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EXECUTION COPYAMENDED AND RESTATEDLIMITED LIABILITY COMPANY OPERATING AGREEMENTFRANKLIN VENTURE, LLCDated as of September 30, 2009Franklin- LLC Operating Agreement8545936.5
TABLE OF CONTENTSPageARTICLE I1.1CERTAIN DEFINITIONS .2Definitions .2ARTICLE IT2.12.22.32.42.52.62.7ORGANIZATION OF THE COMPANY.2Formation; Continuation and Admission of Members.2Name. .2Organizational Contributions and Related Actions . .3Registered Office; Chief Executive Office . .3Purpose; Duration.-. .3Single Purpose Entity; Limitations on Company's Activities . .4Ratification of Certain Actions .6ARTICLETII3.1 EMENT AND OPERATIONS OF THE COMPANY.6Management of the Company's Affairs . :. 6Removal of Managing Member .8Employees and Services . . 8Restrictions on Managing Member .9Related Party Agreements . 10Real Property . 10Custodian and Paying Agent . . 10Relationships with Borrowers, etc .11No Conflicting Obligations .11Compliance with Law . 11No Bankruptcy Filing . 11No Liens . 12MERS . 12Power of Attorney . 12ARTICLE IV4.14.24.34.44.5MEMBERSHIP INTERESTS; RIGHTS AND DUTIES OF, ANDRESTRICTIONS ON, MEMBERS . 13General . l3Interests. :. 13Filings; Duty of Members to Cooperate . 13Certain Restrictions and Requirements .14Liability ofMembers. 14ARTICLEV5.15.25.35.4CAPITAL CONTRIBUTIONS; WORKING CAPITAL ADVANCES . .l5Capital Contributions; Working Capital Advances . .15Defaults.16Security Interest . 16No Reliance by Parties Extending Credit. . 17ARTICLE VICAPITAL ACCOUNTS; ALLOCATIONS; PRIORITY OF PAYMENTS;DISTRIBUTIONS . 17 ·Capital Accounts .17Allocations to .Capital Accounts . l76.16.21Franklin- LLC Operating Agreement8545936.5
TABLE OF CONTENTSPage6.36.46.56.6ARTICLE VII7.17.27.37.47.57.6Tax Allocations .19Determinations by Managing Member .20Priority of Payments .21Distributions.21ACCOUNTING, REPORTING AND TAXATION . .22Fiscal Year .22Maintenance of Books and Records .22Financial Statements .23Additional Reporting and Notice Requirements .23Designation of Tax Matters Member; Certain Tax Matters .26Tax Information .26ARTICLE VIII8.18.28.38.48.58.68.78.88.9RESTRICTIONS ON DISPOSITION OF INTERESTS .27Limitations on Disposition of Interests .27Change of Control .27Additional Provisions Relating to Permitted Dispositions .27Effect of Permitted Dispositions.28Effect of Prohibited Dispositions . 29 ·Distributions After Disposition .29Transfers By Initial Member .29Resignation; Dissolution.29Applicable Law Withdrawa1 . .30ARTICLE IX9.19.2DISSOLUTION AND WINDING-UP OF THE COMPANY .30Dissolution .30Winding-Up Procedures .31ARTICLE X10.1QUALIFIED TRANSFEREES . .32Qualified Transferees . .32ARTICLE XI11.1MANAGING MEMBER LlAB1LITY . .35Liability of Managing Member . .35ARTICLE ERVICING OF LOANS . .36Servicing. .36Servicing Standard . .39Servicing of Loans. . .40Removal ofServicer.41Management Fee .44Servicing Expenses . .44Use of Loan Proceeds . .45Delinquent Real Property Taxes . .46Collection Account . .46Distribution Account . .46Liquidity Reserves; Liquidity Reserve Account . .4611Franklin- LLC Operating Agreement8545936.5
TABLE OF CONTENTSPage12.1212.1312.1412.1512.1612.17Recovery of Expenses; Interest . . .47Certain Servicing and Loan Administration Decisions . .47Management and Disposition ofCollateral . .47Acquisition of Collateral. ,. .47Releases of Collateral . .48Clean-Up Call Rights .48ARTICLE 13.1213.13MISCELLANEOUS . .49Waiver of Rights of Partition and Dissolution . .49Entire Agreement . .49Governing Law; Jurisdiction . .49Third Party Beneficiaries .50Expenses .50Waivers and Amendments .50Notices .50Counterparts; Facsimile Signatures.52Successors and Assigns .52Construction.52Compliance With Law; Severability. .53Power of Attorney .54Submission to Jurisdiction; Waivers . .54111Franklin- LLC Operating Agreement8545936.5
FRANKLIN VENTURE, LLCAMENDED AND RESTATEDLIMITED LIABILITY COMPANY OPERATING AGREEMENTTHIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY OPERATINGAGREEMENT (as the same may be amended or modified from time to time in accordance withthe terms hereof, this "Agreement"), is made and effective as of September 30, 2009 (the"Closing Date"), by and among the Federal Deposit Insurance Corporation ("FDIC"), in itscapacity as receiver for Franklin Bank, S.S.B. ("Failed Bank"), RCS Franklin Venture LLC, aDelaware limited liability company (the "Private Owner"), and Franklin Venture, LLC, aDelaware limited liability company (the "Company"). For purposes of this Agreement,references to the "Receiver" shall be