EXECUTION COPY 


CUSTODIAL AND PAYING AGENCY AGREEMENT 


BY AND BETWEEN 


FRANKLIN VENTURE, LLC, 


FEDERAL DEPOSIT INSURANCE CORPORATION, AS SECURED PARTY, 


AND 


CITIBANK, N.A., AS CUSTODIAN AND PAYING AGENT 


Dated as of_September 30, 2009 

Franklin -Custodial and Paying Agency Agreement 

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TABLE OF CONTENTS 


Article I DEFINITIONS AND CONSTRUCTION ...............................................................2 


Section 1.1 Definitions....................................................................................................2 


Section 1.2 Rules of Construction ................................................................................15 


Article II PAYING AGENT AND PURCHASE MONEY NOTE ....................................... l6 


Section 2.1 Appointment of Paying Agent ...................................................................16 


Section 2.2 Delivery ofDocumentation........................................................................16 


Section 2.3 Duties .........................................................................................................16 


Section 2.4 Forms ofPurchase Money Note ................................................................16 


Section 2.5 Authorized Amount; Stated Maturity; Denominations .............................. 16 


Section 2.6 Execution, Delivery and Dating ................................................................. l7 


Section 2.7 Registration, Registration ofTransfer and Exchange ................................17 


Section 2.8 Mutilated, Defaced, Destroyed, Lost or Stolen Purchase Money Notes ...19 


Section 2.9 Payments with Respect to the Purchase Money Notes ..............................20 


Section 2.10 Persons Deemed Owners ...........................................................................20 


Section 2.11 Cancellation ...............................................................................................20 


Article III ACCOUNTS ..........................................................................................................21 


Section 3.1 Collection Account ....................................................................................21 


Section 3.2 Distribution Account. .................................................................................21 


Section 3.3 Liquidity Reserve Account ........................................................................22 


ArticleN ADDITIONAL PROVISIONS RELATED TO THE ACCOUNTS .....................22 


Section 4."1 Investment ofFunds in Accounts ..............................................................22 


Section 4.2 Interest........................................................................................................24 


Section 4.3 Inadequately Identified Amounts ...............................................................24 


Section 4.4 Payment Procedures .................................................................................. .24 


Article V DISTRIBUTIONS .................................................................................................24 


Section 5.1 Priority ofPayments ................................................................................. .24 


Section 5.2 Notices ofPayment Failure ....................................................................... .26 


Article VI CUSTODIAL DOCUMENTS ...............................................................................26 


Section 6.1 Delivery of Custodial Docurnents ..............................................................26 


Section 6.2 Examination of Custodian Files; Copies ....................................................29 


Section 6.3 Shipment ofCustodial Documents ............................................................30 


Article VII CUSTODIAN ....................................................................................................... .30 


Section 7.1 Appointment ofthe Custodian .................................................................. .30 


Section 7.2 Obligations of the Custodian .................................................................... .30 


Article VIII FEES AND EXPENSES ........................................................................................32 


Section 8.1 Fees and Expenses .....................................................................................32 


Article IX REMOVAL OR RESIGNATION .........................................................................33 


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Section 9.1 Removal or Resignation ofCustodian and Paying Agent. ........................33 


Article X REPRESENTATIONS, WARRANTIES AND COVENANTS ...........................34 


Section 10.1 Representations, Warranties and Covenants ..............................................34 


Section 10.2 Insurance ....................................................................................................34 


Article XI REPORTS ..............................................................................................................35 


Section 11.1 Custodian and Paying Agent Report ..........................................................35 


Section 11.2 Additional Reports .....................................................................................35 


Section 11.3 Company and Servicer Distribution Date Accounting ..............................35 


Section 11.4 Distribution Date Instructions ....................................................................37 


Section 11.5 Books and Records ....................................................................................37 


Article XII NO ADVERSE INTERESTS ................................................................................37 


Section 12.1 No Adverse Interests ..................................................................................37 


Article XIII LIABILITY AND INDEMNIFICATION .............................................................38 


Section 13.1 Liability; Indemnification ..........................................................................3 8 


Article XIV CUSTODIAN AND PAYING AGENT ................................................................39 


Section 14.1 Reliance ofCustodian and Paying Agent. .................................................39 


Article XV TAXES ...................................................................................................................40 


Section 15.1 Tax Reports ............................................................................................... .40 


Section 15.2 Stamp and Other Similar Taxes .................................................................40 


Article XVI TERM ....................................................................................................................40 


Section 16.1 Term .......................................................................................................... .40 


Article XVII AUTHORIZED REPRESENTATIVES ................................................................41 


Section 17.1 Authorized Representatives .......................................................................41 


Article XVIII NOTICES ...............................................................................................................41 


Section 18.1 Notices .......................................................................................................41 


Article XIX MISCELLANEOUS ..............................................................................................42 


Section 19.1 Governing Law ......................................................................................... .42 


Section 19.2 Jurisdiction; Venue and Service .................................................................42 


Section 19.3 WaiverofJuryTrial ...................................................................................43 


Section 19.4 Counterparts ...............................................................................................43 


Section 19.5 Severability ................................................................................................43 


Section 19.6 Compliance With Law ...............................................................................44 


Section 19.7 Entire Agreement ...................................................................................... .44 


Section 19.8 Assignment; Binding Effect... ................................................................... .44 


Section 19.9 Rights Cumulative .................................................................................... .44 


Section 19.10 Amendments ..............................................................................................44 


Section 19.11 Headings ....................................................................................................45 


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Exhibits 

Exhibit A 

ExhibitB 

Exhibit C 

ExhibitD 

ExhibitE 

Exhibit F 

Exhibit G 

Exhibit H 

Exhibit I 

Loan Schedule 

Form of Collateral Certificate 

Form of Supplemental Delivery Certificate 

Request for Release and Receipt 

Form ofLost Instrument Affidavit 

Authorized Representatives 

Fees and Expenses ofCustodian and Paying Agent 

Review Procedures 

Custodian and Paying Agent Report 

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CUSTODIAL AND PAYING AGENCY AGREEMENT 


THIS CUSTODIAL AND PAYING AGENCY AGREEMENT (as the same shall be amended, 

modified or supplemented in accordance with the terms hereof, this "Agreement") is made and 

entered into as ofSeptember 30, 2009, by and between Franklin Venture, LLC, a Delaware 

limited liability company (the "Company"), the Federal Deposit Insurance Corporation, in its 

corporate capacity as the Secured Party under the Reimbursement and Security Agreement (as 

defined herein), and its successors and assigns (the "Secured Party"), and Citibank, N.A., a 

national banking association, (the "Bank"). 

RECITALS 

WHEREAS, on November 7, 2008, the FDIC (hereinafter defined) was appointed 

receiver for Franklin Bank, S.S.B. (the "Failed Bank"); and 

WHEREAS, the Failed Bank previously owned the Loans as described on the Loan 

Schedule attached hereto as Exhibit A (the "Loan Schedule"); and 

WHEREAS, the FDIC as receiver for the Failed Bank (the "Receiver") and the Company 

have entered into a Loan Contribution and Sale Agreement (the "Contribution Agreement") 

dated as ofthe date hereof, pursuant to which the Receiver, in its capacity as the Initial Member 

(as defined below), transferred all ofits right, title, and interest in and to the Loans to the 

Company; and 

WHEREAS, the Receiver, including its successors and assigns (the "Initial Member"), 

the Company, and RCS Franklin Venture LLC, a Delaware limited liability company, have 

entered into the Amended and Restated Limited Liability Company Operating Agreement (the 

"LLC Operating Agreement") dated as ofthe date hereof; and 

WHEREAS, pursuant to the Reimbursement and Security Agreement (the 

"Reimbursement and Security Agreement") dated as of the date hereof, by and between. the 

Company and Secured Party, the Company has pledged the Loans to the Secured Party and the 

Reimbursement and Security Agreement requires that the Company retain a document custodian, 

meeting the requirements set forth in the Reimbursement and Security Agreement, to take 

possession of the Custodial Documents (as defined below), in accordance with the terms and 

conditions hereof; and 

WHEREAS, the Company wishes to open and maintain in its name at a branch ofthe 

Bank certain accounts into which amounts will be deposited and proceeds will be distributed as 

provided herein and to appoint the Bank as Custodian and Paying Agent (each as defined below) 

to perform the services contemplated by this Agreement; and 

WHEREAS, the Bank wishes to accept its appointment as Custodian and as Paying 

Agent to perform the services contemplated by this Agreement; and 

WHE)(EAS, the Company and the Bank wish to enter into this Agreement to, among 

others, govern the allocation ofthe proceeds to be distributed from each account established 

pursuant to this Agreement and the performance of certain tasks by the Bank; 

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NOW, THEREFORE, in consideration of the foregoing and the mutual promises and 

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

sufficiency ofwhich are hereby acknowledged, the parties hereby agree as follows: 

ARTICLE I 


DEFINITIONS AND CONSTRUCTION 


Section 1.1 Definitions. For purposes ofthis Agreement, the following terms shall 

have the meanings set forth below. 

"60 Days Delinquent" shall mean, with respect to any Loan, that either (i) the Borrower 

is 60 or more days delinquent in payment, determined in accordance with the MBA Delinquency 

Calculation Method, under the terms of such Loan or (ii) the principal balance, interest rate or 

other payment terms of such Loan were materially modified at a time when the Borrower was 60 

or more days delinquent in payment (determined in accordance with the MBA Delinquency 

Calculation Method) and, since the effective date of such modification, the Borrower has not yet 

made three consecutive monthly payments under the modified Loan terms on a timely basis. A 

monthly payment will be considered timely for this purpose ifit is made on or prior to the day 

immediately preceding the Loan's next due date. 

"Acceptable Rating" shall mean any of the top three rating categories that may be 

assigned to any security, obligation or entity by the Rating Agencies. 

"Account Control Agreement" shall mean one or more Account Control Agreements 

dated as of the date hereof, among the Company, the Bank and the Purchase Money Note 

Guarantor, as the same shall be amended, supplemented or otherwise modified from time to 

time. 

"Accounts" shall have the meaning given in Section 4.l(b). 

"Acgnired Collateral" shall mean Collateral to which title is acquired by or on behalf of 

the Company or any Ownership Entity by foreclosure, by deed in lieu of foreclosure, by power 

of sale or by sale pursuant to the Uniform Commercial Code, in any such case in accordance 

with the Loan Documents and the LLC Operating Agreement. 

"Affiliate" shall mean, with respect to any specified Person, (i) any other Person directly 

or indirectly Controlling or Controlled by or under common Control with such specified Person, 

(ii) any Person owning or Controlling ten percent (10%) or more ofthe outstanding voting 

securities, voting equity interests, or beneficial interests ofthe Person specified, (iii) any officer, 

director, general partner, managing member, trustee, employee or promoter of the Person 

specified or any hnmediate Family Member of such officer, director, general partner, managing 

member, trustee, employee or promoter, (iv) any corporation, partnership, limited liability 

company or trust for which any Person referred to in clause (ii) or (iii) acts in that capacity, or (v) 

any Person who is an officer, director, general partner, managing member, trustee or holder of 

ten percent (I 0%) or more of the outstanding voting securities, voting equity interests or 

beneficial interests of any Person described in clauses (i) through (iv); provided, however, that 

for the purposes ofthis Agreement neither the Initial Member nor the Secured Party shall be 

deemed an Affiliate ofthe Company. 

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"Agreement" shall have the meaning given in the preamble. 

"Ancillary Documents" shall mean 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 (and the Guaranty required to be delivered thereby), the Purchase Money Note and 

the Reimbursement and Security Agreement, in each case once executed and delivered, and any 

and all other agreements and instruments executed and delivered in connection with the Closing. 

"Applicable Ownership Entitv" shall mean the Company or any subsidiary thereof 

formed from time to time for the purposes of holding REO Property. 

"Authorized Denominations" shall have the meaning given in Section 2.5(b). 

"Authorized Representative" shall mean, with respect to any Person, each individual 

designated, in writing as required by Section 17.1, by such Person to the Custodian to act as an 

authorized representative ofsuch Person for purposes ofthis Agreement. 

"Borrower" shall mean any borrower or other obligor with respect to any Loan. 

"Business Day" shall mean any day except (i) a Saturday, Sunday or other day on which 

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

or authorized by Law to close, or (ii) with respect to any day on which the Company owes an 

obligation to the Custodian or the Paying Agent or on which the Custodian or the Paying Agent 

owes an obligation to the Company, any day on which the Bank's offices are closed. 

"Closing" shall mean the consununation ofthe transactions contemplated in the LLC 

Interest Sale Agreement. 

"Closing Date" shall mean September 30, 2009. 

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

"Collateral" shall mean any and all real or personal property, whether tangible or 

intangible, securiog or pledged to secure a Loan, including any account, equipment, guarantee or 

contract right, or other interest that is the subject of any Collateral Document and, as the context 

requires, includes Acquired Collateral, whether or not so expressly specified. 

"Collateral Certificate" shall have the meaning given in Section 6.l(b). 

"Collateral Document" shall mean any pledge agreement, security agreement, personal 

or corporate guaranty, deed oftrust, deed, mortgage, contract for the sale ofreal property, 

assignment, collateral agreement or other agreement or document of any kind, whether an 

original or a copy, whether similar to or different from those enumerated, (i) securing in any 

manner the performance or payment by any Borrower ofits obligations or the obligations of any 

other Borrower under any ofthe Loans or the Notes evidencing the Loans or (ii) evidencing any 

Acquired Collateral. 

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"Collection Account" shall mean a segregated trust or custodial account established and 

maintained at a branch ofthe Bank for the purpose offunding any payments that are permitted 

under the Priority ofPayments and holding and distributing Loan Proceeds to the Distribution 

Account. 

"Company" shall have the meaning given in the preamble. 

"Contribution Agreement" shall have the meaning given in the recitals. 

"Control" (including the phrases "Controlled by" and "under common Control with") 

when used with respect to any specified Person shall mean the possession, direct or indirect, of 

the power to direct or cause the direction of the management and policies ofsuch Person, 

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

"Custodial Delivery Failure" shall have the meaning given in Section 13.1(b). 

"Custodial Documents" shall mean the documents listed in Section 6.1(c). 

"Custodial Report" shall mean a report prepared by the Custodian, which shall be in a 

form acceptable to the Company detailing, with respect to any Loan that has been released by the 

Custodian, the following: (i) the borrower name and any identification number assigned to the 

Loan, (ii) the location to which the Custodial Documents with respect to such Loan were 

delivered by the Custodian, and (iii) the date on which such Custodial Documents were released 

by the Custodian. 

"Custodian" shall mean the Bank, and any successor custodian that satisfies the 

requirements set forth in Section lO.l(d) ofthis Agreement. 

"Custodian and Paying Agent Report" shall have the meaning given in Section ll.l(a). 

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

"Debt Agreements" shall have the meaning given in Section 2.2. 

"Delinquency Test" shall be satisfied for any Distribution Date ifthe aggregate Unpaid 

Principal Balance ofLoans that are 60 Days Delinquent as ofthe immediately preceding 

Determination Date does not exceed 60% of the aggregate Unpaid Principal Balance of all Loans 

as of such Determination Date. 

"Determination Date" shall mean the last day of each Due Period. 

"Distribution Account" shall mean a segregated trust or custodial account established 

and maintained at a branch ofthe Bank for the sole purpose ofholding and distributing Loan 

Proceeds. 

"Distribution Date" shall mean (i) with respect to the initial Due Period, November 5, 

2009, (ii) with respect to any subsequent Due Period prior to and including the Due Period in 

which the last Servicing Transfer Date occurs, the fifth (5'h) day ofthe second month after such 

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Due Period, or if such day is not a Business Day, the next succeeding day that is a Business Day, 

and (iii) with respect to each subsequent Due Period thereafter, the twenty-fifth (25'h) day ofthe 

month immediately following such Due Period, or ifsuch day is not a Business Day, the next 

succeeding day that is a Business Day. For the avoidance of doubt, there shall be two (2) 

Distribution Dates in the second month after the month in which the last Servicing Transfer Date 

occurs. 

"Distribution Date Report" shall have the meaning given in Section 11.3. 

"Due Period" shall mean (i) the period from the Cut-OffDate to and including 

September 30, 2009, and (ii) each subsequent calendar month. 

"Electronic Agent" shall have the meaning given in the Electronic Tracking Agreement. 

"Electronic Tracking Agreement" shall mean the Electronic Tracking Agreement, 

dated as of September 30, 2009, among Secured Party, the Managing Member, the Servicer, the 

Electronic Agent and MERS®, as the same shall be amended, supplemented or otherwise 

modified from time to time. 

"ERISA" shall mean the United States Employee Retirement Income Security Act of 

1974, as amended. 

"Escrow Account" shall have the meaning given in the Contribution Agreement. 

"Escrow Advance" shall mean any advance made to pay taxes or insurance premiums or 

any other cost or expense that, but for a shortfall in the Borrower's Escrow Account, is payable 

using funds in the Borrower's Escrow Account. 

"Exception" shall mean, with respect to any Loan or REO Property, any variance from 

the requirements of Section 6.l(c), including any missing Custodial Document and any 

document that does not meet the applicable requirements set forth in Section 6.l(c). 

"Excluded Expenses" shall have the meaning given in the LLC Operating Agreement. 

"Existing Servicer" shall have the meaning given in the Contribution Agreement. 

"Failed Bank" shall have the meaning given in the recitals. 

"FDIC" shall mean the Federal Deposit Insurance Corporation in any capacity. 

"Final Disposition" shall mean with respect to any asset, any sale, assignment (excluding 

pledges or other assignments for collateral purposes), conveyance, transfer or other disposition 

thereof The terms "Finally Dispose" and "Finally Disposed of' shall have correlative 

meanmgs. 

"Final Distribution" shall mean the distribution of all remaining Loan Proceeds in 

accordance with the terms of this Agreement after liquidation of all ofthe Loans and related 

Collateral. 

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"Foreclosure Loss" shall mean any loss realized when the Company completes the 

foreclosure on a Loan and realizes final recovery on any Collateral securing such Loan through 

liquidation and recovery of all insurance proceeds. 

"Governmental Authority" shall mean any United States or non-United States national, 

federal, state, local, municipal or provincial or international government or any political 

subdivision of any governmental, regulatory or administrative authority, agency or commission, 

or judicial or arbitral body. 

