with respect
to which gain or loss is recognized for federal income tax purposes shall be
computed by reference to the Gross Asset Value of the property disposed of,
notwithstanding that the Adjusted Basis of that property may differ from its
Gross Asset Value;
	 
	 	2.34.5	 	Depreciation, amortization and other cost recovery deductions taken into
account in computing the taxable income or loss shall be based on the Gross
Asset Value of an asset; and
	 
	 	2.34.6	 	Any items of income, gain, loss or deduction that are specially allocated
pursuant to Sections 7.5.1 through 7.5.5 hereof shall not be taken into account
in computing Profits or Losses.

     2.35 Program means a limited or general partnership, limited liability company, limited
liability partnership, trust, joint venture, unincorporated association or similar organization
other than a corporation formed and operated for the primary purpose of investing in mortgage
loans.

     2.36 Purchase Price means the price paid upon or in connection with the purchase of a
mortgage, but excludes points and prepaid interest.

     2.37 Real Property means and includes (a) land and any buildings, structures, and
improvements, and (b) all fixtures, whether in the form of equipment or other personal property,
that is located on or used as part of land. Real Property does not include Deeds of Trust, mortgage
loans or interests therein.

     2.38 Regulations means, except where the context indicates
otherwise, the permanent, temporary, proposed, or proposed and temporary regulations of the U.S.
Department of the Treasury under the Code, as the regulations may be lawfully changed from time to
time.

     2.39 Reinvested Distributions means units purchased under the Company’s Plan (as defined in
Article 8 of this Agreement).

     2.40 Roll-Up means a transaction involving the acquisition, merger, conversion, or
consolidation, either directly or indirectly, of the Company and the issuance of securities of a
Roll-Up Entity. “Roll-Up” does not include a transaction involving (i) securities of the Company,
if any, listed on a national securities exchange or quoted on the Nasdaq National Market for 12
months or (ii) conversion to corporate, trust, limited liability company, or association form of
only the Company if, as a consequence of the transaction, there will be no significant adverse
change in any of the following: (a) Members’ voting rights; (b) the term of existence of the
Company; (c) Manager compensation; (d) the Company’s investment objectives.

     2.41 Roll-Up Entity means a company, real estate investment trust, corporation, limited
liability company, limited or general partnership or other entity that would be created or would
survive after the successful completion of a proposed Roll-Up.

12

 

     2.42 Sponsor means any Person (a) directly or indirectly instrumental in organizing, wholly
or in part, a Program, or a Person who will manage or participate in the management of a Program,
and any Affiliate of any Person, but does not include a Person whose only relation with a Program
is that of an independent property manager or other provider of services (such as attorneys,
accountants or underwriters), whose only compensation is received in that capacity, or (b) is a
“Sponsor” as otherwise defined in the NASAA Guidelines.

     2.43 Subscription Agreement means the document that is an exhibit to and part of the
Memorandum that every Person who buys Units of the Company must execute and deliver with full
payment for the Units and which, among other provisions, contains the written consent of each
Member to the adoption of this Agreement.

     2.44 Units mean the units of equity in the Company evidencing the Company’s Interests that
are (a) issued to Members upon their admission to the Company under the Subscription Agreement and
the Memorandum; or (b) issued to Members under the Company’s Plan; or (c) transferred to those who
become substituted Members under Section 10.2 hereof. The Manager may purchase Units on the same
basis as other Members.

     2.45 Writedown means a determination by the Manager for a particular Company asset that under
generally accepted accounting principles the asset on the Company’s books is impaired and the
carrying value of the asset exceeds the net realizable value of the asset at the time the
determination is made.

     2.46 Writedown Amount means the amount by which, at the time that a Writedown is determined,
the carrying amount of an asset exceeds its net realizable value.

ARTICLE 3

THE MANAGER

     3.1 Control by Manager. Subject to the provisions of Section 3.2 and except as otherwise
expressly stated elsewhere in this Agreement, the Manager has
exclusive control over the business of the Company (with all acts and decisions being in its sole
discretion except as specifically set forth in this Agreement), including the power to assign
duties, to determine how to invest the Company’s assets, to sign bills of sale, title documents,
leases, notes, security agreements, Mortgage Investments and contracts, and to assume direction of
the business operations. As Manager of the Company and its business, the Manager has all duties
generally associated with that position, including dealing with Members, being responsible for all
accounting, tax and legal matters, performing internal reviews of the Company’s investments and
loans, determining how and when to invest the Company’s capital, and determining the course of
action to take for Company loans that are in default. The Manager also has all of these powers for
ancillary matters. Without limiting the generality of the foregoing, the powers include the right
(except as specifically set forth in this Agreement, including under Section 3.2):

	 	3.1.1	 	To evaluate potential Company investments and to expend the
capital of the Company in furtherance of the Company’s business;
	 
	 	3.1.2	 	To acquire, hold, lease, sell, trade, exchange, or otherwise
dispose of all or any portion of Company property or any interest therein at a
price and upon the terms and conditions as the Manager may deem proper;
	 
	 	3.1.3	 	To cause the Company to become a joint venturer, general or
limited partner or member of an entity formed to own, develop, operate and
dispose of properties

13

 

	 	 	 	owned or co-owned by the Company acquired through
foreclosure of a Mortgage Loan;
	 
	 	3.1.4	 	To manage, operate and develop Company property, or to employ
and supervise a property manager who may, or may not, be an Affiliate of the
Manager;
	 
	 	3.1.5	 	To repay in whole or in part, refinance, increase, modify, or
extend, any obligation, affecting the Company;
	 
	 	3.1.6	 	To employ from time to time, at the expense of the Company,
persons, including the Manager or its Affiliates, required for the operation of
the Company’s business, including employees, agents, independent contractors,
brokers, accountants, attorneys, and others; to enter into agreements and
contracts with persons on terms and for compensation that the Manager
determines to be reasonable; and to give receipts, releases, and discharges for
all of the foregoing and any matters incident thereto as the Manager may deem
advisable or appropriate; provided, however, that any agreement or contract
between the Company and the Manager or between the Company and an Affiliate of
the Manager shall contain a provision that the agreement or contract may be
terminated by the Company without penalty on sixty (60) days’ written notice
and without advance notice if the Manager or Affiliate who is a party to the
contract or agreement resigns or is removed under the terms of this Agreement;
	 
	 	3.1.7	 	To maintain, at the expense of the Company, adequate records
and accounts of all operations and expenditures and furnish the Members with
annual statements of account as of the end of each calendar year, together with
all necessary tax-reporting information;
	 
	 	3.1.8	 	To purchase, at the expense of the Company, liability and
other insurance to protect the property of the Company and its business;
	 
	 	3.1.9	 	To refinance, recast, modify, consolidate, extend or permit
the assumption of any Mortgage Loan or other investment owned by the Company;
	 
	 	3.1.10	 	To pay all expenses incurred in the operation of the Company;
	 
	 	3.1.11	 	To lend money to the Company in accordance with the conditions set forth in
Section 5.4;
	 
	 	3.1.12	 	To file tax returns on behalf of the Company and to make any and all
elections available under the Code;
	 
	 	3.1.13	 	To modify, delete, add to or correct from time to time any provision of this
Agreement as permitted under Section 15.4 hereof.