a reference to the FDIC, in its capacity as receiver of FailedBank; references to the "Initial Member" shall be a reference to the FDIC, in its capacity as aMember of the Company, together with any successor of the FDIC or any transferee of theInterest held by the FDIC); references to the "Secured Partv" shall be a reference to the FDIC,in its capacity as the secured party under Section 5.3 hereunder and under the Reimbursementand Security Agreement; and references to the "Managing Member" shall be a reference toPrivate Owner (or a successor Member) in its capacity as the manager ofthe Company.WHEREAS, on November 7, 2008, the FDIC was appointed Receiver for Failed Bank;WHEREAS, on September 18, 2009, Receiver formed the Company as a Delawarelimited liability company for the purpose of acquiring the Loans and carrying on the Business;WHEREAS, the FDIC and the Company entered into a Loan Contribution and SaleAgreement dated of even date hereof (the "Contribution Agreement") pursuant to which (i)Receiver sold in part and contributed in part, to the Company, and the Company purchased andassumed from Receiver, all of the Receiver's right, title and interest in and to the Loans, (ii) theCompany executed and delivered to the Receiver that certain Purchase Money Note for thebenefit of Receiver and dated the date hereof (the "Purchase Money Note"); and (iii) theSecured Party guaranteed payment of principal and interest on the Purchase Money Notepursuant to the terms of a Guaranty Agreement dated the date hereof between the FDIC, in itscorporate capacity, and the Receiver (the "Purchase Money Note Guaranty"), and obtained asecurity interest in the Loans and Collateral under the Reimbursement and Security Agreement;WHEREAS, in connection with the transactions contemplated by the ContributionAgreement, Receiver was admitted as the "Initial Member" of the Company and received anInterest in the Company representing a one hundred percent (100%) Percentage Interest pursuantto the terms of that certain Limited Liability Company Operating Agreement dated as ofSeptember 18, 2009 by and between Receiver and the Company (the "Original LLC OperatingAgreement");WHEREAS, following closing of the transactions contemplated by the ContributionAgreement and the execution of the Original LLC Operating Agreement, Initial Member agreed,pursuant to the terms of that certain Limited Liability Company Interest Sale and AssigomentAgreement dated of even date herewith (the "LLC Interest Sale Agreement"), to sell to Private1Franklin- LLC Operating Agreement8545936.5
Owner, effective as of the Closing Date, an Interest representing a fifty percent (50%) PercentageInterest in exchange for the Bid Amount;WHEREAS, at the closing under the LLC Interest Sale Agreement, Residential CreditSolutions, Inc., as the sole member of Private Owner, will execute and deliver a guaranty infavor of the Initial Member guaranteeing the obligations of the Private Owner hereunder (the"Sponsor Guaranty");WHEREAS, after giving effect to the transactions contemplated by the LLC Interest SaleAgreement, as of the Closing Date the Initial Member and Private Owner will own all the issuedand outstanding Interests in the Company;WHEREAS, the parties desire to amend and restate the Original LLC OperatingAgreement in its entirety in order to reflect the admission of Private Owner as a Member of theCompany and to set forth the terms and conditions on which the Company shall be owned andoperated;NOW, THEREFORE, in consideration of the premises and the other covenants andconditions contained herein, and for other good and valuable consideration the receipt andsufficiency of which are hereby acknowledged, the parties hereto agree as follows:ARTICLE ICertain Definitions1.1Definitions. Initially capitalized terms used and not defined herein shall have themeanings assigned to them in Annex I hereto, which is hereby incorporated into this Agreementas if set forth in full herein.ARTICLE ITOrganization of the Company2.1Formation; Continuation and Admission of Members.(a)On September 18, 2009, the Receiver caused the Certificate of Formationof the Company, in the form attached as Exhibit A hereto (the "Certificate"), to be filed in theoffice of the Secretary of State of the State of Delaware. The Certificate shall not be amendedexcept to change the registered agent or office of the Company.(b)The Company shall continue as a limited liability company under the Actand in accordance with the further terms and provisions ofthis Agreement.(c)The Initial Member previously was, and the Private Owner hereby agreesto be, and is, admitted as a Member of the Company such that, as of the Closing Date, the InitialMember and the Private Owner are the sole Members of the Company. Until the Company isdissolved pursuant to Section 9.1, the Company shall at all times have two Members.2.2Name.2Franklin - LLC Operating Agreement8545936.5