"Guarantor" shall mean any guarantor of all or any portion of any Loan or all or any of 

any Borrower's obligations set forth and described in the Loan Documents. 

"Holder" shall mean with respect to any Purchase Money Note, the Person whose name 

appears on the Purchase Money Note Register as the registered holder ofsuch Purchase Money 

Note. 

"Immediate Family Member" shall mean, with respect to any individual, his or her 

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

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

stepchildren, grandchildren and grandchildren-in-law. 

"Initial Member" shall have the meaning given in the recitals. 

"Interest Proceeds" shall mean with respect to any Due Period, all Loan Proceeds that 

are received during such Due Period other than those items included in Principal Proceeds. For 

purposes ofthis definition, in the case ofLoan Proceeds omitted from a Monthly Report pursuant 

to Section 7 .4(b) ofthe LLC Operating Agreement, such Loan Proceeds shall be deemed to be 

have been received in the Due Period covered by the Monthly Report in which such Loan 

Proceeds are included. 

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

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

Authority. 

"Lien" shall mean any pledge, security interest, charge, restriction on or condition to 

transfer, voting or exercise or enjoyment of any right or beneficial interest, option, right of first 

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

"Liquidity Reserve" shall have the meaning given in Section 3.3. 

"Liquidity Reserve Account" shall mean a segregated trust or custodial account 

established and maintained at a branch ofthe Bank for the sole purpose of holding and 

distributing the funds in the Liquidity Reserve. 

"Liquidation Proceeds" shall mean cash proceeds of any foreclosure in respect of a 

defaulted Loan, revenues received with respect to the conservation and disposition of a 

foreclosed property or REO Property, and any other amounts received in connection with the 

liquidation of defaulted Loans, whether through trustee's sale, foreclosure sale or otherwise. 

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"LLC Interest Sale Agreement" shall have the meaning given in the LLC Operating 

Agreement. 

"LLC Operating Agreement" shall have the meaning given in the recitals. 

"Loan" shall mean any loan or Loan Participation listed on the Loan Schedule and any 

loan into which any listed loan or Loan Participation is refinanced, and includes with respect to 

each such loan or Loan Participation: (i) any obligation evidenced by a Note; (ii) all rights, 

powers or Liens of the Company in or under the Collateral Documents; (iii) any contract for deed 

or installment land contract and the real property which is subject to any such contract for deed 

or instalhnent land contract; (iv) any lease and the related leased property; and (v) all rights to 

causes of action, lawsuits, judgments, claims and demands of any nature available to or being 

pursued by or for the benefit ofthe Initial Member with respect to the Loans, the Collateral or 

the ownership, use, function, value of or other rights pertaining thereto, whether arising by way 

of counterclaim or otherwise, other than any claims retained by the Initial Member pursuant to 

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

favor ofthe Initial Member with respect to any of the Loans. 

"Loan Documents" shall mean all documents, agreements, certificates, instruments and 

other writings (including all Collateral Documents) now or hereafter executed by or delivered or 

caused to be delivered by any Borrower, any Guarantor or any other obligor evidencing, 

creating, guaranteeing or securing, or otherwise executed or delivered in respect of, all or any 

part of a Loan or any Acquired Collateral or evidencing any transaction contemplated thereby, 

and all Modifications thereto. 

"Loan Modification Program" shall have the meaning assigned to such term in the 

Servicing Agreement. 

"Loan Participation" shall mean any asset subject to a shared credit, participation or 

similar inter-creditor agreement under which the Failed Bank or the Receiver was the lead or 

agent financial depository institution or otherwise managed or held the credit or sold 

participations, or under which the Failed Bank or the Receiver was a participating financial 

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

"Loan Participation Agreement" shall mean an agreement under which the Failed Bank 

or the Receiver was the lead or agent financial depository institution or otherwise managed or 

held a shared credit or sold participations, or under which the Failed Bank or the Receiver was a 

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

another Person. 

"Loan Proceeds" shall mean (i) any and all proceeds (net of such proceeds as are 

payable to others under any Loan Participation Agreement) with respect to any or all ofthe 

Loans and any or all ofthe Collateral that is received at any time after the Cut-OffDate, 

including principal, interest, default interest, prepayment fees, premiums and charges, extension 

and exit fees, late fees, assumption fees, other fees and charges, insurance proceeds and 

condemnation payments (or any portion thereof) that are not used and disbursed to repair, 

replace or restore the related Collateral in accordance with the terms of the Loan Documents; (ii) 

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any and all proceeds from sales or other dispositions of any or all ofthe Loans or the Collateral; 

(iii) any proceeds from making a draw under any letter of credit or certificate of deposit held 

with respect to any Loan, provided that such draw is permitted by the terms ofthe Loan 

Documents; (iv) any recoveries from Borrowers or Guarantors of any kind or nature with respect 

to the Loans; (v) any investor incentive fees received by the Company under any Loan 

Modification Program (but not any incentive fees payable to servicers under any Loan 

Modification Program), and (vi) any interest or other earnings accrued and paid on any ofthe 

amounts described in the foregoing clauses (i) through (v) while held in the Collection Account 

or any other account. 

"Loan Schedule" shall have the meaning given in the recitals. 

"Loan Schedule and Exception List" shall mean a list ofthe Loans and REO Property, 

identifying, with respect to each Loan or each REO Property, each Exception, and that details, 

with respect to any Loan that has been released by the Custodian (i) the borrower name and any 

identification number assigned to the Loan, (ii) the location to which the Custodial Documents 

with respect to such Loan were delivered by the Custodian; and (iii) the date on which such 

Custodial Documents were released by the Custodian. 

"Loss" shall mean, in respect of any Loan, the amount equal to (as applicable and 

without duplication): (a) with respect to any Loan Finally Disposed ofby the Company, the 

amount (if any) by which the Unpaid Principal Balance ofsuch Loan, all interest accrued 

thereon, and all Recovery Expenses related thereto (in each case as ofthe date ofthe Final 

Disposition) exceeds the proceeds from such Final Disposition; (b) with respect to any Loan 

maturing subsequent to the Cut-Off Date (including as a result of acceleration) as to which 

collection efforts have ceased, the amount (if any) by which the Unpaid Principal Balance of 

such Loan, all interest accrued thereon, and all Recovery Expenses related thereto immediately 

prior to its maturity exceeds the principal payments and fees received by the Company in 

connection with its maturity; (c) the amount of any Foreclosure Loss in respect of such Loan; or 

(d) the amount of any Short-Sale Loss in respect of such Loan. 

"Loss Severity" shall mean, with respect to any Determination Date, the fraction, 

expressed as a percentage, the numerator ofwhich is the aggregate ofLosses incurred during the 

related Due Period and the denominator ofwhich is the Unpaid Principal Balance (determined in 

each case immediately prior to liquidation) ofthe Loans with respect to which such Losses were 

incurred. 

"Management Fee" shall mean a fee, payable on each Distribution Date pursuant to 

Section 5.1, (i) with respect to the initial Distribution Date, equal to the sum of(x) one-twelfth 

(1/12'h) of0.50 percent (0.50%) multiplied bv the Unpaid Principal Balance ofthe Loans 

calculated as ofAugust 1, 2009 plus (y) one-twelfth (1/12'h) of0.50 percent (0.50%) multiplied 

f2:i. the Unpaid Principal Balance ofthe Loans calculated as of September 1, 2009, and (ii) with 

respect to each subsequent Distribution Date, equal to one-twelfth (1112'h) of 0.50 percent 

(0.50%) multiplied by the Unpaid Principal Balance ofthe Loans calculated as ofthe first day of 

the Due Period with respect to such Distribution Date. 

"Managing Member" shall have the meaning given in the LLC Operating Agreement. 

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"MBA Delinquency Calculation Method" shall mean the method by which a Loan is 

considered delinquent in payment ifthe monthly payment has not been received by the end ofthe 

day immediately preceding the Loan's next due date (generally the last day ofthe month in 

which the payment was due), assuming that each month consists ofthirty (30) days. For 

example, a Loan with a due date ofJuly 1, 2010, with no payment received by the close of 

business on August 31,2010, would be reported in a September 2010 monthly report ofthe 

Company as sixty (60) days delinquent. 

"MERS®" shall mean Mortgage Electronic Registration Systems, Incorporated, or any 

successor thereto. 

"MERS Designated Loan" shall have the meaning given in the Electronic Tracking 

Agreement. 

"MERS Report" shall mean the schedule listing the MERS Designated Loans and other 

information prepared by the Electronic Agent pursuant to the Electronic Tracking Agreement. 

"Modification" shall mean any extension, renewal, substitution, replacement, 

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

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

''Monthly Report" shall have the meaning given in the LLC Operating Agreement. 

"Mortgage" shall mean the mortgage, deed oftrust or other instrument, including any 

amendments or modifications thereto, creating a first or junior lien on or ownership interest in a 

Mortgaged Property. 

"Mortgage Assignment'' shall mean, with respect to any Mortgage, an assignment ofthe 

Mortgage, notice oftransfer or equivalent instrument in recordable form, sufficient under the 

applicable Law ofthe jurisdiction wherein the related Mortgaged Property is located to reflect 

the assignment and pledge ofthe Mortgage. 

"Mortgaged Property" shall mean any underlying real property constituting part ofthe 

Collateral for any Loan, whether held in fee simple estate or subject to a ground lease or 

otherwise, and whether or not improved by buildings or facilities, and any personal property, 

fixtures, leases and other property or rights pertaining thereto. 

"Note" shall mean each note or promissory note, lost instrument affidavit, loan 

agreement, shared credit or Loan Participation Agreement, intercreditor agreement, 

reimbursement agreement, any other evidence ofindebtedness of any kind, or any other 

agreement, document or instrument evidencing a Loan, and all Modifications to the foregoing. 

"Office" shall have the meaning given in Section 6.1Ca). 

"Ownership Entity" shall mean a Single Purpose Entity, whether already in existence or 

formed by the Company for such purpose, which is used to hold REO Property. 

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Franklin- Custodial and Paying Agency Agreement 

8545894.8 
"Paying Agent" shall mean the Bank, and any successor paying agent that satisfies the 

requirements set forth in Section lO.l(d) ofthis Agreement. 

"Performance Tests" shall mean collectively, the Delinquency Test, the Severity Test 

and the Principal Reduction Test. 

"Permitted Investments" shall mean any one or more ofthe following obligations or 

securities having at the time ofpurchase, or at such other time as may be specified, the required 

ratings, if any, provided for in this definition: 

(i) direct obligations of, or guaranteed as to timely payment of 

principal and interest by, the United States of America or any agency or instrumentality 

ofthe United States ofAmerica, the obligations ofwhich are backed by the full faith and 

credit of the United States of America; 

(ii) demand and time deposits in or certificates of deposit of, or 

bankers' acceptances issued by, any bank or trust company, savings and loan association 

or savings bank, provided that, in the case of obligations that are not fully FDIC-insured 

deposits, the commercial paper and/or long-term unsecured debt obligations of such 

depository institution or trust company (or in the case ofthe principal depository 

institution in a holding company system, the commercial paper or long-term unsecured 

debt obligations ofsuch holding company) have an Acceptable Rating; 

(iii) general obligations of or obligations guaranteed by any state of the 

United States or the District ofColumbia receiving ratings of not less than the highest 

rating of each Rating Agency rating such obligations; 

(iv) mutual funds in which investments are limited to the obligations 

referred to in clauses (1), (2) or (3) ofthis definition; and 

(v) with the prior written consent of the Company or the Secured 

Party, any other demand, money market or time deposit or other obligation, security or 

investment. 

"Person" shall mean any individual, corporation, partuership (general or limited), limited 

liability company, limited liability partnership, firm, joint venture, association, joint-stock 

company, trust, estate, unincorporated organization, govermnental or regulatory body or other 

entity. 

"Pre-Approved Charges" shall have the meaning given in the Contribution Agreement. 

"Principal Proceeds" shall mean with respect to any Due Period, (i) any and all proceeds 

received as principal payments on the Loans during such Due Period (excluding Permitted 

Investments purchased with Interest Proceeds), (ii) any and all proceeds received from sales or 

dispositions of any Loans during such Due Period, and (ii) all Liquidation Proceeds (including 

any such proceeds attributed to unpaid interest thereon) received during such Due Period .. For 

purposes of this definition, in the case ofLoan Proceeds omitted from a Monthly Report pursuant 

to Section 7.4(b) of the LLC Operating Agreement, such Loan Proceeds shall be deemed to be 

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Franklin- Custodial and Paying Agency Agreement 

8545894.8 
have been received in the Due Period covered by the Monthly Report in which such Loan 

Proceeds are included. 

"Principal Reduction Test": (i) shall be inapplicable for the period from the Closing 

Date to but not including the date ofthe first anniversary ofthe Closing Date; (ii) shall be 

satisfied for any Distribution Date in each period set forth below ifthe outstanding principal 

amount ofthe Purchase Money Note as ofthe Determination Date immediately prior to such 

Distribution Date does not exceed the percentage set forth below opposite such period of the 

original principal balance ofthe Purchase Money Note: 

Period Percentage 

The date of the first anniversary ofthe Closing Date 

to but not including the date ofthe second anniversary of 

the Closing Date 90% 

the date ofthe second anniversary ofthe Closing Date 

to but not including the date of the third anniversary of 

the Closing Date 80% 

the date of the third anniversary ofthe Closing Date 

to but not including the date ofthe fourth anniversary of 

the Closing Date 70% 

the date ofthe fourth anniversary ofthe Closing Date 

to but not including the date of the fifth anniversary of 

the Closing Date 60% 

the date of the fifth anniversary ofthe Closing Date 

to but not including the date ofthe sixth anniversary of 

the Closing Date 50% 

the date ofthe sixth anniversary of the Closing Date 

to but not including the date ofthe seventh anniversary of 

the Closing Date 40% 

the date ofthe seventh anniversary ofthe Closing Date 

to but not including the date of the eighth anniversary of 

the Closing Date 30% 

the date ofthe eighth anniversary ofthe Closing Date 

to but not including the date ofthe ninth anniversary of 

the Closing Date 20% 

the date of the ninth anniversary ofthe Closing Date 

to but not including the date of the tenth anniversary of 

the Closing Date 10% 

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Franklin- Custodial and Paying Agency Agreement 

8545894.8 
"Priority of Payments" shall have the meaning given in Section 5 .1. 

"Private Owner" shall mean RCS Franklin Venture LLC, a Delaware limited liability 

company. 

"Purchase Money Note" shall mean that certain Purchase Money Note dated as of 

September 30, 2009 issued by the Company to the Receiver or any other note executed and 

delivered upon registration oftransfer of, or in exchange for, or in lieu of, the Purchase Money 

Note. 

"Purchase Money Note Guarantor" shall mean the FDIC, in its corporate capacity, as 

the guarantor ofthe Purchase Money Note. 

"Purchase Money Note Guaranty" shall mean the Guaranty Agreement by and between 

the Purchase Money Note Guarantor and the Receiver dated as ofthe date hereof. 

"Purchase Money Note Guaranty Fee" shall mean the fee payable to the Purchase 

Money Note Guarantor pursuant to Section 7.15 ofthe Reimbursement and Security Agreement. 

"Purchase Money Note Register" and "Purchase Money Note Registrar" shall have 

the meanings given in Section 2.7(a). 

"Rating Agencies" shall mean each of Standard and Poor's Ratings Service, a division of 

The McGraw-Hill Companies, Inc., Fitch, Inc., or Moody's Investors Service and such other 

rating agencies as are nationally recognized. 

"Receiver" shall have the meaning given in the recitals. 

"Record Date" shall mean the date on which the holders ofthe Purchase Money Note(s) 

entitled to receive a payment in respect ofprincipal, interest or other amounts on the succeeding 

Distribution Date are determined, such date as to any Distribution Date being the fifteenth day 

(whether or not a Business Day) prior to the applicable Distribution Date. 

"Recording Office" shall mean the appropriate recording office ofthe jurisdiction in 

which the Mortgaged Property is located with respect to any given Loan or in which the REO 

Property is located. 

"Recovery Expenses" shall mean for any period, the amount of actual, reasonable and 

necessary out-of-pocket expenses paid to third parties (other than Managing Member or any of 

its Affiliates) by or on behalf ofthe Company to recover amounts owed with respect to any Loan 

as to which a Loss was incurred. 

"Reimbursement and Security Agreement" shall have the meaning given in the 

recitals. 

"REO Deed" shall mean, with respect to each REO Property, the instrument or document 

required by the law ofthe jurisdiction in which the REO Property is located to convey fee title. 

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Franklin- Custodial and Paying Agency Agreement 

8545894.8 
"REO Property" shall mean real property to which title is acquired by or on behalf of 

the Company by foreclosure, by deed in lieu of foreclosure, by power of sale or by sale pursuant 

to the Uniform Commercial Code, in any such case, in accordance with the Loan Documents and 

in connection with the performance by the Company ofits obligations and duties under the LLC 

Operating Agreement. 

"REO Property Files" shall mean, with respect to each REO Property, to the extent 

applicable, the following: (A) ifthe related REO Deed has been delivered for recordation, a 

copy thereof (which may be electronic) file-stamped with evidence of recording thereon in the 

name ofthe Applicable Ownership Entity, together with a certificate of the related servicer or the 

foreclosure attorney certifying that such REO Deed is a true, correct and complete copy ofthe 

original document, or (y) ifthe related REO Deed has been delivered for recordation but not yet 

returned, a copy thereof (which may be electronic) together with a certificate ofthe servicer or 

the foreclosure attorney certifying that such REO Deed is a true, correct and complete copy of 

the original document, and that the original REO Deed has been delivered to the proper 

recording office for recordation; (B) as applicable, either (x) a copy of each REO Deed (which 

may be electronic) that is intervening between the lender that obtained title to such property 

assets as a result of foreclosure or deed in lieu of foreclosure of a mortgage or deed oftrust and 

the Applicable Ownership Entity, with the same certification documentation required in clause 

(A) above, or (y) the original or a copy of the assigrnnent of foreclosure bid between the 

foreclosing lender and the Applicable Ownership Entity with respect to the related REO 

Property, and in the case of a copy, together with a certificate ofthe servicer or the foreclosure 

attorney certifying that such assigrnnent offoreclosure bid is a true, correct and complete copy of 

the original document, with the same certification documentation required in clause (A) above; 

(C) the original or copy policy oftitle insurance prior to foreclosure of the related mortgage loan 

accompanied by a title report procured upon foreclosure ofthe related mortgage loan, with 

respect to the REO Property; and (D) for any REO Property that is subject to a lease, (x) a copy 

of the lease together with a certificate ofthe servicer certifying that such lease is a true, correct 

and complete copy ofthe original document, and (y) ifrequired by the Secured Party, the 

original assigrnnent ofsuch lease from the lessor thereunder to the Applicable Ownership Entity 

or a copy thereof together with a certificate of the servicer certifying that such assigrnnent is a 

true, correct and complete copy ofthe original document. 

