Exhibit 10.3

 

EXECUTION

 

[Osprey/Tax-Exempt]

 

SERIES CERTIFICATE AGREEMENT

by and between

FEDERAL HOME LOAN MORTGAGE CORPORATION,
in its corporate capacity

and

FEDERAL HOME LOAN MORTGAGE CORPORATION,
in its capacity as Administrator

Dated as of December 1, 2007

incorporating by reference

STANDARD TERMS OF THE SERIES CERTIFICATE AGREEMENT

Dated as of December 1, 2007

FREDDIE MAC
MULTIFAMILY VARIABLE RATE CERTIFICATES
Series M012

$2,031,620,947 Class A Certificates
(including Subclasses as indicated herein)
$106,927,419 Class B Certificates

relating to

the Bonds described herein

SPONSOR:  CENTERLINE SPONSOR 2007-1 SECURITIZATION, LLC

 

--------------------------------------------------------------------------------

 

SERIES CERTIFICATE AGREEMENT

 

This SERIES CERTIFICATE AGREEMENT (this “Series Certificate Agreement”) is dated
as of December 1, 2007 by and between FEDERAL HOME LOAN MORTGAGE CORPORATION, in
its corporate capacity (“Freddie Mac”) and FEDERAL HOME LOAN MORTGAGE
CORPORATION, in its capacity as Administrator (the “Administrator”) on behalf of
the Holders of the Series of Class A Certificates (the “Class A Certificates”)
and the Class B Certificates (the “Class B Certificates”) (collectively, the
“Certificates”) described on the cover page.  This Series Certificate Agreement
incorporates by reference the Standard Terms of the Series Certificate Agreement
dated as of December 1, 2007 (the “Standard Terms”), attached as Appendix A,
which Standard Terms will govern the Certificates and the Series Pool except as
provided in this Series Certificate Agreement.  All capitalized terms used and
not defined herein shall have the meaning set forth in the Standard Terms.

 

RECITALS:

 

A.            Freddie Mac desires to issue the Certificates and create the
Series Pool into which the Bonds identified on Schedule 1 hereto and the other
Assets related to the Certificates will be transferred.

 

B.            The conditions to the issuance and delivery of the Certificates as
provided in the Standard Terms and herein have been satisfied.

 

AGREEMENT:

 

SECTION 1.              FREDDIE MAC HEREBY CREATES THE SERIES POOL RELATING TO
THE CERTIFICATES AND TRANSFERS THE BONDS TO SUCH SERIES POOL FOR THE BENEFIT OF
THE HOLDERS OF THE CERTIFICATES, TOGETHER WITH ALL OF ITS INTEREST IN (A) ALL
BOND PAYMENTS MADE FROM AND AFTER THE DATE OF ORIGINAL ISSUE AND ALL
CERTIFICATES AND INSTRUMENTS, IF ANY, REPRESENTING THE BONDS, (B) THE
DISTRIBUTION ACCOUNT AND (C) ALL PROCEEDS OF THE BONDS AND THE DISTRIBUTION
ACCOUNT OF EVERY KIND AND NATURE.

 

SECTION 2.              THE SERIES POOL AND THE RELATED CERTIFICATES WILL BEAR
THE SERIES DESIGNATION SET FORTH ON THE COVER PAGE OF THIS SERIES CERTIFICATE
AGREEMENT.

 

SECTION 3.              THE CLASS A CERTIFICATES WILL BE ISSUED IN SEPARATE
SUBCLASSES WITH INITIAL CERTIFICATE BALANCES AS SET FORTH ON SCHEDULE 2, AND THE
CLASS B CERTIFICATES WILL BE ISSUED WITH AN INITIAL CERTIFICATE BALANCE OF
$106,927,419.  THE CLASS A CERTIFICATES OF EACH SUBCLASS WILL BE ISSUED IN
SUBSTANTIALLY THE FORM SET FORTH IN EXHIBIT B TO THE STANDARD TERMS AND THE
CLASS B CERTIFICATES WILL BE ISSUED IN SUBSTANTIALLY THE FORM SET FORTH IN
EXHIBIT C TO THE STANDARD TERMS.  UPON INITIAL ISSUANCE, PHYSICAL CERTIFICATES
FOR EACH SUBCLASS OF THE CLASS A CERTIFICATES SHALL BE REGISTERED IN THE NAME OF
THE INITIAL REGISTERED HOLDERS THEREOF.  SUCH CLASS A CERTIFICATES SHALL NOT BE
HELD IN A BOOK-ENTRY SYSTEM UNLESS OTHERWISE DIRECTED BY FREDDIE MAC.  UNTIL
SUCH TIME AS THE CLASS A CERTIFICATES ARE HELD IN A BOOK-ENTRY SYSTEM, ALL
REFERENCES TO DTC’S RULES AND PROCEDURES IN THE STANDARD TERMS SHALL BE
INAPPLICABLE, AND ANY REFERENCES TO HOLDERS OF THE CLASS A CERTIFICATES OF ANY
SUBCLASS SHALL REFER TO THE REGISTERED HOLDERS THEREOF.  IN ADDITION, UNTIL SUCH
TIME AS THE CLASS A CERTIFICATES ARE HELD IN A BOOK-ENTRY SYSTEM, ALL PAYMENTS
WILL BE MADE DIRECTLY TO THE REGISTERED HOLDERS THEREOF BY WIRE TRANSFER
PURSUANT TO INSTRUCTIONS RECEIVED FROM SUCH REGISTERED HOLDERS, AND ALL NOTICES
AND COMMUNICATIONS TO BE GIVEN BY THE ADMINISTRATOR WILL BE GIVEN DIRECTLY TO
SUCH REGISTERED HOLDERS AND ALL NOTICES TO BE PROVIDED BY

 

--------------------------------------------------------------------------------

 

THE REGISTERED HOLDERS WILL BE DELIVERED DIRECTLY TO THE ADMINISTRATOR, AND NOT
THROUGH DTC PARTICIPANTS OR THE DTC SYSTEM.

 

Upon initial issuance, the Class B Certificates shall be registered in the name
of the Pledge Custodian for the benefit of the Sponsor subject to the security
interest created by the Reimbursement Agreement in favor of Freddie Mac, and
will be held in definitive form.

 

SECTION 4.              THE SPONSOR WILL BE CENTERLINE SPONSOR 2007-1
SECURITIZATION, LLC (OR ANY PERMITTED SUCCESSOR IN SUCH CAPACITY APPOINTED UNDER
SECTION 3.07 OF THE STANDARD TERMS).

 

SECTION 5.              THE INITIAL RESET RATE METHOD FOR EACH SUBCLASS OF THE
CLASS A CERTIFICATES SHALL BE THE TERM RESET RATE METHOD.  THE INITIAL TERM
RESET RATE WITH RESPECT TO EACH SUBCLASS OF CLASS A CERTIFICATES SHALL BE THE
RESPECTIVE INITIAL TERM RESET RATE INDICATED ON SCHEDULE 2.  EACH SUCH TERM
RESET RATE SHALL BE IN EFFECT FROM THE DATE OF ORIGINAL ISSUE TO THE RESPECTIVE
MANDATORY TENDER DATE INDICATED ON SCHEDULE 2 FOR EACH SUCH SUBCLASS (EACH SUCH
PERIOD, AN “INITIAL TERM RESET RATE PERIOD”).

 

SECTION 6.              THE BONDS WERE NEITHER DEPOSITED WITH NOR ACQUIRED WITH
MARKET DISCOUNT IN EXCESS OF A DE MINIMIS AMOUNT WITHIN THE MEANING OF
SECTION 1278(A)(2)(C) OF THE CODE DETERMINED AS OF THE DATE OF ORIGINAL ISSUE.

 

SECTION 7.              THE MONTHLY CLOSING ELECTION WILL BE MADE ON BEHALF OF
THE SERIES POOL, EFFECTIVE AS OF THE “START-UP DATE” (AS DEFINED IN REVENUE
PROCEDURE 2003-84).  THE SPONSOR AND ALL HOLDERS OF CERTIFICATES (BY THEIR
PURCHASE THEREOF) CONSENT TO THE MONTHLY CLOSING ELECTION.  THE SERIES POOL, THE
SPONSOR AND EACH HOLDER OF CERTIFICATES (BY THEIR PURCHASE THEREOF) AGREE TO
COMPLY WITH THE TAX REPORTING REQUIREMENTS OF SECTIONS 8.02, 8.03 AND 8.04 OF
REVENUE PROCEDURE 2003-84 (OR ANY SUCCESSOR REVENUE PROCEDURE OR OTHER
APPLICABLE INTERNAL REVENUE SERVICE GUIDANCE).

 

SECTION 8.              PARTNERSHIP FACTORS SHALL NOT APPLY TO THE SERIES POOL.

 

SECTION 9.              THE CUSIP NUMBERS FOR THE CERTIFICATES ARE:

 

 

 

CUSIP Number

Class A Certificates

 

As shown on Schedule 2

Class B Certificates

 

31397PPY0

 

SECTION 10.            THE PROVISIONS OF THE STANDARD TERMS RELATED TO THE
HOLDBACK REQUIREMENT AND THE ESTABLISHMENT AND OPERATION OF THE BOND PAYMENT
ACCOUNT – HOLDBACK WILL NOT BE APPLICABLE TO THE SERIES POOL.

 

SECTION 11.            THE PROVISIONS OF THE STANDARD TERMS RELATING TO THE
MAKING OF ADMINISTRATOR ADVANCE AND THE PAYMENT OF DAILY ADMINISTRATOR ADVANCE
CHARGES WILL NOT BE APPLICABLE TO THE SERIES POOL.

 

SECTION 12.            THE NOTIONAL ACCELERATED PRINCIPAL AMORTIZATION SCHEDULE
AND THE CLASS A CERTIFICATE NOTIONAL ACCELERATED PRINCIPAL PAYDOWN AMOUNT WILL
NOT BE APPLICABLE TO THE SERIES POOL.

 

--------------------------------------------------------------------------------

 

SECTION 13.            FOR PURPOSES OF SECTION 7.02 OF THE STANDARD TERMS, THE
OTHER SERIES POOLS FOR WHICH PAYMENTS OF PRINCIPAL ON “CLASS B CERTIFICATES” AND
LIQUIDATION PROCEEDS ON TERMINATION THEREOF WILL GENERATE A SPECIAL ADJUSTMENT
EVENT WITH RESPECT TO CLASS A CERTIFICATES DESIGNATED SUBCLASS A2 ARE THE SERIES
POOLS WITH THE DESIGNATIONS “SERIES M013” AND “SERIES M014”.  UPON THE
OCCURRENCE OF A SPECIAL ADJUSTMENT EVENT, ANY RELATED MANDATORY TENDER WILL NOT
BE APPLICABLE TO ANY CLASS A-1 CERTIFICATES.

 

SECTION 14.            PRIOR TO MAY 16, 2019 (THE DATE FOLLOWING THE EXPIRATION
OF THE LATEST OCCURRING INITIAL TERM RESET RATE PERIOD WITH RESPECT TO THE
CLASS A-1 CERTIFICATES), WITHOUT THE PRIOR CONSENT OF ALL INITIAL TERM
SUBCLASS A1 HOLDERS, THE CLASS A CERTIFICATES SHALL NOT BE SUBJECT TO MANDATORY
TENDER (INCLUDING AS A RESULT OF A LIQUIDITY PROVIDER TERMINATION EVENT) EXCEPT
AS PROVIDED IN SUBSECTIONS 6.04(D), (E), (F) OF THE STANDARD TERMS RELATING TO
THE ESTABLISHMENT OF A TERM EFFECTIVE DATE OR A RESET RATE METHOD CHANGE DATE,
AND EXCEPT AS PROVIDED IN SUBSECTION 6.04(G) WITH RESPECT TO A SPECIAL
ADJUSTMENT EVENT (PROVIDED THAT UPON THE OCCURRENCE OF A SPECIAL ADJUSTMENT
EVENT, ANY RELATED MANDATORY TENDER SHALL NOT BE APPLICABLE TO ANY CLASS A-1
CERTIFICATES).

 

SECTION 15.            RECEIPT BY THE ADMINISTRATOR OF A RATING LETTER FROM S&P
CONFIRMING THE RATING OF THE CLASS A CERTIFICATES AS “AAA” WILL BE AN ADDITIONAL
CONDITION UNDER SECTION 2.09 OF THE STANDARD TERMS TO THE ISSUANCE OF THE
CERTIFICATES.

 

SECTION 16.            THE MAXIMUM RESET RATE WILL BE CALCULATED USING THE
WEIGHTED AVERAGE BOND RATE AND BY TAKING INTO ACCOUNT THE MAXIMUM RATE ON ANY
OUTSTANDING CLASS A-1 CERTIFICATES ON THE DATE THE MAXIMUM RESET RATE IS
DETERMINED.

 

SECTION 17.            THE FOLLOWING DEFINITIONS SHALL APPLY WITH RESPECT TO THE
CERTIFICATES:

 

“Accrual Commencement Date” - shall mean December 1, 2007.

 

“Authorized Denominations” - shall mean (i) with respect to each Subclass of
Class A-1 Certificates, an Initial Certificate Balance equal to the amount of
such entire Subclass until the expiration of the related Initial Term Reset Rate
Period for such Subclass, and thereafter, an Initial Certificate Balance of at
least $100,000 with integral multiples of $1.00 in excess of $100,000, (ii) with
respect to the Subclass of Class A Certificates designated A2, an Initial
Certificate Balance of at least $100,000 with integral multiples of $1.00 in
excess thereof, and (iii) with respect to any Class B Certificate, an Initial
Certificate Balance of at least $5,000 with integral multiples of $1.00 in
excess of $5,000, subject to necessary adjustments due to redemptions after the
Date of Original Issue.

 

“Bond Interest Payment Date” - shall mean the dates indicated with respect to
the Bonds on Schedule 1.

 

“Class A-1 Certificates” shall mean any Certificates of a Subclass of Class A
Certificates that includes “A1” in its designation.

 

“Credit Enhancement Expiration Date” - shall mean January 1, 2038.

 

“Date of Original Issue” - shall mean December 27, 2007.

 

--------------------------------------------------------------------------------

 

“First Optional Disposition Date” - shall mean the Payment Date on
June 15, 2022.

 

“First Payment Date” - shall mean January 15, 2008.

 

“First Redemption Date” - shall mean July 15, 2008.

 

“Initial Term Subclass A1 Holder” - shall mean any Holder of a Subclass of the
Class A-1 Certificates during the Initial Term Reset Rate Period with respect to
such Certificates.

 

“Longest Initial Reset Date” - shall mean June 15, 2022.

 

“Maximum Reset Date” - shall mean December 15, 2037.

 

“Proportional Amount” - shall mean initially $2,031,620,947 Class A Certificates
to $106,927,419 Class B Certificates.

 

“Rating Agency” - shall mean S&P.

 

“Remarketing Agent” - shall mean Morgan Stanley & Co. Incorporated or any
subsequent Remarketing Agent appointed in accordance with the Standard Terms.

 

“Servicer” - shall mean Centerline Mortgage Capital Inc. or any subsequent
Servicer appointed by Freddie Mac.

 

“Special Servicer” - shall mean Centerline Mortgage Capital Inc. or any
subsequent Special Servicer appointed in accordance with the Reimbursement
Agreement and the Servicing Agreement.

 

SECTION 18.            NOTICES UNDER THIS SERIES CERTIFICATE AGREEMENT TO BE
PROVIDED TO THE SPONSOR AND THE RATING AGENCY WILL BE PROVIDED IN THE MANNER SET
FORTH IN SECTION 14.02 OF THE STANDARD TERMS AS FOLLOWS:

 

Sponsor:

Centerline Sponsor 2007-1 Securitization, LLC

 

c/o Centerline Capital Group

 

625 Madison Avenue

 

New York, New York 10022

 

Attention: John D’Amico

 

Facsimile: (212) 593-5796

 

 

Rating Agency:

Standard & Poor’s

 

55 Water Street, 38th Floor

 

New York, New York 10041

 

Attention: Muni Structured Group

 

Facsimile: (212) 438-2152

 

or to such other address as either such party from time to time provides to the
other notice parties under Section 14.02 of the Standard Terms.

 

--------------------------------------------------------------------------------

 

SECTION 19.            NOTWITHSTANDING THE DELIVERY OF AN ELECTION TO RETAIN ALL
CLASS A1 CERTIFICATES OF A SUBCLASS UNDER SECTION 6.07(B), ANY HOLDER OF
CLASS A1 CERTIFICATES WHO HAS HELD SUCH CLASS A1 CERTIFICATES SINCE DECEMBER 21,
2007 (AN “ORIGINAL HOLDER”) AND WHO HAS SO ELECTED TO RETAIN MAY, BY NOTICE TO
THE ADMINISTRATOR, DELIVERED NO LATER THAN 9:00 A.M. ON THE MANDATORY TENDER
DATE, RESCIND SUCH CERTIFICATEHOLDER’S ELECTION TO RETAIN (WHEREUPON IT WILL BE
TREATED AS NEVER HAVING ELECTED TO RETAIN HEREUNDER), BUT ONLY IF IT IS REQUIRED
TO RESCIND SUCH ELECTION PURSUANT TO ITS ORGANIZATIONAL DOCUMENTS DUE TO THE
FAILURE OF REMARKETING OF PREFERRED SHARES OF SUCH ORIGINAL HOLDER, THE
DISTRIBUTION RATE ON WHICH IS LINKED TO THE RESET RATE OF SUCH SUBCLASS OF
CLASS A1 CERTIFICATES.  DESPITE ANY SUCH ELECTION TO RETAIN SUBMITTED BY SUCH
ORIGINAL HOLDER, THE REMARKETING AGENT SHALL PROCEED WITH A REMARKETING OF THE
CLASS A1 CERTIFICATES OF SUCH SUBCLASS AS THOUGH NO SUCH ELECTION HAD BEEN
MADE.  IN THE EVENT OF THE RESCISSION OF SUCH ELECTION, THE REMARKETING AGENT
SHALL PROMPTLY ADVISE FREDDIE MAC WHETHER A REMARKETING OF SUCH TENDERED
CLASS A1 CERTIFICATES HAS BEEN SUCCESSFUL OR WHETHER A DRAW ON THE LIQUIDITY
FACILITY IS REQUIRED, ALL SUBJECT TO OR IN ACCORDANCE WITH ARTICLES V AND VI.

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused this Series Certificate
Agreement to be duly executed by their respective duly authorized officers or
signatories as of the day and year first above written.

 

 

FEDERAL HOME LOAN MORTGAGE
CORPORATION, in its corporate capacity

 

 

 

 

 

By:

/s/ Michael L. Dawson

 

 

Michael L. Dawson

 

 

Vice President, Multiclass Issuance

 

 

 

 

 

FEDERAL HOME LOAN MORTGAGE
CORPORATION, as Administrator

 

 

 

 

 

By:

/s/ W. Kimball Griffith

 

 

W. Kimball Griffith

 

 

Vice President, Multifamily Affordable

 

 

 Housing Production & Investments

 

 

 

 

 

[SIGNATURE PAGE TO SERIES CERTIFICATE AGREEMENT - OSPREY-SERIES M012]

 

--------------------------------------------------------------------------------

 

SPONSOR ACCEPTANCE

 

The Sponsor hereby acknowledges, accepts and agrees to the terms of this
Series Certificate Agreement.

 

 

CENTERLINE SPONSOR 2007-1
SECURITIZATION, LLC, a Delaware limited
liability company, as Sponsor

 

 

 

By: CENTERLINE HOLDING TRUST, a
Delaware statutory trust, its manager

 

 

 

 

 

By:

/s/ Marc D. Schnitzer

 

 

Marc D. Schnitzer

 

 

 

 

President

 

 

 

[ACCEPTANCE PAGE TO SERIES CERTIFICATE AGREEMENT - OSPREY-SERIES M012]

 

--------------------------------------------------------------------------------

 

APPENDIX A

 

STANDARD TERMS

 

--------------------------------------------------------------------------------

 

EXECUTION

 

[Osprey/Tax-Exempt]

 

FREDDIE MAC

MULTIFAMILY VARIABLE RATE CERTIFICATES

SERIES M012

STANDARD TERMS OF THE

SERIES CERTIFICATE AGREEMENT

 

DATED AS OF DECEMBER 1, 2007

 

The Multifamily Variable Rate Certificates will represent undivided ownership
interests in a pool of tax-exempt Bonds issued to finance multifamily affordable
housing mortgages.  “Bonds” include municipal securities issued for such purpose
as well as custodial receipts, trust receipts or any other similar instruments
evidencing an ownership interest in municipal securities held in a pass-through
arrangement.  Each offering of Multifamily Variable Rate Certificates will be
issued as a Series.  Each Series will be comprised of Class A Certificates and
Class B Certificates that have different specified rights in the related
Series Pool (the Class A Certificates and Class B Certificates, collectively,
the “Certificates”).  Each Series Pool will be separate from each other
Series Pool, and the Certificates of any Series will relate only to the assets
of a single Series Pool.

 

Freddie Mac uses standard documentation and terms for the creation, issuance and
sale of each Series of Certificates.  This documentation includes the Offering
Circular and an Offering Circular Supplement for each Series and the
Series Certificate Agreement.  The Series Certificate Agreement will incorporate
the Standard Terms set forth below.  Freddie Mac will execute the
Series Certificate Agreement in its corporate capacity and in its capacity as
Administrator of the Series Pool.  In its corporate capacity, Freddie Mac will
act as the Depositor, the Certificate Registrar, the Pledge Custodian, the
guarantor and the liquidity provider.  The Standard Terms provide that other
entities may serve some of these functions (other than serving as guarantor or
liquidity provider).

 

These Standard Terms will not be effective as to any Certificates until these
Standard Terms are incorporated into a Series Certificate Agreement creating the
related Series.  If a conflict arises between the provisions of a
Series Certificate Agreement and these Standard Terms, the provisions of the
Series Certificate Agreement will control.

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

 

 

 

ARTICLE I

 

DEFINITIONS, CERTAIN CALCULATIONS AND RULES OF CONSTRUCTION

 

Section 1.01

 

Definitions

 

1

Section 1.02

 

Certain Interest Calculations

 

1

Section 1.03

 

Other Definitional Provisions

 

1

Section 1.04

 

Rules of Construction

 

1

 

 

 

 

 

ARTICLE II

 

THE CERTIFICATES AND THE SERIES POOL

 

Section 2.01

 

Classes of Certificates

 

2

Section 2.02

 

Book-Entry Only for Class A Certificates

 

2

Section 2.03

 

Denominations

 

4

Section 2.04

 

Execution and Authentication; Persons Deemed Owners

 

4

Section 2.05

 

Registration of Transfer and Exchange

 

4

Section 2.06

 

Transfer Restrictions Related to Class B Certificates

 

5

Section 2.07

 

Mutilated, Destroyed, Lost or Stolen Certificates

 

5

Section 2.08

 

No Additional Liabilities or Indebtedness

 

5

Section 2.09

 

Initial Authentication and Delivery of Certificates

 

5

Section 2.10

 

Identification of the Assets to a Series Pool

 

6

Section 2.11

 

Delivery and Possession of Bonds

 

6

Section 2.12

 

Purposes and Powers

 

7

Section 2.13

 

Recharacterization

 

7

Section 2.14

 

Decrease of Aggregate Outstanding Class B Certificate Balance

 

7

 

 

 

 

 

ARTICLE III

 

 

 

 

 

SPONSOR COVENANTS; RELEASE EVENT

 

 

 

 

 

Section 3.01

 

Negative Covenants

 

8

Section 3.02

 

Other Obligations

 

8

Section 3.03

 

Maintenance of Office or Agency

 

8

Section 3.04

 

Payment of Certain Fees and Expenses

 

8

Section 3.05

 

Liabilities and Recourse Against Freddie Mac and the Sponsor for Liabilities of
the Series Pool

 

9

Section 3.06

 

The Sponsor’s Interest and Net Worth

 

10

Section 3.07

 

Successor Sponsor

 

10

Section 3.08

 

Release Event

 

11

Section 3.09

 

Sponsor’s Indemnification of the Administrator

 

11

 

i

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ARTICLE IV

 

 

 

 

 

ACCOUNTS AND DISBURSEMENTS; CREDIT ENHANCEMENT

 

 

 

 

 

Section 4.01

 

Collection of Money

 

12

Section 4.02

 

Distribution Account; Establishment; Investments

 

12

Section 4.03

 

Distributions and Payments from Bond Payment Subaccounts

 

13

Section 4.04

 

Administrator May Appoint Paying Agents

 

16

Section 4.05

 

General Provisions Regarding Accounts

 

16

Section 4.06

 

Pledged Class A Certificates

 

16

Section 4.07

 

Reports to Holders

 

17

Section 4.08

 

Reductions of the Aggregate Outstanding Amounts

 

17

Section 4.09

 

Administrator Advances and Daily Administrator Advance Charges

 

17

Section 4.10

 

Class A Principal Payment Election; Rescission

 

18

Section 4.11

 

Credit Enhancement

 

19

Section 4.12

 

Confirming Credit Facility

 

21

 

 

 

 

 

ARTICLE V

 

 

 

 

 

RESET RATES; RESET RATE METHOD; RESET DATES

 

 

 

 

 

Section 5.01

 

Determination of Reset Rates, Reset Rate Methods and Reset Dates

 

21

Section 5.02

 

Weekly Reset Rate; Monthly Reset Rate

 

22

Section 5.03

 

Term Reset Rate; Term Reset Date

 

23

Section 5.04

 

Notice of Reset Rate

 

26

Section 5.05

 

No Changes in Reset Rate Method During the Two Business Days Preceding Mandatory
Tender Date

 

27

Section 5.06

 

Maximum Reset Rate

 

27

 

 

 

 

 

ARTICLE VI

 

 

 

 

 

THE LIQUIDITY FACILITY; THE TENDER OPTION; MANDATORY TENDER

 

 

 

 

 

Section 6.01

 

Tender Option; Rights of Holders; Liquidity Facility

 

27

Section 6.02

 

Funds Held by Administrator

 

29

Section 6.03

 

Exercise of Tender Option

 

29

Section 6.04

 

Mandatory Tender Events

 

30

Section 6.05

 

Notice of Mandatory Tender

 

31

Section 6.06

 

Funding Procedures; Payment of Purchase Price

 

32

Section 6.07

 

Right of Holder to Elect to Retain Class A Certificates Upon the Occurrence of
Certain Mandatory Tender Events

 

36

Section 6.08

 

Sole Sources of Payment of Purchase Price

 

36

 

ii

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ARTICLE VII

 

 

 

 

 

TENDER OPTION TERMINATION EVENTS AND CERTAIN MANDATORY TENDER
EVENTS; OPTIONAL DISPOSITION RIGHT

 

 

 

 

 

Section 7.01

 

Tender Option Termination Events

 

37

Section 7.02

 

Special Adjustment Event

 

37

Section 7.03

 

Liquidity Provider Termination Event

 

38

Section 7.04

 

Sponsor Act of Bankruptcy

 

39

Section 7.05

 

Optional Disposition Date

 

39

Section 7.06

 

Clean-Up Event

 

40

Section 7.07

 

Credit Enhancement Expiration Date

 

41

 

 

 

 

 

ARTICLE VIII

 

 

 

 

 

THE REMARKETING AGENT

 

 

 

 

 

Section 8.01

 

Duties of the Remarketing Agent

 

41

Section 8.02

 

Resignation or Removal of the Remarketing Agent

 

41

Section 8.03

 

Successor Remarketing Agent

 

42

Section 8.04

 

Merger or Consolidation of the Remarketing Agent

 

42

Section 8.05

 

Notices by Remarketing Agent

 

42

 

 

 

 

 

ARTICLE IX

 

 

 

 

 

EVENTS OF DEFAULT AND RIGHTS AND REMEDIES OF HOLDERS

 

 

 

 

 

Section 9.01

 

Event of Default

 

42

Section 9.02

 

Remedies

 

42

Section 9.03

 

Waiver of Past Defaults

 

43

 

 

 

 

 

ARTICLE X

 

 

 

 

 

THE ADMINISTRATOR; HOLDERS’ LISTS AND REPORTS;
BONDHOLDER REPRESENTATIVE

 

 

 

 

 

Section 10.01

 

Certain Duties and Responsibilities

 

44

Section 10.02

 

Notice of Non-Monetary Default

 

45

Section 10.03

 

Certain Rights of the Administrator

 

45

Section 10.04

 

Parties that May Hold Certificates

 

46

Section 10.05

 

Information Regarding Holders

 

46

Section 10.06

 

Corporate Administrator Required; Eligibility

 

46

Section 10.07

 

Resignation

 

46

Section 10.08

 

Preservation of Information; Communications to Holder

 

48

Section 10.09

 

Bondholder Representative

 

49

 

iii

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ARTICLE XI

 

 

 

 

 

PROFITS AND LOSSES

 

 

 

 

 

Section 11.01

 

Tax Information

 

49

Section 11.02

 

Capital Accounts

 

49

Section 11.03

 

Allocations of Profits, Market Discount Gains and Capital Gains

 

50

Section 11.04

 

Allocations of Losses and Capital Losses

 

51

Section 11.05

 

Special Allocations

 

51

Section 11.06

 

Tax Allocations; Code Section 704(c)

 

53

Section 11.07

 

Allocation Among Holders

 

53

Section 11.08

 

Tax Matters; Tax Election

 

53

Section 11.09

 

Accounting Method

 

54

Section 11.10

 

Tax Matters Partner

 

54

Section 11.11

 

Compliance with Code Requirements

 

55

 

 

 

 

 

ARTICLE XII

 

 

 

 

 

AMENDMENTS

 

 

 

 

 

Section 12.01

 

Amendments

 

55

Section 12.02

 

Execution of Amendments

 

56

Section 12.03

 

Effect of Amendment

 

56

Section 12.04

 

Reference in Certificates to Amendments

 

57

 

 

 

 

 

ARTICLE XIII

 

 

 

 

 

TERMINATION

 

 

 

 

 

Section 13.01

 

Termination

 

57

Section 13.02

 

Final Distribution on the Series Expiration Date

 

58

Section 13.03

 

Terminating Mandatory Tender Date

 

59

Section 13.04

 

Exchange Date

 

60

 

 

 

 

 

ARTICLE XIV

 

 

 

 

 

MISCELLANEOUS

 

 

 

 

 

Section 14.01

 

Acts of Holders

 

63

Section 14.02

 

Notices

 

64

Section 14.03

 

Notices to Holders; Waiver

 

64

Section 14.04

 

Successors and Assigns

 

64

Section 14.05

 

Severability

 

64

Section 14.06

 

Benefits of Series Certificate Agreement

 

64

Section 14.07

 

Governing Law

 

65

Section 14.08

 

Counterparts

 

65

Section 14.09

 

Non-Petition Covenants

 

65

 

Exhibit A — Definitions

 

 

 

A-1

Exhibit B — Form of Class A Certificates

 

 

 

B-1

Exhibit C — Form of Class B Certificates

 

 

 

C-1

Exhibit D — Form of Class B Investor Letter

 

 

 

D-1

 

iv

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ARTICLE I

DEFINITIONS, CERTAIN CALCULATIONS AND RULES OF CONSTRUCTION

 

Section 1.01         Definitions.  Whenever used in these Standard Terms,
capitalized terms will have the meaning for those terms provided in Appendix I
to the Offering Circular, which appendix is attached as Exhibit A.