(a)The name of the Company shall be "Franklin Venture, LLC".(b)The Business shall be conducted only under the name of the Company orsuch other name or names that comply with applicable Law as the Members may select fromtime to time.2.3Organizational Contributions and Related Actions.(a)Prior to the execution of this Agreement, pursuant to the terms of the. Contribution Agreement, the Initial Member:(i)made a Capital Contribution to the Company in the form of certainLoans with a fair market value equal to 128,430,000 (the "Initial Member.Capital Contribution") in exchange for the issuance by the Company to theInitial Member of an Interest representing a one hundred percent (1 00%)Percentage Interest; and(ii)sold and assigned to the Company, and the Company purchasedand assumed from Initial Member, Loans (other than that portion of the Loanscomprising the Initial Member Capital Contribution in accordance with Section2.3(a)(i) above) in exchange for the Purchase Money Note.(b)Contemporaneously with the execution of this Agreement, pursuant to theterms of the LLC Interest Sale Agreement, the Private Owner is acquiring from the InitialMember an Interest representing a fifty percent (50%) Percentage Interest for an aggregatepurchase price equal to the Bid Amount, subject to adjustment in accordance with Section 2.3 ofthe Contribution Agreement. ·(c)Upon the consununation of the transactions contemplated in Sections2.3(a) and .(hl, the Members, collectively, shall own one hundred percent (100%) of the issuedand outstanding Interests, and each such Member shall have a fifty percent (50%) PercentageInterest.2.4 Registered Office; Chief Executive Office. The Company shall maintain aregistered office and registered agent in Delaware to the extent required by the Act, which officeand agent shall be as determined by the Managing Member from time to time and which shall beset forth in the Certificate. Initially (and until otherwise determined by the Managing Member),the registered office in Delaware shall be, and the name and address of the Company's registeredagent in Delaware shall be, as specified in the Certificate as originally filed, which may beamended by the Managing Member from time to time as necessary to correctly reflect the nameand address of the Company's registered agent. The chief executive office of the Company shallbe located at 4282 North Freeway, Fort Worth, Texas, 76137, or such other place as shall bedetermined by the Managing Member from time to time.2.5Purpose; Duration.3Franklin - LLC Operating Agreement8545936.5
(a)The purpose of the Company is to engage in and conduct the Business,directly or, to the extent specifically authorized in this Agreement, indirectly through otherPersons. Without limiting the foregoing, the Company shall not form or have any Subsidiariesunless authorized in or pursuant to this Agreement. The Company shall have all powersnecessary, desirable or convenient, or which the Managing Member deems necessary, desirableor convenient, and may engage in any and all activities necessary, desirable or convenient, orwhich the Managing Member deems necessary, desirable or convenient, to accomplish thepurposes of the Company or consistent with the furtherance thereof.(b)Subject to Section 9.1, the Company shall continue m existenceperpetually.2.6Single Purpose Entity; Limitations on Company's Activities. Except to the extentexpressly permitted by this Agreement or the Ancillary Documents, the following shall governfor so long as the Company is in existence:(a)Subject to Section 9.1, the Members shall cause the Company to do orcause to be done all things necessary to preserve and keep in full force and effect its existence,rights (charter and statutory) and franchises, and the Managing Member also shall cause theCompany to:(i)maintain financial statements separate from any Affiliate;provided, however, that each Ownership Entity shall be consolidated in thefinancial statements of the Company; and provided, further, that the assets,liabilities and results of operations of the Company may be included in theconsolidated financial statements