"Review Procedures" shall have the meaning given in Section 6.1(d). 

"Secured Party" shall have the meaning given in the preamble. 

"Securities Act" shall have the meaning given in Section 2.7(h). 

"Servicer" shall mean (i) any Person retained by the Managing Member to service, 

manage or administer any ofthe Loans, the Collateral or the REO Property, and (ii) any Person 

retained by any Person referred to in clause (i) to service, manage or administer any of the 

Loans, the Collateral or the REO Property. 

"Servicing Agreement" shall mean the Servicing Agreement dated as of September 30, 

2009 by and between the Managing Member and Residential Credit Solutions, Inc., and 

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Franklin -Custodial and Paying Agency Agreement 

8545894.8 
thereafter, shall include any substantially similar agreement entered into by the Managing 

Member and any new or successor Servicer. 

"Servicing Expenses" shall mean all customary and reasonable out-of-pocket fees, costs, 

expenses and indemnified amounts incurred in connection with servicing the Loans and the 

Acquired Collateral, including (i) any and all out-of-pocket fees, costs, expenses and indemnified 

amounts which a Borrower is obligated to pay to any Person or to reimburse to the lender 

pursuant to the applicable Note or any other Loan Documents, including Escrow Advances, (ii) 

any and all reasonable out-of-pocket expenses necessary to protect or preserve the value ofthe 

Collateral or the priority ofthe Liens and security interests created by the Loan Documents 

relating thereto, including taxes, insurance premiums (including forced place insurance 

premiums), payment of ground rent, the costs ofprevention of waste, repairs and maintenance, 

foreclosure expenses and legal fees and expenses relating to foreclosure or other litigation with 

respect to the Loans, (iii) any and all direct expenses related to the preservation, operation, 

demolition, management and sale ofthe Acquired Collateral (including real estate brokerage 

fees), and (iv) to the extent not covered by any of clauses (i) through (iii), legal fees and 

expenses (including judgments, settlements and reasonable attorneys fees) incurred by the 

Servicer in its defense of claims asserted against the Company that relate to one or more Loans, 

and (x) arise out of the acts or omissions of the Failed Bank or the Receiver in connection with 

the origination or servicing of such Loans prior to the Servicing Transfer Date for such Loans, or 

(y) allege, as the basis for such claims, any act or omission ofthe Company (or its Servicer) and 

such claims are decided (and there are final non appealable orders) in favor of the Company (or 

·its Servicer); provided, however, that Servicing Expenses shall not include Excluded Expenses. 

"Servicing Standard" shall have the meaning given in the Servicing Agreement. 

"Servicing Transfer Date" shall have the meaning given in the Contribution Agreement. 

"Severitv Test" shall be satisfied for any Distribution Date if the average Loss Severity 

(weighted by the unpaid principal balance of the Loans with respect to which Losses were 

incurred during the applicable Due Period) for the immediately preceding three (3) 

Determination Dates does not exceed 70%. 

"Short-Sale Loss" means any loss resulting from the Company's agreement with a 


mortgagor to accept a payoff in an amount less than the balance due on any Loan. 


"Single Purpose Entitv" shall mean a corporation or limited liability company that (i) is 

organized under the laws of any state of the United States or the District of Columbia, (ii) has no 

material assets other than the Loans and any REO Property, its right, title and interest in, to and 

under the LLC Operating Agreement and the other instruments contemplated by the LLC 

Operating Agreement, (iii) is not engaged in any significant business operations except its 

ownership of the Loans and any REO Property and the conduct ofits business pursuant to the 

LLC Operating Agreement, (iv) does or causes to be done all things necessary to preserve and 

keep in full force and effect its existence, rights (charter and statutory) and franchises, (v) at all 

times holds itself out to the public as a legal entity separate from any other Person (including any 

Affiliate), (vi) except as expressly contemplated by this Agreement, the LLC Operating 

Agreement, or by any other Ancillary Documents, does not commingle its assets with assets of 

14 

Franklin- Custodial and Paying Agency Agreement 

8545894.8 
any other Person, (vii) conducts its business in its own name and strictly complies with all 

organizational formalities to maintain its separate existence, (viii) maintains an arm's length 

relationship with any Affiliate upon terms that are commercially reasonable and on terms no less 

favorable to it than could be obtained in a comparable arm's length transaction with an unrelated 

Person, and (ix) has no Debt (as defmed in the LLC Operating Agreement). 

"Subservicer" shall have the meaning given in the Servicing Agreement. 

"Supplemental Delivery Certificate" shall have the meaning given in Section 6.1(d). 

"Uniform Commercial Code" shall mean the Uniform Commercial Code as in effect in 

any applicable jurisdiction, as amended from time to time. 

"Unpaid Principal Balimce" shall mean, at any time, (a) when used in connection with 

multiple Loans, an amount equal to the aggregate then outstanding principal balance of such 

Loans, and (b) when used with respect to a single Loan, an amount equal to the then outstanding 

principal balance ofsuch Loan. For this purpose, in the case of a Loan for which some or all of 

the related Collateral has been converted to Acquired Collateral, until such time as the Acquired 

Collateral (or any portion thereof) is liquidated, the unpaid principal balance of such Loan shall 

be deemed to equal the sum of(i) the unpaid principal balance of such Loan (adjusted pro rata 

for partial collateral sales, debt forgiveness or retained indebtedness) at the time at which such 

Loan was converted to Acquired Collateral plus (ii) any outstanding balance remaining on such 

Loan which is evidenced by a modification agreement or a replacement or successor promissory 

note executed by the Borrower. 

"Working Capital Advances" shall mean amounts advanced by or on behalf of the 

Managing Member to fund the Company's operations and operating deficits. 

Section 1.2 Rules of Construction. This Agreement shall be construed and interpreted 

in accordance with the following: 

(a) References to "Affiliates" include only other Persons which from time to time 

constitute "Affiliates" of such specified Person, and do not include, at any particular time, other 

Persons that may have been, but at such time have ceased to be, "Affiliates" ofsuch specified 

Person, except to the extent that any such reference specifically provides otherwise. 

(b) The term "or" is not exclusive. 

(c) A reference to a law includes any amendment, modification or replacement to 

such law. 

(d) References to any document, instrument or agreement (a) shall be deemed to 

include all appendices, exhibits, schedules and other attachments thereto and all documents, 

instruments or agreements issued or executed in replacement thereof, and (b) shall mean such 

document, instrument or agreement, or replacement thereto, as amended, modified and 

supplemented from time to time in accordance with its terms and as the same is in effect at any 

given time. 

15 

Franklin- Custodial and Paying Agency Agreement 

8545894.8 
(e) Unless otherwise specified, the words "hereof," "herein" and "hereunder" and 

words of similar import shall refer to this Agreement as a whole and not to any particular 

provision ofthis Agreement. 

(f) The words "include" and "including" and words ofsimilar import are not 

limiting, and shall be construed to be followed by the words "without limitation," whether or not 

they are in fact followed by such words. 

(g) The word "during" when used with respect to a period oftime shall be construed 

to mean commencing at the beginning of such period and continuing until the end ofsuch period. 

ARTICLE II 


PAYING AGENT AND PURCHASE MONEY NOTE 


Section 2.1 Appointment ofPaying Agent. Subject to the terms and conditions of this 

Agreement, the Company hereby appoints the Bank to perform the duties ofPaying Agent 

specifically set forth hereunder, and the Bank hereby accepts such appointment. 

Section 2.2 Delivery ofDocumentation. Executed counterparts ofthe Purchase 

Money Note, the Purchase Money Note Guaranty, the Reimbursement and Security Agreement 

and the Account Control Agreement (the "Debt Agreements") have been delivered to the 

Paying Agent and the Paying Agent acknowledges receipt thereof. The Company agrees to 

deliver to the Paying Agent each ofthe Debt Agreements which is executed and delivered by it, 

or executed by the Secured Party and delivered to it, subsequent to the date ofthis Agreement 

promptly upon such execution and delivery and to deliver each instrument amending or 

modifying any agreement previously delivered to the Paying Agent. 

Section 2.3 Duties. The Paying Agent shall have no duties other than those 

specifically set forth or provided for in this Agreement and each Debt Agreement to which it is a 

party and no implied covenants or obligations of the Paying Agent shall be read into this 

Agreement or any Debt Agreement or any related agreement to which it is a party. The Paying 

Agent shall have no obligation to inquire whether any request, instruction, certificate, direction, 

receipt, demand, consent, resolution, statement, instrument, opinion, report, notice, document, 

communication, statement or calculation is in conformity with the terms of the agreement 

pursuant to which it is given, except those irregularities or errors manifestly apparent on the face 

ofsuch document or actually known to the Paying Agent. If, however, any remittance or 

communication received by the Paying Agent appears manifestly erroneous or irregular, the 

Paying Agent shall endeavor to make prompt inquiry to the Person originating such remittance or 

communication in order to determine whether a clerical error or inadvertent mistake has 

occurred. 

Section 2.4 Forms ofPurchase Money Note. The Purchase Money Notes will be 

issued in the form of one or more certificated notes in definitive, fully registered form without 

interest coupons substantially, which shall be registered in the name of the owner thereof, and 

duly executed by the Company. 

Section 2.5 Authorized Amount; Stated Maturity; Denominations. 

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Franklin -Custodial and Paying Agency Agreement 

8545894.8 
(a) The aggregate face amount ofPurchase Money Notes that may be executed and 

delivered under this Agreement is limited to U.S.$750,000,000 except for Purchase Money Notes 

executed and delivered upon registration oftransfer of, or in exchange for, or in lieu of, other 

Purchase Money Notes pursuant to Section 2.7 or 2.8 of this Agreement. 

(b) The Purchase Money Notes shall be issuable in minimum denominations of 

U.S.$500,000 and integral multiples ofU.S.$1,000 in excess thereof(each such denomination, 

an "Authorized Denomination"). Any interest in a Purchase Money Note equal to or in excess 

of the applicable minimum denomination at the time of the issuance thereof which ceases or fails 

to be such minimum or multiple as a result of the repayment ofprincipal may be transferred in its 

entirety. 

Section 2.6 Execution. Delivery and Dating. 

(a) The Purchase Money Notes shall be executed on behalf ofthe Company by one of 

the Authorized Representatives ofthe Company. The signature of such Authorized 

Representative on the Purchase Money Notes may be manual or facsimile. 

(b) Purchase Money Notes bearing the manual or facsimile signatures of individuals 

who were at any time the Authorized Representative of the Company shall bind the Company, 

notwithstanding the fact that such individuals or any ofthem have ceased to hold such offices 

prior to the execution and delivery ofsuch Purchase Money Notes or did not hold such offices at 

the date of issuance ofsuch Purchase Money Notes. 

(c) Each Purchase Money Note executed and delivered by the Company or the 

Paying Agent on the Closing Date shall be dated as of the Closing Date. All other Purchase 

Money Notes that are executed and delivered after the Closing Date for any other purpose under 

this Agreement shall be dated the date oftheir execution. 

(d) Purchase Money Notes issued upon transfer, exchange or replacement of other 

Purchase Money Notes shall be issued in Authorized Denominations reflecting the original 

aggregate principal or face amount ofthe Purchase Money Notes so transferred, exchanged or 

replaced, but shall represent only the current outstanding principal or face amount of the 

Purchase Money Notes so transferred, exchanged or replaced. In the event that any Purchase 

Money Note is divided into more than one Purchase Money Note in accordance with this Article 

.!.I, the original principal or face amount ofsuch Purchase Money Note shall be proportionately 

divided among the Purchase Money Notes delivered in exchange therefor and shall be deemed to 

be the original aggregate principal or face amount of such subsequently issued Purchase Money 

Notes. 

Section 2.7 Registration, Registration ofTransfer and Exchange. 

(a) The Company shall cause to be kept a register (the "Purchase Money Note 

Register") in which, subject to such reasonable regulations as it may prescribe, the Company 

shall provide for the registration, and the registration oftransfers, ofPurchase Money Notes. 

The Paying Agent is hereby initially appointed "Purchase Money Note Registrar" for the 

purpose of registering Purchase Money Notes and transfers of such Purchase Money Notes as 

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Franklin- Custodial and Paying Agency Agreement 

8545894.8 
herein provided. Upon any resignation or removal ofthe Purchase Money Note Registrar, the 

Company shall promptly appoint a successor. 

(b) If a Person other than the Paying Agent is appointed by the Company as Purchase 

Money Note Registrar, the Company will give the Paying Agent prompt notice ofthe 

appointment of a Purchase Money Note Registrar and of the location, and any change in the 

location, ofthe Purchase Money Note Registrar, and the Paying Agent shall have the right to 

inspect the Purchase Money Note Register at all reasonable times and. to obtain copies thereof 

and the Paying Agent shall have the right to rely upon a certificate executed on behalf ofthe 

Purchase Money Note Registrar by an officer thereof as to the names and addresses of the 

Holders ofthe Purchase Money Notes and the principal or face amounts and numbers of such 

Purchase Money Notes. Upon written request at any time, the Purchase Money Note Registrar 

promptly shall provide to the Company or the Secured Party a current list ofHolders as reflected 

in the Register. 

(c) Subject to this Section 2.7, upon surrender for registration oftransfer of any 

Purchase Money Notes, the Company shall execute and deliver, in the name ofthe designated 

transferee or transferees, one or more new Purchase Money Notes of any Authorized 

Denomination and oflike terms and a like aggregate principal or face amount. 

(d) At the option ofthe Holder, Purchase Money Notes may be exchanged for 

Purchase Money Notes oflike terms, in any Authorized Denominations and of like aggregate 

principal or face amount upon surrender ofthe Purchase Money Notes to be exchanged at such 

office or agency. Whenever any Purchase Money Note is surrendered for exchange, the 

Company shall execute and deliver the Purchase Money Notes that the Purchase Money 

Noteholder making the exchange is entitled to receive. 

(e) All Purchase Money Notes issued upon any registration of transfer or exchange of 

such Purchase Money Notes shall be the valid obligations ofthe Company, evidencing the same 

debt (to the extent they evidence debt), and entitled to the same benefits under this Agreement, as 

the Purchase Money Notes surrendered upon such registration of transfer or exchange. 

(f) Every Purchase Money Note presented or surrendered for registration oftransfer 

or exchange shall be duly endorsed, or be accompanied by a written instrument oftransfer in 

form satisfactory to the Company and the Purchase Money Note Registrar duly executed by the 

Holder thereof or his attorney duly authorized in writing. 

(g) No service charge shall be made to a Holder for any registration oftransfer or 

exchange of Purchase Money Notes, but the Company or the Paying Agent may require payment 

of a sum sufficient to cover any tax or other governmental charge payable in connection 

therewith. 

(h) No Purchase Money Note may be sold or transferred (including, without 

limitation, by pledge or hypothecation) unless such sale or transfer is exempt from the 

registration requirements ofthe Securities Act of 1933, as amended (the "Securities Act"), and 

is exempt under applicable State securities laws and the laws of any other applicable jurisdiction. 

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Franklin -Custodial and Paying Agency Agreement 

8545894.8 
(i) Notwithstanding any provision to the contrary herein, so long as a Purchase 

Money Note remains outstanding, transfers and exchanges of a Purchase Money Note, in whole 

or in part, shall only be made in accordance with this Section 2.7. 

(a) Any purported transfer or exchange of a Purchase Money Note not in accordance 

with this Section 2.7 shall be. null and void ab initio and shall not be given effect for any purpose 

hereunder. 

(b) Nothing in this Section 2.7 shall be construed to limit any contractual restrictions 

on transfers ofPurchase Money Notes or interests therein that may apply to any Person. 

(c) Notwithstanding anything contained herein to the contrary, neither the Paying 

Agent nor the Purchase Money Note Registrar shall be responsible for ascertaining whether any 

transfer complies with the registration provisions of or any exemptions from the Securities Act, 

applicable state securities laws or the applicable laws of any other jurisdiction, ERISA, the Code 

or the Investment Company Act of 1940, as amended; provided that if a certificate is specifically 

required by the express terms of this Agreement to be delivered to the Paying Agent by a holder 

or transferee of a Purchase Money Note, the Paying Agent shall be under a duty to receive and 

examine the same to determine whether or not the certificate substantially conforms on its face to 

the requirements of this Agreement and shall promptly notify the party delivering the same if 

such certificate does not comply with such terms. 

(d) Notwithstanding the foregoing, with the advice of counsel to the Company, the 

Company may adopt one or more other forms oftransfer certificate with respect to the transfer of 

the Purchase Money Notes after the Closing Date. 

Section 2.8 Mutilated, Defaced, Destroyed, Lost or Stolen Purchase Money Notes. 

(a) If (i) any mutilated or defaced Purchase Money Note is surrendered to a Paying 

Agent, or if there shall be delivered to the Company and the Paying Agent evidence to their 

reasonable satisfaction of the destruction, loss or theft of any Purchase Money Note, and (ii) 

there is delivered to the Company and the Paying Agent such security or indemnity as may be 

required by them to save each ofthem and any agent of any ofthem harmless, then, in the 

absence ofnotice to the Company or such Paying Agent that such Purchase Money Note has 

been acquired by a bona fide purchaser, the Company shall execute and deliver, in lieu of any 

such mutilated, defaced destroyed, lost or stolen Purchase Money Note, a new Purchase Money 

Note, oflike tenor (including the same date ofissuance) and equal principal or face amount 

registered in the same manner, dated the date of its authentication, bearing interest from the date 

to which interest has been paid on the mutilated, defaced, destroyed, lost or stolen Purchase 

Money Note and bearing a number not contemporaneously outstanding. 