 

Section 1.02         Certain Interest Calculations.  The computation of interest
on any Certificate when any Weekly Reset Rate Method or Monthly Reset Rate
Method is in effect will be performed on the basis of a 365 or 366-day year for
the actual number of days elapsed during each Accrual Period.  The computation
of interest on any Certificate when any Term Reset Rate Method is in effect will
be performed on the basis of a 360-day year consisting of twelve (30) day months
for each Accrual Period.  However, if interest on any Bond is calculated as if
each year consisted of twelve 30-day months, and if the computation of any
Required Class A Certificate Interest Distribution Amount on the basis of the
actual number of days elapsed would result in an amount in excess of the
interest due on the related Bonds for the applicable period, then the Required
Class A Certificate Interest Distribution Amount will be reduced by the amount
of such excess.

 

Section 1.03         Other Definitional Provisions.  All capitalized terms used
in any certificate or other documents delivered pursuant to these Standard Terms
and not otherwise defined in such documents will have the meanings assigned to
such terms in these Standard Terms.

 

Section 1.04         Rules of Construction.  Unless the context or use indicates
a different meaning or intent, the following rules will apply to the
construction of the Series Certificate Agreement:

 

(A)           WORDS IN THE SINGULAR WILL INCLUDE THE PLURAL AND VICE VERSA.

 

(B)           THE CAPTIONS AND HEADINGS OF THESE STANDARD TERMS ARE SOLELY FOR
CONVENIENCE OF REFERENCE AND NEITHER CONSTITUTE A PART OF THE SERIES CERTIFICATE
AGREEMENT NOR AFFECT ITS MEANING.

 

(C)           ALL REFERENCES TO A PARTICULAR TIME OF DAY WILL BE TO WASHINGTON,
D.C. TIME.

 

(D)           REFERENCES TO SECTIONS, ARTICLES, SCHEDULES AND EXHIBITS WILL BE
TO SECTIONS, ARTICLES, SCHEDULES AND EXHIBITS OF OR TO THE SERIES CERTIFICATE
AGREEMENT UNLESS A DIFFERENT DOCUMENT IS SPECIFIED.

 

(E)           WHENEVER AN ACTION IS TO BE TAKEN BY FREDDIE MAC UNDER THE
SERIES CERTIFICATE AGREEMENT, UNLESS SUCH ACTION IS DESIGNATED TO BE TAKEN BY
FREDDIE MAC AS ADMINISTRATOR, SUCH ACTION IS TO BE TAKEN BY FREDDIE MAC IN ITS
CORPORATE CAPACITY.  IF AN ACTION IS TO BE TAKEN BY THE SPONSOR, IT WILL BE
TAKEN BY THE PERSON DESIGNATED BY FREDDIE MAC AS SPONSOR IN THE
SERIES CERTIFICATE AGREEMENT OR, IF UNDESIGNATED, BY FREDDIE MAC.

 

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ARTICLE II

THE CERTIFICATES AND THE SERIES POOL

 

Section 2.01         Classes of Certificates.  (a)  The Class A Certificates. 
All Class A Certificates will be identical in all respects except for their
designated number and denominations and any Subclass designation, and will be
issued in book-entry only form.  All Class A Certificates issued under the
Series Certificate Agreement will be equally and proportionately entitled to the
benefits of the Series Certificate Agreement without preference, priority or
distinction, except as indicated in these Standard Terms and the
Series Certificate Agreement with respect to any particular Subclass or with
respect to Pledged Class A Certificates.  The Class A Certificates will be in
substantially the form indicated in Exhibit B.

 

(b)           The Class B Certificates.  All Class B Certificates will be
identical in all respects except for their designated number and denominations
and will be issued and held in certificated form.  All Class B Certificates
issued under the Series Certificate Agreement will be equally and
proportionately entitled to the benefits of the Series Certificate Agreement
without preference, priority or distinction.  The Class B Certificates will be
in substantially the form indicated in Exhibit C.

 

Section 2.02         Book-Entry Only for Class A Certificates.  (a)  Unless the
book-entry system is terminated as provided in Section 2.02(b), this paragraph
will override any other conflicting provisions of these Standard Terms, except
in the case of provisions governing Pledged Class A Certificates.  All of the
Class A Certificates will initially be registered in the name of Cede & Co., as
nominee for DTC, provided that Cede & Co. may register the transfer of such
Certificates to another nominee for DTC.  There will be one Global Class A
Certificate for each Subclass, except as otherwise requested by DTC.  The
procedures for making payments on the Class A Certificates and for giving any
notice or other communication that is permitted or required to be given to
Holders of Class A Certificates under these Standard Terms, will comply in all
respects with DTC’s rules and operational arrangements, and, notwithstanding any
other provisions in these Standard Terms, the Administrator and Freddie Mac
agree to comply with all rules and operational arrangements of DTC, as such
rules and operational arrangements change from time to time.  The exercise by
Holders and Registered Holders of Class A Certificates of the Tender Option,
mandatory tender rights, rights to retain Class A Certificates subject to
mandatory tender, consent to a conversion of Class B Certificates to Class A
Certificates, rights to elect to receive principal, the Optional Disposition
Right and all other rights granted to such Holders or Registered Holders under
the Series Certificate Agreement will be made in accordance with DTC’s rules and
operational arrangements, as such rules and operational arrangements change from
time to time.

 

(b)           If, pursuant to DTC’s rules and operating procedures, DTC gives
notice to the Administrator, that DTC will discontinue providing its services as
securities depository for the Class A Certificates or if Freddie Mac elects to
terminate the services of DTC as securities depository with respect to the
Class A Certificates, Freddie Mac will, in its sole discretion, either appoint a
successor securities depository or terminate the book-entry system for the
Class A Certificates.

 

2

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(c)           Any successor securities depository must be a clearing agency
registered with the Commission pursuant to Section 17A of the Securities
Exchange Act, and must enter into an agreement with Freddie Mac and the
Administrator agreeing to act as the depository and clearing agency for all the
Class A Certificates.  After any such agreement has become effective, DTC will
present all the Class A Certificates for registration of transfer in accordance
with Section 2.05, and the Administrator will register them in the name of the
successor securities depository or its nominee.  If a successor securities
depository has not entered into such agreement or otherwise accepted such
position at least 10 days before the effective date of termination of DTC’s
services, the book-entry system will automatically terminate and may not be
reinstated without the consent of all the Holders of the Class A Certificates.

 

(d)           If a successor securities depository is appointed, or the
Administrator receives notice from Freddie Mac that the book-entry system has
been terminated, the Administrator will, at least 10 days before such
appointment or termination is effective, give notice of such event to the
Registered Holders and will inform them either (i) of the name and address of
the successor securities depository or (ii) that certificated Class A
Certificates may now be obtained by Holders of the Class A Certificates, or
their nominees, when proper instructions have been given to DTC by the relevant
DTC Participant and when DTC has complied with the provisions of the
Series Certificate Agreement regarding registration of transfers.

 

(e)           The Administrator and Freddie Mac may enter into an amendment to
these book-entry terms to make those changes that are necessary or appropriate
if the Class A Certificates will not be held by DTC or its nominee.

 

(f)            None of Freddie Mac, the Administrator or the Remarketing Agent
will be liable to any Person, including any DTC Participant, Indirect DTC
Participant or any Person claiming any interest in any Certificate under or
through DTC, any DTC Participant or Indirect DTC Participant, for any action or
failure to act or delay in action by DTC, any DTC Participant or Indirect DTC
Participant.  In particular, none of Freddie Mac, the Administrator or the
Remarketing Agent will have any obligation with respect to the accuracy of any
records maintained by DTC, any DTC Participant or Indirect DTC Participants, the
payment by such parties of any amount in respect of any Certificate, any notice
or other communication that is permitted or required to be given to Holders or
under these Standard Terms or which is permitted or required to be given under
the Letter of Representations, the failure of DTC to effect any transfer, the
selection by DTC, any DTC Participant or Indirect DTC Participant of any Person
to receive payment in the event of a partial redemption of the Bonds, or any
consent given by DTC as Registered Holder.

 

(g)           Except as otherwise provided herein, so long as the Class A
Certificates are registered in the name of DTC or its nominee, the Administrator
may treat DTC or its nominee as, and deem DTC or its nominee to be, the sole and
absolute owner of the Class A Certificates for all purposes whatsoever,
including, without limitation, the payment of distributions to Holders of
Class A Certificates, giving or receiving notices of redemption, tender and
other matters with respect to the Class A Certificates and the selection of
Class A Certificates for redemption or tender.

 

3

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(h)           DTC shall be responsible for transmitting information and payments
to its participants who will be responsible for transmitting such information
and payments to Indirect DTC Participants and the Holders.

 

(i)            Any requirements of surrender of Class A Certificates under these
Standard Terms will be inapplicable if contrary to the rules and operational
procedures of DTC, or if DTC and the Administrator agree to waive them, and an
appropriate notation will instead be made on the related Class A Certificates
then in the possession of DTC or its nominee.

 

Section 2.03         Denominations.  The Certificates will be issued in
registered form in any Authorized Denomination.

 

Section 2.04         Execution and Authentication; Persons Deemed Owners.  A
Responsible Officer acting on behalf of the Administrator will execute and
authenticate the Certificates by manual or facsimile signature.  The signature
of an authorized Responsible Officer will bind the Administrator even if the
Responsible Officer ceases to hold such office prior to the authentication and
delivery of such Certificates or at the date of issuance of such Certificates.

 

Section 2.05         Registration of Transfer and Exchange.  (a)  The
Administrator will act as the initial Certificate Registrar for the purpose of
registering Certificates and transfers and exchanges of Certificates as provided
in these Standard Terms and in accordance with the standard procedures of the
Administrator.  Upon any resignation of the Certificate Registrar, Freddie Mac
will promptly appoint a successor Certificate Registrar or, in the absence of
such appointment, assume the duties of Certificate Registrar.  The Certificate
Registrar will appoint an office or agency in McLean, Virginia where the
Certificates may be surrendered for registration of transfer or exchange, and
presented for final payment, and where notice and demands to or upon the
Certificate Registrar with respect to the Certificates may be served, which
office will initially be the Delivery Office.

 

(b)           All Certificates issued in connection with any transfer or
exchange will be entitled to the same benefits under the Series Certificate
Agreement as the Certificates that were surrendered.

 

(c)           A Holder will not be required to pay a service charge for any
transfer or exchange of Certificates, but may be required to pay a transfer tax
or other governmental charge that may be imposed in connection with any transfer
or exchange of Certificates.  If any such tax or governmental charge is imposed
but is not paid by the transferee or transferor, but is paid by the
Administrator, the Administrator will have the right to be reimbursed the amount
of such payment from the Bond Payment Subaccount, as described in Section 4.03.

 

(d)           If an exercise of the Tender Option or Optional Disposition Right
occurs with respect to a portion, but not all, of a Class A Certificate, the
Administrator will execute, authenticate and deliver to the applicable Class A
Holder, in exchange for the surrendered Class A Certificate, one or more new
Class A Certificates, in Authorized Denominations and of the same Subclass,
having an aggregate Current Certificate Balance equal to the Current Certificate
Balance of that portion of the surrendered Class A Certificate for which the
Tender Option or Optional Disposition Right was not exercised.

 

4

--------------------------------------------------------------------------------

 

(e)           The Sponsor may at any time deliver to the Administrator for
cancellation any Certificates previously authenticated and delivered hereunder
which the Sponsor may have acquired, and all Certificates so delivered shall be
promptly cancelled by the Administrator.

 

Section 2.06         Transfer Restrictions Related to Class B Certificates.  No
Class B Certificate may be transferred without the prior written consent of
Freddie Mac, in its sole and absolute discretion; provided that beneficial
interests therein are transferable subject to conditions set forth in
Section 8.19 of the Reimbursement Agreement.  Any transfer of a beneficial
interest will require the delivery to the Administrator of an Investor Letter by
the Person acquiring such beneficial interest substantially in the form attached
as Exhibit D.

 

Section 2.07         Mutilated, Destroyed, Lost or Stolen Certificates.  (a)  If
any mutilated Certificate is surrendered to the Certificate Registrar or the
Administrator, the Administrator will execute, authenticate and deliver in
exchange a new Certificate of the same type, and having the same Current
Certificate Balance as the surrendered Certificate.  If a Holder of a destroyed,
lost or stolen Certificate provides an affidavit to the Administrator of such
occurrence and indemnity satisfactory to the Certificate Registrar or the
Administrator, the Administrator will execute, authenticate and deliver in
exchange a new Certificate of the same Class and Subclass, as applicable, and
having the same Current Certificate Balance as the destroyed, lost or stolen
Certificate.  Every new Certificate issued pursuant to this paragraph in lieu of
any mutilated, destroyed, lost or stolen Certificate will be entitled to all the
benefits of the Series Certificate Agreement equally and proportionately with
any and all other Certificates properly issued under the Series Certificate
Agreement, whether or not the mutilated, destroyed, lost or stolen Certificate
is at any time enforceable by anyone.  The provisions of this paragraph are
exclusive and will preclude (to the extent lawful) all other rights and remedies
with respect to the replacement or payment of mutilated, destroyed, lost or
stolen Certificates.

 

(b)           When any new Certificate is issued under this Section 2.07, the
Certificate Registrar or the Administrator may require that the Holder pay any
transfer tax or other governmental charge that may be imposed in relation to the
creation, issuance, transfer or registration of the new Certificate and any
other reasonable related expenses (including the fees and expenses of the
Certificate Registrar or the Administrator).  If any such amount is not paid by
the transferee or transferor, but is paid by the Administrator, the
Administrator will have the right to be reimbursed the amount of such payment
from the Bond Payment Subaccount, as described in Section 4.03.

 

Section 2.08         No Additional Liabilities or Indebtedness.  Unless a
Series Certificate Agreement provides otherwise, none of the Administrator, the
parties to the Series Certificate Agreement or the Holders of Certificates will
cause the Series Pool to incur, assume or guarantee any liability or
indebtedness.  The Administrator will have no power or authority to assign,
transfer or pledge any of the Assets of any Series Pool to any Person or
otherwise dispose of any Assets of any Series Pool, except as otherwise
permitted or required by the Series Certificate Agreement.

 

Section 2.09         Initial Authentication and Delivery of Certificates.  The
initial Certificates will be executed, authenticated and delivered by the
Administrator only after Freddie Mac executes the Series Certificate Agreement
and thereby directs the execution, authentication and delivery of the
Certificates.  The Series Certificate Agreement will identify the Persons in

 

5

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whose names the Class A Certificates are to be registered, the Current
Certificate Balances to be registered to each such Person, and also state that
the Class B Certificates are to be registered in the name of the Pledge
Custodian for the benefit of the Sponsor subject to the security interest
created by the Reimbursement Agreement in favor of Freddie Mac, but only after
each of the following is delivered or has occurred:

 

(1)           The Bonds.  The Bonds have been acquired by Freddie Mac and
transferred to the Series Pool created by the Series Certificate Agreement.

 

(2)           Initial Deposits.  The initial deposit of cash required by the
Series Certificate Agreement, if applicable, has been deposited in the
Distribution Account.

 

(3)           Opinion of Counsel.  An Opinion of Tax Counsel, dated the Date of
Original Issue, with respect to certain tax matters and an opinion of the
General Counsel or one of the Deputy General Counsels to Freddie Mac dated the
Date of Original Issue with respect to the status of the Class A Certificates as
exempt securities within the meaning of the laws administered by the United
States Securities and Exchange Commission, and certain other matters pertaining
to the authorization and enforceability of the Series Certificate Agreement.

 

(4)           Reimbursement Agreement.  The original executed Reimbursement
Agreement has been delivered to the Administrator.

 

(5)           Sponsor’s Acceptance.  If the Sponsor is designated by Freddie Mac
in the Series Certificate Agreement, an acceptance by the Sponsor of its
obligations set forth in the Series Certificate Agreement.

 

(6)           Rating Letters.  To the extent receipt of a rating letter is a
condition to the issuance of any Certificates as provided in the
Series Certificate Agreement, a favorable letter from the Rating Agency.

 

Section 2.10         Identification of the Assets to a Series Pool.  (a) 
Freddie Mac acknowledges its ownership of the Bonds on the Date of Original
Issue.  By its execution of the Series Certificate Agreement, Freddie Mac will
simultaneously transfer the Bonds to the Series Pool created by the
Series Certificate Agreement for the benefit of the Holders of the related
Certificates, together with all of its interest in (a) the Bonds, including all
Bond Payments made from and after the Date of Original Issue and all
certificates and instruments, if any, representing the Bonds, (b) the
Distribution Account (including all investments held therein and earnings
thereon) and (c) all proceeds of the Bonds and the Distribution Account of every
kind and nature.

 

(b)           Freddie Mac will segregate the Assets of each Series Pool from all
of its general assets and from any other bonds in its possession, and will hold
the Assets of each Series Pool at all times during the existence of the
Series Pool for the benefit of the related Holders.  The Holders of the Class A
Certificates and Class B Certificates will have the respective rights with
respect to the Assets specified for each Class and Subclass, as applicable, as
set forth in the Series Certificate Agreement.

 

Section 2.11         Delivery and Possession of Bonds.  The Bonds identified to
a Series Pool will not be subject to any Lien in favor of the Administrator
(provided, Freddie Mac in its

 

6

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corporate capacity will be the beneficiary of the pledge of the Class B
Certificates and any Pledged Class A Certificates).

 

Section 2.12         Purposes and Powers.  The Series Pool has been formed for
the sole purpose of, and will engage only in the following activities: 
(a) acquiring, owning, holding and selling the Assets of the Series Pool;
(b) issuing and selling Certificates as provided in the Series Certificate
Agreement; and (c) such other activities as may be required by the express terms
of the Series Certificate Agreement in connection with the conservation and
administration of the Assets of the Series Pool and distributions to Holders.

 

Section 2.13         Recharacterization.  The parties intend that the transfer
of the Assets to the Series Pool will be an acquisition by the Administrator on
behalf of the Holders of all of Freddie Mac’s interest in the Series Pool
Assets.  The parties do not intend that such transfer be deemed a pledge of the
Series Pool Assets by Freddie Mac to secure a debt or other obligation of
Freddie Mac.  However, if, in spite of the parties’ intent, the Series Pool
Assets are held by a court to continue to be the property of Freddie Mac (a) the
Series Certificate Agreement will be deemed a security agreement within the
meaning of the applicable UCC, and may be properly filed as a financing
statement and (b) the transfer of the Series Pool Assets will be deemed a Grant
by Freddie Mac to the Administrator of an interest in all of Freddie Mac’s
interest in the Series Pool Assets, and all amounts payable to the holders of
the Series Pool Assets in accordance with the terms of the Series Certificate
Agreement, and all related proceeds.  Any assignment of the interests of the
Holders of the Certificates pursuant to any provision of the Series Certificate
Agreement will also be deemed to be an assignment of any security interest
created by this recharacterization provision.  The Administrator will cause to
be filed UCC financing statements on a periodic basis as necessary to maintain a
security interest in the Series Pool Assets in favor of the Administrator in the
event of any such recharacterization.

 

Section 2.14         Decrease of Aggregate Outstanding Class B Certificate
Balance.  On any day that is (A) a Business Day with the prior written consent
of 100% of the Holders of Class A Certificates and (B) at least 10 Business Days
following the delivery of notice of the below conversion to the Registered
Holders, with the prior written consent of Freddie Mac, the Sponsor, if a Holder
of Class B Certificates, acting alone or all of the Holders of Class B
Certificates acting together, may direct the Administrator to convert a
specified Current Certificate Balance of Class B Certificates to an equivalent
Current Certificate Balance of Class A Certificates.  If the Sponsor is the
directing Holder alone, the Current Certificate Balance of Class B Certificates
to be converted may be equal to or less than the Current Certificate Balance
that it holds, subject to maintaining a minimum Current Certificate Balance of
Class B Certificates of $5,000.  If all Holders of Class B Certificates make
such direction, the Current Certificate Balance of Class B Certificates to be
converted for each such Holder will be proportional to each Holder’s Current
Certificate Balance of Class B Certificates prior to conversion, subject to the
Sponsor’s maintaining a minimum Current Certificate Balance of Class B
Certificates of $5,000.  Any such conversion will be effected by delivering to
the Administrator (A) at least 15 Business Days prior to the date on which such
conversion is to occur (i) a written request to increase the Current Certificate
Balance of such Class A Certificates, and (ii) the written consent of Freddie
Mac, and (B) on the date of the conversion, an equivalent Current Certificate
Balance of Class B Certificates.  The Administrator will promptly notify Freddie
Mac and DTC of the resulting reduction in the Aggregate Outstanding

 

7

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Class B Certificate Balance and the corresponding increase in the Aggregate
Outstanding Class A Certificate Balance, and the Liquidity Commitment will be
increased accordingly.

 

ARTICLE III

SPONSOR COVENANTS; RELEASE EVENT

 

Section 3.01         Negative Covenants.  The Sponsor will not:

 

(I)            SELL, TRANSFER, EXCHANGE OR OTHERWISE DISPOSE OF, OR OTHERWISE
GRANT A LIEN ON, ANY SERIES POOL ASSETS; OR

 

(II)           CLAIM ANY CREDIT OR DEDUCTION WITH RESPECT TO THE PRINCIPAL OR
INTEREST PAYABLE ON THE CERTIFICATES OR PURSUANT TO THE CREDIT ENHANCEMENT OR
THE LIQUIDITY FACILITY (OTHER THAN FEES PAYABLE WITH RESPECT TO THE PROVISION OF
SUCH CREDIT ENHANCEMENT AND LIQUIDITY FACILITY OR PAYMENT OF ADMINISTRATOR FEES
AND OTHER AMOUNTS PROPERLY WITHHELD FROM SUCH PAYMENTS UNDER THE CODE OR OTHER
APPLICABLE TAX LAW) ON ITS FEDERAL, STATE OR LOCAL INCOME TAX FILINGS.

 

Section 3.02         Other Obligations.  Subject to Section 3.05, the Sponsor
accepts all of its obligations under each of the Documents and will comply in
all material respects with any obligations that are imposed on the Sponsor
pursuant to any of such Documents, whether or not explicitly set forth in the
Series Certificate Agreement.

 

Section 3.03         Maintenance of Office or Agency.  The Sponsor will maintain
an office where notices to the Sponsor in connection with the Certificates and
the Series Certificate Agreement may be served.  The Sponsor will give prompt
written notice to Freddie Mac, the Administrator and the Remarketing Agent of
any change in the location of any notice office.

 

Section 3.04         Payment of Certain Fees and Expenses.  The
Series Certificate Agreement and the Reimbursement Agreement will provide for
the payment to Freddie Mac of the Freddie Mac Fee.  The Sponsor also agrees:

 

(A)           EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THE SERIES CERTIFICATE
AGREEMENT, TO PAY, OR CAUSE TO BE PAID, TO THE ADMINISTRATOR (IF DIFFERENT THAN
FREDDIE MAC) THE ADMINISTRATOR FEE; TO PAY, OR CAUSE TO BE PAID, TO THE
REMARKETING AGENT THE REMARKETING AGENT FEE (EACH TO THE EXTENT NOT PAID FROM
FUNDS RECEIVED BY THE SERIES POOL); AND TO PAY, OR CAUSE TO BE PAID, TO THE
PLACEMENT AGENT ANY AMOUNTS OWED TO THE PLACEMENT AGENT PURSUANT TO THE
REMARKETING AGREEMENT IN CONNECTION WITH PLACING THE CLASS A CERTIFICATES;

 

(B)           EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THE SERIES CERTIFICATE
AGREEMENT OR THE LAST PARAGRAPH OF SECTION 3.5 OF THE REIMBURSEMENT AGREEMENT,
TO REIMBURSE OR CAUSE REIMBURSEMENT OF THE ADMINISTRATOR FOR ALL REASONABLE
OUT-OF-POCKET EXPENSES, DISBURSEMENTS AND ADVANCES INCURRED OR MADE BY IT IN
ACCORDANCE WITH THE SERIES CERTIFICATE AGREEMENT (INCLUDING THE REASONABLE
COMPENSATION, EXPENSES AND DISBURSEMENTS OF ITS RESPECTIVE AGENTS AND COUNSEL),
EXCEPT ANY SUCH EXPENSE, DISBURSEMENT OR ADVANCE AS MAY BE ATTRIBUTABLE TO ITS
GROSS NEGLIGENCE, BAD FAITH, FRAUD OR WILLFUL MISCONDUCT; AND

 

8

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(C)           TO PAY ANY OTHER AMOUNTS REQUIRED TO BE PAID BY IT PURSUANT TO THE
DOCUMENTS.