     3.2 Limitations on Manager’s Authority. The Manager has no authority to:

	 	3.2.1	 	Do any act in contravention of this Agreement;
	 
	 	3.2.2	 	Do any act which would make it impossible to carry on the
ordinary business of the Company;

14

 

	 	3.2.3	 	Confess a judgment against the Company;
	 
	 	3.2.4	 	Possess Company property or assign the rights of the Company
in property for other than a Company purpose;
	 
	 	3.2.5	 	Admit a person as a Manager without the prior affirmative vote
or consent of a Majority, or any higher vote as may be required by applicable
law;
	 
	 	3.2.6	 	Voluntarily withdraw as Manager without the prior affirmative
vote or consent of a Majority unless its withdrawal would neither affect the
tax status of the Company nor materially adversely affect the Members (subject
to any delay in effectiveness of the withdrawal as set forth elsewhere herein);
	 
	 	3.2.7	 	Sell all or substantially all of the assets of the Company in
one or a series of related transactions that is not in the ordinary course of
business, without the prior affirmative vote or consent of a Majority;
	 
	 	3.2.8	 	Amend this Agreement without the prior affirmative vote or
consent of a Majority, except as permitted by Section 15.4 of this Agreement;
	 
	 	3.2.9	 	Dissolve or terminate the Company without the prior
affirmative vote or consent of a Majority;
	 
	 	3.2.10	 	Cause the merger or other reorganization of the Company without the prior
affirmative vote or consent of a Majority;
	 
	 	3.2.11	 	Grant to the Manager or any of its Affiliates an exclusive right to sell any
Company assets;
	 
	 	3.2.12	 	Receive or permit the Manager or any Affiliate of the Manager to receive any
insurance brokerage fee or write any insurance policy covering the Company or
any Company property;
	 
	 	3.2.13	 	Commingle the Company’s assets with those of any other Person;
	 
	 	3.2.14	 	Use or permit another Person to use the Company’s assets in any manner,
except for the exclusive benefit of the Company;
	 
	 	3.2.15	 	Pay or award, directly or indirectly, any commissions or other compensation
to any Person engaged by a potential investor for investment advice as an
inducement to the advisor to advise the purchase of units; provided, however,
that this clause shall not prohibit the payment of Sales Commissions;
	 
	 	3.2.16	 	Make loans to the Manager or an Affiliate of the Manager; or
	 
	 	3.2.17	 	Pay, directly or indirectly, a commission or fee (except as otherwise set
forth in Article 14 hereof) to the Manager or any Affiliate of the Manager in
connection with the reinvestment or distribution of the proceeds of a Capital
Transaction.

     3.3 Right to Purchase Receivables and Loans. As long as the requirements of Article 4 are met

15

 

and the Company adheres to the investment policy described in the Memorandum, the Manager, in its
sole discretion, may at any time, but is not obligated to:

	 	3.3.1	 	Purchase from the Company the interest receivable or principal
on Mortgage Loans held by the Company;
	 
	 	3.3.2	 	Purchase from a senior lien holder the interest receivable or
principal on mortgage loans senior to Mortgage Loans held by the Company;
and/or
	 
	 	3.3.3	 	Use its own monies to cover any other costs associated with
Mortgage Loans held by the Company such as property taxes, insurance and legal
expenses.

     3.4 Extent of Manager’s Obligation and Fiduciary Duty. The Manager shall devote the portion
of its time to the business of the Company as it determines, in good faith, to be reasonably
necessary to conduct the Company’s business. The Manager shall not be bound to devote all of its
business time to the affairs of the Company, and the Manager and its Affiliates may engage for
their own account and for the account of others in any other business ventures and employments,
including ventures and employments having a business similar or identical or competitive with the
business of the Company. The Manager has fiduciary responsibility for the safekeeping and use of
all funds and assets of the Company, whether or not in the Manager’s possession or control, and the
Manager will not employ, or permit another to employ the Company’s funds or assets in any manner
except for the exclusive benefit of the Company. The Manager will not allow the assets of the
Company to be commingled with the assets of the Manager or any other Person. The Company shall not
permit a Member to contract away the fiduciary duty owed to any Member by the Manager under common
law. The Manager, for so long as it owns any units as a Member, hereby waives its right to vote its
units and to have them considered as outstanding in any vote for removal of the Manager or for
amendment of this Agreement (except as provided in Sections 3.1.12 and 15.4) or otherwise.

     3.5 Liability and Indemnification of Manager. Any right to indemnification hereunder shall be
subject to the following:

	 	3.5.1.	 	The Company shall not indemnify the Manager for any liability or loss
suffered by the Manager, nor shall the Manager be held harmless for any loss or
liability suffered by the Company, unless all of the following conditions are
met:

a. the Manager has determined, in good faith, that the course of conduct
which caused the loss or liability was in the best interest of the Company;

b. the Manager was acting on behalf of or performing services for the Company;

c. such liability or loss was not the result of the negligence or misconduct
by the Manager; and

d. such indemnification or agreement to hold harmless is recoverable only
out of the assets of the Company and not from the Members.

	 	3.5.2.	 	Notwithstanding anything to the contrary contained in Section 3.5.1, the
Manager (which shall include Affiliates only if such Affiliates are performing
services on behalf of the Company) and any Person acting as a broker-dealer
shall not be indemnified for any losses, liabilities or expenses arising from
an alleged violation of federal or state securities laws unless the following
conditions are met:

16

 

a. there has been a successful adjudication on the merits of each count
involving alleged securities law violation as to the particular indemnitee;
or

b. such claims have been dismissed with prejudice on the merits by a court
of competent jurisdiction as to the particular indemnitee; or

c. a court of competent jurisdiction has approved a settlement of the claims
against a particular indemnitee and has determined that indemnification of
the settlement and related costs should be made; and

d. in the case of subparagraph c of this paragraph, the court of law
considering the request for indemnification has been advised of the position
of the Securities and Exchange Commission and the position of any state
securities regulatory authority in which securities of the Company were
offered or sold as to indemnification for violations of securities laws;
provided that the court need only be advised of and consider the positions
of the securities regulatory authorities of those states:

	 	(1)	 	which are specifically set forth in the Company agreement; and
	 
	 	(2)	 	in which plaintiffs claim they were offered or
sold Company Interests.

	 	3.5.3.	 	The Company may not incur the cost of that portion of liability insurance
which insures the Manager for any liability as to which the Manager is
prohibited from
being indemnified under this subsection.
	 
	 	3.5.4.	 	Providing an advance from Company funds to the Manager or its Affiliates for
legal expenses and other costs incurred as a result of any legal action is
permissible if the following conditions are satisfied:

a. the legal action relates to acts or omissions with respect to the
performance of duties or services on behalf of the Company;

b. the legal action is initiated by a third party who is not a Member, or
the legal action is initiated by a Member and a court of competent
jurisdiction specifically approves such advancement; and

c. the Manager or its Affiliates undertake to repay the advanced funds to
the Company in cases in which such Person is not entitled to indemnification
under paragraph 1 of this section 3.5.

     3.6 Payment of Expenses by Manager. The Manager may at any time and from time to time pay any
expense of the Company that is chargeable to the Company pursuant to any provision of this
Agreement. The Manager is under no obligation to do so, and any payment of such expenses at any
time does not obligate the Manager to pay the same or any other expense in the future.

     3.7 Assignment by the Manager. The Manager’s Interests in the Company may be assigned at the
discretion of the Manager, subject to Section 10.1.

17

 

     3.8 Removal of Manager. The Manager may be removed upon the following conditions:

	 	3.8.1	 	The Members may remove the Manager by written consent or vote
of a Majority (excluding any Interests of the Manager being removed). This
removal of the Manager, if there is no other Manager, shall not become
effective for at least 120 days following the consent or vote of the Majority.
	 
	 	3.8.2	 	During the 120 day period described in Section 3.8.1, the
Majority (excluding any Interests of the removed Manager) shall have the right
to agree in writing to continue the business of the Company and, within six
months following the termination date of the last remaining Manager, elect and
admit a new Manager(s) who agree(s) to continue the existence of the Company.
	 