(b) If, after delivery ofsuch new Purchase Money Note, a bona fide purchaser of the 

predecessor Purchase Money Note presents for payment, transfer or exchange such predecessor 

Purchase Money Note, the Company, the Purchase Money Note Registrar and the Paying Agent 

shall be entitled to recover such new Purchase Money Note from the Person to whom it was 

delivered or any Person taking therefrom, and shall be entitled to recover upon the security or 

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Franklin- Custodial and Paying Agency Agreement 

8545894.8 
indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the 

Company and the Paying Agent in connection therewith. 

(c) In case any such mutilated, defaced, destroyed, lost or stolen Purchase Money 

Note has become due and payable, the Company may in its discretion, instead of issuing a new 

Purchase Money Note pay such Purchase Money Note without requiring surrender thereof except 

that any mutilated Purchase Money Note shall be surrendered. 

(d) Upon the issuance of any new Purchase Money Note under this Section 2.8, the 

Company may require the payment by the registered holder thereof of a sum sufficient to cover 

any tax or other governmental charge that may be imposed in relation thereto and any other 

expenses (including the fees and expenses ofthe Paying Agent) connected therewith. 

(e) Every new Purchase Money Note issued pursuant to this Section 2.8 in lieu of any 

mutilated, defaced, destroyed, lost or stolen Purchase Money Note shall constitute an original 

additional contractual obligation ofthe Company, and such new Purchase Money Note shall be 

entitled, subject to Section 2.8(b), to all the benefits of this Agreement equally and 

proportionately with any and all other Purchase Money Notes duly issued hereunder. 

The provisions of this Section 2.8 are exclusive and shall preclude (to the extent 

lawful) all other rights and remedies with respect to the replacement or payment of mutilated, 

defaced, destroyed, lost or stolen Purchase Money Notes. 

Section 2.9 Payments with Respect to the Purchase Money Notes. All reductions in 

the principal amount of a Purchase Money Note (or one or more predecessor Purchase Money 

Notes) effected by payments of installments ofprincipal made on any Distribution Date shall be 

binding upon all future Holders of such Purchase Money Note and of any Purchase Money Note 

issued upon the registration oftransfer thereof or in exchange therefor or in lieu thereof, whether 

or not such payment is noted on such Purchase Money Note. Subject to the foregoing, each 

Purchase Money Note delivered under this Agreement and upon registration of transfer of or in 

exchange for or in lieu of any other Purchase Money Note shall carry the rights ofunpaid interest 

and principal or distributions that were carried by such other Purchase Money Note. 

Section 2.10 Persons Deemed Owners. The Company, the Paying Agent, and any agent 

of the Company or the Paying Agent shall treat the Person in whose name any Purchase Money 

Note is registered as the owner of such Purchase Money Note on the Register on the applicable 

Record Date for the purpose ofreceiving payments ofprincipal of and interest on or other 

distributions with respect to such Purchase Money Note and on any other date for all other 

purposes whatsoever (whether or not such payments are overdue), and neither the Company, nor 

the Paying Agent, nor any agent of the Company or the Paying Agent, shall be affected by notice 

to the contrary. 

Section 2.11 Cancellation. All Purchase Money Notes surrendered for payment, 

registration or transfer, exchange or redemption, or deemed lost or stolen, shall, if surrendered to 

any Person other than the Paying Agent, be delivered to the Paying Agent, shall be promptly 

canceled by it and may not be reissued or resold. No Purchase Money Notes shall be issued in 

lieu of or in exchange for any Purchase Money Notes canceled as provided in this Section 2.11, 

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Franklin- Custodial and Paying Agency Agreement 

8545894.8 
except as expressly permitted by this Agreement. All cancelled Purchase Money Notes held by 

the Paying Agent shall be destroyed or held by the Paying Agent in accordance with its standard 

retention policy unless the Company shall direct that they be returned to it. 

ARTICLE III 


ACCOUNTS 


Section 3.1 Collection Account. On the date hereof, the Company shall establish the 

Collection Account with the Paying Agent. The Collection Account shall be held in trust by the 

Paying Agent for the benefit of Secured Party and the Company. For all Loan Proceeds relating 

to any Due Period ending prior to or on October 31, 2009, the Receiver shall transfer such Loan 

Proceeds not later than two (2) Business Days prior to the applicable Distribution Date to the 

Paying Agent for deposit into the Collection Account. For all Loan Proceeds relating to any Due 

Period commencing on or after November 1, 2009, (i) the Receiver shall transfer any such Loan 

Proceeds that may be received by it within two (2) Business Days ofreceipt ofsuch funds to the 

Paying Agent for deposit into the Collection Account, and (ii) the Company shall transfer, or 

cause the Servicer or Subservicer to transfer, all Loan Proceeds within two (2) Business Days of 

receipt of such funds to the Paying Agent for deposit into the Collection Account. No funds 

from any other source (other than interest or earnings on the Loan Proceeds and funds transferred 

from the Liquidity Reserve Account pursuant to Section 3.3) shall be commingled in the 

Collection Account. Funds transferred from the Liquidity Reserve Account to the Collection 

Account pursuant to Section 3.3 in a given Due Period shall be deemed to be (i) Interest 

Proceeds received in such Due Period in the case of any interest and earnings thereon while in 

the Liquidity Reserve Account, (ii) Interest Proceeds received in such Due Period ifsuch funds 

were Interest Proceeds when deposited into the Liquidity Reserve Account and (iii) Principal 

Proceeds received in such Due Period ifsuch funds were Principal Proceeds when deposited into 

the Liquidity Reserve Account. Amounts on deposit in (or that are required to have been 

deposited into) the Collection Account (including interest and earnings thereon) shall be applied 

(i) to the payment of Servicing Expenses and Pre-Approved Charges in accordance with Section 

lJ., and (ii) to transfers to the Distribution Account in accordance with Section 3.2. The 

Managing Member may upon instruction to the Paying Agent request the withdrawal of funds 

from the Collection Account at any time to pay Servicing Expenses and Pre-Approved Charges, 

and ifthe Receiver, the Company, the Servicer or any Subservicer at any time erroneously 

deposits any amount into the Collection Account, the Company may withdraw such amount and 

pay such amount to the Receiver, the Company, the Servicer or any Subservicer, as applicable. 

The Paying Agent shall invest the amounts on deposit in the Collection Account in Permitted 

Investments in accordance with investment directions from the Company but with a maturity that 

allows for their allocation and transfer to the Distribution Account in accordance with Section 

3 .2. The Paying Agent shall be authorized and directed to withdraw funds from the Collection 

Account only to transfer funds to the Distribution Account pursuant to Section 3.2 and as 

otherwise set forth in this Agreement and not for any other purpose. The Collection Account 

(and all funds therein) shall be subject to the security interest granted to the Secured Party under 

the Reimbursement and Security Agreement and to the Account Control Agreement. 

Section 3.2 Distribution Account. On the date hereof, the Company shall establish the 

Distribution Account with the Paying Agent. The Distribution Account shall be held in trust by 

the Paying Agent for the benefit of Secured Party and the Company. The Paying Agent shall 

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transfer from the Collection Account to the Distribution Account, for application pursuant to 

Section 5.1, not later than 12:00 p.m. New York time on the Business Day immediately 

preceding each Distribution Date, the amount specified in the Distribution Date instructions 

delivered pursuant to Section 11.4 for such Distribution Date. All income or gain realized from 

the investment offunds deposited in the Distribution Account held by the Paying Agent shall be 

for the benefit of the Paying Agent. No funds from any other source shall be commingled in the 

Distribution Account. Amounts on deposit in (or that are required to have been deposited into) 

the Distribution Account (including interest and earnings thereon) shall be allocated and may be 

withdrawn and disbursed only in accordance with the provisions of Section 5.1. The Paying 

Agent shall be authorized and directed to withdraw funds from the Distribution Account only to 

make disbursements in accordance with this Agreement and not for any other purpose. The 

Distribution Account (and all funds therein) shall be subject to the security interest granted to the 

Secured Party under the Reimbursement and Security Agreement and to the Account Control 

Agreement. 

Section 3.3 Liquidity Reserve Account. The Company, in its discretion, may establish 

a liquidity reserve (the "Liquiditv Reserve") for the purpose of allocating funds to the 

Collection Account. The Liquidity Reserve Account shall be held in trust by the Paying Agent 

for the benefit of Secured Party and the Company and shall be established and maintained for the 

sole purpose ofholding and distributing the Liquidity Reserve funds. The Company may 

instruct the Paying Agent in the Distribution Date instructions delivered pursuant to Section 11.4 

to fund the Liquidity Reserve as the Company deems appropriate, in the exercise of its 

reasonable discretion in accordance with the provisions of Section 5 .1. The Paying Agent will 

fund such amount on the applicable Distribution Date in accordance with the Distribution Date 

instructions delivered pursuant to Section 11.4 for such Distribution Date. At any time after the 

Company instructs the Paying Agent to fund the Liquidity Reserve Account, the Company may, 

in the exercise of its reasonable discretion, instruct the Paying Agent to release some or all of the 

funds from the Liquidity Reserve Account and allocate and distribute such released funds to the 

Collection Account. At the time ofthe Final Distribution, the Paying Agent shall allocate and 

distribute all remaining funds held in the Liquidity Reserve Account to the Collection Account 

from which account the funds will be transferred to the Distribution Account and made available 

for distribution in accordance with the Priority ofPayments pursuant to this Agreement. The 

Paying Agent shall invest the amounts on deposit in the Liquidity Reserve Account in Permitted 

Investments in accordance with investment directions from the Company. No funds from any 

other source (other than interest or earnings on the funds held in the Liquidity Reserve Account) 

shall be commingled in the Liquidity Reserve Account. The Paying Agent shall be authorized 

and directed to withdraw funds from the Liquidity Reserve Account only to make disbursements 

in accordance with this Agreement and not for any other purpose. The Liquidity Reserve 

Account (and all funds therein) shall be subject to the security interest granted to the Secured 

Party under the Reimbursement and Security Agreement and to the Account Control Agreement. 

ARTICLE IV 


ADDITIONAL PROVISIONS RELATED TO THE ACCOUNTS 


Section 4.1 Investment of Funds in Accounts. 

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(a) The Company shall at all times direct the Paying Agent to, and, upon receipt of 

such investment direction, the Paying Agent shall, invest, pending deposit into the Collection 

Account or the Liquidity Reserve Account, as applicable, amounts received and retained in such 

Accounts, as so directed in Permitted Investments. Ifthe Company does not provide the Paying 

Agent with investment directions pursuant to Sections 3.1, 3.3 or 4.1, the balance standing to the 

credit ofthe Collection Account or Liquidity Reserve Account, as applicable, will remain 

uninvested with no liability for interest thereon. It is agreed and understood that the Paying 

Agent may earn fees associated with Permitted Investments. 

(b) Whenever the Paying Agent is directed or authorized in accordance with the terms 

hereofto make a transfer offunds among the Collection Account, the Distribution Account and 

the Liquidity Reserve Account (collectively, the "Accounts"), after application of all other 

available funds, the Paying Agent shall allocate to the Account to which such funds are to be 

transferred a portion of any Permitted Investment that would otherwise have to be liquidated to 

accomplish such transfer in an amount corresponding to the amount to be so transferred. 

Whenever the Paying Agent is directed or authorized in accordance with the terms hereofto 

make a transfer offunds from the Accounts (unless such transfer is between Accounts), if, after 

application of all other available funds, liquidation of a Permitted Investment is necessary to 

make any such transfer, the Paying Agent is authorized to liquidate such Permitted Investment. 

If any Permitted Investment so liquidated is then allocated to more than one Account, and it is 

not possible to liquidate only the portion ofsuch Permitted Investment allocated to the Account 

from which such transfer is to be made, then the entire Permitted Investment shall be liquidated, 

and the proceeds ofsuch liquidation shall be allocated to the Accounts involved in the same 

proportion as the allocation ofsuch Permitted Investment, except that the net costs and expenses, 

if any, ofsuch liquidation (including any loss ofprincipal) shall be allocated entirely to the 

Account from which the transfer offunds was required to be made. The Paying Agent shall 

liquidate all those Permitted Investments which can be liquidated without interest cost or penalty 

before it shall liquidate any Permitted Investment, the liquidation ofwhich would involve an 

interest cost or penalty. The Paying Agent shall have no liability with respect to any interest cost 

or penalty on the liquidation of any Permitted Investment pursuant to this Section 4.1. 

(c) The Paying Agent shall have no liability with respect to Permitted Investments (or 

any losses resulting therefrom) made at the direction ofthe Company or the Secured Party 

pursuant to this Agreement. 

(d) All references in this Agreement to the Accounts and to cash, moneys or funds 

therein or balances thereof shall include the investments in which such moneys are invested. 

(e) The Paying Agent may execute any investment directions provided to it in respect 

ofthe Permitted Investments through its Affiliates, and neither the Paying Agent nor its 

Affiliates shall have a duty to monitor the investment rating of any such Permitted Investments. 

The Paying Agent will have no obligation to invest or reinvest any funds if all or a portion of 

such funds are deposited with the Paying Agent after 11:00 a.m. New York time on the day of 

deposit. Directions to invest or reinvest that are received after 11:00 a.m. New York time will be 

treated as ifreceived on the following Business Day in New York. Subject to Section 4.1(b) 

above, the Paying Agent will have the power to sell or liquidate Permitted Investments whenever 

the Paying Agent will be required to make a transfer pursuant to the terms hereof. The Paying 

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Franklin -Custodial and Paying Agency Agreement 

8545894.8 
Agent will have no responsibility for any investment losses resulting from the investment, 

reinvestment or liquidation of any funds in accordance with the terms of this Agreement. 

Section 4.2 Interest. Any interest or other earnings accrued on any balances in any 

Account, or on any investment thereof, shall be credited to and accumulated in such Account and 

thereafter be applied without differentiation from other funds in such Account. 

Section 4.3 Inadequately Identified Amounts. Ifthe Paying Agent receives any 

amount which is inadequately or incorrectly identified and the Paying Agent is unable to 

determine the Account into which such amount is to be credited, the Paying Agent shall notify 

the Company and the Secured Party of such event and shall request instructions as to the 

Account into which such amount should be credited. The Paying Agent shall credit such amount 

to the Collection Account until such time as it receives instructions from the Company (with the 

written consent ofthe Secured Party) stating that such amount should be credited to another 

Account in accordance with this Agreement, in which case it shall credit such amount, if still 

available, to the Account designated by the Company (with the written consent ofthe Secured 

Party). 

Section 4.4 Payment Procedures. All amounts which are from time to time 

distributable by the Paying Agent from the Distribution Account in accordance herewith shall be 

paid by the Paying Agent on the Distribution Date in immediately available funds (but not before 

such amounts become immediately available to it). All payments made by the Paying Agent 

shall be made to such account(s) as shall be designated in writing by the Company in accordance 

with the Distribution Date Report and this Agreement. 

ARTICLEV 


DISTRIBUTIONS 


Section 5.1 Priority ofPayments. Notwithstanding any other provision in this 

Agreement, before each Distribution Date, the Paying Agent shall disburse amounts transferred 

to the Distribution Account from the Collection Account pursuant to Section 3.2 as follows and 

for application by the Paying Agent in accordance with the following priorities (the "Priority of 

Payments") and the Distribution Date instructions delivered pursuant to Section 11.4: 

(a) On each Distribution Date, Interest Proceeds, net of amounts used to pay 

Servicing Expenses or Pre-Approved Charges during the applicable Due Period, will be 

distributed in the following order ofpriority: 

(i) first, to pay the fees and expenses of the Custodian and Paying 

Agent in accordance with the terms ofthis Agreement; 

(ii) second, (x) to reimburse the Managing Member for any Working 

Capital Advances made during the applicable Due Period (or any prior Due Period to the 

extent not previously reimbursed), but only to the extent the same were used to pay or 

reimburse costs or expenses constituting Servicing Expenses, fees and expenses ofthe 

Custodian and Paying Agent or Pre-Approved Charges, and (y) in the event that a 

predecessor Managing Member has been removed as the Managing Member pursuant to 

Section 3.2 ofthe LLC Operating Agreement, ifthere are Interest Proceeds remaining 

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Franklin- Custodial and Paying Agency Agreement 

8545894.8 
after payment ofthe Managing Member pursuant to the preceding clause (x), to 

reimburse such predecessor for any Working Capital Advances made by it while serving 

as Managing Member during the applicable Due Period (or any prior Due Period to the 

extent not previously reimbursed), but only to the extent the same were used to pay or 

reimburse costs or expenses constituting Servicing Expenses, fees and expenses ofthe 

Custodian and Paying Agent or Pre-Approved Charges; 

(iii) third, (x) for each Due Period ending prior to or on October 31, 

2009, to pay to the Initial Member an amount equal to the Management Fee, together 

with any unpaid portion ofthe Management Fee for any prior Due Period (in each case 

net of any amounts set off against Loan Proceeds for servicing fees owing to any Existing 

Servicer), and (y) for each Due Period commencing on or after November 1, 2009, to pay 

to the Managing Member an amount equal to the Management Fee, together with any 

unpaid portion ofthe Management Fee for any prior Due Period (in each case net of any 

amounts set off against Loan Proceeds for servicing fees owing to any servicer); 

(iv) fourth, to pay to the Purchase Money Note Guarantor the full 

amount of the Purchase Money Note Guaranty Fee together with any accrued interest 

thereon then due and payable; 

(v) fifth, to pay any reimbursement amounts together with any accrued 

interest thereon, due and payable as ofthe Determination Date for the applicable Due 

Period to the Purchase Money Note Guarantor pursuant to the Reimbursement and 

Security Agreement for previous payments made by it under the Purchase Money Note 

Guaranty; 

(vi) sixth, to pay the aggregate amount ofinterest accrued through and 

including the Determination Date for the applicable Due Period and unpaid on the 

Purchase Money Note; 

(vii) seventh, to fund any Liquidity Reserve Account established by the 

Company as and to the extent permitted by Section 3.3 of this Agreement; and 

(viii) eighth, all remaining Interest Proceeds shall be paid to the Initial 

Member and the Private Owner in accordance with Section 6.6 ofthe LLC Operating 

Agreement, subject to Section 10.2 ofthe Reimbursement and Security Agreement; 

For purposes ofitem (a)(iii)(y) above, in the event that a predecessor Managing Member has 

been removed pursuant to Section 3.2 ofthe LLC Operating Agreement, (x) if such removal 

occurred on a date other than the first day or the last day of a given Due Period, then the amount 

ofthe Management Fee payable for such Due Period shall be allocated between the current 

Managing Member and the predecessor Managing Member pro rata on the basis ofthe number 

of days during such Due Period on which each of them respectively served as Managing Member 

and (y) ifthere are Interest Proceeds remaining after payment ofthe Management Fee to the 

current Managing Member for the applicable Due Period and prior Due Periods (giving effect to 

the preceding clause (x)), such Interest Proceeds shall be applied to the payment ofthe unpaid 

portion ofthe Management Fee, if any, payable to such predecessor Managing Member for the 

25 

Franklin- Custodial and Paying Agency Agreement 

8545894.8 
applicable Due Period and all prior Due Periods (giving effect to the preceding clause (x)) before 

any remaining Interest Proceeds are applied to payment ofthe amounts specified in items (a)(iv) 

through (viii) above. 