 

The provisions of this Section 3.04 will survive any termination of the
Series Certificate Agreement.

 

Section 3.05         Liabilities and Recourse Against Freddie Mac and the
Sponsor for Liabilities of the Series Pool.  (a)  The Sponsor will perform only
those duties of it that are specifically set forth in the Series Certificate
Agreement, and does not assume any other obligation or liability under the
Series Certificate Agreement.  If the Series Certificate Agreement provides that
the Partnership Factors apply to the Series Pool, the Sponsor will be
corporately liable for any fees, expenses and other liabilities of the
Series Pool arising under the Series Certificate Agreement to the extent not
otherwise satisfied (excluding amounts due to Holders in respect of their
Certificates).  Except to the extent payable from the cash flow of the Bonds or
by the Holders of Class B Certificates, the Sponsor agrees that any such fees,
expenses and other liabilities will be without recourse against any other
Holder, and that any such fees, expenses and liabilities will not be secured by
the Bonds or any other Asset of the Series Pool.

 

(b)           Subject to any credit enhancement with respect to any Bonds, the
Issuer of each Bond is the sole obligor with respect to the payment of the
principal or redemption price of such Bond, and interest on the Bond.  The
payments on the Bonds, amounts in the Distribution Account, the Credit
Enhancement and the Liquidity Facility constitute the sole security for the
Certificates.  Neither the Sponsor nor Freddie Mac has any obligation whatsoever
with respect to any Bond or any payments due on the Bonds or with respect to the
security for, or the sufficiency of, any such payments or any obligations of the
Issuer, any related credit enhancer or any other Person arising in connection
with the Bonds, other than the obligations of Freddie Mac under the Credit
Enhancement and the Liquidity Facility.  In the event of a default in the
payment of the principal of or interest on, or any other amount payable with
respect to, any of the Bonds, or in the event of a default under any credit
enhancement with respect to such Bond, neither the Sponsor nor Freddie Mac will
have any duty to proceed against the Issuer or any related credit enhancer and
no obligation to assert any rights and privileges of the Holders with respect to
such Bonds or such credit enhancement.  Neither the Sponsor nor Freddie Mac will
be under any obligation to the Class A Holders whatsoever to appear in,
prosecute or defend any action, suit or other proceeding in respect of such
Bonds or such credit enhancement.  The Servicer and Special Servicer will be
entitled to service and conduct asset resolution with respect to the Bonds and
related Bond Mortgage Loans subject to the terms of the Servicing Agreement with
Freddie Mac.

 

(c)           Payment of the Purchase Price on any Class A Certificate will be
made solely from amounts received by the Administrator pursuant to Section 6.06.

 

(d)           The provisions of this Section 3.05 will survive any termination
of the Series Certificate Agreement.

 

(e)           Without limiting the foregoing, it is expressly acknowledged and
agreed by the parties to the Series Certificate Agreement and other Documents,
and any beneficiary of the Series Certificate Agreement by acceptance of its
status as such beneficiary, and by Holders upon acceptance of a Certificate, and
anyone having a beneficial interest in the Certificates by acceptance of its
status as such beneficiary, that:

 

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(I)            UNDER NO CONDITION OR CIRCUMSTANCE WILL ANY RECOURSE OR PERSONAL
LIABILITY WHATEVER ATTACH TO OR BE INCURRED BY, AND UNDER NO CONDITION OR
CIRCUMSTANCE WILL ANY DEFICIENCY OR OTHER JUDGMENT BE HAD AGAINST, THE OFFICERS,
DIRECTORS, AGENTS, EMPLOYEES OR STOCKHOLDERS OF THE SPONSOR OR FREDDIE MAC, BY
REASON OF ANY OBLIGATION, COVENANT, AGREEMENT, REPRESENTATION, WARRANTY OR
INDEMNITY OF THE SPONSOR OR FREDDIE MAC UNDER THE SERIES CERTIFICATE AGREEMENT,
ANY CERTIFICATES OR ANY DOCUMENT, INSTRUMENT OR CERTIFICATE DELIVERED HEREUNDER
OR THEREUNDER; AND

 

(II)           THEY EXPRESSLY WAIVE RECOURSE AGAINST, OR PERSONAL LIABILITY OF,
ANY OFFICER, DIRECTOR, AGENT, EMPLOYEE OR STOCKHOLDER OF THE SPONSOR OR FREDDIE
MAC FOR BREACHES BY SPONSOR OR FREDDIE MAC OF ANY SUCH OBLIGATION, COVENANT,
AGREEMENT, REPRESENTATION, WARRANTY OR INDEMNITY EITHER AT COMMON LAW OR AT
EQUITY, OR BY STATUTE OR CONSTITUTION; AND

 

(III)          THE PERMISSIVE RIGHT OF THE SPONSOR OR FREDDIE MAC TO TAKE
ACTIONS SET FORTH IN THE SERIES CERTIFICATE AGREEMENT WILL NOT BE CONSTRUED AS A
DUTY, AND NEITHER THE SPONSOR NOR FREDDIE MAC WILL BE ANSWERABLE FOR OTHER THAN
ITS OWN FRAUD, BAD FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.  EACH OF THE
SPONSOR AND FREDDIE MAC WILL NOT BE LIABLE FOR ANY ACTION THAT IT TAKES OR OMITS
TO TAKE IN GOOD FAITH (INCLUDING, BUT NOT LIMITED TO ANY ACTION IT TAKES OR
OMITS TO TAKE AS TAX MATTERS PARTNER PURSUANT TO SECTION 11.10) AND, IN THE
ABSENCE OF FRAUD, BAD FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, THAT IT
BELIEVES TO BE AUTHORIZED OR WITHIN ITS RIGHTS OR POWERS.

 

(f)            Each Registered Holder and Holder (by acceptance of its
Certificate), each party to the Series Certificate Agreement (by its execution
of the Series Certificate Agreement), and any other beneficiary of the
Series Certificate Agreement (by its acceptance of its status as such a
beneficiary), expressly acknowledges and agrees to each and every provision of
this Section 3.05.

 

Section 3.06         The Sponsor’s Interest and Net Worth.  The Sponsor
represents, warrants and covenants that it (a) has and will maintain throughout
the term of the Series Certificate Agreement a Capital Account Balance in an
amount not less than the Minimum Sponsor Interest and, if the Series Certificate
Agreement provides that the Partnership Factors will apply to the Series Pool, a
net worth as determined in compliance with Section 4.07 of Revenue Procedure
89-12; and (b) will not take a distribution of any amount from the Assets of the
Series Pool (other than in connection with the termination of the Series Pool)
if such distribution would result in a Capital Account Balance with respect to
its interest in the Series Pool less than the Minimum Sponsor Interest.  These
representations, warranties and covenants will survive the delivery of the
related Bonds and the Certificates.

 

Section 3.07         Successor Sponsor.  If a party other than Freddie Mac is
the Sponsor and the Sponsor wishes to assign its rights and obligations under
the Series Certificate Agreement to another Person and Freddie Mac provides its
prior written consent, the Sponsor will provide notice to the Administrator, the
Remarketing Agent and each applicable Rating Agency, together with the written
consent of Freddie Mac which shall not be unreasonably withheld, at least 10
Business Days prior to the proposed effective date of such assignment.  Such
notice (a “Successor Sponsor Notice”) will set forth (A) a brief statement that
the Sponsor is assigning its rights and obligations hereunder to the successor
Sponsor named therein and (B) the proposed

 

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effective date of such assignment.  When the Administrator has received the
Successor Sponsor Notice, with the required Freddie Mac consent, the assignment
of the Sponsor to its successor will be irrevocable and will take place on the
proposed date set forth in the Successor Sponsor Notice.  The Administrator
shall, promptly after its receipt of a Successor Sponsor Notice, provide notice
of the same to the Registered Holders of the Class A Certificates.

 

Section 3.08         Release Event.  At the election of Freddie Mac, subject to
and in accordance with the Reimbursement Agreement, when a Release Event occurs,
the affected series of Bonds (or portion thereof) will be subject to mandatory
purchase from the Series Pool at the Release Purchase Price.  Payment of such
Release Purchase Price will be made by Freddie Mac pursuant to the Credit
Enhancement or by the Sponsor.  Any Bond purchased on the related Release Event
Date will be deemed purchased by the Sponsor at the Release Purchase Price from
funds provided pursuant to the Credit Enhancement or, if applicable, by the
Sponsor.  In addition, Hypothetical Gain Share, if any, as calculated by Freddie
Mac, will be payable by the Administrator on the Release Event Date to the
Holders of Class A Certificates on the Release Event Date from amounts provided
by the Sponsor to the Administrator on such Release Event Date (and such
Hypothetical Gain Share will be paid to the Class A Certificateholders in
addition to the Release Purchase Price).  When purchased with monies provided
pursuant to the Credit Enhancement, the Administrator will cause the transfer of
the related Bonds to the Pledge Custodian to be held pursuant to Article VIII of
the Reimbursement Agreement.  When purchased with funds provided by the Sponsor,
the Administrator will cause the transfer and release of the related Bonds to
the Sponsor or as directed by the Sponsor.

 

When the Administrator receives amounts paid by Freddie Mac or the Sponsor in
connection with a Release Event, the Administrator will promptly deposit an
amount equal to the related Outstanding Bond Balance plus Hypothetical Gain
Share, if applicable, into the Bond Payment Subaccount-Principal and an amount
equal to accrued interest thereon into the Bond Payment Subaccount-Interest. 
The Administrator will provide notice of any Release Event to the Registered
Holders, each applicable Rating Agency and the Remarketing Agent concurrently
with the applicable Release Event Date, provided any failure to provide such
notice shall not affect the validity of any payment made pursuant to this
Section.

 

Section 3.09         Sponsor’s Indemnification of the Administrator.  The
Sponsor will indemnify and hold harmless the Administrator from and against any
loss, liability, expense, damage or injury suffered or sustained by reason of
any acts, omissions or alleged acts or omissions arising out of the activities
of the Sponsor pursuant to the Series Certificate Agreement, including but not
limited to, any judgment, award, settlement (to which the Sponsor has given its
prior written consent, which will not be unreasonably withheld), reasonable
attorneys’ fees and expenses and other costs or expenses incurred in connection
with the defense of any actual or threatened action proceeding or claim;
provided, however, that the Sponsor will not indemnify the Administrator if such
acts, omissions or alleged acts or omissions constitute fraud, gross negligence,
bad faith or willful misconduct by the Administrator.  This Section 3.09 will
survive (i) the resignation or removal of the Administrator, (ii) the
termination of the Series Certificate Agreement and (iii) the transfer by the
Sponsor of any portion of its Certificates with respect to obligations incurred
by the Sponsor under this Section 3.09 prior to such transfer.

 

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ARTICLE IV

 

ACCOUNTS AND DISBURSEMENTS; CREDIT ENHANCEMENT

 

Section 4.01         Collection of Money.  Except as otherwise expressly
provided in the Series Certificate Agreement, the Administrator will demand
payment or delivery of, and will directly receive and collect all money and
other property payable to the Administrator pursuant to the Series Certificate
Agreement, and will hold such money and property as part of the Assets of the
Series Pool.

 

Section 4.02         Distribution Account; Establishment; Investments.  (a)  On
or before the Date of Original Issue, the Administrator will establish the
Distribution Account into which the Administrator will deposit all Bond Payments
received from time to time, including Bond Redemption Premiums, all amounts paid
pursuant to the Credit Enhancement, all amounts paid in connection with a
Release Event, all Administrator Advances and all Bankruptcy Coverage Payments. 
The Distribution Account will have the following subaccounts:  (i) the Bond
Payment Subaccount – Interest; (ii) the Bond Payment Subaccount – Principal; and
(iii) the Bond Payment Subaccount – Holdback.

 

(b)           The Administrator will deposit into the Bond Payment
Subaccount–Interest or Bond Payment Subaccount–Principal, as applicable,
promptly upon receipt, Bond Payments in respect of each Bond Interest Payment
Date or Bond Redemption Date, as applicable, Bond Payments in connection with
any Release Event and any Bankruptcy Coverage Payments.  The Administrator will
also deposit into the Bond Payment Account–Interest any Administrator Advances
it makes pursuant to Section 4.09.  Prior to any Bond Interest Payment Date or
Bond Redemption Date, as applicable, the Administrator will notify Freddie Mac
of the amounts of each Bond Payment anticipated on such date.  In connection
with any Payment Date, the Administrator will notify Freddie Mac as soon as
practicable by Electronic Notice of any amounts not received by the
Administrator for such Payment Date corresponding to scheduled interest on and
principal of the Bonds.  If the Administrator receives any Bond Redemption
Premium, it will promptly deposit it into the Bond Payment Subaccount –
Principal.

 

(c)           The Administrator will hold all sums under the Series Certificate
Agreement for the payment of amounts due with respect to the Certificates
separate and apart from its other assets for the benefit of the Persons entitled
thereto.

 

(d)           Upon receipt by the Administrator of any Bankruptcy Coverage
Payments, the Administrator will promptly remit such monies to present and
former Holders to the extent they are entitled thereto.

 

(e)           In addition to the Distribution Account the Administrator may
establish other accounts under the Series Certificate Agreement in order to
carry out its duties.

 

(f)            Amounts on deposit in the Distribution Account (including each
Subaccount thereof) may be invested by the Administrator at the direction of the
Sponsor in Permitted Investments, and any investment earnings will be
distributed on each Payment Date pursuant to Section 4.03(a).  Any such
Permitted Investments must mature or otherwise provide immediately available
funds in an amount equal to the originally invested amounts plus interest
earnings

 

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thereon no later than each Payment Date.  Any interest earnings with respect to
amounts on deposit in the Bond Payment Subaccount — Interest will be retained
therein pending distribution on each Payment Date.  Any interest earnings with
respect to amounts on deposit in the Bond Payment Subaccount — Principal shall
be transferred on each Payment Date to the Bond Payment Subaccount — Interest
prior to the distributions to be made on each Payment Date pursuant to
Section 4.03(a) and Section 4.03(b).

 

(g)           The Administrator shall not be liable for any loss sustained with
respect to investments of amounts held in the Distribution Account.

 

Section 4.03         Distributions and Payments from Bond Payment Subaccounts. 
(a)  No later than 11:00 a.m. on each Payment Date, the Administrator will
withdraw from the Bond Payment Subaccount—Interest and the Bond Payment
Subaccount—Holdback the Available Funds deposited into each such subaccount and
will distribute or retain, as applicable, the following amounts in the following
priority, in each case to the extent of remaining Available Funds (provided that
on the First Payment Date, before making the following distributions, the
Administrator will transfer to the Person designated by the Sponsor the amount,
if any, set forth in the Series Certificate Agreement as Accrued Interest on the
Bonds):

 

(I)            FIRST, TO THE SERVICER, THE AMOUNT OF THE SERVICING FEE DUE AND
PAYABLE ON SUCH DATE;

 

(II)           SECOND, TO THE SPECIAL SERVICER, THE AMOUNT OF THE SPECIAL
SERVICING FEE (IF ANY) DUE AND PAYABLE ON SUCH DATE;

 

(III)          THIRD, PRO RATA TO

 

(A)          THE REGISTERED HOLDERS OF CLASS A CERTIFICATES (OTHER THAN PLEDGED
CLASS A CERTIFICATES), THE AGGREGATE OF THE AMOUNTS OF INTEREST ACCRUED, FOR
EACH DAY IN THE ACCRUAL PERIOD RELATED TO THAT PAYMENT DATE AT THE APPLICABLE
RESET RATE IN EFFECT FOR EACH SUCH DAY AND FOR EACH SEPARATE SUBCLASS, ON THE
CURRENT CERTIFICATE BALANCE OF SUCH CERTIFICATES; AND

 

(B)           THE PLEDGE CUSTODIAN WITH RESPECT TO PLEDGED CLASS A CERTIFICATES,
THE AGGREGATE OF THE AMOUNTS OF INTEREST ACCRUED, FOR EACH DAY IN THE ACCRUAL
PERIOD RELATED TO SUCH PAYMENT DATE AT THE APPLICABLE RESET RATE IN EFFECT FOR
EACH SUCH DAY AND FOR EACH SEPARATE SUBCLASS, ON THE CURRENT CERTIFICATE BALANCE
OF SUCH PLEDGED CLASS A CERTIFICATES;

 

(IV)          FOURTH, TO THE ADMINISTRATOR, THE AMOUNT OF THE AGGREGATE ACCRUED
DAILY ADMINISTRATOR ADVANCE CHARGES UNPAID ON SUCH DATE (IF SECTION 4.09 IS MADE
APPLICABLE UNDER THE SERIES CERTIFICATE AGREEMENT);

 

(V)           FIFTH, TO THE ADMINISTRATOR (IF SECTION 4.09 IS MADE APPLICABLE
UNDER THE SERIES CERTIFICATE AGREEMENT), THE AMOUNT OF ANY OUTSTANDING
ADMINISTRATOR ADVANCES PREVIOUSLY MADE TO HOLDERS OF CLASS A CERTIFICATES AS OF
SUCH PAYMENT DATE;

 

(VI)          SIXTH, TO FREDDIE MAC, THE AMOUNT OF THE FREDDIE MAC FEE DUE AND
PAYABLE ON SUCH DATE;

 

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(VII)         SEVENTH, TO THE ADMINISTRATOR, THE AMOUNT OF THE ADMINISTRATOR FEE
DUE AND PAYABLE ON SUCH DATE AND ALL OTHER REASONABLE AMOUNTS PAYABLE TO THE
ADMINISTRATOR UPON THE ISSUANCE OF A NEW CERTIFICATE PURSUANT TO SECTION 2.05 OR
SECTION 2.07 OR AS REIMBURSEMENT FOR ITS OUT-OF-POCKET EXPENSES;

 

(VIII)        EIGHTH, IF PROVIDED FOR IN THE SERIES CERTIFICATE AGREEMENT, PRO
RATA, TO THE HOLDERS OF CLASS A CERTIFICATES, THEIR CLASS A CERTIFICATE NOTIONAL
ACCELERATED PRINCIPAL PAYDOWN AMOUNTS, IF ANY;

 

(IX)           NINTH, TO THE REMARKETING AGENT, THE AMOUNT OF THE REMARKETING
AGENT FEE (IF ANY) DUE AND PAYABLE ON SUCH DATE;

 

(X)            TENTH, TO THE BOND PAYMENT SUBACCOUNT—HOLDBACK, THE AMOUNT
NECESSARY TO FULLY FUND THE HOLDBACK REQUIREMENT, IF APPLICABLE, AS OF SUCH
PAYMENT DATE; AND

 

(XI)           ELEVENTH, TO THE PLEDGE CUSTODIAN FOR THE BENEFIT OF THE HOLDERS
OF CLASS B CERTIFICATES TO BE DISTRIBUTED IN ACCORDANCE WITH THE TERMS OF THE
REIMBURSEMENT AGREEMENT, THE REMAINDER.

 

(b)           No later than 11:00 a.m. on the First Redemption Date and on each
Redemption Date thereafter, the Administrator will withdraw from the Bond
Payment Subaccount — Principal the Available Funds deposited into that
subaccount and will distribute the following amounts in the following priority,
in each case to the extent of remaining Available Funds, but in the case of
Subsection 4.03(b)(i) below, unless the Mandatory Class A Principal Payment Date
has occurred, distributions will only be made pursuant to such Subsection with
respect to the Class A Certificates or any Subclass thereof to the extent the
Administrator has received a Principal Payment Election Notice from the Holders
thereof pursuant to Section 4.10, which notice has become effective and has not
been subsequently rescinded pursuant to Section 4.10:

 

(i)            first, pro rata to (A) the Pledge Custodian, to pay the
Outstanding Certificate Balance of Pledged Class A Certificates and (B) the
Registered Holders of each Subclass of Class A Certificates, the sum of: 
(1) the remaining Available Funds (other than funds in respect of any Redemption
Premium Payment or any Hypothetical Gain Share payable in connection with a
Release Event) until the Aggregate Outstanding Class A Certificate Balance is
reduced to zero; and (2) the Class A Holder’s allocable share of the respective
portion of the Redemption Premium Payment, if any, payable to Holders,
determined in accordance with the definition of Gain Share or, in connection
with a payment arising from a Release Event, the Class A Holder’s allocable
share of the Hypothetical Gain Share; provided that, if Freddie Mac makes a
principal payment in connection with a Release Event, Freddie Mac may direct
subject to the provisions of the Reimbursement Agreement that the portion of
such principal payment to be paid pro rata to the Pledge Custodian with respect
to the Pledged Class A Certificates and to the Registered Holders of Class A
Certificates will be determined using the following formula:

 

Amount to be paid = X + Y

where X = (60%)(A + B) minus B

and Y = A minus (X + C minus D + E) [BUT Y WILL NEVER BE LESS

 

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THAN ZERO]

 

and where:

 

A =         the principal amount paid by Freddie Mac related to the applicable
tax-exempt Bonds subject to a Release Event

B =          the outstanding principal amount of taxable bonds that financed the
same Project as the applicable Bonds

C =          the Current Class B Certificate Balance

D =          the Minimum Sponsor Interest ($5,000 where Partnership Factors have
not been elected)

E =          prior distributions of principal other than to Holders of Class A
Certificates (including Pledged Class A Certificates) or Holders of Class B
Certificates to pay amounts described in Subsection 4.03(b)(ii) below;(1)

 

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(1)  Example 1:

Assumptions:

1.     Outstanding Bond Balance of applicable Bonds:  $9,000,000

2.     Outstanding principal amount of related taxable bonds:  $1,000,000

3.     Current Class B Certificate Balance:  $20,000,000

4.     Partnership Factors have not been elected

5.     No prior distributions of principal other than to Holders of Class A
Certificates (including Pledged Class A Certificates), and Class B Certificates
have been made.

 

X =  (60%)($9,000,000 + $1,000,000) minus $1,000,000

X =  (60%)($10,000,000) minus $1,000,000

X =  $6,000,000 minus $1,000,000

X =  $5,000,000

Y =  $9,000,000 minus ($5,000,000 + ($20,000,000 minus ($5,000 + $0)))

Y =  $9,000,000 minus ($5,000,000 + ($20,000,000 minus $5,000))

Y =  $9,000,000 minus $24,995,000

Y is less than zero, so (Y) equals zero

 

Because X + Y = $5,000,000, $5,000,000 is the amount of principal paid pro rata
against the Pledged Class A Certificates and Class A Certificates and $4,000,000
is paid against the Class B Certificates.  Pledged Class A Certificates and
Class A Certificates are redeemed pro rata in the amount of $5,000,000 and
Class B Certificates are redeemed in the amount of $4,000,000.  Redemption
payments made on the Pledged Class A Certificates are paid to the Pledge
Custodian; redemption payments made on the Class A Certificates are paid to the
Registered Holders of Class A Certificates.  Redemption payments made on the
Class B Certificates are paid to the Pledge Custodian.

 

Example 2:

Assumptions:

 

1.

 

Same assumptions, with the only difference being that the Current Class B
Balance is $2,000,000.

 

X = $5,000,000

Y = $9,000,000 minus ($5,000,000 + ($2,000,000 minus ($5,000 + $0)))

Y = $9,000,000 minus ($5,000,000 + $1,995,000)

Y = $9,000,000 minus $6,995,000

Y = $2,005,000

 

Because X + Y = $7,005,000, $7,005,000 is the amount of principal paid pro rata
against the Pledged Class A Certificates and the Class A Certificates and
$1,995,000 is principal paid against the Class B Certificates.

 

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(ii)           second, to the Servicer, the Special Servicer, the Administrator,
Freddie Mac and the Remarketing Agent, amounts owed to such parties pursuant to
Subsections 4.03(a)(i), (ii), (iv), (v), (vi), (vii) and (ix) in the same order
of priority to the extent any such amounts were not paid pursuant to such
subsections;

 

(iii)          third, (subject to the provisions of Section 4.03(c) and the
agreement of the Sponsor to maintain a Minimum Sponsor Interest), to the Pledge
Custodian for the benefit of Holders of Class B Certificates to be distributed
in accordance with the terms of the Reimbursement Agreement, the remainder.

 

The foregoing provisions of this Section 4.03(b) notwithstanding, if Freddie Mac
makes a principal payment in connection with a Release Event, Freddie Mac shall
direct if required by Section 5.3 of the Reimbursement Agreement that the entire
amount of such payment be made to the Pledge Custodian for the benefit of the
Holders of Class B Certificates to be distributed in accordance with the terms
of the Reimbursement Agreement.

 

(c)           All distributions made to Holders described above on each Payment
Date will be made to the Registered Holders of the Certificates of record on the
related Regular Record Date, based on the Current Certificate Balances of their
respective Certificates; provided, however, that the final payment on each
Certificate will be made only in accordance with payments to be made on a
termination of the Series Pool pursuant to Article XIII.  Subject to
Section 2.02(b), each distribution with respect to Class A Certificates or
Pledged Class A Certificates will be paid to DTC for distribution to DTC
Participants, Indirect Participants and Holders in accordance with the Letter of
Representations and the rules and regulations of DTC.  Each distribution with
respect to Class B Certificates will be paid to the Pledge Custodian on behalf
of the Holders of the Class B Certificates.  Any such payment to the Pledge
Custodian will count as a payment with respect to the Class B Certificates when
paid.

 

(d)           If a payment error occurs, the Administrator, in its sole
discretion, may elect to correct the error by adjusting payments to be made on
later Payment Dates or in any other manner as it deems appropriate.

 

Section 4.04         Administrator May Appoint Paying Agents.  The Administrator
may appoint one or more Paying Agents to perform the obligations of the
Administrator under Section 4.03.  Each such Paying Agent will execute and
deliver to Freddie Mac an instrument in which such Paying Agent agrees with
Freddie Mac to comply with all obligations and covenants imposed on Paying
Agents by the Series Certificate Agreement and by such instrument.  If
appointed, a Paying Agent will provide notices to Freddie Mac pursuant to
Section 6.06(a)(v) in connection with payments pursuant to the Liquidity
Facility.

 

Section 4.05         General Provisions Regarding Accounts.  The Distribution
Account and its related subaccounts will relate solely to the Certificates and
to the Series Pool Assets, and funds in the Distribution Account and related
subaccounts will not be commingled with any other funds.

 

Section 4.06         Pledged Class A Certificates.  (a)  The Administrator will
not obtain separate CUSIP identification numbers for Pledged Class A
Certificates unless required by DTC.  The Administrator will take any reasonable
action requested by Freddie Mac in order to perfect

 

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or otherwise safeguard its security interest in the Pledged Class A
Certificates, including arranging for such pledge to be noted in the records of
DTC Participants.