	 	3.8.3	 	Substitution of a new Manager, if any, shall be effective upon
written acceptance of the duties and responsibilities of a Manager by the new
Manager. Upon effective substitution of a new Manager, this Agreement shall
remain in full force and effect, except for the change in the Manager, and
business of the Company shall be continued by the new Manager. The new Manager
shall thereupon execute, acknowledge and file a certificate of amendment to the
Certificate of Formation of the Company in the manner required by Section
26.221 of the Delaware Law.
	 
	 	3.8.4	 	Failure of a Majority to designate and admit a new Manager
within the time
specified herein shall dissolve the Company, in accordance with the
provisions of Article 12 of this Agreement.

     3.9 Right to Rely on Manager. Any person dealing with the Company may rely (without duty of
further inquiry) upon a certificate signed by the Manager as to:

	 	3.9.1	 	The identity of the Manager or any Member;
	 
	 	3.9.2	 	The existence or non-existence of any fact or facts which
constitute a condition precedent to acts by the Manager or which are in any
further manner germane to the affairs of the Company;
	 
	 	3.9.3	 	The persons who are authorized to execute and deliver any
instrument or document of the Company; and
	 
	 	3.9.4	 	Any act or failure to act by the Company or any other matter
whatsoever involving the Company or any Member.

     3.10 Transfer of the Control of the Manager. A sale or transfer of a controlling interest in
the Manager will not terminate the Company or be considered the withdrawal or resignation of the
Manager. By majority vote, the Company may terminate the then Manager’s interest in the Company by
paying an amount equal to the then-present fair market value of such Manager’s interest in the
Company, determined as set forth in Section 11.5.

     3.11 Amendment to the Manager’s Duties. Any amendment to this Operating Agreement modifying
the rights and/or duties of the Manager shall require the Manager’s written consent.

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ARTICLE 4

INVESTMENT AND OPERATING POLICIES

     4.1 Commitment of Capital Contributions. The Manager shall take all reasonable steps to
commit ninety-seven percent (97%) of Capital Contributions to Mortgage Loans. The Company may
invest in or purchase Mortgage Loans of such duration and on such real property and with such
additional security as the Manager in its sole discretion shall determine, subject to Section 4.2

     4.2 Investment Policy. In making investments, the Manager shall follow the investment policy
described in the Memorandum.

ARTICLE 5

CAPITAL CONTRIBUTIONS; LOANS TO COMPANY

     5.1 Capital Contribution by Manager. The Manager (in its capacity as the Initial Member)
shall contribute to the capital of the Company such amount as it deems appropriate.

     5.2
Contributions of Other Members. Members other than the Manager shall acquire units in accordance with the terms of the Subscription
Agreement or any future subscription materials approved by the Manager. The names, addresses, date
of admissions and Capital Contributions of the Members shall be set forth in Schedule A maintained
by the Manager. The Manager shall update the Schedule A to reflect the then-current ownership of
units (and Interests) without any further need to obtain the consent of any Member, and the
Schedule A, as revised from time to time by the Manager, shall be presumed correct absent manifest
error. Any member shall have a right to inspect such schedule upon written request to the Manager.

     5.3 Interest. No interest shall be paid on, or in respect of, any Capital Contribution by any
Member, nor shall any Member have the right to demand or receive cash or other property in return
for the Member’s Capital Contribution, subject to Article 11 hereof.

     5.4 Loans. The Manager or any of its Affiliates may, or any Member or Affiliate of a Member
may, with the written consent of the Manager, lend or advance money to the Company. If any such
persons shall make any loans to the Company or advance money on its behalf, the amount of any loan
or advance shall not be treated as a contribution to the capital of the Company, but shall be a
debt due from the Company. Any loans made by the Manager shall conform to NASAA Guidelines. The
amount of any loan or advance by the Manager or its Affiliate, or a Member or an Affiliate of a
Member shall be repayable out of the Company’s cash and shall bear interest at a rate of not in
excess of the lesser of (i) the prime rate published, from time to time, by The Wall Street
Journal, plus five percent (5%) per annum, or (ii) the maximum rate permitted by applicable law.
The inability of the Company to obtain more favorable loan terms shall be a condition to obtaining
such loans from the Manager or its Affiliate or a Member or Affiliate of a Member. None of the
Members or their Affiliates, nor the Manager or its Affiliates, shall be obligated to make any loan
or advance to the Company. This section shall be subject to the Company’s Investment Policy as it
relates to transactions with the Manager or its Affiliates.

ARTICLE 6

VOTING AND OTHER RIGHTS OF MEMBERS

     6.1 No Participation in Management. Except as expressly provided in this Agreement, no Member
shall take part in the conduct or control of the Company’s business or have any right or authority
to act for or bind the Company.

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     6.2 Rights and Powers of Members. In addition to the rights of the Members to remove and
replace the Manager pursuant to Section 3.8, and as otherwise provided for in Section 3.2, the
Members shall have the right to vote upon and take any of the following actions upon the approval
of a Majority, without the concurrence of the Manager, and an affirmative vote of a Majority shall
be required to allow or direct the Manager to:

	 	6.2.1	 	Dissolve and windup the Company before the expiration of the
term of the Company;
	 
	 	6.2.2	 	Amend this Agreement, subject to the rights to the Manager
granted in Section 15.4 of this Agreement and subject also to the prior consent
of the Manager if either the distributions due to the Manager or the duties of
the Manager are affected;
	 
	 	6.2.3	 	Merge the Company or sell all or substantially all of the
assets of the Company, otherwise than in the ordinary course of its business.
	 
	 	6.2.4	 	Change the nature of the Company’s business;
	 
	 	6.2.5	 	Elect to continue the business of the Company other than in
the circumstances described in Section 3.8 of this Agreement.

     6.3 Meetings.

	 	6.3.1	 	The Members may hold meetings of Members within or outside the
State of Delaware at any place selected by the Person or Persons calling the
meeting. If no other place is stated, meetings shall be held at the Company’s
principal place of business as established in accordance with Section 1.3 of
this Agreement. The Members may approve by written consent of a Majority any
matter upon which the Members are entitled to vote at a duly convened meeting
of the Members, which consents will have the same effect as a vote held at a
duly convened meeting of the Members.
	 
	 	6.3.2	 	The Manager, or Members representing more than ten percent
(10%) of the outstanding Interests for any matters on which the Members may
vote, may call a meeting of the Company. If Members representing the requisite
Interests present to the Manager a statement requesting a Company meeting, or
the Manager calls the meeting, the Manager shall fix a date for a meeting and
shall (within ten (10) days after receipt of a statement, if applicable) give
personal or mailed notice or notice by any other means of written
communication, addressed to each Member at the respective address of the Member
appearing on the books of the Company or given to the Company for the purpose
of notice, not less than fifteen (15) or more than sixty (60) days before the
date of the meeting, to all Members of the date, place and time of the meeting
and the purpose for which it has been called. Unless otherwise specified, all
meetings of the Company shall be held at 2:00 p.m. local time at the principal
office of the Company.
	 
	 	6.3.3	 	Members may vote in person or by proxy. A Majority, whether
present in person

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	 	 	 	or by proxy, shall constitute a quorum at any meeting of
Members. Any question relating to the Company which may be considered and acted
upon by the Members may be considered and acted upon by vote at a Company
meeting, and any vote required to be in writing shall be deemed given if
approved by a vote by written ballot.

     6.4 Limited Liability of Members. Units are non-assessable. No Member shall be personally
liable for any of the expenses, liabilities, or obligations of the Company or for any Losses beyond
the amount of the Member’s Capital Contribution to the Company and the Member’s share of any
undistributed net income and gains of the Company.