(b) Without limiting any other applicable provision herein regarding the payment of 

Principal Proceeds, on each Distribution Date Principal Proceeds, net of amounts used to pay 

Servicing Expenses or Pre-Approved Charges during the applicable Due Period to the extent not 

paid from Interest Proceeds, will be distributed in the following order ofpriority: 

(i) first, ifthere are any outstanding amounts due and payable under 

items (a)(i) through (vi) above, then to such items in the order ofpriority set forth therein; 

(ii) second: 

(A) if each Performance Test has been satisfied for such 

Distribution Date, eighty-five percent (85%) ofthe remaining amount ofPrincipal 

Proceeds shall be utilized to pay down principal on the Purchase Money Note; or 

(B) if any Performance Test is not satisfied on the 

Determination Date prior to such Distribution Date, all ofthe remaining amount of 

Principal Proceeds shall be utilized to pay down principal on the Purchase Money Note 

until the occurrence of a Determination Date on which all Performance Tests are met or 

until the balance due and payable on such Purchase Money Note is reduced to zero; 

(iii) third, to fund any Liquidity Reserve Account established by the 

Company as and to the extent permitted by Section 3.3 of this Agreement; and 

(iv) fourth, all remaining Principal Proceeds shall be paid to the Initial 

Member and the Private Owner in accordance with Section 6.6 of the LLC Operating 

Agreement, subject to Section 10.2 ofthe Reimbursement and Security Agreement. 

Section 5.2 Notices ofPavment Failure. The Paying Agent shall deliver prompt 

written notice to the Company and Secured Party in the event that it fails to receive in full the 

amount required to be paid by the Company, which notice shall include a statement that the 

required payment was not made by the Company in full and shall set forth the amount ofsuch 

required payment and in the case ofreceipt of a partial payment, the amount ofsuch partial 

payment. 

ARTICLE VI 


CUSTODIAL DOCUMENTS 


Section 6.1 Delivery of Custodial Documents. 

(a) Delivery. As soon as practical after October 9, 2009, the Company shall deliver 

or cause to be delivered the Custodial Documents to the Custodian at the office of the Custodian 

at Citibank, N.A., Document Custodian, 5280 Corporate Drive, Frederick, Maryland 21703 (the 

"Office"). 

26 

Franklin- Custodial and Paying Agency Agreement 

8545894.8 
(b) Collateral Certificate; Exceptions. The Custodian shall make available during 

normal business hours, and at such other hours as may be reasonable in the circumstances, to the 

Company (and representatives of the Company and, ifthe Company so determines, the Receiver) 

an office space at the Office that is sufficient to accommodate up to six ( 6) people to review the 

Custodial Documents with representatives of the Custodian for a period ofnot more than ten (10) 

days prior to the delivery ofpossession ofthe same to the Custodian. Within thirty (30) days 

after delivery of the Custodial Documents to the Custodian, the Custodian shall execute and 

deliver to the Company and the Secured Party a certificate, substantially in the form annexed 

hereto as Exhibit B, to the effect that the Custodian has received and reviewed the Custodial 

Documents and attaching a Loan Schedule and Exception List ("Collateral Certificate"). In 

reviewing the documents provided with respect to a Loan, the Custodian shall examine the same 

in accordance with the procedures set forth on Exhibit H hereto and to determine, with respect to 

each such document, whether it (i) appears regular on its face (i.e., is not mutilated, damaged, 

tom, defaced or otherwise physically altered), (ii) relates to such Loan, (iii) has been executed by 

the named parties thereon, (iv) where applicable, purports to be recorded, and (v) appears to be 

what it purports to be. 

(c) Custodial Documents. For each Loan and REO Property, to the extent applicable, 

the Custodial Documents shall include the following: 

(i) the original Note bearing all intervening endorsements and 

endorsed "Pay to the order of Franklin Venture, LLC, without recourse" and signed in the 

name of the Federal Deposit Insurance Corporation as Receiver for Franklin Bank, 

S.S.B., and an allonge providing for the endorsement ofthe Note and endorsed "Pay to 

the order of without recourse" and signed by the Company as the last 

endorsee; and in the event that the original Note is not available, a fully executed 

Assignment and Lost Instrument Affidavit in the form ofExhibit D to the Contribution 

Agreement: · 

(ii) the original Mortgage with evidence ofrecording thereon, or a 

certified copy thereof from the applicable Recording Office, or a copy thereof together 

with an officer's certificate ofthe related Borrower, title company, escrow agent or 

closing attorney certifying that such represents a tme and correct copy ofthe original and 

that such original has been submitted for recordation in the applicable Recording Office; 

(iii) the originals of all assumption, modification, consolidation or 

extension agreements (if any) with evidence ofrecording thereon, or certified copies 

thereof from the applicable Recording Office, or copies thereof together with a 

certification by or other similar evidence from the applicable Recording Office or an 

officer's certificate ofthe related Borrower, title company, escrow agent or closing 

attorney certifying that such represents a tme and correct copy ofthe original and that 

such original has been submitted for recordation in the applicable Recording Office; 

(iv) the REO Property Files; 

(v) except in the case of any MERS Designated Loan, the original 

Mortgage Assignment in blank for each Loan, in form and substance acceptable for 

27 

Franklin- Custodial and Paying Agency Agreement 

8545894.8 
recording and signed in the name of (x) the Federal Deposit Insurance Corporation as 

Receiver for Franklin Bank, S.S.B. in the case ofMortgage Assignment to the Company, 

and (y) the Company, in the case ofMortgage Assignment to the Secured Party; 

(vi) except in the case of any MERS Designated Loan, the originals of 

all intervening Mortgage Assignments (if any) with evidence ofrecording thereon, 

showing an unbroken chain oftitle from the originator thereof to the Company, or 

certified copies thereof from the applicable Recording Office, or copies thereof together 

with an officer's certificate ofthe related Borrower, title company, escrow agent or 

closing attorney certifying that such represents a true and correct copy of the original and 

that such original has been submitted for recordation in the applicable Recording Office; 

(vii) the original attorney's opinion oftitle and abstract of title or the 

original mortgage title insurance policy or, if the original mortgage title insurance policy 

has not been issued, the irrevocable commitment to issue the same; 

(viii) the originals of all Collateral Documents executed in connection 

with the Loan, if available; 

(ix) Uniform Commercial Code financing statements with recording 

information thereon from the Recording Offices if necessary to perfect the security 

interest ofthe Loan under the Uniform Commercial Code; 

(x) solely with respect to each MERS Designated Loan, a MERS 

Report; and 

(xi) any bailee letters regarding any Notes or other Custodial 

Documents held by the bailee. 

(d) Supplemental Deliveries. The Company agrees that it shall deliver or cause to be 

delivered to the Custodian (i) any and all additional Custodial Documents with respect to a Loan 

within ten (1 0) days following the execution and delivery of any such instrument and (ii) any and 

all Custodial Documents with respect to any REO Property within ten (1 0) days following 

receipt of any such instrument. All such deliveries of Custodial Documents pursuant to this 

Section 6.l(d) shall be accompanied by a certificate in the form of Exhibit C (a "Supplemental 

Delivery Certificate"), prepared by an Authorized Representative ofthe Company, itemizing 

the Custodial Documents being delivered to the Custodian in such delivery and identifying the 

Loan or REO Property with respect to which each such Custodial Document relates. After the 

receipt thereof, the Custodian shall (A) examine the additional Custodial Documents provided 

with respect to a Loan or the REO Property, as the case may be, in accordance with the review 

procedures set forth on Exhibit H (the "Review Procedures") and, to determine, with respect to 

each such document, whether it (i) appears regular on its face (i.e., is not mutilated, damaged, 

tom, defaced or otherwise physically altered), (ii) relates to such Loan or REO Property, (iii) has 

been executed by the named parties thereon, (iv) where applicable, purports to be recorded, and 

(v) appears to be what it purports to be, and (B) ensure that all such Custodial Documents with 

respect to a Loan are placed in the file for the related Loan. In the event the Custodian 

determines that the Supplemental Delivery Certificate is inaccurate, the Custodian shall so notify 

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Franklin - Custodial and Paying Agency Agreement 

8545894.8 
the Company in writing no later than the first Business Day following its receipt ofthe 

Supplemental Delivery Certificate. Within 7 Business Days after receipt ofthe additional 

Custodial Documents by the Custodian, the Custodian shall provide the Company (with a copy 

to the Secured Party) with a Collateral Certificate , to the effect that the Custodian has received 

and reviewed the additional Collateral Documents and attaching a revised Loan Schedule and 

Exception List. 

(e) Loan Schedules; Exception Lists; Review Procedures. Each Loan Schedule and 

Exception List shall list all Exceptions using such codes as shall be in form and substance agreed 

to by the Custodian and the Company. Each Loan Schedule and Exception List delivered by the 

Custodian to the Company shall supersede and cancel the Loan Schedule and Exception List 

previously delivered by the Custodian to the Company hereunder, and shall replace the then 

existing Loan Schedule and Exception List to be attached to the Collateral Certificate. 

Notwithstanding anything to the contrary set forth herein, in the event that the Loan Schedule 

and Exception List attached to the Collateral Certificate is different from the most recently 

delivered Loan Schedule and Exception List, then the most recently delivered Loan Schedule and 

Exception List shall control and be binding upon the parties hereto. The delivery of each Loan 

Schedule and Exception List to the Company shall constitute the Custodian's representation that, 

other than the Exceptions listed as part ofthe last delivered Loan Schedule and Exception List: 

(i) all documents required to be delivered in respect of a Loan or REO Property pursuant to 

Section 6.1 (c) ofthis Agreement have been delivered and are in the possession ofthe Custodian 

as part ofthe Custodial Documents, (ii) all such documents have been reviewed and examined by 

the Custodian in accordance with the review procedures specified on Exhibit H and in this 

Agreement and appear on their face to be regular and to relate to such Loan or REO Property and 

to satisfy (except in the case of a MERS Designated Loan) the requirements set forth in Section 

6.1(c) ofthis Agreement, (iii) subject to the provisions of Section 7.2(b), each Loan (except in 

the case of a MERS Designated Loan) identified on such Loan Schedule and Exception List is 

being held by the Custodian as the bailee for the Company and (iv) subject to the provisions of 

Section 7 .2(b), each MERS Designated Loan is being held by MERS® as the nominee for the 

Company. In connection with a Loan Schedule and Exception List delivered hereunder by the 

Custodian, the Custodian shall make no representations as to and shall not be responsible for 

verifying, except as set forth in Section 6.1(b) ofthis Agreement, (A) the validity, legality, 

enforceability, due authorization, recordability, sufficiency, or genuineness of any ofthe 

Custodial Documents, or (B) the collectibility, insurability, effectiveness or suitability of any 

such Loan or REO Property. 

Section 6.2 Examination ofCustodian Files; Copies. 

(a) Upon reasonable prior written notice to the Custodian, the Company and the 

Secured Party and their respective agents, accountants, attorneys and auditors, and any other 

Persons designated by the Company or the Secured Party, as applicable, in writing as authorized 

to access and review the Custodial Documents, shall be permitted during normal business hours 

to examine the Custodial Documents. 

(b) Upon the request ofthe Company or the Secured Party, and at the cost and 

expense ofthe requesting party, the Custodian shall provide copies of any requested Custodial 

29 

Franklin -Custodial and Paying Agency Agreement 

8545894.8 
Documents; provided, however, the requesting party shall reimburse the Custodian for the actual, 

reasonable and customary costs incurred in providing copies ofsuch custodial documents. 

Section 6.3 Shipment of Custodial Documents. Prior to any shipment of any 

Custodial Documents hereunder, the Company shall deliver to the Custodian written instructions 

as to the method ofshipment and the shipper that the Custodian is to utilize in connection with 

the transmission of such Custodial Documents. The Company shall arrange for the provision of 

such services at its sole cost and expense (or, at the Custodian's option, reimburse the Custodian 

for all costs and expenses incurred by the Custodian consistent with such instructions) and will 

maintain such insurance against loss or damage to the Custodial Documents as the Company 

may deem appropriate. It is expressly agreed that in no event shall the Custodian have any 

liability for any losses or damages to any Person, including the Company, arising out of actions 

ofthe Custodian pursuant to this Section 6.3 consistent with the instructions of the Company. In 

the event that the Custodian does not receive such written instructions, the Custodian shall be 

authorized and shall be indenmified as provided herein to utilize a nationally recognized courier 

serv1ce. 

ARTICLE VII 


CUSTODIAN 


Section 7.1 Appointment ofthe Custodian. Subject to the terms and conditions of this 

Agreement, the Company hereby appoints the Bank to perform the duties ofthe Custodian, and 

the Custodian hereby accepts such appointment, to act as the Company's agent, custodian and 

bailee to hold and maintain custody ofthe Custodial Documents. 

Section 7.2 Obligations ofthe Custodian. 

(a) Maintenance ofCustody. Subject to the provisions of Section 7.2(b), the 

Custodian shall (i) hold and maintain continuous custody of all Custodial Documents received by 

it in trust for and for the benefit ofthe Company in facilities that are secure and fire resistant in 

accordance with industry standards, (ii) act with the same degree of care and skill that the 

Custodian exercises with respect to any loan files relating to similar loans owned, serviced or 

held as custodian by the Custodian and, in any event, in accordance with customary standards for 

such custody, (iii) reflect in its records the interest of the Company therein, (iv) make disposition 

of the Custodial Documents only in accordance with the provisions ofthis Agreement, and (v) 

subject to the provisions of Section 7 .2(b), hold all Custodial Documents received by it for the 

exclusive use and benefit of the Company, and make disposition thereof only in accordance with 

written instructions furnished by the Company. 

(b) Pledge of Loans and REO Property to the Secured Party. As security for certain 

obligations ofthe Company to the Secured Party under the Reimbursement and Security 

Agreement, the Company has pledged all ofits rights, title and interest in and to the Loans, the 

REO Property and the Custodial Documents to the Secured Party. Accordingly, notwithstanding 

anything to the contrary contained in this Agreement, the Custodian acknowledges and agrees 

that it holds possession of the Notes and the other Custodial Documents for the Secured Party's 

benefit pursuant to Section 9-313( c) ofthe Uniform Commercial Code, and the Custodian shall 

mark its records to reflect the pledge of the Loans, the REO Property and the Custodial 

30 Franklin~ Custodial and Paying Agency Agreement 

8545894.8 
Documents by the Company to the Secured Party. The Custodian's records shall reflect the 

pledge of the Loans, the REO Property and the Custodial Documents by the Company to the 

Secured Party until such time as the Custodian receives written instructions from the Company, 

including a certification that it is entitled pursuant to the Reimbursement and Security 

Agreement to request the release of the Custodial Documents being requested for release and that 

the Loans and the REO Property are no longer pledged by the Company to the Secured Party, at 

which time the Custodian shall change its records to reflect the release ofthe pledge of the 

Loans, the REO Property and the Custodial Documents and that the Custodian is holding the 

Loans, REO Property and the Custodial Documents as custodian for, and for the benefit of, the 

Company; provided, however, that, subject to the provisions of Section 7.2(d), such pledge shall 

not affect the right of the Custodian to rely on instructions from the Company hereunder. The 

Custodian shall (i) make a written request for the return of all Collateral Documents that are 

removed from the Custodian's possession within fifteen (15) days after their removal (if the 

same are not returned before such time) and thereafter, continue to use commercially reasonable 

efforts to obtain the return of such removed Collateral Documents until such time as the 

Collateral Documents are returned, and (ii) provide on a monthly basis to the Secured Party and 

the Company an aging report identifying the released (and uureturned) Collateral Documents. 

(c) Qualification To Conduct Business. Nothing contained in this Agreement shall be 

construed to require the Custodian to qualify to do business in any jurisdiction other than (i) any 

jurisdiction in which any Custodial Document is or may be held by the Custodian from time to 

time under this Agreement, or (ii) any jurisdiction in which the ownership ofits property or the 

conduct ofits business requires such qualification and in which the failure to qualify could have 

a material adverse effect on the Custodian or its property or business or on the ability of the 

Custodian to perform its duties and obligations under this Agreement. 

(d) Events ofDefault Under the Reimbursement and Security Agreement. Upon the 

Custodian's receipt from the Secured Party ofwritten notice at its Office that an Event ofDefault 

under the Reimbursement and Security Agreement (and as defined therein) has occurred and is 

continuing, the Custodian shall promptly notify the Secured Party in writing and seek 

instructions from (and take instructions only from) the Secured Party as to any action to be taken 

by the Custodian hereunder. 

(e) Third Party Demands. In the event that (i) the Company or the Custodian shall be 

served by a third party with any type of levy, attachment, writ or court order with respect to any 

Custodial Document or (ii) a third party shall institute any court proceeding by which any 

Custodial Document shall be required to be delivered otherwise than in accordance with the 

provisions ofthis Agreement, the party receiving such service shall promptly deliver or cause to 

be delivered to the other parties to this Agreement copies of all court papers, orders, documents 

and other materials concerning such proceedings. The Custodian shall, to the extent permitted 

by law, continue to hold and maintain all ofthe Custodial Documents that are the subject ofsuch 

proceedings pending a final, nonappealable order of a court of competent jurisdiction permitting 

or directing disposition thereof. Upon final determination of such court, the Custodian shall 

dispose of such Custodial Documents as directed by the Company, which shall give a direction 

consistent with such court determination. 

31 

Franklin- Custodial and Paying Agency Agreement 

8545894.8 
(f) Release of Custodial Documents. Subject to the provisions of Section 7.2(e), the 

Custodian shall retain the Custodial Documents in its possession and custody at all times during 

the term hereofunless any one ofthe following events has occurred: 

(i) Ifthe Custodian has resigned or has been removed in accordance 

with the provisions of Section 9.1, the Custodian shall deliver the Custodial Documents 

to the successor Custodian in accordance with Section 9 .1. 