 

(b)           The Tender Option will not be effective with respect to any
Pledged Class A Certificate, nor will any Pledged Class A Certificate be subject
to Mandatory Tender on any Mandatory Tender Date.

 

(c)           If the Class A Certificates are ever withdrawn from a book-entry
system with DTC or another depository, when a Certificate becomes a Pledged
Class A Certificate, the Administrator will exchange such Certificate for one or
more new Certificates representing, separately, Pledged Class A Certificates and
Certificates that do not constitute Pledged Class A Certificates.

 

Section 4.07         Reports to Holders.  (a)  On or about the second Business
Day preceding each Payment Date, Freddie Mac will post on its Internet web-site
the following information regarding the Class A Certificates:

 

(I)            THE RELATED PAYMENT DATE FOR SUCH MONTHLY REPORT;

 

(II)           THE CLASS FACTOR FOR THE CLASS A CERTIFICATES; AND

 

(III)          THE WEIGHTED AVERAGE OF THE RESET RATE FOR THE PRECEDING MONTHLY
PERIOD.

 

If the Class A Certificates are to be redeemed in full on a Redemption Date, a
notice as required by Section 13.02(a) will also be delivered by the
Administrator.

 

(b)           Any failure by Freddie Mac to post the information or provide the
notice described in Section 4.07(a) above, will not impair or affect the
validity of the redemption of any other Certificate.

 

Section 4.08         Reductions of the Aggregate Outstanding Amounts.  When any
Certificates are transferred to the Administrator for cancellation, the
Administrator will cancel those Certificates, and following such cancellation,
the Aggregate Outstanding Certificate Balance will be reduced by the Current
Certificate Balance of the canceled Certificates.

 

Section 4.09         Administrator Advances and Daily Administrator Advance
Charges.  The Administrator may make Administrator Advances, if the
Series Certificate Agreement provides for them to be made, as described below.

 

(A)           ADMINISTRATOR TO MAKE ADMINISTRATOR ADVANCES.  THE ADMINISTRATOR
MAY, BUT NEED NOT, MAKE ADMINISTRATOR ADVANCES TO HOLDERS OF CLASS A
CERTIFICATES ON A PAYMENT DATE IN AN AMOUNT UP TO THE REQUIRED CLASS A
CERTIFICATE INTEREST DISTRIBUTION AMOUNT FOR THE PRIOR ACCRUAL PERIOD.  THE
DECISION BY THE ADMINISTRATOR TO MAKE AN ADMINISTRATOR ADVANCE IN ANY AMOUNT
WILL BE MADE IN THE SOLE DISCRETION OF THE ADMINISTRATOR, AND NO DECISION TO
MAKE AN ADMINISTRATOR ADVANCE ON ANY PAYMENT DATE WILL IMPOSE ANY OBLIGATION TO
MAKE AN ADMINISTRATOR ADVANCE OF ANY FURTHER AMOUNT.  ON EACH OCCASION WHEN THE
ADMINISTRATOR DETERMINES TO MAKE AN ADMINISTRATOR ADVANCE, THE ADMINISTRATOR
WILL NOTIFY THE REMARKETING AGENT AND FREDDIE MAC OF SUCH DETERMINATION PRIOR TO
12:00 NOON, ON THE BUSINESS DAY PRIOR TO SUCH PAYMENT DATE.

 

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(B)           REPAYMENT OF ADMINISTRATOR ADVANCES.  UNREIMBURSED ADMINISTRATOR
ADVANCES WILL BE REPAID FROM AMOUNTS DEPOSITED IN THE BOND PAYMENT
SUBACCOUNT-INTEREST AS PROVIDED IN SECTION 4.03(A) OR FROM PROCEEDS OF BONDS
SOLD AS PROVIDED IN ARTICLE XIII.

 

(C)           ADMINISTRATOR ADVANCE CHARGE.  THE ADMINISTRATOR WILL BE ENTITLED
TO RECEIVE A FEE EQUAL TO THE AGGREGATE ACCRUED DAILY ADMINISTRATOR ADVANCE
CHARGES.

 

(D)           PAYMENT OF DAILY ADMINISTRATOR ADVANCE CHARGE.  AGGREGATE DAILY
ADMINISTRATOR ADVANCE CHARGES WILL BE PAID, TO THE EXTENT AVAILABLE, FROM
AVAILABLE FUNDS, ON EACH PAYMENT DATE DERIVED FROM INTEREST PAYMENTS ON BONDS OR
IN THE BOND PAYMENT SUBACCOUNT–HOLDBACK BEFORE PAYMENTS TO CLASS A HOLDERS ON
EACH PAYMENT DATE AND AS ELSEWHERE HEREIN UPON THE WITHDRAWAL, SALE OR
REDEMPTION OF BONDS.

 

(E)           AUTHORIZATION TO DEDUCT ADMINISTRATOR ADVANCES, ADMINISTRATOR
ADVANCE CHARGES, SERVICE CHARGES, LIQUIDITY CHARGES AND ADMINISTRATOR FEES. 
EACH HOLDER OF CERTIFICATES, BY ITS PURCHASE THEREOF, AUTHORIZES THE
ADMINISTRATOR TO DEDUCT FROM PAYMENTS ON THE BONDS ANY UNREIMBURSED
ADMINISTRATOR ADVANCES, UNPAID DAILY ADMINISTRATOR ADVANCE CHARGES, AND ACCRUED
FEES AND REIMBURSEMENTS DUE TO FREDDIE MAC, THE ADMINISTRATOR, THE REMARKETING
AGENT OR THE SERVICER.

 

(F)            IF THE ADMINISTRATOR DETERMINES NOT TO MAKE ADMINISTRATOR
ADVANCES FOR ANY REASON, INTEREST DISTRIBUTIONS ON THE CLASS A CERTIFICATES WILL
BE MADE ON EACH PAYMENT DATE IN THE MANNER DESCRIBED IN SECTION 4.03(A) BY THE
PAYMENT OF THE AVAILABLE FUNDS IN THE BOND PAYMENT SUBACCOUNT-INTEREST AND THE
BOND PAYMENT SUBACCOUNT-HOLDBACK.  AFTER THE PAYMENT OF ADMINISTRATOR FEES AND
AGGREGATE DAILY ADMINISTRATOR ADVANCE CHARGES, ALL AMOUNTS REMAINING IN THE BOND
PAYMENT SUBACCOUNT-INTEREST AND THE BOND PAYMENT SUBACCOUNT-HOLDBACK WILL BE
PAID IMMEDIATELY TO HOLDERS OF CLASS A CERTIFICATES ON EACH PAYMENT DATE. 
INTEREST ON THE CLASS A CERTIFICATES WILL CONTINUE TO ACCRUE AT THE RESET RATE
IN EFFECT FOR EACH ACCRUAL PERIOD WITHOUT AN INCREASE IN THE ACCRUAL RATE FOR
ANY DELAY IN PAYMENT.

 

Section 4.10         Class A Principal Payment Election; Rescission.  A Holder
of any Authorized Denominations of any Subclass of Class A Certificates shall
have the right at any time and from time to time to elect to receive
distributions of principal pursuant to Section 4.03(b) (provided any such
election may not become effective prior to the First Redemption Date).  In order
to elect to receive such distributions, such Holder must deliver (or cause its
DTC Participant to deliver, as required) to the principal office of the
Administrator, a Principal Payment Election Notice indicating such election with
respect to all Class A Certificates of any Subclass held by such Holder.  The
Administrator will give a copy of each Principal Payment Election Notice
received by it to the Remarketing Agent, Freddie Mac and the Sponsor, by
Electronic Notice, promptly confirmed in writing by mailing a copy thereof, not
later than the Business Day following the Business Day on which the
Administrator receives such notice.

 

A Principal Payment Election Notice will be effective 20 days following receipt
thereof by the Administrator, and the Administrator, on and after such effective
date, will make

 

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distributions of principal with respect to the Class A Certificates of the
applicable Subclass for which such election has been made pursuant to
Section 4.03(b).

 

Any Holder of any Authorized Denominations of any Subclass of Class A
Certificates for which a Principal Payment Election Notice has been received by
the Administrator and has become effective as aforesaid may subsequently rescind
such Principal Payment Election Notice.  In order to rescind such notice, such
Holder must deliver (or cause its DTC Participant to deliver, as required) to
the principal office of the Administrator, a Principal Payment Election
Rescission Notice indicating the rescission of the prior election to receive
principal distributions pursuant to Section 4.03(b).  The Administrator will
deliver a copy of each Principal Payment Election Rescission Notice received by
it to the Remarketing Agent, Freddie Mac and the Sponsor, by Electronic Notice,
promptly confirmed in writing by mailing a copy thereof, not later than the
Business Day following the Business Day on which Administrator receives such
notice.

 

A Principal Payment Election Rescission Notice will be effective 20 days
following receipt by the Administrator thereof, and the Administrator on, and
after such effective date, will no longer make distributions of principal with
respect to the Class A Certificates of the applicable Subclass for which such
Principal Payment Election Rescission Notice was received.

 

The Administrator shall be entitled to rely conclusively on any Principal
Payment Election Notice or Principal Payment Election Rescission Notice received
by it as complete authorization for the direction contained therein.

 

Notwithstanding the foregoing provisions of this Section, from and after the
Mandatory Class A Principal Payment Date, on each Redemption Date, all Class A
Holders will be distributed principal in accordance with Section 4.03(b) hereof,
and any election otherwise will be invalid as of such Mandatory Class A
Principal Payment Date.

 

Section 4.11         Credit Enhancement.  Freddie Mac guarantees certain
payments with respect to the Certificates as set forth below:

 

(A)           FREDDIE MAC HEREBY GUARANTEES TO EACH REGISTERED HOLDER OF A
CLASS A CERTIFICATE THE TIMELY PAYMENT ON EACH PAYMENT DATE OF SUCH HOLDER’S PRO
RATA PORTION OF

 

(I)            THE REQUIRED CLASS A CERTIFICATE INTEREST DISTRIBUTION AMOUNT;
AND

 

(II)           THAT PORTION OF THE SCHEDULED PRINCIPAL THEN DUE AND PAYABLE ON
ANY BOND ON THE MOST RECENT BOND REDEMPTION DATE THAT WAS NOT RECEIVED BY THE
ADMINISTRATOR ON SUCH BOND REDEMPTION DATE (EXCLUDING ANY BOND REDEMPTION
PREMIUM).

 

(B)           FREDDIE MAC HEREBY GUARANTEES TO EACH REGISTERED HOLDER OF A
CLASS A CERTIFICATE OR A CLASS B CERTIFICATE THE TIMELY PAYMENT ON EACH RELEASE
EVENT DATE OF THE APPLICABLE RELEASE PURCHASE PRICE (BUT NOT ANY HYPOTHETICAL
GAIN SHARE PAYABLE ON SUCH DATE).

 

(C)           FREDDIE MAC HEREBY GUARANTEES TO THE REGISTERED HOLDER OF THE
CLASS B CERTIFICATES THE TIMELY PAYMENT ON EACH PAYMENT DATE OF SUCH HOLDER’S
RESIDUAL INTEREST SET FORTH IN

 

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SECTION 4.03(A) AND THE PAYMENT OF THE REMAINDER OF PRINCIPAL SET FORTH IN
SECTION 4.03(B) (BUT IN EACH SUCH CASE ONLY TO THE EXTENT THE ADMINISTRATOR HAS
RECEIVED AVAILABLE FUNDS REQUIRED TO BE PAID TO THE PLEDGE CUSTODIAN, AS
REGISTERED HOLDER, PURSUANT TO SECTION 4.03(A) OR SECTION 4.03(B), AS
APPLICABLE).

 

(D)           IN ADDITION, WITH RESPECT TO ANY SERIES OF BONDS, IF ALL OR ANY
PORTION OF A PAYMENT OF PRINCIPAL OF (BUT NOT PREMIUM RELATED TO SUCH BONDS), OR
INTEREST ON, SUCH BONDS OR THE RELEASE PURCHASE PRICE (BUT NOT GAIN SHARE OR
HYPOTHETICAL GAIN SHARE) IS RECOVERED FROM ANY HOLDER OF A CERTIFICATE, IN WHOLE
OR IN PART, AS A MATTER OF A FINAL, NONAPPEALABLE ORDER BY A COURT OF COMPETENT
JURISDICTION PURSUANT TO SECTION 544, 547, 549 OR 550 OF THE UNITED STATES
BANKRUPTCY CODE, OR UNDER THE BANKING LAWS OF THE UNITED STATES, IN ANY
PROCEEDING INSTITUTED THEREUNDER BY OR AGAINST THE OWNER OF THE PROPERTY THAT
SECURES THE APPLICABLE BONDS, OR ANY OTHER PERSON (OTHER THAN FREDDIE MAC)
MAKING SUCH PAYMENT, FREDDIE MAC WILL PAY TO THE ADMINISTRATOR, WITHIN FIVE
(5) BUSINESS DAYS AFTER RECEIVING A WRITTEN NOTICE FROM THE AFFECTED REGISTERED
HOLDERS OF THE CERTIFICATES THAT WERE REQUIRED TO PAY SUCH RECOVERY, AN AMOUNT
EQUAL TO THE AMOUNT OF SUCH RECOVERY.  NOTHING CONTAINED IN THIS PARAGRAPH WILL
PRECLUDE FREDDIE MAC, AFTER MAKING THE PAYMENT REFERRED TO IN THE PRIOR
SENTENCE, FROM CONTESTING, DIRECTLY OR INDIRECTLY, IN ANY SUCH PROCEEDING, ANY
SUCH ATTEMPTED RECOVERY OR STAY, OR FROM SEEKING TO LIFT OR MODIFY THE AUTOMATIC
STAY, AND FREDDIE MAC IN ITS CAPACITY AS ADMINISTRATOR, WILL HAVE THE RIGHT TO
CONTEST ANY ATTEMPTED RECOVERY OR STAY, OR TO SEEK TO LIFT OR MODIFY ANY
AUTOMATIC STAY.  THE AMOUNTS PAYABLE PURSUANT TO THIS PARAGRAPH WILL BE
DEPOSITED INTO THE APPLICABLE BOND PAYMENT SUBACCOUNT WITHIN THE DISTRIBUTION
ACCOUNT.

 

(E)           EXCEPT AS PROVIDED IN THE NEXT SENTENCE, FREDDIE MAC’S OBLIGATIONS
UNDER THE CREDIT ENHANCEMENT WILL TERMINATE ON THE CREDIT ENHANCEMENT EXPIRATION
DATE.  UNDER CERTAIN CIRCUMSTANCES INVOLVING AN OWNER ACT OF BANKRUPTCY, FREDDIE
MAC’S OBLIGATIONS UNDER THE IMMEDIATELY PRECEDING PARAGRAPH WILL CONTINUE BEYOND
THE CREDIT ENHANCEMENT EXPIRATION DATE, AS FOLLOWS:  FREDDIE MAC’S OBLIGATIONS
UNDER THE IMMEDIATELY PRECEDING PARAGRAPH WILL CONTINUE BEYOND THE CREDIT
ENHANCEMENT EXPIRATION DATE WITH RESPECT TO ANY PAYMENT (A “COVERED PAYMENT”) ON
ANY SERIES OF BONDS MADE BY ANY PERSON (OTHER THAN FREDDIE MAC) WITHIN THREE
HUNDRED SIXTY-SIX (366) DAYS PRIOR TO AN OWNER ACT OF BANKRUPTCY WITH RESPECT TO
SUCH BONDS, AND WILL TERMINATE ON THE LATER TO OCCUR OF (I) THE DATE ON WHICH
FREDDIE MAC HAS PAID TO THE ADMINISTRATOR AN AMOUNT EQUAL TO ALL COVERED
PAYMENTS RECOVERED FROM THE HOLDERS PURSUANT TO SUCH PROCEEDING, AND (II) THE
DATE ON WHICH ALL CLAIMS WITH RESPECT TO ANY SUCH PROCEEDING HAVE BEEN DENIED
WITH PREJUDICE BY A FINAL, NONAPPEALABLE ORDER OF A COURT OF COMPETENT
JURISDICTION, AND (B) IF NO OWNER ACT OF BANKRUPTCY HAS OCCURRED, THE LAST
EXPIRATION DATE OF ALL STATUTES OF LIMITATIONS APPLICABLE TO CLAIMS AGAINST
HOLDERS PURSUANT TO AN OWNER ACT OF BANKRUPTCY.  HOWEVER, ALL CREDIT ENHANCEMENT
OBLIGATIONS OF FREDDIE MAC WITH RESPECT TO ANY SERIES OF BONDS WILL TERMINATE ON
THE EARLIER OF (A) THE RECEIPT BY THE ADMINISTRATOR OF A CERTIFICATE OF THE
APPLICABLE OWNER DATED NOT EARLIER THAN 366 DAYS FOLLOWING THE APPLICABLE CREDIT
ENHANCEMENT EXPIRATION DATE TO THE EFFECT THAT AS OF THE DATE OF THE CERTIFICATE
NO OWNER ACT OF BANKRUPTCY HAS OCCURRED OR (B) 380 DAYS FOLLOWING SUCH CREDIT
ENHANCEMENT EXPIRATION DATE PROVIDED THAT THE ADMINISTRATOR HAS NOT RECEIVED
NOTICE THAT AN OWNER ACT OF BANKRUPTCY HAS OCCURRED.

 

(F)            FREDDIE MAC WILL BE SUBROGATED TO ALL THE RIGHTS, INTEREST,
REMEDIES, POWERS AND PRIVILEGES OF THE HOLDERS WITH RESPECT TO ANY PAYMENTS MADE
BY FREDDIE MAC

 

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PURSUANT TO ITS CREDIT ENHANCEMENT SET FORTH IN THIS SECTION 4.11.  IN
PARTICULAR, TO THE EXTENT FREDDIE MAC MAKES A PAYMENT PURSUANT TO ITS CREDIT
ENHANCEMENT UNDER THIS SECTION 4.11 AND TO THE EXTENT FREDDIE MAC HAS NOT BEEN
FULLY REIMBURSED FOR SUCH PAYMENT PURSUANT TO THE TERMS OF THE REIMBURSEMENT
AGREEMENT, THE ADMINISTRATOR WILL REMIT TO FREDDIE MAC ANY SUBSEQUENT BOND
PAYMENTS OR OTHER PAYMENTS RECEIVED BY THE ADMINISTRATOR IN SATISFACTION OF THE
OBLIGATIONS WITH RESPECT TO WHICH SUCH CREDIT ENHANCEMENT PAYMENT WAS MADE.  IN
THE EVENT FREDDIE MAC MAKES A PAYMENT PURSUANT TO ITS CREDIT ENHANCEMENT UNDER
THIS SECTION 4.11 AND IS FULLY REIMBURSED FOR SUCH CREDIT ENHANCEMENT PAYMENT IN
ACCORDANCE WITH THE REIMBURSEMENT AGREEMENT, THEN ANY SUBSEQUENT BOND PAYMENTS
OR OTHER PAYMENTS RECEIVED BY THE ADMINISTRATOR IN SATISFACTION OF THE
OBLIGATIONS WITH RESPECT TO WHICH SUCH REIMBURSED CREDIT ENHANCEMENT PAYMENT WAS
MADE, SHALL BE PAID TO THE PLEDGE CUSTODIAN FOR THE BENEFIT OF THE HOLDERS OF
THE CLASS B CERTIFICATES TO BE DISTRIBUTED IN ACCORDANCE WITH THE TERMS OF THE
REIMBURSEMENT AGREEMENT.  EACH HOLDER OF CERTIFICATES WILL BE DEEMED TO HAVE
CONSENTED TO THESE SUBROGATION RIGHTS.

 

(G)           ANY PAYMENTS BY FREDDIE MAC PURSUANT TO ITS GUARANTY SET FORTH IN
THIS SECTION 4.11 WILL BE MADE BY FREDDIE MAC USING ITS OWN FUNDS, AND NOT ANY
FUNDS OF THE SPONSOR OR OTHERWISE DERIVED FROM THE BONDS.

 

(H)           FOR SAKE OF CLARITY, IF THE BONDS DEPOSITED WITH RESPECT TO A
SERIES POOL ARE CUSTODIAL RECEIPTS, TRUST RECEIPTS OR ANY OTHER SIMILAR
INSTRUMENT EVIDENCING AN OWNERSHIP INTEREST IN MUNICIPAL SECURITIES HELD IN A
PASS-THROUGH ARRANGEMENTS, THEN PAYMENTS GUARANTEED BY FREDDIE MAC IN THIS
SECTION 4.11 WITH RESPECT TO THE BONDS WILL REFER TO SUCH PAYMENTS WITH RESPECT
TO THE UNDERLYING BONDS.

 

Section 4.12         Confirming Credit Facility.  If the rating of the long-term
senior debt of Freddie Mac is reduced either below “A3” (or withdrawn) in the
case of Moody’s, or below “A-” (or withdrawn) in the case of S&P, then the
Sponsor may arrange to be delivered a confirming credit facility acceptable to
each applicable Rating Agency maintaining a rating with respect to the Class A
Certificates as evidenced by a rating letter from each such Rating Agency
confirming a rating of not less than “A”.

 

ARTICLE V

RESET RATES; RESET RATE METHOD; RESET DATES

 

Section 5.01         Determination of Reset Rates, Reset Rate Methods and Reset
Dates.

 

(A)           EACH SERIES OF CLASS A CERTIFICATES OR ANY SUBCLASS THEREOF MAY
HAVE A RESET RATE METHOD THAT IS A WEEKLY RESET RATE METHOD, A MONTHLY RESET
RATE METHOD OR A TERM RESET RATE METHOD.  THE SERIES CERTIFICATE AGREEMENT WILL
DESIGNATE THE INITIAL RESET RATE METHOD AS OF THE DATE OF ORIGINAL ISSUE FOR THE
CLASS A CERTIFICATES OR, AS APPLICABLE, FOR EACH SUBCLASS THEREOF.  THE
REMARKETING AGENT WILL DETERMINE THE RESET RATE FOR THE CLASS A CERTIFICATES, OR
EACH SUBCLASS THEREOF, AS APPLICABLE, IN ACCORDANCE WITH THIS ARTICLE V.  THE
HOLDERS OF NOT LESS THAN 51% OF THE AGGREGATE OUTSTANDING CLASS B CERTIFICATE
BALANCE, WITH THE CONSENT OF FREDDIE MAC, WILL HAVE THE RIGHT TO CHANGE THE
INITIAL RESET RATE METHOD OR ANY SUBSEQUENT RESET RATE METHOD TO ANOTHER RESET
RATE METHOD.

 

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(B)           (I) ANY CHANGE IN THE RESET RATE METHOD FROM A WEEKLY RESET RATE
METHOD OR A MONTHLY RESET METHOD WILL BE CONDITIONED UPON THE REMARKETING OF ALL
AVAILABLE REMARKETING CLASS A CERTIFICATES FOR A PRICE EQUAL TO THE CURRENT
CLASS A CERTIFICATE BALANCE THEREOF; AND (II) ANY CHANGE IN THE RESET RATE
METHOD FROM A TERM RESET RATE METHOD (BUT NOT A CONTINUATION OF A TERM RESET
RATE METHOD) WILL BE CONDITIONED UPON THE REMARKETING OF ALL AVAILABLE
REMARKETING CLASS A CERTIFICATES FOR A PRICE EQUAL TO THE CURRENT CLASS A
CERTIFICATE BALANCE THEREOF.

 

(C)           IF ALL AVAILABLE REMARKETING CLASS A CERTIFICATES ARE NOT
REMARKETED FOR A PURCHASE PRICE EQUAL TO THE CURRENT CLASS A CERTIFICATE BALANCE
THEREOF AS PROVIDED IN SECTION 5.01(B), BEGINNING ON THE DATE THAT WOULD HAVE
BEEN THE RESET RATE METHOD CHANGE DATE, THE RESET RATE METHOD THAT WILL BE IN
EFFECT WILL BE A WEEKLY RESET RATE METHOD, AND THE WEEKLY RESET RATE WILL BE
DETERMINED BY THE REMARKETING AGENT ON OR PRIOR TO THE RESET RATE METHOD CHANGE
DATE, AND WILL BE EFFECTIVE FROM THE DAY THAT WOULD HAVE BEEN THE RESET RATE
METHOD CHANGE DATE THROUGH THE NEXT SUCCEEDING WEDNESDAY.  THE RESET RATE METHOD
THEREAFTER WILL CONTINUE TO BE A WEEKLY RESET RATE METHOD UNLESS AND UNTIL A
RESET RATE METHOD CHANGE DATE OCCURS.

 

Section 5.02         Weekly Reset Rate; Monthly Reset Rate.

 

(A)           WEEKLY RESET RATE; WEEKLY RESET DATE.  IF THE RESET RATE METHOD
IS, OR IS BEING CHANGED TO, A WEEKLY RESET RATE METHOD, THE REMARKETING AGENT
WILL DETERMINE, BY NOT LATER THAN 5:00 P.M. ON EACH WEEKLY RESET DATE, THE
WEEKLY RESET RATE FOR THE CLASS A CERTIFICATES, OR SUBCLASS THEREOF, AS
APPLICABLE, WHICH RATE WILL BE THE PER ANNUM RATE, NOT EXCEEDING THE MAXIMUM
RESET RATE, DETERMINED BY THE REMARKETING AGENT AS THE MINIMUM RATE OF INTEREST
WHICH WOULD, IN THE JUDGMENT OF THE REMARKETING AGENT, UNDER THEN PREVAILING
MARKET CONDITIONS (TAKING INTO ACCOUNT THAT SUCH RATE WILL BE RESET ON THE NEXT
WEEKLY RESET DATE), RESULT IN A SALE OF THE CLASS A CERTIFICATES AT A MARKET
PRICE EQUAL TO THE CURRENT CERTIFICATE BALANCE THEREOF, PLUS ACCRUED INTEREST. 
THE WEEKLY RESET RATE APPLICABLE ON THE WEEKLY RESET DATE IN EACH WEEK WILL BE
IN EFFECT FROM THURSDAY OF SUCH WEEK THROUGH WEDNESDAY OF THE FOLLOWING WEEK,
OR, IF EARLIER, THROUGH THE DAY PRECEDING THE NEXT RESET RATE METHOD CHANGE
DATE.  HOWEVER, IF ON ANY WEEKLY RESET DATE, THE REMARKETING AGENT FAILS TO
ESTABLISH THE WEEKLY RESET RATE, THE THEN APPLICABLE RESET RATE WILL BE THE
LESSER OF THE PREVIOUS RESET RATE OR THE MAXIMUM RESET RATE.