     6.5 Access to Books and Records. Upon 5 business days advance written notice to the Manager,
the Members and their designated representatives shall have access to books and records of the
Company during the Company’s normal business hours. An alphabetical list of the names, addresses
and business telephone numbers, to the extent such are available, of all Members together with the
number of units held by each of them will be maintained as a part of the
books and records of the Company. The Company shall make the list available on request to any
Member or his representative for a stated purpose including, without limitation, matters relating
to Members’ voting rights, tender offers, and the exercise of Members’ rights under federal proxy
law. A copy of the Members list shall be mailed to any Member requesting it within ten business
days of the request, although the Company may charge a reasonable amount for the copy work. The
Member list shall be updated at least quarterly to reflect changes in the information contained
therein.

     If the Manager neglects or refuses to exhibit, produce or mail a copy of the Member list as
requested, the Manager shall be liable to any Member requesting the list for the costs, including
attorney fees, incurred by that Member for compelling the production of the list, and for actual
damages suffered by the Member by reason of the refusal or neglect. However, the Company need not
exhibit, produce or mail a copy of the Member list if the actual purpose and reason for the request
therefor is to secure the list or other information for the purpose of selling the list or copies
thereof, or of using it for a commercial purpose other than in the interest of the Person as a
Member in the Company. The Manager may require the Person requesting the list to represent that the
list is not requested for any commercial purpose. The remedies provided hereunder to Members
requesting copies of the list are in addition to, and shall not in any way limit, other remedies
available to Members under federal or Delaware law.

     6.6 Representation of Company. Each of the Members hereby acknowledges and agrees that the
attorneys representing the Company and the Manager and its Affiliates do not represent and shall
not be deemed under the applicable codes of professional responsibility to have represented or be
representing any or all of the Members in any respect at any time. Each of the Members further
acknowledges and agrees that the attorneys shall have no obligation to furnish the Members with any
information or documents obtained, received or created in connection with the representation of the
Company, the Manager and its Affiliates.

ARTICLE 7

PROFITS AND LOSSES; CASH DISTRIBUTIONS

     7.1 Allocation of Profits and Losses. The Manager shall credit all Company Profits to and
charge all Company Losses against the Members in proportion to their respective Interests. The
Manager shall allocate to the Members all Profits and Losses realized by the Company during any
month as of the close of business on the last day of each calendar month, in accordance with their
respective Interests and in proportion to the number of days during the month that they owned the
Interests (i.e., a weighted average Capital Account), without regard to Profits and Losses realized
for time periods within the month.

21

 

     7.2 Net Distributable Earnings . The Company shall distribute Net Distributable Earnings to
Members according to the allocations provided for in Section 7.1, in cash to those Members who have
on file with the Company their written election to receive cash distributions, as a pro rata share
of the total Net Distributable Earnings. The Company shall make these distributions monthly in
proportion to the weighted average Capital Account of each Member during the preceding calendar
month.

     7.3 Net Proceeds. Net Proceeds may also be distributed to Members in cash at such time or
times as the Manager shall determine, in the Manager’s sole discretion, or be retained by the
Company for other uses as set forth herein. The Company may use Net Proceeds to make new loans,
improve or maintain properties acquired by the Company through foreclosure or to pay operating
expenses. Distributions of Net Proceeds shall be in accordance with the allocations provided for in
Section 7.1 above.

     7.4 Cash Distributions Upon Dissolution. Upon dissolution and winding up of the Company, the
Company shall thereafter distribute Net Distributable Earnings and Net Proceeds available for
distribution, if any, to the Members in accordance with the provisions of Section 12.3 of this
Agreement.

     7.5 Special Allocation Rules.

	 	7.5.1	 	Minimum Gain Chargeback. Except as otherwise provided in
Regulation section 1.704-2(f), notwithstanding any other provision of this
Article 7, if there is a net decrease in Company Minimum Gain 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 such Member’s share of the net decrease in Company Minimum Gain,
determined in accordance with Regulation section 1.704-2(g). Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Member pursuant thereto. The items to
be so allocated shall be determined in accordance with Regulation section
1.704-2(f)(6) and 1.704-2(j)(2). This Section 7.5.1 is intended to comply with
the minimum gain chargeback requirement in Regulation section 1.704-2(f) and
shall be interpreted consistently therewith.
	 
	 	7.5.2	 	Member Minimum Gain Chargeback. Except as otherwise provided
in Regulation section 1.704-2(i)(4), notwithstanding any other provision of
this Article 7, if there is a net decrease in Member Nonrecourse Debt Minimum
Gain attributable to a Member Nonrecourse Debt during any Fiscal Year, each
Member who has a share of the Member Nonrecourse Debt Minimum Gain attributable
to such Member Nonrecourse Debt, determined in accordance with Regulation
section 1.704-2(i)(5), 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 such Member’s share of the net decrease in Member Nonrecourse
Debt, determined in accordance with Regulation section 1.704-2(i)(4).
Allocations pursuant to the previous sentence shall be made in proportion to
the respective amounts required to be allocated to each Member pursuant
thereto. The items to be so allocated shall be determined in accordance with
Regulation sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 7.5.2 is
intended to comply with the minimum gain chargeback requirement in Regulation
section 1.704-2(i)(4) of the Regulations and shall be interpreted consistently
therewith.

22

 

	 	7.5.3	 	Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal
Year shall be specially allocated to the Members in proportion to their
respective Units.
	 
	 	7.5.4	 	Member Nonrecourse Deductions. Any Member Nonrecourse
Deductions for any Fiscal Year shall be specially allocated to the Member who
bears the economic risk of loss with respect to the Member Nonrecourse Debt to
which such Member Nonrecourse Deductions are attributable in accordance with
Regulation section 1.704-2(i)(1).
	 
	 	7.5.5	 	Code Section 754 Adjustments. To the extent an adjustment to
the adjusted tax basis of any Company asset, pursuant to Code section 734(b) or
Code section
743(b) is required, pursuant to Regulation sections 1.704-1(b)(2)(iv)(m)(2)
or 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital
Accounts as the result of a distribution to a Member in complete liquidation
of such Member’s Interest in the Company, the amount of such adjustment to
Capital Accounts shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases such
basis), and such gain or loss shall be specially allocated to the Members in
accordance with their interests in the Company in the event Regulation
section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Member to whom such
distribution was made in the event Regulation section
1.704-1(b)(2)(iv)(m)(4) applies.
	 
	 	7.5.6	 	No allocation of Loss (or items thereof) shall be made to any
Member to the extent that such allocation would create or increase a deficit in
such Member’s Capital Account (as determined after debiting such Capital
Account for the items described in Regulations Section
1.704-1(b)(2)(ii)(d)(4),(5) and (6) and crediting such Capital Account for any
amounts that such Partner is obligated to restore or is deemed obligated to
restore pursuant to Treasury Regulations Section 1.704-2).
	 
	 	7.5.7	 	For purposes of determining the Profits, Losses, Net
Distributable Earnings or any other items allocable to any period, these other
items shall be determined on a daily, monthly, or other basis, as determined by
the Manager using any permissible method under Section 706 of the Code and the
Regulations thereunder.

     7.6 Code Section 704(c) Allocations.

	 	7.6.1	 	Income, gains, losses and deductions, as determined for
Federal income tax purposes, for any Company asset which has a Gross Asset
Value that differs from its adjusted basis for Federal income tax purposes
shall, solely for Federal income tax purposes, be allocated among the Members
so as to take account of any variation between the adjusted basis of the
Company asset to the Company for Federal income tax purposes and its initial
Gross Asset Value in accordance with Code Section 704(c) and the Regulations
thereunder. In furtherance of the foregoing, it is understood and agreed that
any income, gain, loss, or deduction attributable to Code Section 704(c)
property shall be allocated to the Members in accordance with the traditional
method of making Code Section 704(c) allocations, in accordance with Regulation
1.704-3(b).
	 