(ii) Ifthe Custodian has received a notice from an Authorized 

Representative ofthe Company stating that the Company has received all amounts due 

under a Loan, or a discounted payoff as payment in full ofsuch Loan, the Custodian shall 

release the related Custodial Documents to the Company or to the Managing Member in 

accordance with the instructions provided in such notice. 

(iii) Ifthe Custodian has received notice from an Authorized 

Representative ofthe Company that the Company or the Managing Member needs the 

Custodial Documents in order to foreclose on a Mortgaged Property, accept a deed in lieu 

thereof or modify or restructure the terms thereof, the Custodian shall release the related 

Custodial Documents to the Company or to the Managing Member in accordance with 

the instructions provided in such notice. 

(iv) Ifthe Custodian has received notice from an Authorized 

Representative ofthe Company that the Company has agreed to sell a Loan or the 

Collateral, the Custodian shall deliver the related Custodial Documents to the Company 

or to the Managing Member in accordance with the instructions provided in such notice. 

(g) No Other Duties. The Custodian shall have no duties or responsibilities as 

Custodian except those that are specifically set forth herein and shall not be liable except for the 

performance ofsuch duties and obligations. No implied covenants or obligations shall be read 

into this Agreement. 

(h) No Investigation. The Custodian shall be under no obligation to make any 

investigation into the facts or matters stated in any resolution, certificate, statement, 

acknowledgement, consent, order or other document that is included in the Custodial 

Documents. 

(i) Survival. The provisions ofthis Section 7.2 shall survive the resignation or 

removal ofthe Custodian and Paying Agent and the termination ofthis Agreement. 

(j) Cooperation. The Company shall cooperate and use commercially reasonable 

efforts to provide any additional documentation or information reasonably requested by the 

Custodian in performing its duties and obligations hereunder. 

ARTICLE VIII 


FEES AND EXPENSES 


Section 8.1 Fees and Expenses. The Bank shall charge such fees for its services and 

be reimbursed for such ofits expenses under this Agreement as are set forth on Exhibit G, which 

32 

Franklin -Custodial and Paying Agency Agreement 

8545894.8 
fees and expenses must be reasonable and customary. The Company shall pay such fees and 

expenses pursuant to the Priority ofPayments. The provisions of this Section 8.1 shall survive 

any resignation or removal ofthe Bank as Custodian or Paying Agent or the termination or 

assignment ofthis Agreement. 

ARTICLE IX 


REMOVAL OR RESIGNATION 


Section 9 .I Removal or Resignation of Custodian and Paying Agent. 

(a) Resignation. Subject to the provisions of Section 9.l(c). the Bank may at any 

time resign and terminate its obligations as Custodian and Paying Agent under this Agreement 

upon at least sixty (60) days' prior written notice to the Company and the Secured Party. In the 

event the Bank resigns it must resign as both Custodian and Paying Agent. Promptly after 

receipt ofnotice ofthe Bank's resignation as Custodian and Paying Agent, subject to the 

provisions ofthe LLC Operating Agreement and the Reimbursement and Security Agreement as 

they relate to the Company, the Company shall appoint, by written instrument, a successor 

Custodian and Paying Agent. In the event that no successor shall have been appointed as 

Custodian and Paying Agent within such sixty ( 60) day period, the Bank may petition any court 

of competent jurisdiction to appoint a successor Custodian and Paying Agent. 

(b) Removal. Subject to the provisions of Section 9.l(c), the Company or the 

Secured Party may remove and discharge the Bank as Custodian and Paying Agent (or any 

successor custodian and paying agent thereafter appointed) without cause from the performance 

of its obligations under this Agreement upon at least thirty (30) days' prior written notice to the 

Bank. Promptly after the giving ofnotice ofremoval to the Bank as Custodian and Paying 

Agent, subject to the provisions ofthe LLC Operating Agreement and the Reimbursement and 

Security Agreement as they relate to the Company, the Company shall appoint, by written 

instrument, a successor Custodian and Paying Agent. 

(c) Effectiveness. Upon appointment of a successor Custodian and Paying Agent, the 

successor Custodian and Paying Agent shall execute, acknowledge and deliver an instrument 

accepting such appointment under, and agreeing to be bound by the terms of, this Agreement, at 

which time the resignation or removal ofthe predecessor Custodian and Paying Agent shall 

become effective and the successor Custodian and Paying Agent, without any further act, deed or 

conveyance, shall become fully vested with all rights, powers, duties and obligations ofthe 

Custodian and the Paying Agent under this Agreement, as if originally named Custodian and 

Paying Agent hereunder. One original counterpart of such instrument shall be delivered to each 

ofthe Company, the predecessor Custodian and Paying Agent and the successor Custodian and 

Paying Agent. 

(d) Transfer ofDocuments. In the event of any removal or resignation as Custodian 

and Paying Agent, the Bank shall promptly transfer to the successor custodian and Paying Agent, 

as directed, all Custodial Documents and funds deposited in the Accounts, and the Company and 

the Bank shall execute and deliver such instruments and do such other things as may reasonably 

be required for more fully and certainly vesting and confirming in the successor custodian and 

33 

Franklin- Custodial and Paying Agency Agreement 

8545894.8 
paying agent all rights, powers, duties and obligations ofthe Bank as Custodian and Paying 

Agent under this Agreement. 

(e) Costs. The Company shall be responsible for payment to the successor Custodian 

and Paying Agent of all fees and expenses ofthe successor Custodian and Paying Agent and any 

fees and expenses for transferring Custodial Documents and funds deposited in the Accounts to 

the successor Custodian and Paying Agent. 

ARTICLE X 


REPRESENTATIONS, WARRANTIES AND COVENANTS 


Section 10.1 Representations, Warranties and Covenants. The Bank as Custodian and 

Paying Agent and the Company, as applicable, represent and warrant to each other as follows: 

(a) it has the requisite power and authority and the legal right to execute and deliver, 

and to perform its obligations under, this Agreement, and has taken all necessary corporate 

action to authorize its execution, delivery and performance ofthis Agreement; 

(b) no consent or authorization of, filing with, or other act by or in respect of, any 

United States or non-United States national, federal, state, local or provincial or international 

government or any political subdivision of any governmental, regulatory or administrative 

authority, agency or commission, or judicial or arbitral body, and no consent of any other Person 

(including any stockholder or creditor) is required in connection with the execution, delivery, 

performance, validity or enforceability ofthis Agreement by it; 

(c) this Agreement has been duly executed and delivered on behalf ofit and 

constitutes a legal, valid and binding obligation ofit enforceable in accordance with its terms, 

except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium 

or similar laws affecting the enforcement of creditors' rights generally and by general principles 

of equity (whether enforcement is sought in a proceeding in equity or at law); and 

(d) the Bank (i) is a bank, trust company or title insurance company subject to 

supervision and examination by any federal or state regulatory authority, (ii) is experienced in 

providing services of the type required to be performed by the Bank as the Custodian and Paying 

Agent under this Agreement, (iii) is qualified and licensed to do business in each jurisdiction in 

which the Custodial Documents will be held to the extent required unless and to the extent the 

failure to be so qualified or licensed will not have a material adverse effect on the Custodian or 

its ability to perform its obligations hereunder, (iv) is not prohibited from exercising custodial 

powers in any jurisdiction in which the Custodial Documents are or will be held, (v) has 

combined capital and surplus of at least $50,000,000 as reported in its most recent report of 

condition, (vi) has the facilities to safeguard the funds deposited in the Accounts, the Loan 

Documents and other Custodial Documents, (vii) is not an Affiliate of the Company or of any 

Servicer, and (viii) is acceptable to and approved by Initial Member (such approval not to be 

unreasonably withheld, delayed or conditioned). 

Section I 0.2 Insurance. At its own expense, the Custodian and Paying Agent shall 

maintain at all times and keep in full force and effect (a) fire and other casualty insurance, (b) 

fidelity insurance, (c) theft of documents insurance, (d) forgery insurance, and (e) errors and 

34 

Franklin- Custodial and Paying Agency Agreement 

8545894.8 
om1sswns insurance. All such insurance shall be in amounts, with standard coverage and subject 

to deductibles, as are customary for insurance typically maintained by financial institutions 

which act as paying agent and as custodian of collateral substantially similar to the Custodial 

Documents. Upon written request, the Company shall be entitled to receive a certificate ofthe 

respective insurer that such insurance is in full force and effect. 

ARTICLE XI 


REPORTS 


Section 11.1 Custodian and Paving Agent Report. 

(a) The Custodian and Paying Agent shall cause to be furnished to the Managing 

Member, the Receiver and the Secured Party, no later than 12:00 noon, New York City time, on 

each Distribution Date, a report for the applicable Due Period (the "Custodian and Paying 

Agent Report") (i) with respect to the Loans and Collateral (including the Accounts setting forth 

. in reasonable detail the balances of and any investments in such Accounts as ofsuch date and all 

deposits to and disbursements, including of all Loan Proceeds, from such Accounts, including 

the date on which made, since the date ofthe previous report) held by the Custodian and Paying 

Agent pursuant to this Agreement, (ii) on the satisfaction ofthe Performance Tests, and (iii) 

containing such other information as is specified on Exhibit I. The Custodian and Paying Agent 

shall reconcile any discrepancies between the Distribution Date Report and the internal records 

of the Custodian and Paying Agent with respect to distributions from the Distribution Account 

and perform the calculations and reconciliations required to determine whether the Performance 

Tests are satisfied and to confirm the amounts distributable with respect to payments ofprincipal 

and interest on any Purchase Money Note. 

(b) The Custodian and Paying Agent Report shall be based solely on information 

included in (i) the Managing Member's Monthly Report for the applicable Due Period and 

certified by an Authorized Representative ofthe Managing Member, (ii) the Distribution Date 

Report for the applicable Due Period, and (iii) the internal records ofthe Custodian and Paying 

Agent relating to distributions from the Distribution Account. 

Section 11.2 Additional Reports. 

(a) Within two (2) Business Days after receipt of a written request ofthe Company or 

ofthe Secured Party for a Custodial Report or an updated Loan Schedule and Exception List, the 

Custodian and Paying Agent shall provide the requesting party with the Custodial Report or the 

updated Loan Schedule and Exception List, as applicable. 

(b) The Custodian and Paying Agent shall provide any additional information or 


reports relating to the Accounts and the transactions therein reasonably requested from time to 


time by the Company or the Secured Party in the case of any Account. 


Section 11.3 Company and Servicer Distribution Date Accounting. For each Due 

Period, the Company shall render or cause the Managing Member or Servicer to render to the 

Paying Agent an accounting determined as ofthe close ofbusiness on the applicable 

Determination Date and certified by an Authorized Representative ofthe Company (the 

"Distribution Date Report"). The Company shall provide the Distribution Date Report to the 

35 

Franklin- Custodial and Paying Agency Agreement 

8545894.8 
Paying Agent (i) with respect to any Due Period prior to and including the Due Period in which 

the last Servicing Transfer Date occurs, on date that is two (2) Business Days prior to the 

applicable Distribution Date, and (ii) commencing with the Due Period immediately following 

the Due Period in which the last Servicing Transfer Date occurs and for any Due Period 

thereafter, on the fifteenth (151

h) of each month after the applicable Determination Date, or if 

such day is not a Business Day, the next succeeding day that is a Business Day. The Distribution 

Date Report shall contain the following information: 

(a) the aggregate amount ofLoan Proceeds as ofthe close ofbusiness on such 

Determination Date, after giving effect to Loan Proceeds received with respect to the applicable 

Due Period; 

(b) the amount ofPrincipal Proceeds and the amount ofInterest Proceeds received 

during the applicable Due Period; and 

(c) for the Collection Account: 

(i) the amount to be transferred from the Collection Account to the 

Distribution Account which shall equal the sum of: (x) all Loan Proceeds received for the 

applicable Due Period less (y) the total amount offunds withdrawn from the Collection 

Account as permitted pursuant to Section 3.1 for the applicable Due Period; and 

(ii) the amounts payable from the Collection Account (through a 

transfer to the Distribution Account) pursuant to the Priority of Payments, specifically 

including: 

1. The amount of Working Capital Advances payable to the 

Managing Member, and if a predecessor Managing 

Member has been removed as the Managing Member 

pursuant to Section 3.2 of the LLC Operating Agreement, 

the amount of Working Capital Advances payable to such 

predecessor Managing Member, 

2. (a) For any Due Period prior to and including October 31, 

2009, the amount of Management Fee payable to the Initial 

Member, and (b) for the Due Period commencing on 

November 1, 2009 and all subsequent Due Periods, the 

amount of Management Fee payable to the Managing 

Member, and if a predecessor Managing Member has been 

removed as the Managing Member pursuant to Section 3.2 

of the LLC Operating Agreement, the amount of 

Management Fee payable to such predecessor Managing 

Member, 

3. The amount of the Purchase Money Note Guaranty Fee and 

any accrued interest thereon payable to the Purchase 

Money Note Guarantor, 

36 

Franklin- Custodial and Paying Agency Agreement 

8545894.8 
4. 	 The reimbursement amounts and any accrued interest 

thereon payable to the Purchase Money Note Guarantor for 

previous payments made by it under the Purchase Money 

Note Guaranty, 

5. 	 The amount of accrued and unpaid interest payable on the 

Purchase Money Note, 

6. 	 The amount of Interest Proceeds to be deposited in the 

Liquidity Reserve Account, 

7. 	 The amount of Interest Proceeds payable as distributions to 

the Initial Member and to the Private Owner, 

8. 	 Whether each ofthe Performance Tests have been satisfied, 

and the amount of Principal Proceeds payable as principal 

on the Purchase Money Note, 

9. 	 The amount of Principal Proceeds to be deposited in the 

Liquidity Reserve Account, and 

10. 	 The amount of Principal Proceeds payable as distributions 

to the Initial Member and to the Private Owner. 

Section 11.4 Distribution Date Instructions. Each Distribution Date Report shall 

contain instructions to the Paying Agent to withdraw on the related Distribution Date from the 

Distribution Account and pay or transfer the amounts set forth in such report in the manner 

specified, and in accordance with the priorities established, in Section 5.1 ofthis Agreement. 

Section 11.5 Books and Records. The Paying Agent shall maintain all such accounts, 

books and records as may be necessary to properly record all transactions carried out by it with 

respect to the Accounts, including the disbursement of all Loan Proceeds. The Paying Agent 

shall also maintain a complete and accurate set of files, books and records regarding the Loans 

and the Collateral. This obligation to maintain a complete and accurate set ofrecords shall 

encompass all files in the Custodian and Paying Agent's custody, possession or control 

pertaining to the Loans and the Collateral, including all Custodial Documents. The Paying 

Agent shall permit the Company and the Secured Party to examine such accounts, books and 

records that relate to any Account, provided that any such examination shall occur upon 

reasonable prior notice and during normal business hours. 

ARTICLE XII 


NO ADVERSE INTERESTS 


Section 12.1 No Adverse Interests. By execution of this Agreement, the Bank 

represents and warrants that it currently holds, and during the term ofthis Agreement shall hold, 

no adverse interest, by way ofsecurity or otherwise, in any Loan or any REO Property, and 

hereby waives and releases any such interest which it may have in any Loan or REO Property as 

ofthe date hereof. The Loans and the REO Property shall not be subject to any security interest, 

37 

Franklin- Custodial and Paying'Agency Agreement 

8545894.8 
lien or right to set-offby the Bank or any third party claiming through the Bank, and the Bank 

shall not pledge, encumber, hypothecate, transfer, dispose of, or otherwise grant any third party 

interest in, any ofthe Loans or REO Property. 

ARTICLE XIII 


LIABILITY AND INDEMNIFICATION 


Section 13.1 Liability; Indemnification. 

(a) The Company shall indemnify and hold harmless the Custodian and Paying Agent 

and the directors, officers, agents and employees ofthe Custodian and Paying Agent against any 

and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, 

expenses or disbursements of any kind or nature whatsoever, including reasonable attorney's 

fees and litigation costs, that may be imposed on, incurred by, or asserted against it or them in 

any way relating to or arising out of this Agreement or any action taken or not taken by it or 

them hereunder unless such liabilities, obligations, losses, damages, penalties, actions, 

judgments, suits, costs, expenses or disbursements were imposed on, incurred by or asserted 

against the Custodian and Paying Agent because ofthe breach by the Custodian and Paying 

Agent ofits obligations hereunder, which breach was caused by negligence, lack of good faith or 

willful misconduct on the part ofthe Custodian and Paying Agent or any of directors, officers, 

agents or employees ofthe Custodian and Paying Agent. The foregoing indemnification shall 

survive any resignation or removal ofthe Custodian and Paying Agent or the termination or 

assignment ofthis Agreement. 

(b) In the event that, the Custodian fails to produce a Custodial Document that was 

not identified as an Exception in the then controlling Loan Schedule and Exception List within 

two (2) Business Days after required or requested by the Company, and such Custodial 

Document is not outstanding pursuant to a Request for Release and Receipt in the form attached 

as Exhibit D (a "Custodial Delivery Failure"), then (i) with respect to any missing Note with 

respect to which a Custodial Delivery Failure has occurred and has continued in excess of three 

(3) Business Days, the Custodian shall promptly deliver to the Company upon request, a Lost 

Instrument Affidavit in the form attached as Exhibit E (unless the original Note shall have been 

delivered prior to such time) and (ii) with respect to any missing document related to such Loan, 

including a missing Note, (1) the Custodian shall indemnify the Company and the Secured Party 

in accordance with Section 13.1 (c) and, (2) at the Company's option, at any time the long term 

obligations of the Custodian are rated below the second highest rating category ofMoody's 

Investors Service, Inc. or Standard and Poor's Ratings Group, a division of McGraw-Hill, Inc., 

the Custodian shall obtain and maintain an insurance bond naming the Company and the Secured 

Party, and their successors in interest and assigns as loss payees, insuring against any losses 

associated with the loss of such document, in an amount equal to the then outstanding principal 

balance ofthe related Loan or such lesser amount requested by the Company in the Company's 

sole discretion. 

