SOF III - 1081 Southern Financial LLC Section 10: Certain Legal, ERISA and Tax Considerations Secondary Opportunities Fund III. LP affiliates on behalf of the Fund) and the IRS. An FFI Agreement would require the Fund (or the Manager or one of its affiliates on behalf of the Fund) to report to the IRS information about its US Investors and certain US persons that indirectly hold an interest in the Fund through a non-US Investor. and to comply with other reporting, verification, due diligence and other procedures established by the IRS. including a requirement to seek waivers of non-US laws that would prevent the reporting of such information. The IRS may terminate the FFI Agreement if the IRS notifies the Fund that it is out of compliance with the FFI Agreement and the Fund does not remediate the compliance failure. Under the Fund Partnership Agreement, an Investor will be required to provide such information and comply with such procedures as required for the Fund to comply with an FFI Agreement, including in the case of a non-US Investor, to provide information regarding certain US direct and indirect owners of the Investor. The failure of an Investor to comply with these requirements may also result in adverse consequences applying to such Investor pursuant to the Fund Partnership Agreement. Although it is expected that an application to enter into an FFI Agreement will be submitted to the IRS on behalf of the Fund, no assurance can be given that the Fund will be able to satisfy the conditions for entering into and complying with an FFI Agreement (for example, if Investors do not provide the required information). Even if the Fund is subject to an FFI Agreement. an Investors share of withholdable payments (whether or not distributed) and distributions to an Investor that are treated as 'foreign passthru payments" generally will be subject to a 30% withholding tax (a) if the Investor fails to provide information or take other actions required for