EXECUTION COPY 


GUARANTY 


BY 


RESIDENTIAL CREDIT SOLUTIONS, INC. 


INFAVOROF 


FEDERAL DEPOSIT INSURANCE CORPORATION 


AS RECEIVER FOR 


FRANKLIN BANK, S.S.B. 


Dated as of September 30, 2009 

Franklin- Guaranty ofManaging Member's Obligation 

8547558.5 
GUARANTY 

THIS GUARANTY dated as of September 30,2009 (this "Guaranty") is made by 

Residential Credit Solutions, Inc. (the "Guarantor"). Capitalized terms used but not defmed 

herein have the meanings assigned to them in the Loan Contribution and Sale ("Contribution 

Agreement") dated as ofthe date hereof, between Franklin Venture, LLC, a Delaware limited 

liability company (the "Company") and the Federal Deposit Insurance Corporation as Receiver 

for Franklin Bank, S.S.B. ("Receiver"). 

WHEREAS, the Receiver has formed the Company and holds the sole membership 

interest in the Company (the "LLC Interest"); and 

WHEREAS, the Company, the Receiver and RCS Franklin Venture LLC, a Delaware 

limited liability coni.pany ("Private Owner") are parties to the Amended and Restated Limited 

Liability Company Operating Agreement ofthe Company (the "LLC Operating Agreement") 

dated as ofthe date hereof; and 

WHEREAS, the Guarantor owns (directly or indirectly) all of the outstanding equity 

interests ofthe Private Owner; and 

WHEREAS, the Receiver and Private Owner are entering into the Limited Liability 

Company Interest Sale and Assignment Agreement (the "LLC Interest Sale Agreement") dated 

as ofthe date hereofbetween the Receiver, as the initial member ofthe Company (the "Initial 

Member"), and the Private Owner, pursuant to which, among other things, the Receiver has 

agreed to sell and transfer 50% of the LLC Interest to the Private Owner and retain 50% of the 

LLC Interest (the "Initial Member's LLC Interest Share"); and 

WHEREAS, the Guarantor will directly or indirectly receive significant financial benefit 

from the consurmnation ofthe transactions contemplated by the LLC Operating Agreement, the 

Servicing Agreement (including the Electronic Tracking Agreement attached as an exhibit 

thereto), one or more Account Control Agreements, the Contribution Agreement, the LLC 

Interest Sale Agreement, the Purchase Money Note, the Reimbursement and Security Agreement 

and the Custodial and Paying Agency Agreement in each case once executed and delivered, and 

any and all other agreements and instruments executed and delivered in connection with the 

Closing (the "Ancillary Documents"); and 

WHEREAS, as a condition and inducement to the Receiver's willingness to enter into the 

LLC Interest Sale Agreement, the Guarantor has agreed to guarantee (the following are referred 

to as the "Guaranteed Obligations"): (a) the due and punctual payment when due of all 

amounts now or hereafter payable by the Company or by Private Owner under the LLC Interest 

Sale Agreement, the LLC Operating Agreement, the Contribution Agreement and each other 

Ancillary Document (other than the Purchase Money Note and the Reimbursement and Security 

Agreement) to which the Company or the Private Owner is or will be a party; and (b) the full and 

complete performance by the Company and the Private Owner of all ofthe terms, covenants and 

conditions contained in the LLC Interest Sale Agreement, the LLC Operating Agreement, the 

Contribution Agreement and each other Ancillary Document (other than the Purchase Money 

Franldin- Guaranty ofManaging Member's Obligation 

8547558.5 
Note and the Reimbursement and Security Agreement) to which the Company or the Private 

Owner is or will be a party when and as the same shall become due thereunder. 

NOW, THEREFORE, in consideration ofthe foregoing and the promises and agreements 

contained herein, and for other good and valuable consideration, the receipt and sufficiency of 

which are hereby acknowledged, the Guarantor agrees as follows: 

1. Guarantv. The Guarantor hereby unconditionally and irrevocably guarantees the 

Guaranteed Obligations. Any Beneficiary (as defined below) may at any time deliver notice to 

and proceed against the Guarantor in the event of any failure ofpayment or performance of any 

of the Guaranteed Obligations. 