 

(B)           MONTHLY RESET RATE; MONTHLY RESET DATE.  IF THE RESET RATE METHOD
IS, OR IS BEING CHANGED TO, A MONTHLY RESET RATE METHOD, THE REMARKETING AGENT
WILL DETERMINE, BY NOT LATER THAN 5:00 P.M. ON EACH MONTHLY RESET DATE, THE
MONTHLY RESET RATE FOR THE CLASS A CERTIFICATES, OR SUBCLASS THEREOF, AS
APPLICABLE, WHICH RATE WILL BE THE PER ANNUM RATE, NOT EXCEEDING THE MAXIMUM
RESET RATE, DETERMINED BY THE REMARKETING AGENT AS THE MINIMUM RATE OF INTEREST
WHICH WOULD, IN THE JUDGMENT OF THE REMARKETING AGENT, UNDER THEN PREVAILING
MARKET CONDITIONS (TAKING INTO ACCOUNT THAT SUCH RATE WILL BE RESET ON THE NEXT
MONTHLY RESET DATE), RESULT IN A SALE OF THE CLASS A CERTIFICATES AT A MARKET
PRICE EQUAL TO THE CURRENT CERTIFICATE BALANCE THEREOF, PLUS ACCRUED INTEREST. 
THE MONTHLY RESET RATE WILL BE IN EFFECT FROM THE FIRST DAY OF THE MONTH THROUGH
THE LAST DAY OF SUCH MONTH OR, IF EARLIER, ON THE DAY PRECEDING THE NEXT RESET
RATE METHOD CHANGE DATE.  HOWEVER, IF ON ANY MONTHLY RESET DATE, THE REMARKETING
AGENT FAILS TO ESTABLISH THE MONTHLY RESET RATE, THE THEN APPLICABLE RESET RATE
WILL BE THE LESSER OF THE PREVIOUS RESET RATE OR THE MAXIMUM RESET RATE.  SIX
BUSINESS DAYS BEFORE ANY MONTHLY

 

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RESET DATE, THE REMARKETING AGENT WILL DETERMINE THE PRELIMINARY CLASS A
CERTIFICATE RATE PURSUANT TO THE STANDARD SET FORTH IN THE FIRST SENTENCE OF
THIS SUBSECTION 5.02(B).  UPON SUCH DETERMINATION, THE REMARKETING AGENT WILL
IMMEDIATELY GIVE TELEPHONIC NOTICE OF THE PRELIMINARY CLASS A CERTIFICATE RATE
TO EACH HOLDER REQUESTING SUCH NOTICE.  THE MONTHLY RESET RATE MAY BE MORE THAN,
BUT WILL BE AT LEAST EQUAL TO SUCH PRELIMINARY CLASS A CERTIFICATE RATE,
PROVIDED THAT IT MAY NOT EXCEED THE MAXIMUM RESET RATE.

 

(C)           RESET RATE METHOD CHANGE NOTICE AND RELATED MANDATORY TENDER.  IF
THE HOLDERS OF NOT LESS THAN 51% OF THE AGGREGATE OUTSTANDING CLASS B
CERTIFICATE BALANCE, WITH THE WRITTEN CONSENT OF FREDDIE MAC (WHICH MAY BE
CONDITIONED UPON A REPRICING BY THE REMARKETING AGENT), AT ANY TIME DETERMINE TO
CHANGE THE RESET RATE METHOD FROM A WEEKLY RESET RATE METHOD TO A MONTHLY RESET
RATE METHOD, OR FROM A MONTHLY RESET RATE METHOD TO A WEEKLY RESET RATE METHOD,
AND GIVES THE ADMINISTRATOR NOTICE OF SUCH DETERMINATION ALONG WITH A COPY OF
SUCH CONSENT IF APPLICABLE, THE ADMINISTRATOR WILL GIVE, BY ELECTRONIC NOTICE, A
RESET RATE METHOD CHANGE NOTICE TO THE REMARKETING AGENT AND TO THE REGISTERED
HOLDERS OF THE CLASS A CERTIFICATES (OR THE AFFECTED SUBCLASS THEREOF, AS
APPLICABLE), NOT LATER THAN THE SECOND BUSINESS DAY FOLLOWING THE DATE FREDDIE
MAC CONSENTS TO OR INITIATES SUCH CHANGE.  EACH SUCH RESET RATE METHOD CHANGE
NOTICE MUST BE PROVIDED TO THE HOLDERS OF CLASS A CERTIFICATES (OR THE AFFECTED
SUBCLASS THEREOF, AS APPLICABLE) NO LATER THAN EIGHT BUSINESS DAYS PRIOR TO THE
RESET RATE METHOD CHANGE DATE AND STATE (A) THAT A WEEKLY RESET RATE METHOD OR
MONTHLY RESET RATE METHOD, WHICHEVER IS APPLICABLE, WILL BE IN EFFECT, FOLLOWING
THE RESET RATE METHOD CHANGE DATE, (B) THE DATE ON WHICH SUCH WEEKLY RESET RATE
METHOD OR MONTHLY RESET RATE METHOD WILL BECOME EFFECTIVE, (C) THAT THE CLASS A
CERTIFICATES WILL BE SUBJECT TO MANDATORY TENDER ON THE RESET RATE METHOD CHANGE
DATE (SUBJECT TO THE CLASS A HOLDERS’ RIGHT TO RETAIN THEIR CLASS A
CERTIFICATES) AND (D) THAT THE CHANGE IN RESET RATE METHOD WILL BE SUBJECT TO
THE REMARKETING OF ALL AVAILABLE REMARKETING CLASS A CERTIFICATES FOR A PRICE
EQUAL TO THE CURRENT CLASS A CERTIFICATE BALANCE THEREOF AND IF NOT REMARKETED,
THE RESET RATE METHOD WILL CHANGE TO THE WEEKLY RESET RATE METHOD.  SUCH NOTICE
WILL BE ATTACHED TO THE MANDATORY TENDER NOTICE THAT IS REQUIRED TO BE PROVIDED
PURSUANT TO SECTION 6.05.

 

Section 5.03         Term Reset Rate; Term Reset Date.

 

(A)           DETERMINATION OF TERM RESET RATE.  SUBJECT TO THE NEXT SENTENCE OF
THIS SECTION 5.03(A), IF THE RESET RATE METHOD IS, OR IS BEING CHANGED TO, A
TERM RESET RATE METHOD, THE REMARKETING AGENT WILL DETERMINE BY NOT LATER THAN
5:00 P.M. ON THE TERM RESET DATE THE TERM RESET RATE FOR THE CLASS A
CERTIFICATES (OR SUBCLASS THEREOF, AS APPLICABLE), WHICH RATE WILL BE THE PER
ANNUM RATE, NOT EXCEEDING THE MAXIMUM RESET RATE (OR IN THE CASE OF A
CONTINUATION OF THE TERM RESET RATE METHOD APPLICABLE TO A SUBCLASS, THE INITIAL
TERM RESET RATE APPLICABLE TO SUCH SUBCLASS), DETERMINED BY THE REMARKETING
AGENT AS THE MINIMUM RATE OF INTEREST WHICH WOULD, IN THE JUDGMENT OF THE
REMARKETING AGENT, UNDER THEN PREVAILING MARKET CONDITIONS (TAKING INTO ACCOUNT
THAT SUCH RATE WILL BE RESET ON THE NEXT TERM RESET DATE), RESULT IN A SALE OF
THE CLASS A CERTIFICATES AT A PRICE EQUAL TO THE CURRENT CERTIFICATE BALANCE
THEREOF, PLUS ACCRUED INTEREST.  IF THE RESET RATE METHOD IS BEING CHANGED TO A
TERM RESET RATE METHOD, THE CLASS A CERTIFICATES WILL ONLY BEAR INTEREST AT THE
TERM RESET RATE IF ON THE TERM RESET DATE ALL AVAILABLE REMARKETING CLASS A
CERTIFICATES ARE REMARKETED FOR A PRICE EQUAL TO THE CURRENT CLASS A CERTIFICATE
BALANCE THEREOF, AND IF ALL SUCH AVAILABLE REMARKETING CLASS A CERTIFICATES ARE
NOT REMARKETED FOR A PRICE EQUAL TO THE CURRENT CLASS A CERTIFICATE BALANCE
THEREOF, BEGINNING ON THE

 

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DATE THAT WOULD HAVE BEEN THE TERM RESET DATE, THE CLASS A CERTIFICATES WILL
BEAR INTEREST AT THE WEEKLY RESET RATE.

 

The Term Reset Rate determined on each Term Reset Date will be in effect from
the related Term Effective Date through the day preceding the next Term
Effective Date.  The period during which a Term Reset Rate may be in effect will
not be less than 90 days nor extend past the latest occurring stated maturity
date of the Bonds, and shall be specified in the Term Reset Method Notice.

 

The Holders of not less than 51% of the Aggregate Outstanding Class B
Certificate Balance shall, in conjunction with the Remarketing Agent, with the
written consent of Freddie Mac, establish the length of the period during which
the Term Reset Rate will be effective.  In the case of a continuation of the
Term Reset Rate Method, if Freddie Mac does not provide its consent to such
period or such Holders do not provide the applicable Notice to the Administrator
when required by Section 5.03(b), the Term Reset Rate for the ensuing term shall
be established in accordance with the parameters of this Subsection 5.03(a) as
follows:  (i) if the rate reset is to occur before the Longest Initial Reset
Date, for a period extending to the Longest Initial Reset Date or (if all the
applicable Class A Certificates cannot be remarketed at a rate equal to or lower
than the applicable maximum rate at a price equal to the Current Certificate
Balance thereof, plus accrued interest, to such date) then to such next shorter
period in the determination of the Remarketing Agent that would result in a sale
of all the applicable Class A Certificates at a rate equal to or lower than the
applicable maximum rate at a price equal to the Current Certificate Balance
thereof, plus accrued interest, or (ii) if the rate reset is to occur on or
after the Longest Initial Reset Date, for a period extending to the Maximum
Reset Date or (if all the applicable Class A Certificates cannot be remarketed
at a rate equal to or lower than the applicable maximum rate at a price equal to
the Current Certificate Balance thereof, plus accrued interest, to such date)
then to such next shorter period in the determination of the Remarketing Agent
that would result in a sale of all the applicable Class A Certificates at a rate
equal to or lower than the applicable maximum rate at a price equal to the
Current Certificate Balance thereof, plus accrued interest.

 

In the case of a continuation of the Term Reset Rate Method where the Holders of
not less than 51% of the Aggregate Outstanding Class B Certificate Balance have
given the notice to the Administrator when required by Section 5.03(b) to effect
such continuation along with the aforementioned Freddie Mac consent, but the
Remarketing Agent is unable to remarket all applicable Available Remarketing
Class A Certificates for a price equal to the Current Class A Certificate
Balance thereof plus accrued interest, for the period indicated in the related
Term Reset Method Notice, the Remarketing Agent will notify Freddie Mac and such
Class B Holders, and the Term Reset Rate for the ensuing term shall be
established in accordance with the parameters of this Subsection 5.03(a) for
such shorter period of not less than 90 days that in the determination of the
Remarketing Agent would result in a sale of all the applicable Class A
Certificates at a rate equal to or lower than the applicable maximum rate at a
price equal to the Current Certificate Balance thereof, plus accrued interest.

 

Six Business Days before any Term Reset Date, the Remarketing Agent will
determine the Preliminary Class A Certificate Rate pursuant to the standard set
forth in the first sentence of this Subsection 5.03(a).  Upon such
determination, the Remarketing Agent will immediately give telephonic notice of
the Preliminary Class A Certificate Rate and the length of the ensuing term

 

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to each Holder requesting such notice.  The Term Reset Rate may be more than,
but will be at least equal to such Preliminary Class A Certificate Rate,
provided that it may not exceed the Maximum Reset Rate (or in the case of a
continuation of the Term Reset Rate Method applicable to a Subclass, the Initial
Term Reset Rate applicable to such Subclass).

 

(B)           TERM RESET METHOD NOTICE AND RELATED MANDATORY TENDER.  A TERM
RESET RATE MAY BE SET OR RESET AS OF THE APPLICABLE TERM EFFECTIVE DATE AND MAY
BE SET OR RESET AT A FIXED RATE.  IF THE HOLDERS OF NOT LESS THAN 51% OF THE
AGGREGATE OUTSTANDING CLASS B CERTIFICATE BALANCE DETERMINE TO CONTINUE THE TERM
RESET RATE METHOD IN EFFECT WITH RESPECT TO THE CLASS A CERTIFICATES OR ANY
APPLICABLE SUBCLASS THEREOF, OR, WITH THE WRITTEN CONSENT OF FREDDIE MAC,
DETERMINE TO CHANGE THE RESET RATE METHOD FROM A WEEKLY RESET RATE METHOD OR
MONTHLY RESET RATE METHOD TO A TERM RESET RATE METHOD (AND GIVES THE
ADMINISTRATOR NOTICE OF SUCH DETERMINATION ALONG WITH A COPY OF SUCH CONSENT IF
APPLICABLE, IN ALL EVENTS BEFORE ANY TERM RESET DATE AND ON OR PRIOR TO THE
NINTH BUSINESS DAY PRIOR TO THE TERM EFFECTIVE DATE) THE ADMINISTRATOR WILL GIVE
BY ELECTRONIC NOTICE, A TERM RESET METHOD NOTICE TO THE REMARKETING AGENT AND TO
THE REGISTERED HOLDERS OF THE CLASS A CERTIFICATES (OR THE AFFECTED SUBCLASS, AS
APPLICABLE) NOT LATER THAN THE BUSINESS DAY FOLLOWING THE DATE FREDDIE MAC
CONSENTS TO OR INITIATES SUCH CHANGE.  SUCH NOTICE WILL BE ATTACHED TO THE
MANDATORY TENDER NOTICE THAT IS REQUIRED TO BE PROVIDED PURSUANT TO
SECTION 6.05, IF APPLICABLE.  EACH SUCH TERM RESET METHOD NOTICE WILL SET FORTH:
(A) A STATEMENT THAT THE ENSUING RESET RATE METHOD WILL BE A TERM RESET RATE
METHOD, (B) THE TERM EFFECTIVE DATE ON WHICH THE TERM RESET RATE METHOD WILL
TAKE EFFECT AND THE LENGTH OF THE PERIOD DURING WHICH THE TERM RESET RATE WILL
BE IN EFFECT, (C) A STATEMENT THAT THE CLASS A CERTIFICATES WILL BE SUBJECT TO
MANDATORY TENDER ON THE TERM EFFECTIVE DATE (SUBJECT TO THE CLASS A HOLDERS’
RIGHT TO RETAIN THEIR CLASS A CERTIFICATES), PROVIDED THAT SUCH DATE WILL BE NO
EARLIER THAN EIGHT BUSINESS DAYS FOLLOWING THE DATE ON WHICH SUCH NOTICE IS
GIVEN TO THE REGISTERED HOLDERS BY THE ADMINISTRATOR, (D) THE TERM RESET DATE ON
WHICH THE TERM RESET RATE FOR SUCH TERM EFFECTIVE DATE WILL BE DETERMINED, (E) A
STATEMENT THAT THE PRELIMINARY CLASS A CERTIFICATE RATE WILL BE DETERMINED SIX
BUSINESS DAYS BEFORE THE TERM RESET DATE, AND (F) A STATEMENT THAT THE BEGINNING
OF THE TERM RESET RATE METHOD ON THE TERM RESET DATE IN THE CASE OF A CHANGE TO
(BUT NOT A CONTINUATION OF) THE TERM RESET RATE METHOD WILL BE SUBJECT TO THE
REMARKETING OF ALL AVAILABLE REMARKETING CLASS A CERTIFICATES FOR A PRICE EQUAL
TO THE CURRENT CLASS A CERTIFICATE BALANCE THEREOF AND IF NOT SO REMARKETED,
BEGINNING ON THE DATE THAT WOULD HAVE BEEN THE TERM RESET DATE, THE CLASS A
CERTIFICATES WILL BEAR INTEREST AT THE WEEKLY RESET RATE.

 

(C)           RESET RATE METHOD CHANGE NOTICE AND RELATED MANDATORY TENDER.  IF
THE HOLDERS OF NOT LESS THAN 51% OF THE AGGREGATE OUTSTANDING CLASS B
CERTIFICATE BALANCE, WITH THE WRITTEN CONSENT OF FREDDIE MAC (WHICH MAY BE
CONDITIONED UPON A REPRICING BY THE REMARKETING AGENT), DETERMINE TO CHANGE THE
RESET RATE METHOD FROM A TERM RESET RATE METHOD TO A WEEKLY RESET RATE METHOD OR
MONTHLY RESET RATE METHOD AND GIVE THE ADMINISTRATOR NOTICE OF SUCH
DETERMINATION ALONG WITH A COPY OF SUCH CONSENT IF APPLICABLE, NO LATER THAN THE
NINTH BUSINESS DAY PRIOR TO THE DAY THAT WOULD BE THE TERM EFFECTIVE DATE IF THE
TERM RESET RATE METHOD WERE TO CONTINUE, THE ADMINISTRATOR WILL GIVE BY
ELECTRONIC NOTICE A RESET RATE METHOD CHANGE NOTICE TO THE REMARKETING AGENT AND
TO THE REGISTERED HOLDERS OF THE CLASS A CERTIFICATES (OR THE AFFECTED SUBCLASS,
AS APPLICABLE) NOT LATER THAN THE BUSINESS DAY FOLLOWING THE DATE FREDDIE MAC
CONSENTS OR INITIATES SUCH CHANGE.  SUCH RESET RATE METHOD CHANGE NOTICE WILL
SET FORTH (A) A STATEMENT THAT A WEEKLY RESET RATE METHOD OR MONTHLY RESET RATE
METHOD, WHICHEVER IS APPLICABLE, WILL BE IN EFFECT, (B) THE DATE ON WHICH SUCH
WEEKLY RESET RATE METHOD OR MONTHLY

 

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RESET RATE METHOD WILL BECOME EFFECTIVE; PROVIDED THAT SUCH DATE WILL BE A
BUSINESS DAY NOT EARLIER THAN THE FIRST DAY FOLLOWING THE END OF THE TERM WHICH
WAS IN EFFECT AND NOT EARLIER THAN EIGHT BUSINESS DAYS FOLLOWING THE DATE ON
WHICH SUCH NOTICE IS GIVEN BY THE ADMINISTRATOR TO THE REGISTERED HOLDERS, (C) A
STATEMENT THAT THE CLASS A CERTIFICATES WILL BE SUBJECT TO MANDATORY TENDER ON
THE RESET RATE METHOD CHANGE DATE (SUBJECT TO THE CLASS A HOLDERS’ RIGHT TO
RETAIN THEIR CLASS A CERTIFICATES) AND (D) A STATEMENT THAT IF ALL AVAILABLE
REMARKETING CLASS A CERTIFICATES ARE NOT REMARKETED FOR A PRICE EQUAL TO THE
CURRENT CLASS A CERTIFICATE BALANCE THEREOF, BEGINNING ON THE RESET METHOD
CHANGE DATE ALL CLASS A CERTIFICATES WILL BEAR INTEREST AT THE WEEKLY RESET
RATE, NOTWITHSTANDING, IF APPLICABLE, THE PRIOR ELECTION TO CHANGE THE RESET
RATE METHOD TO THE MONTHLY RESET METHOD.  SUCH NOTICE WILL BE ATTACHED TO THE
MANDATORY TENDER NOTICE THAT IS REQUIRED TO BE PROVIDED PURSUANT TO
SECTION 6.05.

 

(D)           REVERSION TO WEEKLY RESET RATE METHOD.  IN THE CASE OF A CHANGE TO
(BUT NOT A CONTINUATION OF) THE TERM RESET RATE METHOD, IF THE ADMINISTRATOR HAS
NOT RECEIVED A TERM RESET METHOD NOTICE PURSUANT TO SECTION 5.03(B), OR A RESET
RATE METHOD CHANGE NOTICE PURSUANT TO SECTION 5.03(C), BY THE NINTH BUSINESS DAY
PRIOR TO THE DAY THAT WOULD BE THE TERM EFFECTIVE DATE IF THE TERM RESET RATE
METHOD WERE TO CONTINUE OR IF ALL AVAILABLE REMARKETING CLASS A CERTIFICATES
HAVE NOT BEEN REMARKETED FOR A PRICE EQUAL TO THE CURRENT CLASS A CERTIFICATE
BALANCE THEREOF, THE RESET RATE METHOD THAT WILL BE IN EFFECT AS OF THE END OF
SUCH TERM WILL BE A WEEKLY RESET RATE METHOD, AND THE WEEKLY RESET RATE WILL BE
DETERMINED BY THE REMARKETING AGENT ON THE LAST BUSINESS DAY ON OR PRIOR TO THE
END OF SUCH TERM AND WILL BE EFFECTIVE FROM THE DAY FOLLOWING THE END OF SUCH
TERM THROUGH THE NEXT SUCCEEDING WEDNESDAY, OR, IF EARLIER, THROUGH THE DAY
PRECEDING THE NEXT RESET RATE METHOD CHANGE DATE.  UNLESS ANY SUCH RESET RATE
METHOD CHANGE DATE OCCURS ON OR PRIOR TO SUCH WEDNESDAY, THE RESET RATE METHOD
THEREAFTER WILL CONTINUE TO BE A WEEKLY RESET RATE METHOD UNLESS AND UNTIL A
RESET RATE METHOD CHANGE DATE OCCURS.  ON THE EIGHTH BUSINESS DAY PRIOR TO THE
DAY THAT WOULD BE THE TERM EFFECTIVE DATE IF THE TERM RESET RATE METHOD WERE TO
CONTINUE, THE ADMINISTRATOR WILL GIVE A NOTICE TO FREDDIE MAC AND THE REGISTERED
HOLDERS OF CLASS A CERTIFICATES SETTING FORTH (A) A STATEMENT THAT A WEEKLY
RESET RATE METHOD WILL BE IN EFFECT, (B) THE DATE ON WHICH SUCH WEEKLY RESET
RATE METHOD WILL BECOME EFFECTIVE, AND (C) A STATEMENT THAT THE CLASS A
CERTIFICATES WILL BE SUBJECT TO MANDATORY TENDER ON THE RESET RATE METHOD CHANGE
DATE (SUBJECT TO THE CLASS A HOLDERS’ RIGHT TO RETAIN THEIR CLASS A
CERTIFICATES).  SUCH NOTICE WILL BE ATTACHED TO THE MANDATORY TENDER NOTICE THAT
IS REQUIRED TO BE PROVIDED PURSUANT TO SECTION 6.05.

 

Section 5.04         Notice of Reset Rate.  On each Weekly Reset Date, Monthly
Reset Date and Term Reset Date, promptly after determining the Reset Rate
applicable to the Class A Certificates (or Subclass thereof, as applicable), the
Remarketing Agent will give to the Sponsor, the Administrator and Freddie Mac,
by Electronic Notice, a notice setting forth (A) the Maximum Reset Rate, (B) the
Reset Rate and (C) the date on which such Reset Rate will take effect in
accordance with this Article V.  Upon the giving of such notice to the
Administrator, the determination of the Reset Rate by the Remarketing Agent
will, in the absence of manifest error, be conclusive and binding upon the
Remarketing Agent, the Administrator, Freddie Mac, and the Holders, subject to
the Maximum Reset Rate.  The Administrator and the Remarketing Agent will make
the Reset Rate available by telephone to any requesting Holder during regular
business hours.

 

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Section 5.05         No Changes in Reset Rate Method During the Two Business
Days Preceding Mandatory Tender Date.  No change in any Reset Rate Method will
be effective during the last two Business Days preceding any Mandatory Tender
Date.

 

Section 5.06         Maximum Reset Rate.  In no event will the rate at which
interest will accrue on any day on the Class A Certificates exceed the Maximum
Reset Rate for such day.  The Maximum Reset Rate will be calculated by the
Remarketing Agent on each Reset Date immediately prior to the determination of
the Reset Rate.

 

ARTICLE VI

THE LIQUIDITY FACILITY; THE TENDER OPTION; MANDATORY TENDER

 

Section 6.01         Tender Option; Rights of Holders; Liquidity Facility.  (a) 
Each Holder of a Class A Certificate will have the right, at its option, at the
times and in compliance with the requirements and subject to the provisions of
Section 6.03, to tender such Holder’s Class A Certificate in Authorized
Denominations to the Administrator for purchase and to receive payment of the
Purchase Price thereof pursuant to Section 6.06.  This right of tender is not
available to Affected Certificates after the occurrence of an applicable Tender
Option Termination Event or to Pledged Class A Certificates.

 

(b)           (i)            Freddie Mac agrees to provide payment of the
Purchase Price of Class A Certificates (other than Affected Certificates or
Pledged Class A Certificates) on a Purchase Date, Optional Disposition Date or
Mandatory Tender Date, as applicable, in accordance with the following
provisions.  Subject to its receipt of notice from the Remarketing Agent as
provided in Section 6.01(b)(iii) and, if applicable, from the Paying Agent
pursuant to Section 6.06(a)(v), Freddie Mac hereby agrees to pay the
Administrator no later than 2:00 p.m. on any Purchase Date, Optional Disposition
Date or Mandatory Tender Date, as applicable, the Purchase Price of any Class A
Certificate that is subject to (i) Optional Tender, (ii) Mandatory Tender
following a Mandatory Tender Event, or (iii) the right of Holders of Class A
Certificates to exercise the Optional Disposition Right (in each instance, less
any available remarketing proceeds as provided in Section 6.06(a), and in
certain cases involving an Optional Disposition Right, subject to the priority
of sources described in Section 7.05(c), or in the case of Class A Certificates
subject to Mandatory Tender in connection with a Special Adjustment Event, only
to the extent the applicable Purchase Price is not funded from the sources
described in Sections 7.02(c) of these Standard Terms).  Unless a Tender Option
Termination Event has occurred and continues with respect to all of the
Certificates, this obligation of Freddie Mac is binding against it, irrespective
of any insolvency, bankruptcy, assignment for the benefit of creditors or
readjustment of the debts of, or other similar events or proceedings affecting,
any Person, or any action taken by any trustee or receiver, or any court in any
such proceeding, or any allegation of invalidity of the agreement of Freddie Mac
to make such payments in any such proceeding.

 

(ii)           The initial Liquidity Commitment is an amount equal to the sum of
(A) the Aggregate Outstanding Class A Certificate Balance as of the Date of
Original Issue plus (B) an amount equal to interest for thirty five (35) days on
the Aggregate Outstanding Bond Balance at a rate per annum equal to the Weighted
Average Bond Rate assuming that the Bond Rate is the maximum possible rate for
the related Bond.  The Liquidity Commitment will be increased on the date on
which Class B Certificates are converted to Class A Certificates pursuant to
Section 2.14

 

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so that as of such date of conversion, the Liquidity Commitment will be the
Aggregate Outstanding Class A Certificate Balance plus an amount equal to
interest for thirty five (35) days on the Aggregate Outstanding Bond Balance at
a rate per annum equal to the Weighted Average Bond Rate assuming that the Bond
Rate is the maximum possible rate for the related Bond.  The Liquidity
Commitment will be decreased on any date on which Class A Certificates (A) are
canceled, exchanged for Bonds or proceeds from the Disposition of Bonds or
(B) become Pledged Class A Certificates pursuant to the Series Certificate
Agreement.

 

(iii)          Freddie Mac’s obligation to pay the Purchase Price with respect
to any Available Remarketing Class A Certificates on any Purchase Date, Optional
Disposition Date or Mandatory Tender Date pursuant to the Liquidity Facility is
subject to the condition precedent that Freddie Mac has timely received from the
Remarketing Agent and, if applicable, the Paying Agent, all notices required to
be received by Freddie Mac pursuant to Section 6.06 no later than 9:00 a.m. and
10:00 a.m., respectively, on such date, in which event Freddie Mac will pay the
amounts required under the Liquidity Facility no later than 2:00 p.m. on such
date.  If Freddie Mac receives such notice from the Remarketing Agent after
9:00 a.m., or from the Paying Agent, if applicable, after 10:00 a.m., it will
pay the amounts required under the Liquidity Facility no later than 2:00 p.m. on
the Business Day following the Purchase Date, as applicable.