(c) The Custodian and Paying Agent hereby indemnifies and holds harmless the 

Company, the Secured Party and their respective directors, officers, employees, agents and 

designees, against any and all liabilities, obligations, losses, damages, penalties, actions, 

judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever, including 

38 

Franklin- Custodial and Paying Agency Agreement 

8545894.8 
reasonable attorney's fees and litigation costs, that may be imposed on, incurred by, or asserted 

against it or them in any way relating to or arising out of a Custodial Delivery Failure or the 

Custodian and Paying Agent's negligence, lack of good faith or willful misconduct or any breach 

of any ofthe conditions, representations, warranties or obligations ofthe Custodian and Paying 

Agent contained herein; provided that in no event shall the Custodian and Paying Agent or any 

of directors, officers, agents or employees of the Custodian and Paying Agent have any liability 

with respect to any special, indirect, punitive or consequential damages suffered by the 

Company. The foregoing indemnification shall survive any termination or assignment of this 

Agreement. 

ARTICLE XIV 


CUSTODIAN AND PAYING AGENT 


Section 14.1 Reliance ofCustodian and Paving Agent. 

(a) Documents; Communications. The Custodian and Paying Agent may rely 

conclusively on any request, instruction, certificate, direction, receipt, demand, consent, 

resolution, statement, instrument, opinion, report, notice or other document or communication 

furnished to the Custodian and Paying Agent hereunder or under any Loan Document that the 

Custodian and Paying Agent believes in good faith (i) to have been signed or presented by an 

Authorized Representative and (ii) conforms in form to the requirements of this Agreement; 

provided, however, that in the case of any request, instruction, certificate, direction, receipt, 

demand, consent, resolution, statement, instrument, opinion, report, notice or other document or 

communication which by any provision hereof is specifically required to be furnished to the 

Custodian and Paying Agent, the Custodian and Paying Agent shall be under a duty to examine 

the same in accordance with the requirements ofthis Agreement and any Loan Document. 

(b) Requested Instructions. Subject to the provisions of Section 7.2(d), in which case 

the Custodian and Paying Agent shall take instructions only from the Secured Party, ifthe 

Custodian and Paying Agent requests instructions from the Company with respect to any act, 

action or failure to act in connection with this Agreement, the Custodian and Paying Agent shall 

be entitled (without incurring any liability therefor to the Company, the Secured Party or any 

other Person) to refrain from taking such action and continue to refrain from acting unless and 

until the Custodian and Paying Agent shall have received written instructions from the Company 

(or the Secured Party, as the case may be). 

(c) Certificates. Whenever the Custodian and Paying Agent shall deem it necessary 

or desirable that a matter be proved or established in connection with taking or omitting any 

action by it hereunder, such matter (unless other evidence in respect thereof be herein 

specifically prescribed) may, in the absence of gross negligence or willful misconduct on the part 

ofthe Custodian and Paying Agent, be deemed to be conclusively proved or established by a 

certificate of an Authorized Representative of the relevant Party delivered to the Custodian and 

Paying Agent. 

(d) Reliance on Experts. The Custodian and Paying Agent may consult with and 

obtain advice from reputable and experienced outside counsel, certified public accountants which 

are nationally recognized, or other experts and the advice or any opinion ofsuch counsel, 

39 

Franklin - Custodial and Paying Agency Agreement 

8545894.8 
accountants or other experts shall be full and complete authorization and protection in respect of 

any action taken or omitted by it hereunder in good faith and in accordance with such advice or 

opinion of counsel, accountants or other experts. 

(e) Limited Risk. None ofthe provisions of this Agreement shall require the 

Custodian and Paying Agent to expend or risk its own funds or otherwise to incur any liability, 

financial or otherwise, in the performance of any ofits duties hereunder, or in the exercise of any . 

ofits rights or powers, ifit shall have reasonable grounds for believing that repayment ofsuch 

funds or indemnity satisfactory to it against such risk or liability is not assured to it. 

(f) Merger or Consolidation. Any corporation into which the Custodian and Paying 

Agent may be merged or converted or with which it may be consolidated, or any corporation 

resulting from any merger, conversion or consolidation to which the Custodian and the Paying 

Agent shall be a party, or any corporation succeeding to the business ofthe Custodian and 

Paying Agent, except for any such Person who is or, upon consummation ofsuch transaction, 

will be an Affiliate of the Company or any Servicer, shall be the successor ofthe Custodian and 

Paying Agent hereunder without the execution or filing of any paper with any party hereto or any 

further act on the part of any ofthe parties hereto except where an instrument oftransfer or 

assigrnnent is required by law to effect such succession, anything herein to the contrary 

notwithstanding; provided that any such successor shall satisfy the representations, warranties 

and covenants set forth in Section 10.1 ofthis Agreement. The Custodian and Paying Agent or 

successor Custodian and Paying Agent shall provide the Company with written notice prior to or 

within ten (1 0) days after the consummation of any such transaction. At no time shall an 

Affiliate ofthe Company or any Servicer be the Custodian and Paying Agent under this 

Agreement. 

ARTICLE XV 


TAXES 


Section 15.1 Tax Reports. The Custodian and Paying Agent shall not be responsible 

for the preparation or filing of any reports or returns relating to federal, state or local income 

taxes with respect to this Agreement, other than in respect of the Custodian and Paying Agent's 

compensation or for reimbursement of expenses. 

Section 15.2 Stamp and Other Similar Taxes. The Company agrees to indenmify and 

hold harmless the Custodian and Paying Agent from, and shall reimburse the Custodian and 

Paying Agent for, any present or future claim for liability for any stamp or other similar tax and 

any penalties or interest with respect thereto, which may be assessed, levied or collected by any 

jurisdiction in connection with this Agreement. The obligations of the Company under this 

Section 15.2 shall survive the termination ofthe other provisions ofthis Agreement. 

ARTICLE XVI 

TERM 

Section 16.1 Term. This Agreement shall terminate upon (a) the first to occur of (i) the . 

final payment or other liquidation of all ofthe Loans and (ii) disposition of all Collateral 

(including any REO Property), and (b) the release and delivery to the Company of all Custodial 

40 

Franklin -Custodial and Paying Agency Agreement 

8545894.8 
Documents held by or in the possession ofthe Custodian in accordance with the terms ofthis 

Agreement. Notwithstanding anything to the contrary herein, this Agreement may be terminated 

without cause upon at least thirty (30) days' prior written notice to the Custodian and Paying 

Agent, by either the Company or the Secured Party. 

ARTICLE XVII 


AUTHORIZED REPRESENTATIVES 


Section 17.1 Authorized Representatives. Each individual designated as an Authorized 

Representative of any Person is authorized to give and receive notices, requests and instructions 

and to deliver certificates and documents in connection with this Agreement on behalf ofsuch 

Person, and the specimen signature for each such Authorized Representative, initially authorized 

hereunder, is set forth on Exhibit F. From time to time, any Person may, by delivering to the 

other parties hereto a revised copy of Exhibit F, change such Person's Authorized Representative 

(and amend this Agreement to so provide), but until a new Exhibit F with the information 

regarding the successor Authorized Representative is delivered to a party in accordance with this 

Agreement, that party shall be entitled to rely conclusively on the Exhibit F last delivered 

hereunder. 

ARTICLE XVIII 


NOTICES 


Section 18.1 Notices. All demands, notices or other communications required or 

permitted to be given or delivered by any party hereto or the Secured Party under or by reason of 

the provisions ofthis Agreement shall be in writing and shall be given by registered or certified 

mail (postage prepaid) or delivered by hand or by a nationally recognized air courier service, 

directed to the address of each party set forth below: 

Ifto the Bank: 

Citibank, N.A. 


Agency & Trust 


388 Greenwich Street, 141

h Floor 


New York, NY 10013 · 


Attention: Cirino Emanuele 


Tel: (212) 816-5614 


Ifto the Company: 

Franklin Venture, LLC 


4282 North Freeway 


Fort Worth, Texas 76137 


Attention: Dennis G. Stowe 


Tel: (817) 321-6001 


with a copy to: 

K&L Gates LLP 

41 

Franklin- Custodial and Paying Agency Agreement 

8545894.8 
1601 K Street, N.W. 


Washington, DC 20006 


Attention: Phillip J. Kardis, II 


Tel: (202) 778-9401 


Ifto the Secured Party: 

Director, Division ofFinance 


c/o Federal Deposit Insurance Corporation 


3501 Fairfax Drive (Room VS-4088) 


Arlington, VA 22226 


Attention: Bret D. Edwards 


Tel: (703) 562-6101 


with a copy to: 

Senior Counsel 

FDIC Legal Division 

Litigation and Resolutions Branch, Receivership Section 

Special Issues Unit 

3501 Fairfax Drive (Room E-7056) 

Arlington, VA 22226 

Attention: David Gearin 

Tel: (703) 562-2430 

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. From time to time, any Person may designate a new 

address for purposes ofnotice hereunder by notice to such effect to the other Persons identified 

above. 

ARTICLE XIX 


MISCELLANEOUS 


Section 19.1 Governing Law. This Agreement shall be governed by and construed in 

accordance with the laws of the State ofNew York without reference to any rules of conflicts of 

laws that might refer the governance or construction of this Agreement to the law of any other 

jurisdiction. 

Section 19.2 Jurisdiction; Venue and Service. Each ofthe Company and the Bank, 

hereby irrevocably and unconditionally: 

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

party with respect to this Agreement may be instituted, and that any suit, action or proceeding by 

it against any other party with respect to this Agreement shall be instituted, only in the Supreme 

Court of the State ofNew York, County ofNew York, or the U.S. District Court for the Southern 

District ofNew York or the United States District Court for the District of Columbia (and 

42 

Franklin ~Custodial and Paying Agency Agreement 

8545894.8 
appellate courts from any ofthe foregoing) as the party instituting such suit, action or proceeding 

may in his or its sole discretion elect, (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 party 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 19.2(a) may be effected by the mailing of copies thereof by 

registered or certified mail, postage prepaid, to the Company or the Bank, as applicable, at its 

address for notices pursuant to Article VIII (with copies to such other Persons as specified 

therein); provided, however, that nothing contained in this Section 19.2 shall affect the ability of 

the Company or the Bank 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 ofvenue 

of any suit, action or proceeding arising out of or relating to this Agreement brought in any court 

specified in Section 19.2(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; and 

(d) agrees that nothing contained in this Section 19.2 shall be construed to constitute 

consent to jurisdiction by the Initial Member, the Failed Bank, the Receiver or the FDIC in any 

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

Section 19.3 Waiver ofJurv Trial. EACH OF THE COMPANY AND THE BANK 

AND HEREBY IRREVOCABLY AND UNCONDITIONALLY WANES ANY RIGHT IT 

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

TO THIS AGREEMENT AND AGREES THAT ANY SUCH DISPUTE SHALL BE TRIED 

BEFORE A JUDGE SITTING WITHOUT A JURY. 

Section 19.4 Counterparts. This Agreement may be executed in two (2) or more 

counterparts, each ofwhich shall be deemed an original but all ofwhich together shall constitute 

but one and the same agreement. This Agreement and any amendments hereto, to the extent 

signed and delivered by facsimile or other electronic means, shall be treated in all manner and 

respects as an original agreement and shall be considered to have the same binding legal effect as 

ifit were the original signed version thereof delivered in person. No signatory to this Agreement 

shall raise the use of a facsimile machine or other electronic means to deliver a signature or the 

fact that any signature or agreement was transmitted or communicated through the use of a 

facsimile machine or other electronic means as a defense to the formation or enforceability of a 

contract and each such Person forever waives any such defense. 

Section 19.5 Severability. Any provision ofthis Agreement which is prohibited or 

unenforceable in any jurisdiction shall be ineffective, but such ineffectiveness shall be limited as 

follows: (i) ifsuch provision is prohibited or unenforceable in such jurisdiction only as to a 

particular Person or Persons and/or under any particular circumstance or circumstances, such 

provision shall be ineffective, but only in such jurisdiction and only with respect to such 

particular Person or Persons and/or under such particular circumstance or circumstances, as the 

43 

Franklin -Custodial and Paying Agency Agreement 

8545894.8 
case may be; (ii) without limitation of clause (i), such provision shall in any event be ineffective 

only as to such jurisdiction and only to the extent ofsuch prohibition or unenforceability, and 

such prohibition or unenforceability in such jurisdiction shall not invalidate or render 

unenforceable such provision in any other jurisdiction; and (iii) without limitation of clauses (i) 

or (ii), such ineffectiveness shall not invalidate any of the remaining provisions of this 

Agreement. Without limitation of the preceding sentence, it is the intent of the parties to this 

Agreement that in the event that in any court proceeding, such court determines that any 

provision ofthis Agreement is prohibited or unenforceable in any jurisdiction (because ofthe 

duration or scope (geographic or otherwise) ofsuch provision, or for any other reason) such 

court shall have the power to, and shall, (x) modify such provision (including, to the extent 

applicable, by limiting the duration or scope of such provision and/or the Persons against whom, 

and/or the circumstances under which, such provision shall be effective in such jurisdiction) for 

purposes of such proceeding to the minimum extent necessary so that such provision, as so 

modified, may then be enforced in such proceeding and (y) enforce such provision, as so 

modified pursuant to clause (x), in such proceeding. Nothing in this Section 19.4 is intended to, 

or shall, limit (I) the ability of any party to this Agreement to appeal any court ruling or the 

effect of any favorable ruling on appeal or (2) the intended effect of Section 19 .1. 

Section 19.6 Compliance With Law. Except as otherwise specifically provided herein, 

each party to this Agreement shall, at its own cost and expense, obey and comply with all 

applicable laws, as they may pertain to such party's performance ofits obligations hereunder. 

Section 19.7 Entire Agreement. This Agreement contains the entire agreement between 

the Company and the Custodian and Paying Agent with respect to the subject matter hereof and 

supersedes any and all other prior agreements, whether oral or written. 

Section 19.8 Assignment; Binding Effect. Except as is permitted pursuant to the 

provisions ofthis Agreement providing for successor Custodians and Paying Agents, the 

Custodian and Paying Agent shall not assign or delegate this Agreement or any ofits rights or 

obligations hereunder without the prior written consent ofthe Company and any such purported 

assignment or delegation without such consent shall be void ab initio. This Agreement shall be 

binding on and inure to the benefit ofthe parties hereto, and inure to the benefit of the Secured 

Party as third party beneficiary hereunder, and in each case their respective successors and 

permitted assigns, and no other Person or Persons shall have any rights or remedies under or by 

reason ofthis Agreement. 

Section 19.9 Rights Cumulative. The rights, powers and remedies ofthe Custodian and 

Paying Agent and the Company under this Agreement shall be in addition to all rights, powers 

and remedies given to the Custodian and Paying Agent and the Company by virtue of any statute 

or rule oflaw, or any other agreement, all ofwhich rights, powers and remedies shall be 

cumulative and may be exercised successively or concurrently. 

Section 19.10 Amendments. Subject to the requirements ofthe LLC Operating 

Agreement as they relate to the Company, this Agreement may be amended from time to time by 

written agreement signed by the Company and the Custodian and Paying Agent; provided that 

the parties obtain the Secured Party's prior written consent to any such amendment. 

44 

Franklin- Custodial and Paying Agency Agreement 

8545894.8 
Section 19.11 Headings. Paragraph titles or captions contained in this Agreement are 

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

describe the scope ofthis Agreement or the intent of any provisions hereof. All section and 

paragraph references contained herein shall refer to sections and paragraphs in this Agreement 

unless otherwise specified. 

45 Franklin~ Custodial and Paying Agency Agreement 

8545894.8 
IN WITNESS WHEREOF, the Bank and the Company have each caused lhi1 Agreement 

to be executed as ofthe date first written above. 

CITI

FE RAL DEPOSIT INSURANCE 

CORPORATION, in its corporate ca~acity 

By:N~a-m_e_:------------~----­

Title: 

FRANKLIN VENTURE, LLC 

By: 	 RCS Franklin Venture LLC, its Managing 

Member 

By: 	 Residential Credit Soluthns, Inc., its 

sole Member 

By:.~---------------­ Name: 

Title: 

Franklin Bank- Custodial and Paying Agency Agreement 
fN WITNESS WHEREOF, the Bank and the Company have each caused this Agreement 

to be executed as of the date first written above. 

CITIBANK, N.A. 

By: ________________________ 

Name: 


Title: 


FEDERAL DEPOSIT INSURANCE 

CORPO TI.ON, in its corporate capacity 

By A--------------­

N

T

FRANKLIN VENTURE, LLC 

By: 	 RCS Franklin Venture LLC, its Managing 

Member 

By: 	 Residential Credit Solutions, Inc., its 

sole Member 

By:c:-:-------------­

Name: 

Title: 

Franklin Bank- Custodial :md Paying Agency :\.grc~:mcnt 
IN WITNESS WHEREOF, the Bank and the Company have each caused this Agreement 

to be executed as of the date first written above. 

CITIBANK, N.A. 

By: ______________________ 

Name: 

Title: 

FEDERAL DEPOSIT INSURANCE 

CORPORATION, in its corporate capacity 

By:-::-------------­

Name: 

Title: 

FRANKLIN VENTURE, LLC 

By: 	 RCS Franklin Venture LLC, its Managing 

Member 

By: 	 Residential Credit Solutions, Inc., its 

sole Member 

ByT

Franklin Bank- Custodial and Paying Ag~ncy Agreement 
. 
EXHIBIT A 

LOAN SCHEDULE 

The Loan Schedule is separately being certified and delivered on the Closing Date by the 

Company. 

Franklin- Custodial and Paying Agency Agreement A-1 

8545894.8 

EXHIBITB 


FORM OF COLLATERAL CERTIFICATE 


------'' 2__ 


[ ], LLC 

Re: 	 Custodial and Paying Agency Agreement, dated September 30, 2009, by and between 

Franklin Venture, LLC, as the Company, and Citibank,N.A., as the Custodian 

("Custodial and Paying Agency Agreement") 

Ladies and Gentlemen: 

In accordance with the provisions of Section 6.1 (b) ofthe Custodial and Paying Agency 

Agreement, the undersigned, as Custodian, hereby certifies that other than the Exceptions listed 

as part ofthe Loan Schedule and Exceptions List attached hereto (a) (i) it has received all ofthe 

Custodial Documents required to be delivered with respect to each Loan and REO Property 

identified on the Loan Schedule and Exceptions List attached hereto, and (ii) the Custodial 

Documents for each such Loan are as listed on such Loan Schedule and Exceptions List, (b) all 

documents have been reviewed and examined by the Custodian in accordance with the Review 

Procedures, and (c) based upon its examination ofthe Custodial Documents, such documents 

appear (i) regular on their face (i.e., are not mutilated, damaged, tom, defaced or otherwise 

physically altered); (ii) to relate to the Loans or REO Property with respect to which they purport 

to relate; (iii) to have been executed by the named parties; (iv) to be what they purport to be; and 

(v) where applicable, to be recorded. 