of its parent or ultimate parent in accordancewithGAAP;(ii)at all times hold itself out to the public as a legal entity separatefrom the Members and any other Person;(iii)file its own tax returns, as may be required under applicable Law,and pay any taxes so required to be paid under applicable Law;(iv)except as contemplated hereby or by the Ancillary Documents,segregate its assets and not commingle its assets with assets of any other Person;(v)conduct the business in its own name and strictly comply with allorganizational formalities to maintain its separate legal existence;(vi)pay its own liabilities only out ofits own funds;(vii) maintain an arm's length relationship with any Affiliate uponterms that are commercially reasonable and that are no less favorable to theCompany than could be obtained in a comparable arm's length transaction with anunrelated Person;4Franklin- LLC Operating Agreement8545936.5
(viii) subject at all times to Section 3.3, pay the salaries of its ownemployees, if any, and maintain, or cause to be maintained, a sufficient number ofemployees, if any, in light of its contemplated business operations;(ix)allocate, fairly and reasonably, shared expenses, including anyoverhead for shared office space;(x)(xi)identity; anduse separate stationery, invoices and checks;correct any known misunderstanding regarding its separate(xii) maintain adequate capital in light of its contemplated businesspurpose, transactions and liabilities, if any.(b)Neither any Member nor the Managing Member shall cause or permit aDissolution Event or an Insolvency Event to occur with respect to the Company to which theInitial Member and, so long as the Purchase Money Note is outstanding, the Secured Party, hasnot provided its written consent, and neither any Member nor the Managing Member shall,without the written consent of the Initial Member and the Secured Party, cause or permit theCompany to:(i)except as contemplated hereby or by the Ancillary Documents,hold out its credit or assets as being available to satisfy the obligations of others,or become bound by any Guarantee of, or otherwise obligate itself with respect to,the Debts of any other Person, including any Affiliate;(ii)except as contemplated hereby or by the Ancillary Documents(including the Purchase Money Note, the Purchase Money Note Guaranty, and theReimbursement and Security Agreement), pledge its assets for the benefit of anyother Person, make any loans or advances to any other Person, or encumber orpermit any Lien to be placed on the Loans, the Collateral, or the proceedstherefrom; provided that the Company may invest its funds in interest bearingaccounts held by any bank that is not its Affiliate and make advances inaccordance with Article XII;(iii)Business;own any assets, or engage m any business, unrelated to the(iv)incur, create or assume any Debt other than the Purchase MoneyNote, any Working Capital Advance or as otherwise .expressly permitted herebyor by the Ancillary Documents;(v)make or permit to remain outstanding any loan or advance to, orown or acquire any stock or securities of, any Person (other than an OwnershipEntity), except that the Company may invest in those investments permitted underthe Ancillary Documents and may make any advance required or expressly5Franklin- LLC Operating Agreement8545936.5
permitted to be made pursuant to any provisions of Article XII or the AncillaryDocuments and permit the same to remain outstanding in accordance with suchprOVISIOnS;(vi)to the fullest extent permitted by Law, the Company shall notconsolidate or merge with or into any other Person, convert into any other type ofPerson or convey or transfer its properties and assets substantially as an entirety toany entity, transfer its ownership interests, or engage in any dissolution orliquidation, except in each case to the extent such activities are expresslypermitted pursuant to any provision of this Agreement or the AncillaryDocuments (and subject to obtaining any approvals required hereunder orthereunder, as applicable); or(vii) except as contemplated or permitted by this Agreement or theServicing Agreement, form, acquire or hold any Subsidiary other than anOwnership Entity or form any trust for the purpose of holding Loans for thebenefit of the Company.