	 	7.6.2	 	If the Gross Asset Value of any Company asset is adjusted
under Section 2.17, subsequent allocations of income, gain, losses and
deductions, as determined for

23

 

	 	 	 	Federal income tax purposes, for the Company
asset shall, solely for Federal income tax purposes, take account of any
variation between the adjusted basis of the Company asset for Federal income
tax purposes and its Gross Asset Value in the same manner as under Code Section
704(c) and the Regulations thereunder.
	 
	 	7.6.3	 	Allocations under this Section 7.6 are solely for purposes of
Federal, state and local income taxes and shall not affect, or in any way be
taken into account in computing, any Member’s Capital Account.
	 
	 	7.6.4	 	Except as otherwise set forth in this Agreement, any elections
or other decisions relating to allocations under this Section 7.6 shall be made
by the Manager, with
the review and concurrence of the Company’s accountants, in a manner that
reasonably reflects the purpose and intention of this Agreement.

     7.7 Intent of Allocations. It is the intent of the Company that this Agreement comply with
the safe harbor test set out in Regulation 1.704-1(b)(2)(ii)(d) and 1.704-2. If, for whatever
reasons, the Company is advised by counsel or its accountants that the allocation provisions of
this Agreement are unlikely to be respected for federal income tax purposes, the Manager is granted
the authority to amend the allocation provisions of this Agreement, to the minimum extent deemed
necessary by counsel or its accountants to effect the plan of Allocations and Distributions
provided in this Agreement. The Manager shall have the discretion to adopt and revise rules,
conventions and procedures as it believes appropriate for the admission of Members to reflect
Members’ Interests in the Company at the close of the years.

     7.8 Quarterly Review of Assets. For each of the Company’s Mortgage Investments and other
assets, the Manager shall review the assets as of the end of each calendar quarter and determine if
a Writedown is required with respect thereto. Any Writedown of an asset resulting from the review
shall be effective on the last day of the calendar quarter for which the determination was made.

ARTICLE 8

REINVESTMENT PLAN

     8.1 Members’ Reinvested Distributions. A Member may elect to participate in the Company’s
Reinvestment Plan (the “Plan”) at the time of his purchase of units, by electing to do so in the
Subscription Agreement executed by the Member. If the Member so elects, the Member’s participation
in the Plan commences after the Company has accepted the Member’s Subscription Agreement. A Member
may also elect to participate in the Plan after executing the Subscription Agreement by sending a
notice of such election to the Manager. Also, a Member may revoke any previous election or make a
new election to participate in the Plan by sending written notice to the Manager. Any notice of an
election to participate or any notice of revocation of an election to participate shall be
effective for the month in which the notice is received, if received at least ten (10) days before
the end of the calendar month. Otherwise the notice is effective the following month.

     8.2 Purchase of Additional Units. Under the Plan, participating Members use distributions to
purchase additional units or fractional units at $10,000 per whole unit or the then current price
for a unit if different from $10,000. The Manager will credit units purchased under the Plan to the
Member’s Capital Account as of the first day of the month following the month in which the
Reinvested Distribution is made. If a Member revokes a previous election to participate in the
Plan, subsequent to the month in which the Company receives the revocation notice, the Company
shall make distributions in cash to the Member instead of reinvesting the distributions in
additional units.

24

 

     8.3 Statement of Account. Within 30 days after the Reinvested Distributions have been
credited to Members participating in the Plan, the Manager will send to participating Members a
statement of account describing the Reinvested Distributions received, the number of incremental
units purchased, the purchase price per unit (if other than $10,000 per unit), and the total number
of units held by the Member. Before the Members’ reinvestment of distributions in the Company, the
Manager will also send an updated disclosure document to each Member that fully describes the Plan,
including the minimum investment amount, the type or source of proceeds which may
be reinvested and the tax consequences of the reinvestment to the Members, all to the extent deemed
necessary by the Manager.

     8.4 Continued Suitability Requirements. Each Member who is a participant in the Plan must
continue to meet the investor suitability standards described in the Subscription Agreement and
Memorandum (subject to minimum requirements of applicable securities laws) to continue to
participate in reinvestments. It is the responsibility of each Member to notify the Manager
promptly if he no longer meets the suitability standards set forth in the Memorandum for a purchase
of units in the offering. The Members acknowledge that the Company is relying on this notice in
issuing the units, and each Member shall indemnify the Company if he fails to so notify the Company
and the Company suffers any damages, losses or expenses, or any action or proceeding is brought
against the Company due to the issuance of units to the Member.

     8.5 Changes or Termination of the Plan. The terms and conditions of the Plan may be amended,
supplemented, suspended or terminated for any reason by the Manager at any time by sending notice
thereof at least thirty (30) days before the effective date of the action to each participating
Member at his last address of record.

ARTICLE 9

BOOKS AND RECORDS, REPORTS AND RETURNS

     9.1 Books and Records. The Manager shall cause the Company to keep the following:

	 	9.1.1	 	Complete books and records of account in which shall be
entered fully and accurately all transactions and other matters relating to the
Company;
	 
	 	9.1.2	 	A current list setting forth the full name and last known
business or residence address of the Manager and each Member which shall be
listed in alphabetical order and stating his respective Capital Contribution to
the Company and share in Members’ Equity;
	 
	 	9.1.3	 	A copy of the filed Certificate of Formation, and all
amendments thereto;
	 
	 	9.1.4	 	Copies of the Company’s federal, state and local income tax
returns and reports, if any, for the six (6) most recent years;
	 
	 	9.1.5	 	Copies of this Agreement, including all amendments thereto;
and
	 
	 	9.1.6	 	The financial statements of the Company for the three (3) most
recent years.

     All books and records shall be maintained at the Company’s principal place of business and
shall be available for inspection and copying by, and at the sole expense of, any Member, or any
Member’s duly authorized representatives, during the Company’s normal business hours and upon five
(5) business days prior notice to the Manager.

25

 

     9.2 Annual Statements.

	 	9.2.1	 	The Manager shall cause to be prepared at least annually, at
the Company’s expense, audited financial statements prepared in accordance with
generally accepted accounting principles and accompanied by an auditor’s report
thereon containing an opinion of an independent certified public accountant.
The financial statements will include: an audited balance sheet, statements
of income or loss, statement of Members’ Equity, and a statement of cash
flows. Copies of the financial statements and the auditor’s report shall be
sent to each Member within 120 days after the close of each Fiscal Year of
the Company.
	 
	 	9.2.2	 	The Manager shall cause to be prepared and distributed to the
Members not later than 75 days after the close of each Fiscal Year of the
Company all Company information necessary in the preparation of the Members’
federal income tax returns.

     9.3 Filings. The Manager, at Company expense, shall cause the income tax returns for the
Company to be prepared and timely filed with the appropriate authorities. The Manager, at Company
expense, shall also cause to be prepared and timely filed with and/or delivered to appropriate
federal and state regulatory and administrative bodies and/or the Members applicable, all reports
required to be filed with or delivered to those entities or Members under applicable law, including
those described in the Company’s undertakings in any securities filing. The reports shall be
prepared using the accounting or reporting basis required by the relevant regulatory bodies. The
Company will provide a copy of the reports to each Member who requests one, without expense to the
Member. The Manager, at Company expense, shall file, with the Administrators for the states in
which this Company is registered, as required by these states, a copy of each report referred to
under this Article 9.