2. Waiver, Etc. 

(a) The Guarantor waives: 

(i) all notices ofthe creation, renewal, extension or accrual of any of 

the Guaranteed Obligations and notice or proofofreliance by the Receiver (including its 

successors and assigns, the "Beneficiaries") on this Guaranty or acceptance ofthis Guaranty; 

(ii) diligence, presentment, demand for payment, protest and notice of 

nonpayment or dishonor and all other notices and demands whatsoever relating to the 

Guaranteed Obligations or the requirement that a Beneficiary proceed first against the Company 

or Private Owner or any other guarantor with respect to the Guaranteed Obligations or otherwise 

exhaust any right, power or remedy under the LLC Interest Sale Agreement, the LLC Operating 

Agreement, the Contribution Agreement or any other Ancillary Document to which the 

Company or Private Owner is or will be a party before proceeding hereunder; and 

(iii) all suretyship defenses including, without limitation, all defenses 

based upon any statute or rule of law which provides that the obligation of a surety must be 

neither larger in amount nor in other respects more burdensome than that ofthe principal. 

(b) The Guaranteed Obligations shall conclusively be deemed to have been 

created, contracted or incurred in reliance on this Guaranty, and all dealings between the 

Beneficiaries and their Affiliates, on the one hand, and the Guarantor and/or any of the 

Guarantor's Affiliates, on the other hand, in connection with the LLC Interest Sale Agreement, 

the Contribution Agreement, the LLC Operating Agreement and any other Ancillary Document 

to which the Company or Private Owner is or will be a party and the transactions contemplated 

hereby and thereby shall likewise conclusively be presumed to have been had or consununated in 

reliance on this Guaranty. 

(c) The Guarantor covenants that this Guaranty shall not be discharged except 

by complete payment and performance ofthe Guaranteed Obligations. 

(d) The obligations ofthe Guarantor hereunder shall constitute a present and 


continuing guarantee ofpayment and not ofcollectibility only, shall be absolute and 


Franklin- Guaranty ofManaging Member's Obligation 3 8547558.5 
unconditional, shall not be subject to any counterclaim, setoff, deduction or defense the 

Guarantor may have against any Beneficiary or any other Person, and shall remain in full force 

and effect until all Guaranteed Obligations have been satisfied and performed in full, without 

regard to any event whatsoever (whether or not the Guarantor shall have any knowledge or 

notice thereof or shall have consented thereto), including, without limitation: 

(i) any amendment or modification of, or supplement to, the LLC 

Interest Sale Agreement, the LLC Operating Agreement, the Contribution Agreement or any 

other Ancillary Document to which the Company or Private Owner is or will be a party, any 

assignment or transfer of any ofthe rights; obligations, duties or covenants of any party to the 

LLC Interest Sale Agreement, the LLC Operating Agreement, the Contribution Agreement or 

any other Ancillary Document to which the Company or Private Owner is or will be a party, any 

renewal or extension oftime for the performance of any ofthe Guaranteed Obligations, or any 

furnishing or acceptance of security so furnished or accepted for any ofthe Guaranteed 

Obligations; 

(ii) any waiver, consent, extension, forbearance, release or substitution 

ofsecurity or other action or inaction under or in respect ofthe LLC Interest Sale Agreement, the 

LLC Operating Agreement, the Contribution Agreement or any other Ancillary Document to 

which the Company or Private Owner is or will be a party or this Guaranty, or any exercise of, or 

failure to exercise, any right, remedy or power in respect hereof or thereof; 

(iii) any bankruptcy, insolvency, marshaling of assets and liabilities, 

arrangements, readjustment, composition, receivership, assignment for the benefit of creditors, 

liquidation or similar proceedings with respect to the Company or Private Owner or any oftheir 

Mfiliates or the Guarantor; 

(iv) the dissolution, sale or other disposition of all or substantially all of 

the assets of any ofthe Company or Private Owner or any oftheir Mfiliates or the Guarantor; 

(v) any default by the Company or Private Owner or any oftheir 

Mfiliates or the Guarantor under, or any invalidity or any unenforceability of, or any 

misrepresentation by the Company or Private Owner or any oftheir Mfiliates or the Guarantor 

in, or any irregularity or other defect in, the LLC Interest Sale Agreement, the LLC Operating 

Agreement, the Contribution Agreement or any other Ancillary Document to which the 

Company or Private Owner is or will be a party or this Guaranty or any other instrument or 

agreement; or 

(vi) any other event, action or circumstance that would, in the absence 

ofthis Section 2(d)(vi), result in the release or discharge ofthe Guarantor from the performance 

or observance of any obligation, covenant or agreement contained in this Guaranty or otherwise 

constitute a defense to this Guaranty. 