The Custodian makes no representations in or by this Certificate and/or the Custodial and 

Paying Agency Agreement as to: (i) the validity, legality, enforceability or genuineness of any 

ofthe Custodial Documents or any ofthe Loans or REO Property, or (ii) the collectibility, 

insurability, effectiveness or suitability of any ofthe Loans or REO Property. 

Initially capitalized terms used and not otherwise defined herein shall have the meanings 

assigned to such terms in the Custodial and Paying Agency Agreement. 

Franklin- Collateral Certificate 	 B-1 

8545894.8 
In confirmation of your acknowledgement ofthe foregoing, please sign this certificate in the 

place provided below and return an executed copy to us. 

CITIBANK, N.A. 

By:___________ 

Name: 

Title: 

Acknowledged: 

FRANKLIN VENTURE, LLC 

By: RCS Franklin Venture LLC, its 

Managing Member 

By: 	Residential Credit Solutions, Inc., its sole 

Member 

By:::-::---------­

Name: 

Title: 

Franklin- Co11atera1 Certificate 	 B-2 

8545894.8 

EXHIBITC 


FORM OF SUPPLEMENTAL DELIVERY CERTIFICATE 


_____,,2_ 


Re: 	 Custodial and Paying Agency Agreement, dated September 30, 2009, by and between 

Franklin Venture, LLC, as the Company, and Citibank, N.A., as the Custodian 

("Custodial and Paying Agency Agreement") 

Ladies and Gentlemen: 

In accordance with the provisions ofSection 6.1( d) ofthe Custodial and Paying Agency 

Agreement, the Company, hereby certifies that: (i) attached is a list of additional Custodial 

Documents relating to the Loans, identifying with respect to each such Custodial Document the 

related Loan or, as the case may be, relating to any newly acquired REO Property, and (ii) 

enclosed with this certificate are the Custodial Documents listed on the attached. 

Initially capitalized terms used and not otherwise defined herein shall have the meanings 

assigned to such terms in the Custodial and Paying Agency Agreement. 

In confirmation of your acknowledgement ofthe foregoing, please sign this certificate in 

the place provided below and return an executed copy to us. 

Franklin Venture, LLC, as the Company 

By: RCS Franklin Venture LLC, its 

Managing Member 

By: Residential Credit Solutions, Inc., its sole 

Member 

By:::-::---------­

Name: 

Title: 

Franklin- Custodial and Paying Agency Agreement C-1 

8545894.8 
Acknowledged: 

Citibank, N.A., as the Custodian 

By:___________ 

Name: 

Title: 

Franklin- Custodial and Paying Agency Agreement C-2 

8545894.8 

EXHIBITD 


REQUEST FOR RELEASE AND RECEIPT 


To: 

Re: 	 Custodial and Paying Agency Agreement dated September 30, 2009, by and between 

Franklin Venture, LLC, as the Company, and Citibank, N.A., as Custodian ("Custodial 

and Paying Agency Agreement") 

In connection with the administration ofthe Custodial Documents held by you as the 

Custodian pursuant to the Custodial and Paying Agency Agreement, we request the release, and 

acknowledge and certify receipt of, the Custodial Documents for the Loan(s) and/or REO 

Property described on Schedule A hereto for the reason indicated below. 

Reason for Requesting Documents (check one) 

1. 	 Loan to be paid in full or received or discounted pay-off accepted or to be 

accepted as payment in full. 

2. 	 Loan to be foreclosed on, or to be modified or restructured, or deed to be accepted 

in lieu thereof or required pursuant to court order or other reason related to 

litigation, as permitted under the Custodial and Paying Agency Agreement. 

3. 	 Loan or REO Property agreed to be sold. 

If some or all ofthe Custodial Documents for a specified Loan have been previously 

released to us, please release to us any additional Custodial Documents in your possession 

relating to that Loan. Ifitem 2 is checked, upon our return, as appropriate, ofthe Custodial 

Documents to you as Custodian, please acknowledge your receipt by signing in the space 

indicated below, and returning this form. 

Franklin Venture, LLC, as the Company 

By: 	RCS Franklin Venture LLC, its 

Managing Member 

By: Residential Credit Solutions, Inc., its sole 

Member 

By:__________ 

Name: 

Title: 

Franklin -Custodial and Paying Agency Agreement D-1 

8545894.8 
Acknowledged: 

By:______________ 


Name: 


Title: 


Franklin -Custodial and Paying Agency Agreement 

8545894.8 

D-2 

EXHIBITE 

FORM OF LOST INSTRUMENT AFFIDAVIT 

(Note to Preparer: When preparing the actual Affidavit delete this instruction and the reference 

to Exhibit E and the language "Form ofLost Instrument Affidavit" above.) 

STATE OF _____ § 


§ 


COUNTY OF _____ § 


LOST INSTRUMENT AFFIDAVIT 

(Franklin Bank, S.S.B. Sale) 

Before me, the undersigned authority, personally appeared 

------,-----------,-'' who upon being duly cautioned and sworn deposes and says and 

represents and warrants, to the best ofhis !her knowledge, as follows: 

1. 	 That s/he is the ___--:-__ for _________ 

whose address is ------~------~~~ ---------­ ----'________(the "Custodian''). 

2. The Custodian is the document custodian for Franklin Venture, LLC (the 

"Company") and, as such, was in possession of certain documents with respect to that certain 

loan, obligation or interest in a loan or obligation evidenced by a promissory note, evidencing an 

indebtedness or evidencing rights in an indebtedness (the "Instrument"), as follows: 

Loan Number: ______________ 

Name ofMaker:-----------­

Original Principal Balance: _________ 

Date ofInstrument: ___________ 

3. That the original Instrument has been lost or misplaced. The Instrument 

was not where it was assumed to be, and a diligent search to locate the Instrument was 

undertaken, without results. 

4. That ifthe Custodian subsequently locates the Instrument, the Custodian 

shall use reasonable efforts to provide written notice to the Company and deliver the Instrument 

to the Company in accordance with written instructions received from the Company (or such 

other party designated in writing by the Company). 

5. That the purpose of this affidavit is to establish such facts. This affidavit 

shall not confer any rights or benefits, causes or claims, representations or warranties (including, 

Franklin- Custodial and Paying Agency Agreement E-1 

8545894.8 
without limitation, regarding ownership or title to the Instrument or the obligations evidenced 

thereby) upon the Company, its successors or assigns. 

6. That the Custodian hereby indemnifies and holds harmless the Company · 

and its Affiliates and their respective successors, assigns, directors, officers, employees, 

contractors and agents (the "Indemnified Parties") from and against any and all claims 

(including any claim by any individual or entity for the collection of any sums due under or with 

respect to the Instrument), liabilities, losses, damages, costs and expenses (including reasonable 

attorneys' fees) incurred by any ofthe Indemnified Parties and arising out of or resulting from (i) 

the Custodian's inability to find the Instrument and deliver it to the Company, or (ii) any 

inaccuracy or misstatement of fact, or a breach of any representation, warranty or agreement or 

duty contained, in this affidavit. 

7. This affidavit shall be governed by and construed in accordance with the 

laws of the State ofNew York without reference to any rules of conflicts of laws that might refer 

the governance or construction of this affidavit to the law of any other jurisdiction. 

By: ---------------------­

Name: Title: ---------­

Signed and sworn to before me this ___ day of_______, ___ 

Notary Public 


[SEAL] My Commission expires: _____ 


Franklin - Custodial and Paying Agency Agreement E-2 

8545894.8 
ACKNOWLEDGMENT 

STATE OF ______ § 

§ 

COUNTY OF _________ § 

Before me, the undersigned authority, a Notary Public in and for the county and 

state aforesaid, on this day personally appeared , known to 

me to be the person whose name is subscribed to the foregoing instrument, as --=---=---=----=--­

of acting in the capacity stated above, and acknowledged to 

me that s/he executed the same as the act of , for the 

purposes and consideration therein expressed, and in the capacity therein stated. 

Given under my hand and seal of office on this the __day of 

20 . 

Notary Public 

[SEAL] My Commission expires: _______ 

Franklin -Custodial and Paying Agency Agreement E-3 

8545894.8 

EXHJBIT F 

AUTHORIZED REPRESENTATIVES 

1. 	 Authorized Representatives of the Co

Dennis Stowe 

Kelly O'Bannon 

Mark Roaers 

2. 	 Authorized Representative of the Custodian and Paying Agent: 

[Signature) 

[Signature) 

[Signature) 

3. 	 Authorized Representative ofSecured Party 

Timothy A. Kmse [Signature] 

Herbert J. Held [Signature) 

William P. Stewart [Signature] 

franklin- Cus-todial and Paying r\gt.:ncy t\grecm<.'nt F-l 
EXHIBITF 

AUTHORIZED REPRESENTATIVES 

I. 	 Authorized Representatives of the Company: 

Dennis Stowe 

[Signature] 

Kelly O'Bannon 

[Signature] 

Mark Rogers 

[Signature] 

2. 	 Authorized Representative of the Cust

John Hannon 

Vice President 

KAREN SCHU:r'iiR,, 

Vice Preslderit ·· 

JENNIFER MctOURT 

Vice President 

3. 	 Authorized Representative ofSecured Party 

Timothy A. Kruse [Signature] 

Herbert J. Held · [Signature] 

William P. Stewart [Signature] 

Frnnklin - C'ustC'Idl31 3nd Pa)'lng: Agency Agreemenc F-1 
EXHIBITF 

AUTHORIZED REPRESENTATIVES 

I. 	 Authorized Representatives ofthe Company: 

Dennis Stowe 

[Signature] 

Kelly O'Bannon 

[Signature] 

Mark Rogers 

[Signature] 

2. Authorized Representative ofthe Custodian and Paying Agent: 

[Signature] 

[Signature] 

[Signature] 

3. 

William P. Stewart 

Franklin -Custodial and Paying Agency Agreement F-1 
4. Authorized Representatives of the Managin

[Signature] 

Franklin- Custodial and Paying Agency Agreement F-2 

EXHIBITG 


FEES AND EXPENSES OF CUSTODIAN AND PAYING AGENT 


[To be attached] 


Franklin -Custodial and Paying Agency Agreement G-1 

8545894.8 
SCHEDULE OF FEES FOR SERVICES AS 


CUSTODIAN AND PAYING AGENT 


FOR 


FRANKLIN VENTURE, LLC 


$1.3B LOAN PORTFOLIO OF THE FDIC AND RCS 

September 25, 2009 

On-Time Acceptance Fee: 

To cover the acceptance of the Custodian and Paying Agent appointment, the study and 

consideration of the Agreement and supporting documents submitted in connection with the 

execution and delivery thereof, and communication with other members ofthe working group. 

Waived 

Paying Agent Annual Administration Fees: 

To cover the administrative functions of the Paying Agent under the Agreement, including the 

establishment and maintenance of the accounts and activation, investment of the funds, 

maintenance of the records, follow-up of the agreement provisions, disbursements, monthly 

calculation of interest due on the Purchase Money Note, and any other duties required of the 

Paying Agent under the terms of the agreement. The Annual Administration Fees are paid 

annually in advance. 

$6,000 (1 Day Float) 

Custody Fees: 

To cover the administrative functions of the Custodian under the Custodial and Paying Agent 

Agreement, including the review, release and safekeeping of the collateral files, trailing 

documents, certifications and reporting, establishment and maintenance of the Custody accounts 

and activation, maintenance of the records, follow-up of the agreement provisions, and any other 

duties required of the Custodian under the terms ofthe agreement. This fee is payable monthly in 

arrears through the waterfall. 

Initial File Review Fee: $3.25 per file 

Annual Fee: $3.50 per file (1112 will be billed per file, per month) 

File Release Fee: $2.00 per file 
Legal Fee: 


To cover review of legal documents by Citibank's outside counsel on behalf of Citibank. 


Waived 

Schedule Assumptions: 

• 	 Subject to internal approval and satisfactory review of the documentation. 

• 	 Citibank, N.A. will hold all necessary trust accounts and receive daily collections from the 

Servicer. 

• 	 Daily collected funds will be invested in an Institutional Money Market fund selected by 

Franklin Venture, LLC, from a list ofproviders we will supply. As a result, Citibank will 

receive Shareholder Servicing fees. 

• 	 Servicer will provide monthly report to Citibank, N.A. at least two business days prior to 

Payment Date. 

• 	 Citibank N.A. will provide monthly calculation of interest due on the Purchase Money Note 

• 	 Documentation to be governed by New York law. 

This fee schedule is offered for the program cited within and discloses all fees or charges earned by Citibank 

Agency and Trust. The above schedule of fees does not include charges for out-of-pocket expenses or for any 

services of an extraordinary nature that we may be cailed upon from time to time to perfonn in either an agency or 

fiduciary capacity, nor does it include the fees of our legal counsel. Fees are also subject to satisfactory review of 

the documentation, and we reserve the right to modify them should the characteristics of the transaction change. 

Our participation in this program is subject to internal approval of the third party depositing monies into the escrow 

account. The acceptance fee is payable upon execution of this document. Should this schedule offees be accepted 

and agreed upon and work commenced on this program but subsequently halted and the program is not brought to 

market, the Acceptance Fee and legal fees incurred, if any, will still be payable in full. This Fee Schedule is offered 

for, and applicable to the program cited on page one only, and is guaranteed for sixty days from the date on this 

proposal. After sixty days, this offer can be extended in writing only. To help the US government fight terrorism 

and money laundering, Federal law requires us to obtain, verify and record information that identifies each business 

or entity that opens an account or establishes a relationship. What this means for you: when you open an account or 

establish a relationship, we will ask for your business name, a street address and a tax identification number, that 

Federal law requires us to obtain. We appreciate your cooperation. 

Citi Agency & Trnst 

Vice President 	

EXHIBITH 

REVIEW PROCEDURES 

1. The Note and Mortgage each appear to bear an original signature or signatures 

purporting to be the signature or signatures ofthe Person or Persons named as the maker and 

Borrower, or in the case of copies ofthe Mortgage, that such copies bear a reproduction ofsuch 

signature. 

2. The amount ofthe Note is the same as the amount specified on the related 

Mortgage and Loan Schedule. 

3. The original mortgagee is the same as the payee on the Note. 

4. The Mortgage contains a legal description other than address, city and state; 

provided that Custodian shall have no responsibility for the accuracy, validity or completeness of 

such legal description. 

5. The notary section (acknowledgment) is present and attached to the related 

Mortgage and is signed. · 

6. None ofthe original Note, the copy ofthe Mortgage, or the original Mortgage 

Assignment, contain any notations on their face which appear in the good faith judgment of 

Custodian to evidence any claims, liens, security interests, encumbrances or restrictions on 

transfer or any other alterations which appear irregular on their face, or if altered, such 

alterations have the initials ofthe person(s) named as the Borrower. 

7. The Note is endorsed in blank by the original payor or the last endorsee. 

8. Each original Mortgage Assignment in blank and any intervening assignment of 

mortgage, if applicable, appears to bear the original signature ofthe named mortgagee or 

beneficiary including any subsequent assignors, as applicable, or in the case of copies with 

respect to intervening Mortgage Assignments, that such copies appear to bear a reproduction of 

such signature or signatures, and the intervening Mortgage Assignments evidence a complete 

chain of assignment and transfer ofthe related Mortgage from the originating Person to the 

Company or in the case of a MERS Designated Loan to MERS®. The Custodian shall have no 

obligation to determine whether the certifications referenced in the foregoing sentence are 

authorized or issued by any particular person or officer or by a person who is in fact an 

Authorized Representative or is otherwise authentic. 

9. The date of each intervening Mortgage Assignment is on or after the date ofthe 

related Mortgage and/or the immediately preceding assignment, as the case may be. 

10. The notary section (acknowledgment) is present and attached to each intervening 

assignment and is signed. 

Franklin- Custodial and Paying Agency Agreement H -1 

8545894.8 
11. Based upon a review ofthe Note, the Loan number, the Mortgagor's name, the 

address ofthe Mortgaged Property, the original amount ofthe Note, the original mortgage 

interest rate, the date of the Note, the first payment date and the maturity date and any other 

fields as mutually agreed upon as set forth in the Loan Schedule are correct. 

12. Each MERS Designated Loan has been issued a MERS® identification number. 

13. The REO Deed appears to bear an original signature or signatures purporting to 

be the signature or signatures ofthe Person or Persons named as grantor, or in the case of copies 

ofthe REO Deed, that such copies bear a reproduction of such signature. 

14. The REO Deed contains a legal description other than address, city and state and 

has evidence ofrecording thereon provided that the Custodian shall have no responsibility for the 

accuracy or completeness ofsuch legal description. 

15. Each document has been executed by the named parties herein. 

16. The Mortgage, REO Deed and Mortgage Assignments have evidence of 

recording. 

Franklin- Custodial and Paying Agency Agreement H-2 

8545894.8 

EXHIBIT I 

CUSTODIAN AND PAYING AGENT REPORT 

DISTRIBUTION REPORT 

Net Funds Available from Collection Account 

Current period Working Capital Advance 

TOTAL FUNDS FOR DISTRIBUTION 

Distributio11s: 

To Custodian and Paying Agent: 

Custodian and Paying Agent Fee 

To Noteholder: 


Principal 


Interest 


Total to Noteholder 

To Note Guarantor: 


Note Guaranty Fee 


Reimbursement due 


Total to Note Guarantor 

Transfer to Liquidity Reserve 

To Managing Member: 


Prior month cumulative Working Capital Advances 


Management Fee 


Distribution on Equity 


Total to Managing Member 

To Initial Member: 


Distribution on Equity 


To predecessor Managing Member (if applicable): 


Prior month cumulative Working Capital Advances 


Management Fee 


Total to predecessor Managing Member 

TOTAL DISTRIBUTIONS 

NOTE ROLLFORWARD 

Note balance, previous Distribution Date 


Current period principal payment 


Note balance, current Distribution Date 


Franklin- Custodial and Paying Agency Agreement 1-1 

8545894.8