     9.4 Suitability Requirements. The Manager, at Company expense, shall maintain for a period of
at least six years a record of the documentation indicating that a Member complies with the
suitability standards set forth in the Memorandum.

     9.5 Fiscal Matters.

	 	9.5.1	 	Fiscal Year. The Company has previously adopted the Fiscal
Year for tax and accounting purposes. Subject to the provisions of Section 706
of the Code and approval by the Internal Revenue Service and the applicable
state taxing authorities, in the Manager’s sole discretion and without the
approval of a Majority, from time to time the Manager may change the Company’s
fiscal year to a period to be determined by the Manager.
	 
	 	9.5.2	 	Method of Accounting. The Company shall continue to use the
accrual method of accounting for both income tax purposes and financial
reporting purposes.
	 
	 	9.5.3	 	Adjustment of Tax Basis. Upon the transfer of an interest in
the Company, the Company may, at the sole discretion of the Manager, elect
under Code Section 754, to adjust the basis of the Company property as allowed
by Sections 734(b) and 743(b) thereof.
	 
	 	9.5.4	 	Tax Matters Partner. The Manager shall act as the “Tax Matters
Partner” (“TMP”) and shall have all the powers and duties assigned to the TMP
under Sections 6221 through 6234 of the Code and the Regulations thereunder.
The

26

 

	 	 	 	Members agree to perform all acts necessary under Section 6231 of the Code
and Regulations thereunder to designate the Manager as the TMP.

ARTICLE 10

TRANSFER OF COMPANY INTERESTS

     10.1 Interests of Manager. A successor or additional Manager may be admitted to the Company
as follows:

	 	10.1.1	 	With the consent of all Managers (should there be any manager other than the
Manager) and a Majority, a manager may at any time designate one or more
Persons to be a successor to it or to be an additional manager, in each case
with the participation in the Manager’s Interests as they may agree upon, so
long as the Company and the Members shall not be adversely affected thereby.
	 
	 	10.1.2	 	Upon any sale or transfer of a Manager’s Interests, if there is an additional
or successor manager of the Company, the successor manager shall succeed to all
the powers, rights, duties and obligations of the assigning Manager hereunder,
and the assigning Manager shall thereupon be irrevocably released and
discharged from any further liabilities or obligations of or to the Company or
the Members accruing after the date of the transfer. The sale, assignment or
transfer of all or any portion of the outstanding stock of the Manager, or of
any interest therein, or an assignment of the Manager’s Interests for security
purposes only, shall not be deemed to be a sale or transfer of the Manager’s
Interests subject to the provisions of this Section 10.1.

     10.2 Transfer of Member’s Interest. To the extent any of the following restrictions is not
necessary to the Company, in the discretion of the Manager reasonably exercised, the Manager may
eliminate or modify any restriction. Subject to the immediately preceding sentence, no assignee of
the whole or any portion of a Member’s Interest in the Company shall have the right to become a
substituted Member in place of his assignor, unless the following conditions are first met:

	 	10.2.1	 	Members may transfer fractional units, however, no Member may transfer units
where, as a result of the transfer, the Member would thereafter own less than
one unit, except where the transfer occurs by operation of law;
	 
	 	10.2.2	 	The assignor shall designate its intention in a written instrument of
assignment, which shall be in a form and substance reasonably satisfactory to
the Manager;
	 
	 	10.2.3	 	The transferring Member shall first obtain written consent of the Manager to
the substitution. The Manager shall not unreasonably withhold its consent, but
the Manager will withhold its consent to the extent necessary to prohibit
transfers that could cause us to be classified as a publicly traded
partnership. The Manager will also withhold consent if it determines that the
sale or transfer will otherwise jeopardize the continued ability of the Company
to qualify as a “partnership” for federal income tax purposes or that the sale
or transfer may violate any applicable securities laws (including any
investment suitability standards);
	 
	 	10.2.4	 	The assignor and assignee named therein shall execute and acknowledge any
other instruments as the Manager may deem necessary or desirable to effect the
substitution, including, but not limited to, a power of attorney;

27

 

	 	10.2.5	 	The assignee shall accept, adopt and approve in writing all of the terms and
provisions of this Agreement as the same may have been amended;
	 
	 	10.2.6	 	The assignee shall pay or, at the election of the Manager, obligate himself
to pay all reasonable expenses connected with the substitution, including but
not limited to reasonable attorneys’ fees associated therewith; and
	 
	 	10.2.7	 	The Company has received, if required by the Manager, a legal opinion
satisfactory to the Manager that the transfer will not violate the registration
provisions of the Securities Act of 1933, as amended, or any applicable state
securities laws, which opinion shall be furnished at the Member’s expense.

     Assignments complying with the above shall be recognized by the Company not later than the
last day of the calendar month in which the written notice of assignment is received by the
Company.

     10.3 Further Restrictions on Transfers. Notwithstanding any provision to the contrary
contained in this Agreement, the following restrictions shall also apply to any and all proposed
sales, assignments and transfer of Interests, and any proposed sale, assignment or transfer in
violation of same shall be void and of no effect:

	 	10.3.1	 	No Member shall make any transfer or assignment of all or any part of his
Interests if said transfer or assignment would, when considered with all other
transfers during the same applicable twelve month period, cause a termination
of the Company for federal or Delaware state income tax (if any) purposes;
	 
	 	10.3.2	 	Appropriate legends under applicable securities laws shall be affixed to any
certificates evidencing the units.
	 
	 	10.3.3	 	No Member shall make any transfer or assignment of all or any of his
Interests if the Manager determines that the transfer or assignment would
result in the Company being classified as a “publicly traded partnership” with
the meaning of Section 7704(b) of the Code or Regulations promulgated
thereunder. To prevent that:

	 	(a)	 	The Manager will not permit trading of units on
an established securities market within the meaning of Section 7704(b);
	 
	 	(b)	 	The Manager will prohibit any transfer of units
(other than withdrawals) which would cause the sum of percentage
interest in Company capital or profits represented by Interests that
are sold or otherwise disposed of during any taxable year of the
Company to exceed two percent (2%) of the total Interests in Company
capital or profits; and
	 
	 	(c)	 	The Manager will not permit any withdrawal of
units except in compliance with the provisions of this Agreement.

ARTICLE 11

DEATH, LEGAL INCOMPETENCY, OR WITHDRAWAL OF A MEMBER;

WITHDRAWAL OF THE MANAGER

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     11.1 Effect of Death or Legal Incompetency of a Member on the Company. The death or legal
incompetency of a Member shall not cause a dissolution of the Company or entitle the Member or his
estate to a return of his Capital Account.

     11.2 Rights of Personal Representative. On the death or legal incompetency of a Member, his
personal representative shall have all the rights of that Member for the purpose of settling his
estate or managing his property, including the rights of assignment and withdrawal.