 

(iv)          The Administrator will receive and hold for the benefit of
tendering Holders all funds provided by Freddie Mac under the Liquidity Facility
on account of the Purchase Price of Class A Certificates and will not disburse
such funds until the tendered Class A Certificates have been received from the
Registered Holders of the Tendered Class A Certificates.  On the Purchase Date,
the Administrator will cause Pledged Class A Certificates to be registered in
the name of the Pledge Custodian until remarketed or redeemed, subject to the
security interest provided for in the Reimbursement Agreement.

 

(v)           When Freddie Mac pays the Purchase Price of Class A Certificates
tendered as provided above, all payment obligations of Freddie Mac related to
the payment of the Purchase Price of such Class A Certificates will terminate,
subject to reinstatement as provided in the next sentence.  Freddie Mac’s
obligation to pay all or a portion of the Purchase Price of such tendered
Class A Certificates, as applicable, will be reinstated (A) automatically, when
and to the extent that (1) Freddie Mac has confirmed in writing to the
Administrator full reimbursement in immediately available funds for the amount
provided by it pursuant to the Liquidity Facility to pay all or a portion of the
Purchase Price of such tendered Class A Certificates or (2) the Administrator
has received immediately available funds from the Remarketing Agent or other
applicable source to reimburse Freddie Mac fully for the amount provided to pay
all or a portion of the Purchase Price of such tendered Class A Certificates,
and the Remarketing Agent has delivered to Freddie Mac a certificate to that
effect, by facsimile transmission to the Director of Multifamily Management and
Information Control (with confirmation of the facsimile transmission by
(X) telephone call to the Director of Multifamily Management and Information
Control, and (Y) concurrently mailed an original certificate to that effect,
completed and signed by an officer of the Remarketing Agent, by first-class
mail, postage fully prepaid, to the Director of Multifamily Management and
Information Control or to such other offices or Freddie Mac employee as Freddie
Mac designates by written notice to the Remarketing Agent) or (B) at such time
as and to the extent that Freddie Mac, in its discretion, advises the
Remarketing Agent in writing that such reinstatement will occur, it being
understood that Freddie Mac has no obligation to grant any such reinstatement
except as provided in clause

 

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(A) immediately above.  Freddie Mac may, by notice to the Administrator and
Remarketing Agent, change the office or employee to which such notice is to be
provided.

 

(vi)          The Liquidity Facility will terminate on the earlier of (i) the
date that the Reset Rate Method for the Class A Certificates is changed to the
Term Reset Rate Method for a term interval that ends on the latest maturity date
of the Bonds, (ii) the termination of the Series pursuant to Article XIII,
(iii) the occurrence of a Tender Option Termination Event with respect to all of
the Certificates, (iv) the date on which the Class A Certificates have been
redeemed in full or (v) the Credit Enhancement Expiration Date.

 

Section 6.02         Funds Held by Administrator.  In connection with an
exercise of the Tender Option pursuant to Section 6.03, if a Mandatory Tender
Event occurs pursuant to Section 6.04, or in connection with an exercise of the
Optional Disposition Right pursuant to Section 7.05, the Administrator, on
behalf of the Holders of Class A Certificates (other than Affected Certificates
and Pledged Class A Certificates), agrees to accept and hold all moneys related
to the Purchase Price of such Certificates separate and apart from its other
assets, until such funds are to be disbursed in accordance with the terms of the
Series Certificate Agreement.

 

Section 6.03         Exercise of Tender Option.  (a)  Purchase Dates.  Class A
Certificates as to which a Weekly Reset Rate Method is in effect are eligible
for purchase pursuant to the Tender Option on any Business Day, subject to
compliance with the notice and other requirements set forth Section 6.03(b). 
Class A Certificates as to which a Monthly Reset Rate Method is in effect are
eligible for purchase pursuant to the Tender Option only on the first Business
Day of every calendar month.  Class A Certificates as to which a Term Reset Rate
Method is in effect are not eligible for purchase pursuant to the Tender Option;
such Class A Certificates are subject to mandatory tender on the Mandatory
Tender Date following a Mandatory Tender Event, subject to the Holder’s right to
retain its Class A Certificate.

 

(b)           Exercise Notice and Delivery Requirements for Class A
Certificates.  In order to exercise the Tender Option with respect to Class A
Certificates, a Holder will instruct its DTC Participant to (i) give to the
Administrator and the Remarketing Agent, not later than 5:00 p.m. on the fifth
Business Day preceding the applicable Purchase Date, a notice of exercise of the
Tender Option (an “Exercise Notice”), (ii) deliver not later than 11:00 a.m. on
the Purchase Date “free” to the Administrator, by book-entry transfer into the
Administrator’s account at DTC, all tendered Certificates, and (iii) advise the
Administrator, in writing, of the single account of such DTC Participant into
which payment for such Certificates (for all Holders using such DTC Participant)
is to be transferred.  Any such Exercise Notice (A) will specify the Initial
Certificate Balance and Current Certificate Balance in Authorized Denominations
of the Certificates tendered and the Purchase Date on which such Certificates
will be purchased, and (B) will be given telephonically, with prompt
confirmation by Electronic Notice, to the Administrator at its principal office
and to the Remarketing Agent at its principal office.

 

(c)           Irrevocability of Exercise Notice.  Any exercise of the Tender
Option made pursuant to this Section 6.03 will be irrevocable, and from and
after the giving of an Exercise Notice to the Administrator or the Remarketing
Agent in accordance with Section 6.03(b), the Class A Holder will have no
further rights or interests in such Class A Certificates other than the right to
receive payment of the Purchase Price, without interest on such Class A
Certificates from and after the Purchase Date, as provided in Section 6.06, from
moneys held by the Administrator

 

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for such purpose, upon delivery or deemed delivery of such Certificates to the
Administrator in accordance with Section 6.03.

 

(d)           Failure to Deliver Class A Certificates Following Exercise
Notice.  If an Exercise Notice with respect to any Class A Certificate is duly
given by any DTC Participant, but the Class A Certificate described in such
Exercise Notice is not timely delivered to the Administrator as described in
Section 6.03, the Administrator will deem such Class A Certificate to have been
delivered, and the Administrator will promptly notify the DTC Participant that
the DTC Participant will be required to deliver such Certificate to the
Administrator as described in Section 6.03(b).

 

(e)           Re-Delivery in Event of Failed Exercise.  If the Administrator
deems the Tender Option not to have been exercised with respect to any Class A
Certificate, or if any Class A Certificates are delivered to the Administrator
in connection with an attempted exercise of the Tender Option, but such
attempted exercise does not comply with the requirements of subsection
(b) above, the Administrator will reject such exercise and use its best efforts
to redeliver such Class A Certificates by requesting the transfer of such
Certificates “free” on the records of DTC to the Holder’s DTC Participant.

 

(f)            Tender Advice.  Not later than 5:00 p.m. on the Business Day
after it receives an Exercise Notice, the Administrator will give Freddie Mac,
the Remarketing Agent and DTC a Tender Advice by Electronic Notice setting forth
(i) the Purchase Date, and (ii) the Current Certificate Balance in Authorized
Denominations of such Class A Certificates tendered for purchase.

 

Section 6.04         Mandatory Tender Events.  Class A Certificates (other than
Affected Certificates and Pledged Class A Certificates) are subject to Mandatory
Tender in accordance with the procedures set forth in Sections 6.05, 6.06, 6.07
and 6.08.  Subject to the right of a Holder of Class A Certificates to retain
its Class A Certificates pursuant to Section 6.07, the Class A Certificates
(other than Affected Certificates and Pledged Class A Certificates) are subject
to Mandatory Tender on the earliest to occur of (a) the Business Day specified
by Freddie Mac pursuant to Section 7.03 below with respect to a Liquidity
Provider Termination Event, (b) the fifth (5th) Business Day after the
Administrator provides notice to the Holders with respect to a Sponsor Act of
Bankruptcy pursuant to Section 7.04, (c) on the Payment Date next preceding the
Credit Enhancement Expiration Date, (d) a Term Effective Date (that is not a
Reset Rate Method Change Date), (e) a Reset Rate Method Change Date relating to
a change (but not a continuation) in the Reset Rate Method from a Weekly Reset
Rate Method or Monthly Reset Rate Method to a Monthly Reset Rate Method or a
Term Reset Rate Method, (f) a Reset Rate Method Change Date relating to a change
(but not a continuation) in the Reset Rate Method from a Term Reset Rate Method
or a Monthly Reset Rate Method to a Weekly Reset Rate Method or Monthly Reset
Rate Method, (g) the date specified by Freddie Mac as described in
Section 7.02(b) below with respect to a Special Adjustment Event and (h) the
date specified by Freddie Mac or the Sponsor as described in
Section 7.06(b) below with respect to a Clean-Up Event (each, a “Mandatory
Tender Date”).  Holders of Affected Certificates and Pledged Class A
Certificates have no right to tender such Affected Certificates or Pledged
Class A Certificates for purchase by the Administrator at the Purchase Price
upon the occurrence of a Mandatory Tender Event.

 

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Section 6.05         Notice of Mandatory Tender.  (a)  When any Mandatory Tender
Event occurs, the Administrator will give to the Registered Holders a Mandatory
Tender Notice, as applicable, with one copy to Freddie Mac, the Sponsor and the
Remarketing Agent (i) on the Business Day on which such notice is required to be
given pursuant to Section 7.03(b) in connection with the occurrence of a
Liquidity Provider Termination Event, (ii) on the Business Day on which such
notice is required to be given pursuant to Section 7.04 in connection with the
occurrence of a Sponsor Act of Bankruptcy, (iii) on the Business Day on which
notice is required to be given pursuant to Section 7.07 preceding the Credit
Enhancement Expiration Date, (iv) on the Business Day on which such notice is
required to be given in connection with a Term Reset Method Notice, a Reset
Method Change Notice or a reversion to a Weekly Rate Reset Method, (v) on the
Business Day on which such notice is required to be given with respect to a
Special Adjustment Date pursuant to Section 7.02(b) and (vi) on the Business Day
on which notice is required to be given pursuant to Section 7.06(b) in
connection with the occurrence of a Clean-Up Event.  Each Mandatory Tender
Notice will set forth (A) the Mandatory Tender Date, (B) a brief statement
specifying the applicable Mandatory Tender Event, (C) a statement that the
Purchase Price payable to the Holders of Class A Certificates (other than
Affected Certificates, Pledged Class A Certificates or Class A Certificates with
respect to which the Holders thereof have timely delivered a Retention Notice)
pursuant to Section 6.06 will be payable on the Mandatory Tender Date, and that
interest payable with respect to such Class A Certificates will cease to accrue
from and after such Mandatory Tender Date, (D) in connection with a Terminating
Mandatory Tender Date, a statement that Hypothetical Gain Share, if any, will be
paid to the Holders of Class A Certificates based upon a valuation of the Bonds,
(E) if applicable, a statement that such Class A Holder will have the right to
elect to retain such Certificates by delivering a Retention Notice to the
Administrator under the circumstances, at the time and in the manner provided in
Section 6.07, (F) a statement that even if the Holder of Class A Certificates
fails to surrender its Class A Certificate on the Mandatory Tender Date, the
Tender Option with respect to such Certificates will terminate on the Mandatory
Tender Date, and any Class A Certificates not surrendered on the Mandatory
Tender Date will, for all purposes of the Series Certificate Agreement, be
deemed to have been surrendered unless the applicable Holder of Class A
Certificates has delivered a conforming Retention Notice; and (G) a statement
that, notwithstanding such Mandatory Tender Notice, each affected Holder of
Class A Certificates will continue to have the right to exercise the Tender
Option in accordance with the terms and provisions of the Series Certificate
Agreement; provided that, if the Series is terminated as a result of such
Mandatory Tender Event, such right will terminate at the last applicable time
and date on which an Exercise Notice may be given by or on behalf of such Holder
of Class A Certificates in accordance with the terms and provisions of the
Series Certificate Agreement.

 

(b)           Tender Advice.  Not later than 10:00 a.m. on the second Business
Day prior to any Mandatory Tender Date, the Administrator will give a Tender
Advice by Electronic Notice to DTC, the Remarketing Agent and Freddie Mac
setting forth (A) such Mandatory Tender Date, (B) the aggregate Current
Certificate Balance of Class A Certificates (or Subclass thereof, as applicable)
subject to Mandatory Tender and (C) if applicable, the Authorized Denominations
of Class A Certificates with respect to which a conforming Retention Notice has
been received by the Administrator.

 

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Section 6.06         Funding Procedures; Payment of Purchase Price.

 

(A)           FUNDING PROCEDURES.  (I) THE PURCHASE PRICE OF ANY CLASS A
CERTIFICATE WILL BE PAID AS FOLLOWS IF THE APPLICABLE CONDITIONS HAVE BEEN
SATISFIED:

 

(A)          A HOLDER OF CLASS A CERTIFICATES THAT HAS PROPERLY EXERCISED ITS
TENDER OPTION WILL BE PAID ON THE PURCHASE DATE DESIGNATED IN THE RELATED
EXERCISE NOTICE.

 

(B)           A HOLDER OF CLASS A CERTIFICATES SUBJECT TO MANDATORY TENDER WILL
BE PAID ON THE MANDATORY TENDER DATE DESIGNATED IN THE RELATED MANDATORY TENDER
NOTICE.

 

(C)           A HOLDER OF CLASS A CERTIFICATES THAT HAS PROPERLY EXERCISED ITS
OPTIONAL DISPOSITION RIGHT WILL BE PAID ON THE OPTIONAL DISPOSITION DATE.

 

The Administrator will obtain funds to make such payments on or before the
designated date for distribution as provided in Section 6.06(c) from the Person
indicated below in the following order of priority:

 

(1)           (x) with respect to Available Remarketing Class A Certificates as
described in Section 6.06(a)(ii) only, the Remarketing Agent will deposit with
the Administrator, immediately available funds in an amount equal to the net
proceeds from the remarketing of such Class A Certificates up to the amount of
such Purchase Price, (y) with respect to Class A Certificates that have been
tendered on an Optional Disposition Date but are not to be remarketed pursuant
to Section 7.05(c) from the sale of Bonds as specified in Section 7.05(c), or
(z) with respect to Class A Certificates subject to Mandatory Tender as a result
of a Special Adjustment Event as described in Section 7.02 only, the Pledge
Custodian will deposit with the Administrator immediately available funds in the
amount of such Purchase Price; and

 

(2)           with respect to Tendered Class A Certificates, all Class A
Certificates subject to Mandatory Tender, or Class A Certificates with respect
to which the Holder has exercised the Optional Disposition Right, the
Administrator will, subject to the terms and conditions of the Liquidity
Facility, demand payment of an amount equal to such Purchase Price (less any
amounts received from remarketing proceeds), which will be deposited with the
Administrator on behalf of the Holders by Freddie Mac, in immediately available
funds.

 

(II)           UPON RECEIPT BY THE ADMINISTRATOR AND THE REMARKETING AGENT OF
(A) AN EXERCISE NOTICE WITH RESPECT TO TENDERED CLASS A CERTIFICATES, (B) NOTICE
OF A MANDATORY TENDER DATE WITH RESPECT TO A TERM EFFECTIVE DATE (THAT IS NOT A
RESET RATE METHOD CHANGE DATE) OR A RESET RATE METHOD CHANGE DATE RELATING TO A
CHANGE (BUT NOT A CONTINUATION) IN THE RESET RATE METHOD, AND (C) UNLESS
OTHERWISE DIRECTED BY FREDDIE MAC, NOTICE THAT ANY HOLDER OF CLASS A
CERTIFICATES HAS EXERCISED ITS OPTIONAL DISPOSITION RIGHT (ALL CERTIFICATES
BEING SUBJECT TO ANY SUCH NOTICE BEING REFERRED TO AS “AVAILABLE REMARKETING
CLASS A CERTIFICATES”), THE REMARKETING AGENT WILL SOLICIT OFFERS FOR PURCHASES
OF SUCH AVAILABLE REMARKETING CLASS A CERTIFICATES IN ACCORDANCE WITH THE
REMARKETING AGREEMENT AND THE SERIES CERTIFICATE AGREEMENT.

 

(III)          NOT LATER THAN 9:00 A.M. ON THE PURCHASE DATE, A MANDATORY TENDER
DATE OR AN OPTIONAL DISPOSITION DATE, AS APPLICABLE, THE ADMINISTRATOR WILL
CONFIRM WITH THE REMARKETING

 

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AGENT THE PURCHASE PRICE OF SUCH AVAILABLE REMARKETING CLASS A CERTIFICATES. 
NOT LATER THAN 9:00 A.M. ON THE PURCHASE DATE,  MANDATORY TENDER DATE OR
OPTIONAL DISPOSITION DATE, AS APPLICABLE, THE REMARKETING AGENT WILL GIVE TO
FREDDIE MAC AND THE ADMINISTRATOR, A REMARKETING AGENT NOTICE BY ELECTRONIC
NOTICE, PROMPTLY CONFIRMED BY FIRST CLASS MAIL.  SUCH REMARKETING AGENT NOTICE
WILL CONTAIN (A) A STATEMENT THAT SUCH AVAILABLE REMARKETING CLASS A
CERTIFICATES HAVE BEEN FULLY REMARKETED, AND THAT THE NET REMARKETING PROCEEDS
WILL BE DEPOSITED WITH THE ADMINISTRATOR BY NOT LATER THAN 9:15 A.M. ON SUCH
PURCHASE DATE, MANDATORY TENDER DATE OR OPTIONAL DISPOSITION DATE, AS
APPLICABLE, OR (B) A STATEMENT THAT ONLY A PORTION OF SUCH AVAILABLE REMARKETING
CLASS A CERTIFICATES HAVE BEEN REMARKETED AND THE REMARKETING PROCEEDS THAT WERE
OBTAINED WILL BE DEPOSITED WITH THE ADMINISTRATOR BY NOT LATER THAN 9:15 A.M. ON
THE PURCHASE DATE, MANDATORY TENDER DATE OR OPTIONAL DISPOSITION DATE, AS
APPLICABLE, OR (C) A STATEMENT THAT SUCH AVAILABLE REMARKETING CLASS A
CERTIFICATES HAVE NOT BEEN REMARKETED BY THE REMARKETING AGENT AND THAT NO FUNDS
WILL BE DEPOSITED WITH THE ADMINISTRATOR ON THE PURCHASE DATE, MANDATORY TENDER
DATE OR OPTIONAL DISPOSITION DATE, AS APPLICABLE.  IF SUCH AVAILABLE REMARKETING
CLASS A CERTIFICATES HAVE BEEN REMARKETED AND THE REMARKETING AGENT HAS RECEIVED
THE REMARKETING PROCEEDS, THE REMARKETING AGENT WILL, NOT LATER THAN 9:15 A.M.
ON THE PURCHASE DATE, MANDATORY TENDER DATE, OR OPTIONAL DISPOSITION DATE, AS
APPLICABLE, DEPOSIT WITH THE ADMINISTRATOR, FROM THE REMARKETING PROCEEDS,
IMMEDIATELY AVAILABLE FUNDS IN THE AMOUNT SPECIFIED IN THE REMARKETING AGENT
NOTICE.

 

(IV)          IF FREDDIE MAC HAS RECEIVED A REMARKETING AGENT NOTICE FROM THE
REMARKETING AGENT AS DESCRIBED IN SECTION 6.06(A)(III) INDICATING A FAILURE TO
REMARKET ANY OF THE AVAILABLE REMARKETING CLASS A CERTIFICATES AND REQUESTING
PAYMENT, FREDDIE MAC WILL MAKE A PAYMENT IN ACCORDANCE WITH THE CONDITIONS SET
FORTH IN THE LIQUIDITY FACILITY OF THE PURCHASE PRICE OF SUCH AVAILABLE
REMARKETING CLASS A CERTIFICATES NOT REMARKETED (NET OF ANY REMARKETING PROCEEDS
THAT HAVE BEEN RECEIVED) NO LATER THAN 2:00 P.M. ON THE PURCHASE DATE.  ANY SUCH
REMARKETING AGENT NOTICE MUST BE SENT TO FREDDIE MAC’S SPECIAL TRANSACTION
ACCOUNTING BY FACSIMILE TRANSMISSION AT (703) 714-3273, IMMEDIATELY CONFIRMED BY
OVERNIGHT DELIVERY SERVICE (OR TO SUCH OTHER FACSIMILE NUMBER OR USING SUCH
OTHER MEANS OF ELECTRONIC COMMUNICATION AS OTHERWISE INSTRUCTED BY FREDDIE MAC).

 

(V)           IF THE ADMINISTRATOR HAS APPOINTED A PAYING AGENT, IT WILL BE AN
ADDITIONAL CONDITION PRECEDENT TO FREDDIE MAC’S OBLIGATIONS TO PAY PURSUANT TO
THE LIQUIDITY FACILITY THAT NO LATER THAN 10:00 A.M. ON THE PURCHASE DATE,
MANDATORY TENDER DATE OR OPTIONAL DISPOSITION DATE, AS APPLICABLE, THE PAYING
AGENT WILL HAVE PROVIDED PROPER NOTICE BY FACSIMILE MEANS TO FREDDIE MAC TO THE
EFFECT THAT MONIES HELD BY THE PAYING AGENT FOR THE PURPOSE OF PAYING THE
PURCHASE PRICE OF TENDERED CLASS A CERTIFICATES ARE INSUFFICIENT AND THAT
FREDDIE MAC IS REQUIRED PURSUANT TO THE LIQUIDITY FACILITY TO COVER SUCH
DEFICIT.

 

(B)           PURCHASE PRICE EXCESSES.  IF, AS OF ANY TIME PRECEDING THE PAYMENT
OF THE PURCHASE PRICE OF CLASS A CERTIFICATES THE SUM OF THE AMOUNTS DEPOSITED
WITH THE ADMINISTRATOR PURSUANT TO SECTION 6.06(A) EXCEEDS THE AGGREGATE
PURCHASE PRICE OF SUCH CLASS A CERTIFICATES (ANY SUCH EXCESS, A “PURCHASE PRICE
EXCESS”), THE ADMINISTRATOR WILL (I) GIVE TO THE REMARKETING AGENT AND FREDDIE
MAC NOTICE OF THE AMOUNT OF SUCH PURCHASE PRICE EXCESS BY ELECTRONIC NOTICE, AND
(II) PAY BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS UNLESS OTHERWISE
REQUESTED (A) FIRST, TO FREDDIE MAC, THAT PORTION OF THE PURCHASE PRICE EXCESS
FUNDED BY FREDDIE MAC PURSUANT TO THE LIQUIDITY FACILITY AND (B) SECOND, TO THE
REMARKETING AGENT, THE BALANCE OF SUCH PURCHASE PRICE EXCESS.  SUCH PAYMENTS
WILL BE MADE BY THE ADMINISTRATOR IN ACCORDANCE WITH

 

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WRITTEN INSTRUCTIONS FOR SUCH TRANSFER PROVIDED BY FREDDIE MAC.  CONCURRENTLY
WITH THE RECEIPT BY FREDDIE MAC OR THE REMARKETING AGENT, AS THE CASE MAY BE, OF
ANY PAYMENT MADE PURSUANT TO THIS SECTION 6.06(B), SUCH PERSON WILL EXECUTE AND
DELIVER TO THE ADMINISTRATOR A RECEIPT THEREFOR.

 

(C)           (I)            PAYMENT OF PURCHASE PRICE OF TENDERED CLASS A
CERTIFICATES.  PAYMENT OF THE PURCHASE PRICE OF ANY TENDERED CLASS A
CERTIFICATES WILL BE MADE BY THE ADMINISTRATOR AT OR BEFORE 3:00 P.M. TO THE
CLASS A HOLDERS, UPON RECEIPT BY THE ADMINISTRATOR OF SUCH CLASS A CERTIFICATES
PURSUANT TO SECTION 6.03(B), FROM AMOUNTS PROVIDED TO THE ADMINISTRATOR BY
2:00 P.M., BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS TO SUCH ACCOUNT AS
SUCH HOLDER’S DTC PARTICIPANT HAS SPECIFIED IN WRITING TO THE ADMINISTRATOR.  IF
ALL OR A PORTION OF FUNDS FOR THE PAYMENT OF THE PURCHASE PRICE OF ANY TENDERED
CLASS A CERTIFICATES ARE PROVIDED THE ADMINISTRATOR AFTER 2:00 P.M. ON ANY
BUSINESS DAY, THE ADMINISTRATOR WILL PAY SUCH PURCHASE PRICE OR PORTION THEREOF
TO THE RELATED DTC PARTICIPANT BY NOT LATER THAN 3:00 P.M. ON THE NEXT
SUCCEEDING BUSINESS DAY.

 

(ii)           Payment of Purchase Price of Certificates Subject to Mandatory
Tender or Optional Disposition Right.  Subject to Section 6.07, payment of the
Purchase Price of any Class A Certificates subject to Mandatory Tender or the
Optional Disposition Right will be made by the Administrator to the Class A
Holders, (x) from amounts provided to the Administrator from remarketing
proceeds (or in certain cases where Class A Certificates tendered pursuant to
the Optional Disposition Right are not to be remarketed, from the other sources
specified in Section 7.05(c) hereof), (y) from, in the case of a Mandatory
Tender related to a Special Adjustment Event, the Pledge Custodian, or (z) in
each case, from the Liquidity Facility, as applicable, pursuant to
Section 6.01(b) or 6.06(a), only upon presentation and surrender of the Class A
Certificates by the Class A Holder, on the Mandatory Tender Date or Optional
Disposition Date, as applicable, at the principal office of the Administrator. 
Such payment will be made by the Administrator at or before 3:00 p.m. to the
Class A Holder from amounts provided to the Administrator by 2:00 p.m. on any
Business Day for such purpose pursuant to Section 6.06(a), by payment to the
Class A Holder by wire transfer of immediately available funds to such account
as such Holder’s DTC Participant specifies in writing to the Administrator.  If
all or a portion of the funds for payment of the Purchase Price of a Class A
Certificate that is subject to Mandatory Tender or the Optional Disposition
Right are provided to the Administrator after 2:00 p.m. on any Business Day, the
Administrator will pay such Purchase Price or portion thereof to the related DTC
Participant by not later than 3:00 p.m. on the next succeeding Business Day.

 

(iii)          Failure to Pay Purchase Price.  If payment of the Purchase Price
is not made as described in Section 6.06(c)(i) or (ii), as applicable, on any
Purchase Date for Class A Certificates for which the Tender Option has been
exercised, any Mandatory Tender Date or the Optional Disposition Date for
Class A Certificates for which the Optional Disposition Right has been exercised
because of a failure by the Liquidity Provider to comply with the terms of the
Liquidity Facility (a “Liquidity Failure”), then, unless such failure is cured
on or before the third Business Day after such date, each Class A Holder will be
required to exchange its Class A Certificates for its pro rata share of the
Bonds or sales proceeds thereof in accordance with Section 13.04 on the related
Exchange Date.  The Administrator will immediately notify the Sponsor upon the
occurrence of a Liquidity Failure, and the Sponsor will advise the Administrator
of the related Exchange Date.  The Administrator will notify the Registered
Holders, each applicable Rating Agency and the Remarketing Agent within one
Business Day

 

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after the occurrence of a Liquidity Failure.  Any distribution made in
connection with such a Liquidity Failure is in no way intended to, and will not,
negate or waive any rights of the Holders of Class A Certificates or the
Administrator on their behalf, to take any action against, or to pursue any
other remedy available to them under the Series Certificate Agreement, under any
other document related to the Series Certificate Agreement, at law, in equity or
otherwise against Freddie Mac, with respect to any failure by Freddie Mac to pay
the Purchase Price for Class A Certificates when required to do so and such
failure is not cured on or before the third Business Day after the related
Mandatory Tender Date or Purchase Date.