Any term ofthis Guaranty to the contrary notwithstanding, if at any time any amount 

(constituting a Guaranteed Obligation) paid or payable by Private Owner or the Company is 

rescinded or must otherwise be restored or returned, whether upon or as a result ofthe 

Franklin- Guaranty ofManaging Member's Obligation 4 

8547558.5 
appointment of a custodian, receiver or trustee or similar officer for the Private Owner or the 

Company or any substantial part of any oftheir assets, or the insolvency, bankruptcy or 

reorganization ofPrivate Owner or the Company or otherwise, the Guarantor's obligations 

hereunder with respect to such payment shall be reinstated as though such payment had been due 

but not made at such time. 

3. Obligations Independent. The obligations ofthe Guarantor hereunder are 

independent ofthe obligations of any other guarantor or the Company or the Private Owner. 

Separate action or actions may be brought and prosecuted against the Guarantor, whether or not 

action is brought against the Company or the Private Owner and whether or not the Company or 

Private Owner be joined in any such action or actions. 

4. Guaranty. The aggregate amount for which the Guarantor shall be liable under 

this Guaranty (such amount, the "Guarantv Limit") shall be the greater of (a) an amount equal 

to (i) the Unpaid Principal Balance as ofthe date ofthe calculation ofthe Guaranty Limit, 

multiplied by (ii) the Initial Member's LLC Interest Share expressed as a fraction, multiplied by 

(iii) 0.50, multiplied by (iv) a percentage, expressed as a decimal, equal to (x) the Bid Amount 

(as defined in the Contribution Agreement), divided by the aggregate Adjusted Unpaid Principal 

Balance (as defined in the Contribution Agreement), divided by (y) the percent\(ge obtained by 

subtracting the Initial Member's LLC Interest Share from 100%, and (b) $5,000,000. For the 

avoidance of doubt, the Guaranty Limit on the Closing Date shall be $32,107,500. The Guaranty 

Limit for any claim under this Guaranty shall be the Guaranty Limit on the date on which the 

earliest of any act or omission that is a basis ofthe claim occurred. 

5. Representations and Warranties ofthe Guarantors. The Guarantor represents and 

warrants as follows: 

5.1 Capacity, Enforceability and Consents. 

(a) The Guarantor is duly organized, validly existing and in good standing 

under the laws ofthe jurisdiction ofits incorporation or organization and has all requisite power 

and authority (corporate or other) to own, lease and operate its assets and properties and to carry 

on its business as presently conducted. 

(b) The Guarantor has all requisite power and authority (corporate or other) to 

execute, deliver and perform its obligations under this Guaranty and to consununate the 

transactions contemplated hereby. The execution and delivery by the Guarantor of, and the 

performance by the Guarantor ofits obligations under, this Guaranty have been duly and validly 

authorized by all requisite action on the part ofthe Guarantor, and this Guaranty constitutes a 

valid and binding obligation of the Guarantor enforceable against it in accordance with its terms, 

except as enforceability may be limited by applicable bankruptcy, insolvency, fraudulent 

conveyance, reorganization, moratorium or other laws relating to or affecting the rights and. 

remedies of creditors generally and to general principles of equity (regardless ofwhether in 

equity or at law). 

Franklin- Guaranty of Managing Member•s Obligation 5 

8547558.5 
(c) The execution and delivery by the Guarantor ofthis Guaranty, the 

performance by the Guarantor ofits obligations hereunder and the consummation by the 

Guarantor ofthe transactions contemplated hereby dp not and will not: (i) violate any provision 

ofthe certificate of formation or limited liability company agreement (or comparable 

organizational documents with different names) ofthe Guarantor; (ii) require on the part ofthe 

Guarantor any notice or filing with, or any permits, licenses, authorizations, registrations, 

franchises, approvals, consents, certificates, variances and similar rights obtained, or required to 

be obtained, from, or other authorization of, or any exemption by, any Governmental Authority; 

(iii) in any material respect, result in a violation or breach of, constitute a default under, result in 

the acceleration of, give rise to any right to accelerate, terminate, modify or cancel, or require 

any notice, consent, authorization, approval or waiver under, or result in any other adverse 

consequence under, any contract to which the Guarantor is a party or by which the Guarantor or 

any ofits assets or properties is bound; (iv) render the Guarantor insolvent or bankrupt; (v) 

violate or breach the terms of or cause any default under any law applicable to the Guarantor or 

any ofits properties or assets; or (vi) with the passage oftime, the giving ofnotice or both, have 

any ofthe effects described in clauses (i) through (v) ofthis Section 5.1(c). 

5.2 Legal Matters. There is no claim pending against, or, to the knowledge ofthe 

Guarantor, threatened against or affecting, the Guarantor or any ofthe Guarantor's properties or 

rights, at law or in equity, before or by any conrt, arbitrator, panel or other Governmental 

Authority that could adversely affect the ability ofthe Guarantor to consummate the transactions 

contemplated by this Guaranty or any Ancillary Document to which the Guarantor is a party. 