     11.3 Withdrawal of Members Other than Managers. With the sole discretion of the Manager
reasonably exercised, the Manager may modify, eliminate or waive any such limitation on the
withdrawal rights of a member as set forth below, on a case by case basis or by class so long as
the modifying, waiving, or elimination of the limitation does not: (a) adversely affect rights of
the other members as a whole; or (b) result in the Company being classified as a “publicly traded
partnership” within the meaning of Section 7704(b) of the Code or Regulations promulgated
thereunder. To withdraw, or partially withdraw from the Company, a Member must give written notice
thereof to the Manager and may thereafter obtain the return, in cash, of his Capital Account, or
the portion thereof as to which he requests withdrawal, within sixty (60) to ninety (90) days after
written notice of withdrawal is received by the Manager, subject to the following limitations:

	 	11.3.1	 	Except with regard to the right of the personal representative of a deceased
Member under Section 11.2 above, no notice of withdrawal shall be honored and
no withdrawal made of or for any units until the expiration of at least 60 days
from the date of purchase of those units in the offering, other than purchases
by way of automatic reinvestment of Company distributions described in Article
8 of this Agreement;
	 
	 	11.3.2	 	To assure that the payments to a Member or his representative do not impair
the capital or the operation of the Company, any cash payments in return of an
outstanding Capital Account shall be made by the Company only to the extent
that the Manager determines that sufficient cash is available;
	 
	 	11.3.3	 	The Manager shall not be required to establish a reserve fund for the purpose
of funding the payments, nor shall the Manager be required to sell or otherwise
liquidate any portion of the Company’s Mortgage Investments or any other asset
in order to make a cash distribution of any Capital Account under this Section
11.3;
	 
	 	11.3.4	 	Subject to the restrictions on withdrawal contained in this Agreement, the
amount to be distributed to any withdrawing Member shall be an amount equal to
the amount of the Member’s Capital Account as of the date of the distribution,
as to which the Member has given a notice of withdrawal under this Section
11.3, notwithstanding that the amount may be greater or lesser than the
Member’s proportionate share of the current fair market value of the Company’s
net assets;
	 
	 	11.3.5	 	Unless the Manager determines that any distribution in excess of ten percent
(10%) will not have an adverse effect on the Fund or the Members, the Manager
will not permit the withdrawal during any calendar year of total amounts from
the Capital Accounts of members that exceeds ten percent (10%) of the aggregate
Interests, except upon the vote of the Members to dissolve the Company under
this Agreement;

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	 	11.3.6	 	Requests by Members for withdrawal will be honored in the order in which they
are received by the Manager. If any request may not be honored, due to any
limitations imposed by this Section 11.3 (except the 60 day waiting limitation
set forth in Subsection 11.3.1), the Manager will so notify the requesting
Member in writing, whose request, if not withdrawn by the Member, will be
honored if and when the limitation no longer is imposed; and
	 
	 	11.3.7	 	If a Member’s Capital Account would have a balance of less than $10,000
following a requested withdrawal, the Manager, at its discretion, may
distribute to the Member the entire balance in the account.

     11.4 Withdrawal by Manager. The Manager may withdraw from the Company upon not less than 120
days written notice of the same to all Members, but only with the affirmative vote or consent of a
Majority, as noted in Section 3.2. The withdrawing Manager shall not be liable for any debts,
obligations or other responsibilities of the Company or this Agreement arising after the effective
date of the withdrawal.

     11.5 Payment to Terminated Manager. If the business of the Company is continued as provided
elsewhere in this Agreement upon the withdrawal, removal, dissolution, or bankruptcy of the
Manager, then the Company shall pay to the Manager a sum equal to all amounts then accrued and
owing to the Manager. The Company may terminate the Manager’s interest in the Company by paying an
amount equal to the then-present fair market value of the Manager’s interest in the Company, which
the Company and Manager acknowledge is the outstanding Capital Account as of the date of the
removal, withdrawal, dissolution or bankruptcy. If the business of the Company is not so continued,
then the Manager shall receive from the Company the sums it would have received in the course of
dissolving the Company and winding up its affairs, as provided in Section 12.2 below.

     The method of payment to any terminated Manager must be fair and must protect the solvency and
liquidity of the Company. Where the termination is voluntary, the method of payment will be deemed
presumptively fair where it provides for a non-interest bearing unsecured promissory note with
principal payable, if at all, from distributions which the terminated Manager otherwise would have
received under this Agreement had the Manager not terminated. Where the termination is involuntary,
the method of payment will be deemed presumptively fair where it provides for an interest bearing
promissory note coming due in no less than five years with equal installments each year.

     In the event the Company and the Manager disagree as to the then-present fair market value,
then the dispute shall be settled by arbitration in Phoenix, Arizona, in accordance with the then
current rules of the American Arbitration Association.

ARTICLE 12

DISSOLUTION OF THE COMPANY

     12.1 Events Causing Dissolution. The Company shall dissolve upon occurrence of the earlier of
the following events:

	 	12.1.1	 	Upon the affirmative vote or consent of a Majority;
	 
	 	12.1.2	 	The withdrawal, removal, dissolution or bankruptcy of the Manager, unless, if
there is no remaining manager, a Majority agree in writing to continue the
business of the Company and, within six months after the last remaining manager
has ceased to be a manager, admit one or more managers who agree to such
election and join the Company as managers.

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     12.2 Winding Up. Upon the occurrence of an event of dissolution, the Company shall
immediately be dissolved, but shall continue until its affairs have been wound up according to the
provisions of the Delaware Statutes. Upon dissolution of the Company, unless the business of the
Company is continued as provided above, the Manager will wind up the Company’s affairs as follows:

	 	12.2.1	 	No new Mortgage Investments shall be invested in or purchased;
	 
	 	12.2.2	 	The Manager(s) shall liquidate the assets of the Company either by sale of
the assets to third parties or by servicing the Company’s outstanding Mortgage
Investments in accordance with their terms;
	 
	 	12.2.3	 	All sums of cash owned by the Company as of the date of dissolution, together
with all sums of cash received by the Company during the winding up process
from any source whatsoever, shall be distributed in accordance with Section
12.3 below.

     12.3 Order of Distribution of Assets. If the Company is dissolved under Section 12.1 above,
the assets of the Company shall be distributed in accordance with Delaware Statutes Section 18-804.

     12.4 No Recourse to Manager. Upon dissolution and winding up under the Delaware Statutes,
each Member shall look solely to the assets of the Company for the return of his Capital Account,
and if the Company assets remaining after the payment or discharge of the debts and liabilities of
the Company are insufficient to return the amounts of the Capital Account of Members, Members shall
have no recourse against the Manager or any other Member. The winding-up of the affairs of the
Company and the distribution of its assets shall be conducted exclusively by the Manager. The
Manager is hereby authorized to do any and all acts and things authorized by law for these
purposes. If the Manager becomes insolvent or bankrupt, dissolves, withdraws or is removed by the
Members, the winding-up of the affairs of the Company and the distribution of its assets shall be
conducted by the person or entity selected by a vote of a Majority, which person or entity is
hereby authorized to do any and all acts and things authorized by law for such purposes.

     12.5 Compliance With Timing Requirements of Regulations. If the Company is “liquidated”
within the meaning of Regulation 1.704-1(b)(2)(ii)(g), distributions shall be made under this
Article 12 (if such liquidation constitutes a dissolution of the Company) or Article 7 hereof (if
it does not) to the Manager and Members who have positive Capital Accounts in compliance with
Regulation 1.704-1(b)(2)(ii)(b)(2).

ARTICLE 13

ROLL-UPS

     13.1 Roll-Up Transactions: Appraisal. If the Company proposes to enter into a Roll-Up
transaction, an appraisal of all Company assets shall be obtained from a competent, Independent
Expert. If the appraisal will be included in a Memorandum to offer the securities of a Roll-Up
entity to the Members, the appraisal shall be filed with the Securities and Exchange Commission and
the states as an exhibit to the Registration Statement for that offering. The
Independent Expert will appraise the assets of the Company on a consistent basis, and conduct the
appraisal based on an evaluation of the Company’s assets as of a date immediately before the
announcement of the proposed Roll-Up. In performing the appraisal, the Independent Expert shall
assume an orderly liquidation of the Company’s assets over a 12-month period. The terms of the
engagement of the Independent Expert shall clearly state that the

31

 

engagement is for the benefit of
the Company and its Members. The Company shall include a summary of the Independent Expert’s
appraisal, indicating all material assumptions underlying the appraisal, in a report to the Members
regarding the proposed Roll-Up.