(c)The failure of the Company, the Members, or the Managing Member onbehalf of the Company, to comply with any of the foregoing covenants or any other covenantscontained in this Agreement shall not affect the status of the Company as a separate legal entityor the limited liability of the Members.2.7Ratification of Certain Actions. Prior to the Closing Date, the Companypreviously approved (a) each of the Ancillary Documents, and (b) the taking of all actionreasonably necessary to effect the foregoing approvals, including without linritation theexecution and performance of this Agreement and the Ancillary Documents (the "PreviouslyApproved Matters"). The Previously Approved Matters, and all actions taken by the Companyin furtherance of the Previously Approved Matters, are hereby ratified, approved and confirmedin their entirety and the Managing Member is hereby authorized and directed to execute anddeliver, for and on behalf of the Company, any and all documents as may now or hereafter bereasonably required in order to effect the Previously Approved Matters.ARTICLE illManagement and Operations of the Company3.1Management of the Company's Affairs.(a)The management of the Company shall be vested exclusively in thePerson appointed from time-to-time hereunder as the "manager" of the Company (the"Managing Member"). Effective as of the Closing Date, the Private Owner is hereby appointedas Managing Member. Subject to the terms and conditions of this Agreement, the ManagingMember shall have full and exclusive power and discretion to, and shall, manage the businessand affairs of the Company in accordance with this Agreement. The Managing Member shallnot resign as manager, may not assign or delegate its responsibilities as manager to any otherPerson, and shall serve as manager until such time as (i) the Private Owner's Interest is Disposedof in accordance with the terms of this Agreement and the transferee is admitted as a Meniber6Franklin- LLC Operating Agreement8545936.5
and successor to the Private Owner, in which case the transferee Member (or its designee) shall,effective upon such Disposition, be appointed as the "Managing Member" of the Company,(ii) the Private Owner is removed as manager by the hritial Member and replaced in accordancewith Section 3.2 below; or (iii) the Company is dissolved in accordance with the terms of thisAgreement. In the event that a successor manager is appointed in accordance with the terms ofthis Agreement, all references in this Agreement to the Managing Member, in its capacity asmanager of the Company, shall be deemed to be references to the successor manager soappointed. The Managing Member shall devote such time to the affairs of the Company as isnecessary to manage the Company as set forth in this Agreement. Private Owner (and anysuccessor or transferee of Private Owner) hereby expressly acknowledges that, as it relates to itsrole as the Managing Member, this Agreement constitutes a personal services contract betweenPrivate Owner and the Company. Nothing in this Section 3.1 eliminates, limits or otherwisemodifies any of the express terms of this Agreement or any liability, obligation or covenant ofany Person hereunder.(b)Except as otherwise specifically provided in this Agreement and withoutlimitation of the powers expressly granted to the Managing Member under any other provision ofthis Agreement, the authority, duties (including fiduciary duties) and functions of the ManagingMember shall be identical to the authority, duties (including fiduciary duties) and functions ofthe board of directors and the officers of a corporation organized under the Delaware GeneralCorporation Law (and not electing to be governed by subchapter XN thereof). The ManagingMember shall have no authority to take or authorize the taking of any action in contravention ofany express term of this Agreement.·(c)No Person dealing with the Company or the Managing Member shall berequired to determine, and any such Person may conclusively assume and rely upon, theauthority of the Managing Member to execute any instrument or make any undertaking on behalfof the Company. No Person dealing with the Company or the Managing Member shall berequired to determine any facts or circumstances bearing upon the existence of such authority.Without limitation of the foregoing, any Person dealing with the Company or the ManagingMember
Agreement and the execution of the Original LLC Operating Agreement, Initial Member agreed, pursuant to the terms of that certain Limited Liability Company Interest Sale and Assigoment Agreement dated of even date herewith (the "LLC Interest Sale Agreement"), to sell to Private . 1 . Franklin- LLC Operating Agreement . 8545936.5
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