6. Survival. All representations, warranties, covenants and agreements contained in 

this Guaranty shall survive (and not be affected in any respect by) the consummation ofthe 

transactions contemplated in the LLC Interest Sale Agreement, any investigation conducted by 

or on behalf of any party hereto and any information which any Beneficiary may receive or have. 

7. Miscellaneous. 

7.1 Notices. All notices, requests, demands, and other communications required or 

permitted to be given or delivered under or by reason ofthe provisions ofthis Guaranty shall be 

in writing and shall be given by registered or certified mail (postage prepaid and return receipt 

requested) or delivered by hand or by a nationally recognized air courier service, directed to the 

address of each party set forth below: 

Ifto the Receiver, to: 

Senior Capital Markets Specialist 


c/o Federal Deposit Insurance Corporation 


550 17'h Street, NW (Room F-7026) 


Washington, D.C. 20429-0002 


Attention: Timothy A. Kruse 


Tel: (202) 898-6832 


Franklin- Guamnty of Managing Member's Obligation 6 8547558.5 
with a copy to: 

Senior Counsel 


FDIC Legal Division 


Litigation and Resolutions Branch, Receivership Section 


Special Issues Unit 


3501 Fairfax Drive (Room E-7056) 


Arlington, Virginia 22226 


Attention: David Gearin 


Tel: (703) 562-2430 


Ifto the Guarantor, to its address on a signature page hereto. 

Any such notice shall become effective when received (or receipt is refused) by the 

addressee, provided that any notice or communication that is received (or refused) other than 

during regular business hours ofthe recipient shall be deemed to have been given at the opening 

· ofbusiness on the next Business Day ofthe recipient. From time to time, any Person may 

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

Persons identified above. 

7.2 Assi=ent. This Guaranty and all ofthe provisions hereof shall be binding upon 

and inure to the benefit of the Guarantor, the Beneficiaries and their respective heirs (in the case 

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

not assign this Guaranty or any ofits rights, interests or obligations hereunder. Any purported 

assignment or delegation in violation ofthis Guaranty shall be null and void ab initio. 

7.3 Entire Agreement. This Guaranty, the LLC Interest Sale Agreement, the LLC 


Operating Agreement, the Contribution Agreement and the other Ancillary Documents 


(including the schedules and exhibits hereto and thereto) embody the entire agreement and 


understanding ofthe parties and their respective Affiliates with respect to the transactions 


contemplated hereby and supersede and cancel all prior written or oral commitrnents, 


arrangements or understandings with respect thereto. 


7.4 Modifications, Amendments and Waivers. This Guaranty may not be modified or 

amended except by an instrument or instruments in writing signed by the Beneficiaries and the 

Guarantor. Any Beneficiary may, only by an instrument in writing, waive compliance by the 

Guarantor with any term or provision hereof. No failure or delay of any Beneficiary in 

exercising any right or remedy hereunder shall operate as a waiver thereof, nor will any single or 

partial exercise of any right or power, or any abandoument or discontinuance ofsteps to enforce 

such right or power, preclude any other or further exercise thereof or the exercise of any other 

right or power. The waiver by any Beneficiary of a breach of any term or provision hereof shall 

not be construed as a waiver of any subsequent breach. The rights and remedies ofthe 

Beneficiaries hereunder are cumulative and are not exclusive of any rights or remedies that they 

would otherwise have hereunder. 

7.5 Effectiveness; Facsimile Signatures. This Guaranty will become effective when 

the signature page has been signed by the Guarantor and delivered to the Beneficiaries. A copy 

Franklin- Guararity ofManaging Member's Obligation 7 

8547558.5 
ofthe executed signature transmitted by telecopy, facsimile or other electronic transmission 

service shall be considered an original for purposes ofthis Section 7.5, provided that receipt of 

copies of such signature page is confirmed. 

· 7.6 Governing Law. THIS GUARANTY IS GOVERNED BY AND SHALL BE 

CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, 

EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER 

THE GOVERNANCE OR THE CONSTRUCTION OF THIS GUARANTY TO THE LAW OF 

ANOTHER JURISDICTION. Nothing in this Guaranty shall require any unlawful action or 

inaction by any Person. 