 

(D)           DISPOSITION OF TENDERED CLASS A CERTIFICATES AND CLASS A
CERTIFICATES SUBJECT TO MANDATORY TENDER.  (I)  CONCURRENTLY WITH THE PAYMENT OF
THE PURCHASE PRICE FOR AVAILABLE REMARKETING CLASS A CERTIFICATES ON ANY
PURCHASE DATE, MANDATORY TENDER DATE OR OPTIONAL DISPOSITION DATE (OR THE
PAYMENT OF THE PURCHASE PRICE FOR CLASS A CERTIFICATES SUBJECT TO MANDATORY
TENDER AS A RESULT OF A SPECIAL ADJUSTMENT EVENT), THE ADMINISTRATOR WILL (A) TO
THE EXTENT THAT THE REMARKETING AGENT DEPOSITED WITH THE ADMINISTRATOR
REMARKETING PROCEEDS IN THE AMOUNT OF SUCH PURCHASE PRICE PURSUANT TO
SECTION 6.06(A)(I), DELIVER TO THE REMARKETING AGENT (FOR REDELIVERY TO THE
PURCHASERS OF SUCH CLASS A CERTIFICATES) THE CLASS A CERTIFICATES WITH RESPECT
TO WHICH THE REMARKETING AGENT DEPOSITED WITH THE ADMINISTRATOR THE PURCHASE
PRICE AND (B) TO THE EXTENT FREDDIE MAC PURSUANT TO THE LIQUIDITY FACILITY
DEPOSITED WITH THE ADMINISTRATOR THE AMOUNT OF ANY PURCHASE PRICE WITH RESPECT
TO ANY SUCH CLASS A CERTIFICATES, DELIVER SUCH CLASS A CERTIFICATES TO THE
PLEDGE CUSTODIAN FOR THE BENEFIT OF FREDDIE MAC, OR IN THE CASE OF CLASS A
CERTIFICATES SUBJECT TO MANDATORY TENDER RELATED TO A SPECIAL ADJUSTMENT EVENT,
TO THE EXTENT THE PLEDGE CUSTODIAN DEPOSITED WITH THE ADMINISTRATOR, THE AMOUNT
OF ANY PURCHASE PRICE WITH RESPECT TO ANY SUCH CLASS A CERTIFICATES
CORRESPONDING TO ANY PRINCIPAL PAYMENT AND LIQUIDATION PROCEEDS RECEIVED WITH
RESPECT TO A RELATED SERIES POOL IN ACCORDANCE WITH SECTION 7.02 HEREOF, DELIVER
SUCH CLASS A CERTIFICATES TO THE PLEDGE CUSTODIAN, FOR THE BENEFIT OF FREDDIE
MAC.  IN THE CASE OF A DELIVERY DESCRIBED BY CLAUSE (A) ABOVE, THE ADMINISTRATOR
WILL DELIVER SUCH CLASS A CERTIFICATES TO THE REMARKETING AGENT REGISTERED IN
SUCH NAME AND TO SUCH ADDRESS AS THE REMARKETING AGENT DIRECTS IN WRITING.  IN
THE CASE OF A DELIVERY DESCRIBED BY CLAUSE (B) ABOVE, THE ADMINISTRATOR WILL
DELIVER SUCH CLASS A CERTIFICATES TO THE PLEDGE CUSTODIAN REGISTERED IN SUCH
NAME, AND TO SUCH ADDRESS, AS FREDDIE MAC DIRECTS IN WRITING, AND THE
ADMINISTRATOR AND THE CERTIFICATE REGISTRAR WILL NOTE THE PLEDGE OF SUCH CLASS A
CERTIFICATES TO THE PLEDGE CUSTODIAN ON BEHALF OF FREDDIE MAC ON THE BOOKS AND
RECORDS OF THE ADMINISTRATOR AND THE CERTIFICATE REGISTRAR, AND THE
ADMINISTRATOR WILL SEND CONFIRMATION OF SUCH DELIVERY TO FREDDIE MAC.  ANY
CLASS A CERTIFICATES DELIVERED TO THE PLEDGE CUSTODIAN AS DESCRIBED IN THE
PRECEDING SENTENCE WILL BE PLEDGED CLASS A CERTIFICATES SUBJECT TO
SECTION 4.06.  FOLLOWING SUCH REGISTRATION, FREDDIE MAC WILL BE ENTITLED TO
RECEIVE PAYMENTS ON THE PLEDGED CLASS A CERTIFICATES IN ACCORDANCE WITH ITS
INTEREST.

 

(ii)           If any Class A Certificate that is subject to Mandatory Tender is
not surrendered by the Holder of such Certificate on a Mandatory Tender Date
(except for a Class A Certificate which the respective Holder has elected to
retain as provided in Section 6.07), such Class A Certificate will be deemed
surrendered for all purposes under the Series Certificate Agreement.  After the
Mandatory Tender Date, except to the extent of the portion, if any, of the
Current Class A Certificate Balance of such Class A Certificates that is not
subject to Mandatory Tender on such Mandatory Tender Date, the Class A Holder
will have no further rights with respect to such Class A Certificates except the
right to receive payment of the Purchase Price, without interest from or after
the Mandatory Tender Date, and its portion of the Hypothetical Gain Share, if
any,

 

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pursuant to Section 13.03 upon the presentation and surrender of such Class A
Certificate at the Delivery Office of the Administrator.

 

(E)           REDUCTIONS OF THE AGGREGATE OUTSTANDING AMOUNTS.  THE AGGREGATE
OUTSTANDING CLASS A CERTIFICATE BALANCE WILL BE REDUCED BY THE AGGREGATE CURRENT
CERTIFICATE BALANCE OF SUCH CLASS A CERTIFICATES SUBJECT TO MANDATORY TENDER
THAT ARE CANCELED.

 

(F)            NO INVESTMENT.  ANY AMOUNTS RECEIVED PURSUANT TO THE LIQUIDITY
FACILITY OR AS REMARKETING PROCEEDS WILL BE HELD UNINVESTED.

 

(G)           SUBSTITUTION OF PROCEDURE TIMES.  ANY TIMES SPECIFIED IN SECTIONS
6.03 AND 6.06 MAY BE MODIFIED PURSUANT TO (I) A SERIES CERTIFICATE AGREEMENT
APPLICABLE TO ANY SERIES OF CERTIFICATES OR (II) WRITTEN AGREEMENT EXECUTED BY
FREDDIE MAC, THE ADMINISTRATOR AND THE REMARKETING AGENT, PROVIDED NOTICE OF ANY
SUCH AGREEMENT IS PROVIDED TO THE REGISTERED HOLDERS OF CERTIFICATES.

 

Section 6.07         Right of Holder to Elect to Retain Class A Certificates
Upon the Occurrence of Certain Mandatory Tender Events.  (a)  If the Class A
Certificates are subject to Mandatory Tender in connection with (a) a Term
Effective Date (that is not a Reset Rate Method Change Date), (b) a Reset Rate
Method Change Date relating to a change (but not a continuation) in the Reset
Rate Method from a Weekly Reset Rate Method or a Monthly Reset Rate Method to a
Monthly Reset Rate Method or a Term Reset Rate Method, or (c) a Reset Rate
Method Change Date relating to a change (but not a continuation) in the Reset
Rate Method from a Term Reset Rate Method or a Monthly Reset Rate Method to a
Weekly Reset Rate Method or Monthly Reset Rate Method, the Class A Certificates
owned by each Holder that exercised its right to elect to retain such Class A
Certificates in accordance with the requirements of subsection (b) below will
not be subject to Mandatory Tender.

 

(b)           In order to elect to retain such Holder must deliver (or cause its
DTC Participant to deliver, as required) to the principal office of the
Administrator, a Retention Notice by no later than 12:00 noon on the third
Business Day prior to the Mandatory Tender Date.  The Administrator will give a
copy of each Retention Notice received by it to the Remarketing Agent and
Freddie Mac, by Electronic Notice, promptly confirmed in writing by mailing a
copy thereof, not later than the Business Day following the Business Day on
which the Administrator receives such notice.  Upon receipt by the Administrator
of a Retention Notice, the related Class A Certificates will no longer be
subject to the applicable Mandatory Tender.

 

Section 6.08         Sole Sources of Payment of Purchase Price.  The sole
sources of payment of the Purchase Price of any Tendered Class A Certificates,
Class A Certificates subject to Mandatory Tender, and Class A Certificates with
respect to which the Holders thereof have exercised the Optional Disposition
Right will be (a) proceeds from the remarketing of Available Remarketing Class A
Certificates, to the extent available (or in certain cases where Class A
Certificates tendered pursuant to the Optional Disposition Right are not to be
remarketed, from the other sources specified in Section 7.05(c) hereof),
(b) with respect to Class A Certificates subject to Mandatory Tender as a result
of a Special Adjustment Event as described in Section 7.02 only, the Pledge
Custodian, and (c) amounts received under the Liquidity Facility, as further
described in Section 6.06(a)(1) and (2).

 

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ARTICLE VII

TENDER OPTION TERMINATION EVENTS AND CERTAIN MANDATORY TENDER
EVENTS; OPTIONAL DISPOSITION RIGHT

 

Section 7.01         Tender Option Termination Events.  (a)  Without notice, on
or prior to any Purchase Date, Mandatory Tender Date, or Optional Disposition
Date, upon the occurrence of any of the following events (each a “Tender Option
Termination Event”), the Tender Option will be terminated as provided below:

 

(I)            IF FREDDIE MAC FAILS TO PAY UNDER THE CREDIT ENHANCEMENT SET
FORTH IN SECTION 4.11 AND SUCH FAILURE CONTINUES FOR A PERIOD OF THREE
(3) BUSINESS DAYS; OR

 

(II)           UPON THE ENTRY OF ANY DECREE OR JUDGMENT BY A COURT OF COMPETENT
JURISDICTION OR THE TAKING OF ANY OFFICIAL ACTION BY THE INTERNAL REVENUE
SERVICE OR THE DEPARTMENT OF THE TREASURY, WHICH DECREE, JUDGMENT OR ACTION IS
DEEMED FINAL UNDER APPLICABLE PROCEDURAL LAW, AND WHICH HAS THE EFFECT OF A
DETERMINATION THAT THE INTEREST ON ANY OF THE BONDS IS INCLUDABLE IN THE GROSS
INCOME OF THE RECIPIENTS THEREOF FOR FEDERAL INCOME TAX PURPOSES.

 

When the Administrator has Knowledge of a Tender Option Termination Event it
will promptly give the Remarketing Agent a Tender Option Termination Notice with
respect thereto by Electronic Notice, promptly confirmed by mailing a copy
thereof.  The Tender Option Termination Notice will set forth (1) a description
of the Tender Option Termination Event that has occurred and a description of
the Affected Bonds, (2) the date when such Tender Option Termination Event
occurred, (3) a schedule, prepared by Freddie Mac, of the Bonds, if any, that
will remain after the complete or partial liquidation of the Series Pool and
required distributions have been effected on the related Exchange Date, and
(4) a schedule, prepared by Freddie Mac, of the amounts of Class A Certificates
and Class B Certificates, and of the Liquidity Commitment, that will remain
after the complete or partial liquidation of the Series Pool and after all
required distributions have been effected on the related Exchange Date.

 

Not later than one Business Day following its delivery of a Tender Option
Termination Notice to the Remarketing Agent, the Administrator will give the
Registered Holders, the Sponsor and each applicable Rating Agency a copy of such
Tender Option Termination Notice; provided, however, that the Administrator will
have no duty or obligation to ascertain whether any Tender Option Termination
Event described therein occurred; and provided further, that neither the failure
to give notice of any Tender Option Termination Event to the Administrator, the
failure of the Administrator to give such notice to any Registered Holder, nor
the failure of any Holder to receive such notice, will delay or affect in any
manner the termination of the right of Class A Holders to exercise the Tender
Option with respect to any Affected Certificate.

 

When a Tender Option Termination Event occurs, the Series Pool Assets will be
subject to complete or partial liquidation on the related Exchange Date in
accordance with Section 13.04.

 

Section 7.02         Special Adjustment Event.  (a) Subject to Section 8.8 of
the Reimbursement Agreement, Freddie Mac will have the right to cause a
Mandatory Tender in part of the Class A Certificates upon the Pledge Custodian’s
receipt of any principal paid with respect

 

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to any “Class B Certificates” of another designated Series with respect to such
Certificates and liquidation proceeds of such designated Series received upon
termination thereof; provided that in such event, the aggregate Current
Certificate Balance of Class A Certificates subject to Mandatory Tender will
equal such amount of principal and liquidation proceeds received by the Pledge
Custodian as of the tenth Business Day of the month (rounded down to the nearest
$5,000 increment) which, at the direction of Freddie Mac, is to be remitted to
the Administrator on or before the related Mandatory Tender Date.  The
Series Certificate Agreement will designate the other series pool that will
result in a Special Adjustment Event.

 

(b)           When any Special Adjustment Event occurs with respect to which
Freddie Mac exercises its right to cause a Mandatory Tender, Freddie Mac will
give a Special Adjustment Event Notice to the Administrator, each applicable
Rating Agency, and the Remarketing Agent by Electronic Notice, promptly
confirmed by mailing a copy thereof.  The Special Adjustment Event Notice will
set forth (i) a brief statement describing the Special Adjustment Event,
(ii) the aggregate Current Certificate Balance of Class A Certificates to be
Selected by Lot which will be subject to Mandatory Tender, and (iii) the Special
Adjustment Date specified by Freddie Mac on which Class A Certificates so
Selected by Lot will be subject to Mandatory Tender, which date may not be
earlier than five (5) nor later than ten (10) Business Days after that the
Administrator provides notice to the Holders as described in the following
sentence.  Not later than 5:00 p.m. on the second Business Day following the
date on which a Special Adjustment Event Notice is received by the
Administrator, the Administrator will give to Registered Holders Selected by Lot
a Mandatory Tender Notice.  Any Special Adjustment Event Notice executed by
Freddie Mac under the Series Certificate Agreement will become irrevocable when
the related Mandatory Tender Notice is given by the Administrator to the
Registered Holders Selected by Lot.  Pledged Class A Certificates existing at
the time of such Mandatory Tender will not be subject to Mandatory Tender as a
result of the Special Adjustment Event.

 

(c)           If a Special Adjustment Event arises from the termination of
another Series as provided above, no later than 3:00 p.m. on such Mandatory
Tender Date, the Administrator will, with the monies provided by the Pledge
Custodian to the Administrator, purchase an equal aggregate Current Certificate
Balance of Class A Certificates tendered on the related Mandatory Tender Date
for the account of each related holder of Class B Certificates of the other
Series (an “Exchanging Holder”).

 

(d)           Class A Certificates that are purchased on a Mandatory Tender Date
in connection with a Special Adjustment Event will be deemed Pledged Class A
Certificates, will be delivered to the Pledge Custodian to be held pursuant to
the Reimbursement Agreement and will not be subject to any subsequent
remarketing.

 

(e)           No Hypothetical Gain Share will be payable in connection with any
Mandatory Tender arising as the result of a Special Adjustment Event.

 

Section 7.03         Liquidity Provider Termination Event.  When any Liquidity
Provider Termination Event occurs with respect to which Freddie Mac exercises
its right to cause a Mandatory Tender, Freddie Mac will give a Liquidity
Provider Termination Notice to the Administrator, the Remarketing Agent, the
Sponsor and each applicable Rating Agency by Electronic Notice, promptly
confirmed by first class mail, which notice will set forth (i) a brief statement
describing the Liquidity Provider Termination Event giving rise to such
termination,

 

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and (ii) the Mandatory Tender Date specified by Freddie Mac on which the Class A
Certificates will be subject to Mandatory Tender, which date will be no earlier
than five (5), nor later than ten (10), Business Days after the Administrator
provides notice to the Holders, as described in the following sentence.  Not
later than 5:00 p.m. on the second Business Day following the date on which a
Liquidity Provider Termination Notice is received by the Administrator, the
Administrator will give to the Registered Holders a Mandatory Tender Notice. 
Any Liquidity Provider Termination Notice executed by Freddie Mac under the
Series Certificate Agreement will become irrevocable when the related Mandatory
Tender Notice is given by the Administrator to the Registered Holders.

 

Section 7.04         Sponsor Act of Bankruptcy.  (a)  If the Partnership Factors
apply to the Series Pool, the Class A Certificates are subject to Mandatory
Tender upon the occurrence of a Sponsor Act of Bankruptcy, in accordance with
the following provisions.  If the Series Certificate Agreement provides that the
Partnership Factors will apply, then when a Sponsor Act of Bankruptcy occurs
(i) Freddie Mac will promptly give a Notice of Sponsor Bankruptcy to the
Administrator, the Remarketing Agent and each applicable Rating Agency, promptly
confirmed by first class mail, which Notice of Sponsor Bankruptcy will set forth
(A) a statement that the Administrator has received notice that a Sponsor Act of
Bankruptcy has occurred, and (B) the Mandatory Tender Date on which the Class A
Certificates will be subject to Mandatory Tender, which date will be the fifth
Business Day after the Administrator provides notice to the Registered Holders
as described in the following sentence.  Not later than 5:00 p.m. on the second
Business Day following the date on which the Administrator provides the Notice
of Sponsor Bankruptcy, the Administrator will give to the Registered Holders a
Mandatory Tender Notice, as required by Section 6.05 of the Standard Terms.

 

(b)           If the Series Certificate Agreement does not provide that the
Partnership Factors will apply, this Section 7.04 will not apply to the
Series Pool.

 

Section 7.05         Optional Disposition Date.  (a)  The Class A Certificates
(other than any Class A Certificates held by any Sponsor Party) may be tendered
at a price equal to the Optional Disposition Price on any Optional Disposition
Date, in accordance with the following provisions.  On any Optional Disposition
Date, any Holder of Class A Certificates (other than Affected Certificates or
Pledged Class A Certificates), which has held such Class A Certificates for at
least one year, may tender any of its Class A Certificates for a price equal to
the Optional Disposition Price.  To tender its Class A Certificates, the Holder
must submit a notice to the Administrator and its DTC Participant at least five
(5) Business Days before the related Optional Disposition Date stating that such
Holder is the Holder of a specified Current Certificate Balance of Class A
Certificates, that it is exercising its right to tender such Class A
Certificates in exchange for the Optional Disposition Price and its identity. 
Within one Business Day after it receives an optional disposition notice, the
Administrator will notify the Remarketing Agent and Freddie Mac of its receipt. 
Unless otherwise directed by Freddie Mac, with the prior consent of the Sponsor
(provided such consent shall not be required if a Liquidity Provider Termination
Event has occurred and is continuing), the Remarketing Agent will attempt to
remarket all Class A Certificates tendered pursuant to the Optional Disposition
Right, for settlement on the related Optional Disposition Date.

 

(b)           On any Business Day not earlier than 10 Business Days before an
Optional Disposition Date, any Holder of Class A Certificates may request a
valuation of the Bonds from

 

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the Remarketing Agent.  The Remarketing Agent will then determine such valuation
for such Business Day in the manner specified in the definition of “Hypothetical
Gain Share”.  Such valuation will be provided to any such Holder solely for
informational purposes and will be non-binding on any Person.

 

On the Optional Disposition Date, the Class A Certificates tendered pursuant to
the Optional Disposition Right will be surrendered by the related Holders to the
Administrator.  Such Holders of Class A Certificates will be paid the Optional
Disposition Price for such Class A Certificates consisting of the Purchase Price
of such Certificates and the related Hypothetical Gain Share.  To the extent
that (x) either (i) such Optional Disposition Date is also a Reset Date and the
tendered Class A Certificates are to be remarketed on such Reset Date or
(ii) the Holders of the Class B Certificates commit to purchase such tendered
Class A Certificates for the Purchase Price thereof and have deposited the
amount of such Purchase Price with the Administrator prior to such Optional
Disposition Date (but only if the Administrator has received a letter from each
applicable Rating Agency confirming that such remarketing to Holders of Class B
Certificates would not adversely affect the rating with respect to the Class A
Certificates, and if such letter is not received, then no such remarketing to
Holders of Class B Certificates shall be permitted) and (y) the Holders of
Class B Certificates have provided the Administrator with the amount of any
Hypothetical Gain Share payable to such tendering Holder prior to such Optional
Disposition Date, then the Purchase Price will be paid in accordance with
Section 6.06 of the Standard Terms (treating any payment by the Holder of
Class B Certificates pursuant to clause (x)(ii) above as remarketing proceeds),
and the Hypothetical Gain Share, as calculated by Freddie Mac, will be paid from
amounts so provided to the Administrator by the Holders of Class B
Certificates.  In all other cases, the Purchase Price shall be paid (i) from
proceeds of the sale of Bonds selected by Freddie Mac (after consultation with
the Sponsor, but if no agreement is reached between Freddie Mac and the Sponsor,
then such Bonds as selected by Freddie Mac), in an aggregate principal amount
not exceeding the aggregate Current Certificate Balance of the Class A
Certificates tendered pursuant to the Optional Disposition Right or (ii) in the
event and to the extent proceeds of such sale are not received in sufficient
amounts or on a timely basis to pay the Purchase Price, from amounts advanced
under the Liquidity Facility under Section 6.01(b) (any such advances to be
reimbursed (together with interest thereon) from amounts received upon
completion of any such sale).  In connection with any sale of Bonds pursuant to
the preceding sentence, Hypothetical Gain Share payable to such tendering
Certificateholders shall also be paid from such proceeds, and the Bonds sold
shall be selected to permit payment of such Purchase Price and such Hypothetical
Gain Share.  In the event of such sale of Bonds to fund the Purchase Price of
tendered Class A Certificates, the Class A Certificates paid as a result shall
be cancelled.

 

However, in no event may a Holder of Class A Certificates exercise its Optional
Disposition Right unless the Hypothetical Gain Share is greater than zero. If
the Hypothetical Gain Share is not greater than zero, the Optional Disposition
Date for which the Optional Disposition Right has been exercised will be
cancelled, and any Class A Certificates delivered to the Administrator pursuant
to the preceding paragraph will be returned to the Holders thereof.

 

Section 7.06         Clean-Up Event.  (a)  Each of Freddie Mac and the Sponsor
has the right to cause a Mandatory Tender of the Class A Certificates at any
time after the Aggregate Outstanding Bond Balance is not more than 5% of the
Aggregate Outstanding Bond Balance on the Date of Original Issue (a “Clean-Up
Event”) in accordance with the following provisions.

 

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(b)           When a Clean-Up Event occurs with respect to which Freddie Mac or
Sponsor exercises its right to cause a Mandatory Tender, such party will provide
written notice of such exercise to the other party and to the Administrator. 
Promptly following receipt of such notice, the Administrator will give a
Clean-Up Notice to the Remarketing Agent and each applicable Rating Agency by
Electronic Notice, promptly confirmed by first class mail, which Clean-Up Notice
will set forth (i) a brief statement describing the Clean-Up Event, and (ii) the
Mandatory Tender Date specified by Freddie Mac or the Sponsor, as applicable, on
which the Class A Certificates will be subject to Mandatory Tender, which date
will be not earlier than five (5), nor later than ten (10), Business Days after
the Administrator provides notice to the Holders as described in the following
sentence.  Not later than 5:00 p.m. on the second Business Day following its
receipt of a Clean-Up Notice, the Administrator will give to the Registered
Holders a Mandatory Tender Notice.

 

Section 7.07         Credit Enhancement Expiration Date.  All of the Class A
Certificates shall be subject to Mandatory Tender on the Payment Date next
preceding the Credit Enhancement Expiration Date.  The Administrator shall
provide a Mandatory Tender Notice to the Registered Holders with respect to such
Mandatory Tender Date not later than the tenth (10th) Business Day preceding
such Mandatory Tender Date.

 

ARTICLE VIII

 

THE REMARKETING AGENT

 

Section 8.01         Duties of the Remarketing Agent.  The Remarketing Agent
will undertake to perform the duties, and only those duties, as are specifically
set forth in the Series Certificate Agreement and in the Remarketing Agreement.

 

Section 8.02         Resignation or Removal of the Remarketing Agent.  (a)  Upon
the giving of 30 days’ written notice to the Sponsor, Freddie Mac and the
Administrator, the Remarketing Agent may resign as Remarketing Agent and be
discharged from its duties to be performed under the Series Certificate
Agreement and the Remarketing Agreement.  Upon receiving any such notice of
resignation, Freddie Mac will promptly appoint in writing a successor
Remarketing Agent with the prior written consent of the Sponsor.

 

(b)           The Remarketing Agent may be removed, without cause, upon 10 days’
written notice from the Administrator in accordance with the terms of the
Remarketing Agreement.  Upon any such removal of the Remarketing Agent, Freddie
Mac will promptly appoint in writing a successor Remarketing Agent with the
prior written consent of the Sponsor.

 

(c)           Any removal or resignation of the Remarketing Agent, and any
appointment of a successor Remarketing Agent pursuant to any of the provisions
of this Section 8.02, will not become effective until the successor Remarketing
Agent has accepted its appointment as provided in Section 8.03.

 

(d)           Any other provision of this Section notwithstanding, if the
Remarketing Agent position has become vacant and remains vacant 15 days prior to
any required remarketing, the Administrator may appoint a temporary Remarketing
Agent for the purpose of handling such remarketing.

 

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Section 8.03         Successor Remarketing Agent.  (a)  Any successor
Remarketing Agent appointed as provided in Section 8.02 will execute,
acknowledge and deliver to the Administrator, and to its predecessor Remarketing
Agent, an instrument accepting such appointment under the Series Certificate
Agreement and the Remarketing Agreement, and when accepted, such successor
Remarketing Agent, without any further act, will become fully vested as
Remarketing Agent as if originally named.  The predecessor Remarketing Agent
will deliver to the successor Remarketing Agent all documents held by it under
the Series Certificate Agreement, and the Administrator and the predecessor
Remarketing Agent will execute and deliver such instruments, and do such other
things, as may reasonably be required to confirm the new appointment.

 

(b)           Upon the Administrator’s receipt of an acceptance notice pursuant
to Section 8.03(a), the Administrator will provide notice of the appointment of
the successor Remarketing Agent to the Registered Holders and the Sponsor not
later than two Business Days later.

 

Section 8.04         Merger or Consolidation of the Remarketing Agent.  If the
Remarketing Agent merges or consolidates with another Person, the resulting
entity will be the successor to the Remarketing Agent, without the need to
execute or file any paper, or take any further action.  The Remarketing Agent
will provide notice of any such merger or consolidation to Freddie Mac and the
Administrator.

 

Section 8.05         Notices by Remarketing Agent.  The Remarketing Agent will
agree to provide to beneficial owners of Class A Certificates copies of all
notices that are to be provided to Holders of Class A Certificates upon its
receipt of a written request from such beneficial owner(s) setting forth the
address that such notices are to be sent, together with evidence of its
beneficial ownership in a form reasonably satisfactory to the Remarketing Agent.