     13.2 Members’ Rights in a Roll-Up. If a Roll-Up is effected as to the Company, the Roll-Up
Entity making the offer to the Company shall offer to each Member who votes against the Roll-Up the
choice of:

	 	13.2.1	 	accepting the securities of the Roll-Up Entity that were offered in the
proposed Roll-Up, or
	 
	 	13.2.2	 	either (a) remaining as a Member of the Company and preserving its Interests
therein unchanged; or (b) receiving cash in an amount equal to the Member’s
pro-rata share of the appraised Net Asset Value of the Company.

     13.3 Limitations on Roll-Ups. The Company’s ability to participate in a Roll-Up is also
subject to the following:

	 	13.3.1	 	The Company shall not participate in any proposed Roll-Up which would result
in Members having voting rights in the Roll-Up Entity which are less than those
provided in Section 6.2 of this Agreement.
	 
	 	13.3.2	 	If the Roll-Up Entity is a corporation, the voting rights of the Members
shall correspond to the voting rights provided in this Agreement to the extent
reasonably possible.
	 
	 	13.3.3	 	The Company will not participate in any proposed Roll-Up which includes
provisions which would operate to materially impede or frustrate the
accumulation of shares, units or other equity interests, however denominated,
by any purchaser of the securities of the Roll-Up Entity (except to the minimum
necessary to preserve the tax status of the Roll-Up Entity).
	 
	 	13.3.4	 	The Company will not participate in any proposed Roll-Up which would limit
the ability of a Member to exercise the voting rights of the securities of the
Roll-Up Entity on the basis of the value of the Interests held by the Member.
	 
	 	13.3.5	 	The Company will not participate in any proposed Roll-Up in which the
Members’ rights as securities holders to access the records of the Roll-Up
Entity will be less than those provided for in this Agreement or in which any
of the costs of the Roll-Up transaction would be borne by the Company if the
Roll-Up is not approved by necessary vote of the Members.

ARTICLE 14

COMPENSATION TO THE MANAGER AND ITS AFFILIATES

     The Company shall pay the Manager the compensation and permit the Manager to charge and
collect the fees and other amounts from borrowers as set forth in the Memorandum. The Company shall
pay the Manager an annual management fee of 0.25% of the Earning Asset Base and shall pay to the
Manager 25% of late fees, penalties or any net proceeds from the sale of a foreclosed asset after
payment to the Company of its principal and interest due in connection with the loan associated
with the foreclosed asset. Any amendment to this Operating Agreement modifying the Manager’s
compensation or

32

 

distribution to which the Manager is entitled shall require the Manager’s consent.
No additional reimbursement shall be paid to the Manager or its Affiliates for any general or
administrative overhead expenses incurred by the Manager or its Affiliates or for any other
expenses they may incur. The Company will pay all direct expenses in connection with its
operations, except for the preparation of financial statements which will be provided at the
Manager’s expense.

ARTICLE 15

MISCELLANEOUS

     15.1 Covenant to Sign Documents. Each Member covenants, for himself and his successors and
assigns, to execute, with acknowledgment or verification, if required, any and all certificates,
documents and other writings which may be necessary or expedient to form the Company and to achieve
its purposes, including, without limitation, any amendments to the Certificate of Formation and any
filings, records or publications necessary or appropriate under the laws of any jurisdiction in
which the Company shall conduct its business.

     15.2 Notices. Except as otherwise expressly provided for in this Agreement, all notices which
any Member may desire or may be required to give any other Members shall be in writing and shall be
deemed duly given when delivered personally or when deposited in the United States mail,
first-class postage pre-paid. Notices to Members shall be addressed to the Members at the last
address shown on the Company records. Notices to the Manager or to the Company shall be delivered
to the Company’s principal place of business, as set forth in Section 1.3 above or as hereafter
changed as provided herein.

     15.3 Right to Engage in Competing Business. Nothing contained in this Agreement shall
preclude any Member from purchasing or lending money upon the security of any other property or
rights therein, or in any manner investing in, participating in, developing or managing any other
venture of any kind, without notice to the other Members, without participation by the other
Members, and without liability to them or any of them. Each Member waives any right he may have
against the Manager for using for its own benefit information received as a consequence of the
Manager’s management of the affairs of the Company. This Section 15.3 shall be subject in its
entirety to the fiduciary duty of the Manager set forth in Section 3.4.

     15.4 Amendment. This Agreement is subject to amendment by the affirmative vote of a Majority
in accordance with Section 6.2; provided, however, that no amendment shall be permitted if the
effect of such amendment would be to increase the duties or liabilities of any Member or materially
adversely affect any Member’s interest in Profits, Losses, Company assets, distributions,
management rights or voting rights, except as agreed by that Member. In addition, and
notwithstanding anything to the contrary contained in this Agreement, the Manager shall have the
right to amend this Agreement, without the vote or consent of any of the Members, if, in the
reasonable judgment of the Manager, such amendment does not adversely affect the rights of the
Members, including, without limitation, an amendment:

	 	15.4.1	 	to grant to Members (and not solely the Manager in its capacity as a Member)
additional rights, remedies, powers or authority that may lawfully be granted
to or conferred upon them;
	 
	 	15.4.2	 	to cure any ambiguity, to correct or supplement any provision which may be
inconsistent with any other provision, or to make any other provisions for
matters or questions arising under this Agreement which will not be
inconsistent with the provisions of this Agreement;
	 
	 	15.4.3	 	to conform this Agreement to applicable laws and regulations, including
without limitation, federal and state securities and tax laws and regulations,
and the NASAA Guidelines;

33

 

	 	15.4.4	 	in the form of a revision to or updating of Schedule A in accordance with
Section 5.2 hereof; and
	 
	 	15.4.5	 	to elect for the Company to be governed by any successor Delaware statute
governing limited liability companies.

     The Manager shall notify the Members within a reasonable time of the adoption of any
amendment.

     15.5 Entire Agreement. This Agreement constitutes the entire Agreement between the parties
and supersedes any and all prior agreements and representations, either oral or in writing, between
the parties hereto regarding the subject matter contained herein.

     15.6 Waiver. No waiver by any party hereto or any breach of, or default under, any provision
of this Agreement by any party shall be construed or deemed a waiver of any breach of or default
under any other provision of this Agreement, and shall not preclude any party from exercising or
asserting any rights under this Agreement for any future breach or default of the same provision of
this Agreement.

     15.7 Severability. If any term, provision, covenant or condition of this Agreement is held by
a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the
provisions of this Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.

     15.8 Application of Delaware Law. This Agreement and the application or interpretation
thereof shall be governed, construed, and enforced exclusively by its terms and by the law of the
State of Delaware.

     15.9 Captions. Section 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.

     15.10 Number and Gender. Whenever the singular form is used in this Agreement it includes the
plural when required by the context, and the masculine gender shall include the feminine and neuter
genders.

     15.11 Counterparts. This Agreement may be executed in counterparts, any or all of which may
be signed by Manager on behalf of the Members as their attorney-in-fact.

     15.12 Waiver of Action for Partition. Each of the parties hereto irrevocably waives during the term of the Company any right that it may
have to maintain any action for partition for any property of the Company.

     15.13 Defined Terms. All terms used in this Agreement which are defined in the Memorandum
shall have the meanings assigned to them in said Memorandum, unless this Agreement shall provide
for a specific definition in Article 2.

     15.14 Binding on Assignees. Each and all of the covenants, terms, provisions and agreements
herein contained shall be binding upon and inure to the benefit of the successors and assigns of
the respective parties hereto, subject to the provisions of Section 10.2, which control the
assignment or other transfer of Company Interests.

34

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