7.7 Submission to Jurisdiction; Waiver ofJury Trial. The Guarantor, for itself and its 

Affiliates, hereby irrevocably and unconditionally: 

(a) (i) agrees that any suit, action or proceeding instituted against it by any 

Beneficiary with respect to this Guaranty may be instituted, and that any suit, action or 

proceeding by it against any other Person with respect to this Guaranty shall be instituted, only in 

the Supreme Court ofthe State ofNew York, County ofNew York, or the United States District 

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

Columbia (and appellate courts from any ofthe foregoing), (ii) consents and submits, for itself 

and its property, to the jurisdiction ofsuch courts for the purpose of any such suit, action or 

proceeding instituted against it by any other Person and (iii) agrees that a final judgment in any 

such suit, action or proceeding shall be conclusive and may be enforced in other jurisdictions by 

suit on the judgment or in any other manner provided by law; 

(b) agrees that service of all writs, process and summonses in any suit, action 

or proceeding pursuant to Section 7. 7(a) may be effected by the mailing of copies thereof by 

registered or certified mail, postage prepaid, to the Guarantor at its address for notices pursuant 

to Section 7.1 (with copies to such other Persons as specified therein); provided, however, that 

nothing contained in this Section 7. 7 shall affect the ability ofthe Guarantor to be served process 

in any other manner permitted by law; 

(c) (i) waives any objection that it may now or hereafter have to the laying of 

venue of any suit, action or proceeding arising out of or relating to this Guaranty brought in any 

court specified in Section 7 .7(a), (ii) waives any claim that any such suit, action or proceeding 

brought in any such court has been brought in an inconvenient forum and (iii) agrees not to plead 

or claim either ofthe foregoing; 

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

ANY DISPUTE ARISING OUT OF OR RELATING TO THIS GUARANTY AND AGREES 

THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT 

A JURY; and 

(e) agrees that nothing contained in this Section 7. 7 shall be construed to 

constitute a consent to jurisdiction by the Failed Bank or the FDIC in any capacity, or a 

limitation on any removal rights the FDIC, in any capacity, may have. 

Franklin- Guaranty ofManaging Member's Obligation 8 

8547558.5 
7.8 Severability. To the fullest extent that it may effectively do so under applicable 

law, the Guarantor hereby waives any provision oflaw that renders any provision ofthis 

Guaranty invalid, illegal or unenforceable in any respect. The Guarantor further agrees that any 

provision ofthis Guaranty which, notwithstanding the preceding sentence, is rendered or held 

invalid, illegal or unenforceable in any respect in any jurisdiction shall be ineffective, but such 

ineffectiveness shall be limited as follows: (a) ifsuch provision is rendered or held invalid, 

illegal or unenforceable in such jurisdiction only as to a particular Person or Persons or under 

any particular circumstance or circumstances, such provision shall be ineffective, but only in 

such jurisdiction and only with respect to such particular Person or Persons or under such 

particular circumstance or circumstances, as the case may be; (b) without limitation of clause (a), 

such provision shall in any event be ineffective only as to such jurisdiction and only to the extent 

ofsuch invalidity, illegality or unenforceability, and such invalidity, illegality or unenforceability 

in such jurisdiction shall not render invalid, illegal or unenforceable such provision in any other 

jurisdiction; and (c) without limitation of clause (a) or (b), such ineffectiveness shall not render 

invalid, illegal or unenforceable this Guaranty or any ofthe remaining provisions hereof. 

7.9 No Presumption. With regard to each and every term and condition of this 

Guaranty, the Guarantor understands and agrees that the same have or has been mutually 

negotiated, prepared and drafted (by the Guarantor, on the one hand, and on behalf ofthe 

Beneficiaries, on the other hand), and if at any time any such term or condition is desired or 

required to be interpreted or construed, no consideration shall be given to the issue ofwho 

actually prepared, drafted or requested any term or condition of this Guaranty or any agreement 

or instrument subject hereto. 

7.10 Third Partv Beneficiaries. This Guaranty is for the benefit of each ofthe 

Beneficiaries and their respective successors and assigns, all ofwhom shall be express third 

party beneficiaries under this Guaranty and shall be entitled to enforce their rights hereunder. 

(Remainder ofthe Page Intentionally Left Blank] 

Franklin- Guaranty ofManaging Member's Obligation 9 8547558.5 
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly executed 

and delivered as ofthe date first written above. 

RESIDENTIAL CREDIT SOLUTIONS, INC. 

By: 

Name: 

Title: 

Address: 

Residential Credit Solutions, Inc. 

4282 North Freeway 

Fort Worth, Texas 76137 

Attention Dennis G. Stowe 

Tel: (817) 321-6001 

with a copy to: 

K&L Gates LLP 

1601 K Street, N.W. 

Washington, D.C. 20006 

Attention: Phillip J. Kardis, II 

Tel: (202) 778-9401 

Fr.tnklin- Guaranty of Managing Member's Obligation