 

ARTICLE IX

EVENTS OF DEFAULT AND RIGHTS AND REMEDIES OF HOLDERS

 

Section 9.01         Event of Default.  “Event of Default”, wherever used in the
Series Certificate Agreement, means any one of the following events:

 

(a)           The Administrator defaults in the payment to Holders of the
applicable Certificate Payment Amount, or Freddie Mac defaults in the payment of
any amount pursuant to the Credit Enhancement or the Liquidity Facility, when
the same is due and payable as provided in the Series Certificate Agreement, and
such default continues for a period of three Business Days; or

 

(b)           Freddie Mac or the Administrator fails to observe or perform any
other of its covenants set forth in the Series Certificate Agreement, and such
failure continues for a period of 60 days after the date on which written notice
of such failure, requiring Freddie Mac or the Administrator to remedy the same,
has been given to Freddie Mac or the Administrator, as appropriate, by the
Holders representing not less than 60% of the Current Class A Certificate
Balance (other than Freddie Mac) or the Current Class B Certificate Balance, as
applicable.

 

Section 9.02         Remedies.  (a)  If an Event of Default occurs and
continues, then the Holders (other than Freddie Mac) representing a majority of
the then Current Certificate Balance of any affected Class of Certificates may,
by written notice to Freddie Mac, remove the

 

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Administrator and nominate a successor Administrator under the
Series Certificate Agreement, which nominee will be deemed appointed as
successor Administrator unless within 10 days after such nomination Freddie Mac
objects, in which case Freddie Mac may petition any court of competent
jurisdiction for the appointment of a successor Administrator, or any Holder
(other than Freddie Mac), which has been a bona fide Holder of any affected
Class for at least six months may, on behalf of such Holder and all others
similarly situated, petition any such court for appointment of a successor
Administrator.  Such court may thereupon, after such notice, if any, as it may
deem proper, appoint a successor Administrator.

 

(b)           Upon the appointment of any successor Administrator pursuant to
this Section 9.02, the retiring Administrator will submit to its successor a
complete written report and accounting as to the Certificates and will take all
other steps necessary or desirable to transfer its interest in, and the
administration of, the Series Certificate Agreement to the successor.  Subject
to the Freddie Mac Act, such successor may take such actions with respect to the
Series Certificate Agreement as may be reasonable and appropriate in the
circumstances.  Prior to any such designation of a successor Administrator, the
Holders (other than Freddie Mac) representing a majority of the Current
Certificate Balance of Certificates of any affected Class then Outstanding may
waive any past default or Event of Default.  The appointment of a successor
Administrator will not relieve Freddie Mac of its Credit Enhancement obligation
as set forth in Section 4.11 or its Liquidity Facility obligations set forth in
Section 6.01.

 

Section 9.03         Waiver of Past Defaults.  Except to the extent otherwise
provided, the Holders (other than Freddie Mac) of Certificates representing a
majority of the then Current Certificate Balance may waive any past default,
Event of Default or breach of a covenant under the Series Certificate Agreement
and its consequences.  In the case of any such waiver, Freddie Mac, the
Administrator and the Holders of the Certificates will be restored to their
former positions and rights, respectively, but no such waiver will extend to any
subsequent or other default, Event of Default or breach of a covenant under the
Series Certificate Agreement or impair any right related to a subsequent or
unwaived breach.  When any default, Event of Default or breach of a covenant is
waived, such default, Event of Default or breach will cease to exist and will be
deemed cured and not to have occurred for every purpose of the
Series Certificate Agreement.

 

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ARTICLE X

THE ADMINISTRATOR; HOLDERS’ LISTS AND REPORTS;
BONDHOLDER REPRESENTATIVE

 

Section 10.01       Certain Duties and Responsibilities.  (a) (i)  The
Administrator agrees to perform only such duties as are specifically set forth
in the Series Certificate Agreement, and no implied covenants or obligations
will be read into the Series Certificate Agreement against the Administrator. 
If Freddie Mac is Administrator, it will hold or administer, or supervise the
administration of, the Series Pool in a manner consistent with and to the extent
required by prudence and in substantially the same manner as it holds and
administers assets of the same or similar type for its own account.

 

(ii)           The Administrator is not authorized to, and agrees that it will
not, engage in activities with respect to the Series Pool that are not required
by the Series Certificate Agreement.

 

(iii)          In the absence of gross negligence or willful misconduct on its
part, the Administrator may conclusively rely upon certificates or opinions
furnished to the Administrator and conforming to the requirements of the
Series Certificate Agreement; provided, that, as to the truth of the statements
and the correctness of the opinions expressed therein in the case of any such
certificates or opinions which by any provision of the Series Certificate
Agreement are specifically required to be furnished to the Administrator, the
Administrator will be under a duty to examine those opinions or certificates to
determine whether or not they conform to the requirements of the
Series Certificate Agreement.

 

(b)           No provision of the Series Certificate Agreement will be construed
to relieve the Administrator from liability for its own grossly negligent action
or its own grossly negligent failure to act, or its own willful misconduct,
except that:

 

(i)            the Administrator will not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that the
Administrator was grossly negligent in ascertaining the pertinent facts; and

 

(ii)           the Administrator will not be liable with respect to any action
taken or omitted by it upon the direction of the required percentage of the
Holders affected (such percentage will not include those Certificates, if any,
that are to be disregarded in accordance with the definition of the term
“Outstanding”) relating to the time, method and place of conducting any
Proceeding for any remedy available to the Administrator, or relating to the
exercise of any power conferred upon the Administrator under the
Series Certificate Agreement with respect to the Certificates.

 

(c)           No provision of the Series Certificate Agreement will require the
Administrator to expend or risk its own funds, or otherwise to incur any
financial liability in the performance of any of its duties under the
Series Certificate Agreement, or in the exercise of any of its rights or powers,
if it has reasonable grounds for believing that repayment of such funds, or
adequate indemnity against such risk or liability, is not reasonably assured to
it.  However, the Administrator agrees to perform and continue performing fully
its duties under any other

 

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provision of the Series Certificate Agreement even following any Person’s
failure to perform any repayment or indemnity obligation owed to the
Administrator by such Person as described in this Section 10.01(c); but such
performance will not be deemed a waiver of the Administrator’s right to
repayment or indemnity.

 

(d)           The permissive right of the Administrator to take actions
enumerated in the Series Certificate Agreement will not be construed as a duty,
and the Administrator will not be answerable for other than its own gross
negligence or willful misconduct.

 

(e)           In no event will the Administrator be liable for acts or omissions
of its agents, designees, subcustodians or correspondents, other than its
failure to appoint them without gross negligence or willful misconduct.

 

(f)            In no event will the Administrator be liable for special,
consequential or punitive damages.

 

Section 10.02       Notice of Non-Monetary Default.  The Administrator will
transmit notice of the occurrence of any Non-Monetary Default known to the
Administrator, (a) by Electronic Notice to Freddie Mac, the Sponsor, the
Remarketing Agent and each applicable Rating Agency promptly upon the
Administrator’s Knowledge of such Non-Monetary Default and, in any event, within
one Business Day after such Non-Monetary Default has become known to the
Administrator, and (b) by first class mail to all Holders of Certificates, as
their names and addresses appear in the Certificate Register, within five
Business Days after the Administrator’s Knowledge of such Non-Monetary Default.

 

Section 10.03       Certain Rights of the Administrator.  Except as otherwise
provided in Section 10.01:

 

(A)           THE ADMINISTRATOR MAY RELY, AND WILL BE PROTECTED IN ACTING OR
REFRAINING FROM ACTING, (I) UPON ANY DOCUMENT OR FACSIMILE TRANSMISSION BELIEVED
BY IT TO BE GENUINE AND TO HAVE BEEN SIGNED OR PRESENTED BY THE PROPER PARTY OR
PARTIES, OR (II) FOLLOWING CONSULTATION, UPON ANY ADVICE OF COUNSEL;

 

(B)           THE ADMINISTRATOR WILL BE UNDER NO OBLIGATION TO EXERCISE ANY OF
THE RIGHTS OR POWERS VESTED IN IT BY THE SERIES CERTIFICATE AGREEMENT (OTHER
THAN WITH RESPECT TO THE ADMINISTRATOR’S OBLIGATION TO MAKE DEMANDS ON THE
LIQUIDITY FACILITY OR THE CREDIT ENHANCEMENT AT THE REQUEST OR DIRECTION OF ANY
OF THE HOLDERS OF CLASS A CERTIFICATES PURSUANT TO THE SERIES CERTIFICATE
AGREEMENT), UNLESS SUCH HOLDERS OF CLASS A CERTIFICATES HAVE OFFERED TO THE
ADMINISTRATOR REASONABLE SECURITY OR REASONABLE INDEMNITY AGAINST THE COSTS,
EXPENSES AND LIABILITIES WHICH MIGHT BE INCURRED BY IT IN COMPLY WITH SUCH
REQUEST OR DIRECTION;

 

(C)           THE ADMINISTRATOR WILL NOT BE LIABLE FOR ANY ACTION THAT IT TAKES
OR OMITS TO TAKE IN GOOD FAITH AND, IN THE ABSENCE OF GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT, THAT IT BELIEVES TO BE AUTHORIZED OR WITHIN ITS RIGHTS OR
POWERS.

 

(d)           Freddie Mac, as Administrator, will have the right to engage
subcontractors for the performance of any of its duties as Administrator under
the Series Certificate Agreement.

 

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Section 10.04       Parties that May Hold Certificates.  The Administrator, any
Paying Agent, Certificate Registrar or any other agent of Freddie Mac, in its
individual or any other capacity, may become the owner or pledgee of Class A
Certificates with the same rights as it would have if it were not the
Administrator, Paying Agent, Certificate Registrar or such other agent.

 

Section 10.05       Information Regarding Holders.  For purposes of taking or
recognizing any direction from the Holders of a given percentage of the Current
Certificate Balance of any Class or Subclass, as applicable, of Certificates,
the Administrator may conclusively rely (i) in the case of the Class A
Certificates, on written information received from DTC or its nominee while the
Class A Certificates are held in book-entry only form through the facilities of
DTC, and (ii) in the case of Class B Certificates, on a written certification
received from the Sponsor.

 

Section 10.06       Corporate Administrator Required; Eligibility.  The
Administrator, if other than Freddie Mac, must have the following
qualifications.  It (i) will be either (1) a bank or trust company organized, in
good standing and doing business under the laws of the State of New York or
(2) a national banking association organized, in good standing and doing
business under the laws of the United States of America with its principal place
of business located in the State of New York, in either case, reasonably
acceptable to Freddie Mac, (ii) will be authorized under such laws to exercise
corporate trust powers, (iii) will have a combined capital and surplus of at
least $50,000,000, (iv) will be subject to supervision or examination by Federal
or State banking authority, (v) will be a member of the Federal Reserve System
and (vi) will not be or be affiliated (within the meaning of Rule 405 under the
Securities Act) with any of Freddie Mac, the Remarketing Agent, any Class B
Holder, or with an Affiliate of any of the foregoing.  If such Administrator
publishes reports of conditions at least annually, pursuant to law or the
requirements of such supervising or examining authority, then for the purposes
of this paragraph, the combined capital and surplus of such Administrator will
be deemed to be its combined capital and surplus as set forth in its most
recently published report of condition.  If at any time the Administrator ceases
to be eligible in accordance with the provisions of this Section 10.06, it will
resign immediately in the manner and with the effect specified in Article X.

 

Section 10.07       Resignation.  (a)  Freddie Mac may resign from the duties
imposed upon Freddie Mac in its capacity as Administrator by the terms of the
Series Certificate Agreement at any time provided that at the time of its
resignation a successor administrator meeting the qualifications set forth in
Section 10.06 is appointed by Freddie Mac and has accepted such appointment.  If
Freddie Mac resigns in accordance with these terms, it promptly will furnish
written notice to all Holders.  Subsequent to such resignation, Freddie Mac will
continue to be obligated pursuant to the Credit Enhancement and the Liquidity
Facility.

 

(b)           If the Administrator is no longer Freddie Mac, the following
provisions will apply:

 

(I)            NO RESIGNATION OR REMOVAL OF THE ADMINISTRATOR, AND NO
APPOINTMENT OF A SUCCESSOR ADMINISTRATOR PURSUANT TO THIS ARTICLE X, WILL BECOME
EFFECTIVE UNTIL THE SUCCESSOR ADMINISTRATOR HAS ACCEPTED ITS APPOINTMENT UNDER
THIS SECTION 10.07(B).

 

(II)           THE ADMINISTRATOR, OR ANY ADMINISTRATOR OR ADMINISTRATORS
APPOINTED AS SUCCESSORS, MAY RESIGN AT ANY TIME BY GIVING WRITTEN NOTICE OF
RESIGNATION TO FREDDIE MAC,

 

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THE SPONSOR, THE REMARKETING AGENT AND EACH APPLICABLE RATING AGENCY, AND BY
MAILING NOTICE OF RESIGNATION TO REGISTERED HOLDERS OF THE CERTIFICATES AT THEIR
ADDRESSES APPEARING ON THE CERTIFICATE REGISTER. UPON RECEIVING NOTICE OF
RESIGNATION, FREDDIE MAC WILL PROMPTLY APPOINT A SUCCESSOR ADMINISTRATOR OR
ADMINISTRATORS BY DELIVERING A DEPOSITOR ORDER TO BOTH THE RESIGNING
ADMINISTRATOR AND THE SUCCESSOR ADMINISTRATOR.  IF NO SUCCESSOR ADMINISTRATOR
HAS BEEN APPOINTED AND HAS ACCEPTED ITS APPOINTMENT WITHIN 30 DAYS AFTER THE
GIVING OF SUCH RESIGNATION NOTICE, THE RESIGNING ADMINISTRATOR MAY PETITION ANY
COURT OF COMPETENT JURISDICTION FOR THE APPOINTMENT OF A SUCCESSOR
ADMINISTRATOR, OR ANY HOLDER OF A CERTIFICATE MAY, SUBJECT TO
SECTION 10.07(B)(VII), PETITION ANY SUCH COURT FOR THE APPOINTMENT OF A
SUCCESSOR ADMINISTRATOR.  SUCH COURT MAY, AFTER RECEIVING SUCH NOTICE, IF ANY,
AS IT MAY DEEM PROPER, APPOINT A SUCCESSOR ADMINISTRATOR.

 

(III)          IF AT ANY TIME:

 

(A)          the Administrator ceases to be eligible under Section 10.06 and
fails to resign after written request by Freddie Mac; or

 

(B)           (1) the Administrator becomes incapable of acting or (2) there is
entered a decree or order for relief by a court having jurisdiction in an
involuntary case against the Administrator under the Bankruptcy Code or any
other applicable federal or state bankruptcy, insolvency, or other similar law,
or appointing a receiver, or similar official of the Administrator, for any
substantial part of its property, or ordering the winding-up or liquidation of
its affairs, and any such decree or order continues unstayed and in effect for a
period of 15 consecutive days, or (3) the Administrator commences a voluntary
case under the Bankruptcy Code, or any other applicable federal or state
bankruptcy, insolvency, or other similar law, or consents to the appointment of
a receiver or other similar official of the Administrator, of any substantial
part of its property, or the making by it of any assignment for the benefit of
its creditors, or the Administrator fails generally to pay its debts as such
debts become due or takes any corporate action in furtherance of any of the
above,

 

then, in any such case, Freddie Mac, will remove the Administrator.

 

(IV)          AT ANY TIME FREDDIE MAC MAY, UPON FIVE DAYS’ WRITTEN NOTICE TO THE
ADMINISTRATOR, AND WITH OR WITHOUT CAUSE, REMOVE THE ADMINISTRATOR AND APPOINT A
SUCCESSOR ADMINISTRATOR.

 

(V)           IF THE ADMINISTRATOR IS REMOVED OR IF A VACANCY OCCURS IN THE
OFFICE OF THE ADMINISTRATOR FOR ANY CAUSE, FREDDIE MAC WILL PROMPTLY APPOINT IN
WRITING A SUCCESSOR ADMINISTRATOR.  IF NO SUCCESSOR ADMINISTRATOR IS SO
APPOINTED AND ACCEPTS ITS APPOINTMENT AS PROVIDED BELOW WITHIN 30 DAYS ANY
HOLDER MAY PETITION ANY COURT OF COMPETENT JURISDICTION TO APPOINT A SUCCESSOR
ADMINISTRATOR.  SUCH COURT MAY THEREUPON, AFTER SUCH NOTICE, IF ANY, AS IT MAY
DEEM PROPER, APPOINT A SUCCESSOR ADMINISTRATOR.

 

(VI)          FREDDIE MAC WILL GIVE NOTICE OF EACH REMOVAL OF THE ADMINISTRATOR,
AND EACH APPOINTMENT OF, AND THE ACCEPTANCE OF ITS DUTIES BY, A SUCCESSOR
ADMINISTRATOR BY

 

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MAILING NOTICE OF SUCH EVENT TO THE REGISTERED HOLDERS, AND BY ELECTRONIC NOTICE
TO THE REMARKETING AGENT, THE SPONSOR AND EACH APPLICABLE RATING AGENCY.

 

(VII)         EVERY SUCCESSOR ADMINISTRATOR APPOINTED UNDER THE
SERIES CERTIFICATE AGREEMENT WILL, WITHIN 10 DAYS OR ITS APPOINTMENT, EXECUTE,
ACKNOWLEDGE AND DELIVER TO FREDDIE MAC, THE SPONSOR AND ITS PREDECESSOR
ADMINISTRATOR AN INSTRUMENT ACCEPTING SUCH APPOINTMENT, AND THEREUPON THE
RESIGNATION OR REMOVAL OF THE PREDECESSOR ADMINISTRATOR WILL BECOME EFFECTIVE,
AND SUCH SUCCESSOR ADMINISTRATOR, WITHOUT ANY FURTHER ACT, DEED, OR CONVEYANCE,
WILL BECOME VESTED WITH ALL THE RIGHTS, POWERS, DUTIES AND OBLIGATIONS OF ITS
PREDECESSOR UNDER THE SERIES CERTIFICATE AGREEMENT.  ALL RELEVANT LEGAL
DOCUMENTS AND RECORDS HELD BY THE PREDECESSOR ADMINISTRATOR IN SUCH CIRCUMSTANCE
WILL BE TRANSFERRED TO THE SUCCESSOR ADMINISTRATOR.

 

(VIII)        NO SUCCESSOR ADMINISTRATOR WILL ACCEPT ITS APPOINTMENT UNLESS, AT
THE TIME OF SUCH ACCEPTANCE, SUCH SUCCESSOR ADMINISTRATION IS QUALIFIED AND
ELIGIBLE UNDER SECTION 10.06 AND SATISFIES THE REQUIREMENTS FOR A “TRUSTEE”
UNDER SECTION 26(A)(1) OF THE INVESTMENT COMPANY ACT.

 

(IX)           NO SUCCESSOR ADMINISTRATOR SHALL BE APPOINTED UNDER THIS
SECTION (OTHER THAN ONE APPOINTED BY COURT ORDER) WITHOUT THE PRIOR WRITTEN
CONSENT OF THE SPONSOR (PROVIDED NO SUCH CONSENT SHALL BE REQUIRED IF A
LIQUIDITY PROVIDER TERMINATION EVENT HAS OCCURRED AND IS CONTINUING).

 

Section 10.08       Preservation of Information; Communications to Holder.  (a) 
Holders may communicate with other Holders with respect to their rights under
the Series Certificate Agreement.  If any Holder writes to the Administrator and
states that it desires to communicate with other Holders with respect to its
rights under the Series Certificate Agreement, and encloses with such writing a
copy of the form of proxy or other communication which it proposes to transmit
to the other Holders, the Administrator will, within five Business Days after
the receipt of such writing, at its election either:

 

(I)            AFFORD SUCH HOLDER ACCESS TO THE INFORMATION REGARDING THE NAMES
AND ADDRESSES OF ALL OTHER HOLDERS PROVIDED BY THE REMARKETING AGENT PURSUANT TO
SECTION 14.03, OR

 

(II)           INFORM THE REQUESTING HOLDER(S) OF THE APPROXIMATE NUMBER OF
HOLDERS WHOSE NAMES AND ADDRESSES APPEAR IN THE INFORMATION PROVIDED BY THE
REMARKETING AGENT PURSUANT TO SECTION 14.03, AND AS TO THE APPROXIMATE COST OF
MAILING TO SUCH HOLDERS THE FORM OF PROXY OR OTHER COMMUNICATION, IF ANY,
SPECIFIED IN SUCH WRITTEN REQUEST.

 

If the Administrator does not allow the requesting Holder(s) access to the
information described in subsection (i) above, the Administrator will, upon the
written request of such Holder(s), mail to each current Holder a copy of the
form of proxy or other communication that is specified in such request, with
reasonable promptness, upon the Administrator’s receipt of the material to be
mailed and payment of the reasonable mailing expenses.  The Holder(s) requesting
such mailing will be solely responsible for complying with any state and Federal
securities laws and regulations regarding any communication pursuant to this
Section, and the Administrator

 

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will have no responsibility in that regard.  At the request of Freddie Mac, a
requesting Holder may be required to provide an Opinion of Counsel that all
securities laws have been complied with in connection with any such mailing.

 

(b)           Every Holder, by receiving and holding any such information as to
the names and addresses of the Holders in accordance with Section 10.08(a), or
by directing the Administrator to mail certain information pursuant to
Section 10.08(b), agrees with Freddie Mac and the Administrator to hold such
information confidential, and agrees that none of Freddie Mac, the Remarketing
Agent or the Administrator will be held accountable by reason of the disclosure
of such information regardless of the source from which such information was
derived.

 

Section 10.09       Bondholder Representative.  Freddie Mac in its role as
provider of the Credit Enhancement and the Liquidity Facility will be appointed
as the Bondholder Representative for all Bonds.  If any action, consent or
direction from the owners of the Bonds is required as provided in the related
Bond Documents, the Administrator will solicit from the Bondholder
Representative (or the Bondholder Representative’s appointee) its proxy for such
vote, consent or direction in favor of and returnable to the Administrator,
which will vote, consent or otherwise take direction solely in accordance with
the written direction of the Bondholder Representative (or its appointee).

 

ARTICLE XI

PROFITS AND LOSSES

 

Section 11.01       Tax Information.  The Administrator, upon request, will
furnish Freddie Mac and the Holders of Certificates with all such information
known to the Administrator as may be reasonably required by Freddie Mac and the
Holders of Certificates in connection with the preparation of tax returns and
other information relating to the Series Certificate Agreement.

 

Section 11.02       Capital Accounts.  (a)  There will be established for each
Holder a capital account (the “Capital Account”) on the books for the
Series Pool to be maintained and adjusted pursuant to the Series Agreement,
which will control (pursuant to the provisions of Article XIII) the division of
Series Pool Assets upon the termination of the Series Pool and liquidation
and/or distribution of the Series Pool Assets or the redemption of any
Certificate.  Such Capital Account will be increased by (i) the amount of all
Capital Contributions made or deemed made by such Holder to the Series Pool
pursuant to the Series Certificate Agreement, and (ii) the allocable share of
Profits, Market Discount Gains and Capital Gains of such Holder and all items in
the nature of income or gain specially allocated to such Holder pursuant to
Sections 11.03 and 11.05; and will be decreased by (i) the amount of any cash
and the Fair Market Value of any non-cash assets distributed to such Holder by
the Series Pool pursuant to the Series Certificate Agreement, and (ii) the
allocable share of Losses and Capital Losses of such Holder and all items in the
nature of Series Pool expenses or losses which are specially allocated to such
Holder pursuant to Sections 11.04 and 11.05.  Freddie Mac will be responsible
for the establishment and maintenance of the Capital Accounts in accordance with
this Section 11.02 and, to facilitate such establishment and maintenance, will
monitor the Current Certificate Balances of Holders of Class A Certificates and
Class B Certificates.

 

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(b)           Immediately before a distribution to any Holder in redemption of
all or any portion of its Certificates (including the liquidation of the
Series Pool as a result of a Series Termination Event), the Capital Account of
such Holder will be increased or decreased, as the case may be with its
allocable portion of any Profit, Losses, Market Discount Gain, Capital Gain or
Capital Loss, or other items of income, gain, loss or deduction that would
result if the Series Pool Assets were sold at such time at their Fair Market
Values.  In the case of any distribution of Bonds to any Holder, the Capital
Account of such Holder will be adjusted in the manner described in the preceding
sentence.

 

(c)           A transferee of an interest in the Series Pool will succeed to the
Capital Account of the transferor to the extent it relates to the interest
transferred.

 

(d)           The foregoing provisions and the other provisions of the
Series Certificate Agreement relating to the maintenance of Capital Accounts are
intended to comply with Section 1.704-1(b) of the Regulations, and will be
interpreted and applied in a manner consistent therewith.  In the event that
Freddie Mac determines that it is necessary to modify the manner in which the
Capital Accounts, or any debits or credits thereto are computed in order to
comply with such Regulations, Freddie Mac will make such modification, provided
that such modification is not likely to have a material effect on the amounts
distributable to any Holders pursuant to Articles IV, VII or XIII upon the
withdrawal of the Holders or the dissolution of the Series Pool.

 

Section 11.03       Allocations of Profits, Market Discount Gains and Capital
Gains.  (a)  Profits for each Fiscal Year or other relevant period will be
allocated (i) first, to the Holders of Class A Certificates in proportion to
their Current Class A Certificate Balances until each Holder of a Class A
Certificate has been allocated, on a cumulative basis, an amount equal to the
cumulative amount of its Required Class A Certificate Interest Distribution
Amount for such period; (ii) second, to the Holders of Class B Certificates, in
proportion to their Current Class B Certificate Balances, the Class A
Certificate Notional Accelerated Principal Paydown Amount, and (iii) third, the
remainder to the Holders of the Class B Certificates in proportion to their
Current Class B Certificate Balances.  The Capital Accounts relating to the
Class B Certificates will be adjusted for any bond premium required to be
amortized pursuant to Section 171 of the Code and any other capitalized items
subject to amortization.

 

(b)           Market Discount Gains realized under applicable Federal income tax
provisions from a Disposition of any Bond will be allocated solely to the
Holders of Class B Certificates in proportion to their current Class B
Certificate Balances.

 

(c)           Capital Gains recognized other than in connection with an Exchange
Date will be allocated in accordance with the Gain Share.

 

(d)           With respect to an Exchange Date, Capital Gains will be allocated:
(i) to the extent that any Losses or Capital Losses have been allocated to the
Holders of Class B Certificates pursuant to Section 11.04(a), first, to the
Holders of Class B Certificates, pro rata, until the sum of all amounts of
Losses or Capital Losses allocated to them under Section 11.04(a) for the
current and all preceding periods equals the sum of all Capital Gains allocated
to them pursuant to this subsection or Section 11.03(c) for the current and all
preceding periods, and (ii) thereafter according to the Gain Share.

 

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(e)           In the event of a partial redemption of the Bonds, the Gain Share
is only determined with respect to Holders that are redeemed as a result
thereof.

 

Section 11.04       Allocations of Losses and Capital Losses.  (a)  Other than
in connection with the occurrence of an Exchange Date, Losses and Capital Losses
that result from a liquidation of the related Bonds as a result of a mandatory
purchase, failure to remarket tendered Class A Certificates or redemption of any
related Bonds will be allocated to the Holders of the Class B Certificates, pro
rata, to the extent of their Capital Account Balances.

 

(b)           (1)           In connection with the occurrence of a Tender Option
Termination Event and immediately prior to the distribution of the Bonds or
Affected Bonds, as applicable, to the Holders, both Losses and Capital Losses
will be allocated: (i) first, to the Holders of the Affected Class A
Certificates and Affected Class B Certificates on a pro rata basis in proportion
to the Aggregate Outstanding Certificate Balances until their Capital Account
Balances have been reduced to zero; and (ii) thereafter, to the Sponsor.

 

(2)           In connection with the occurrence of an Exchange Date described in
Section 6.06(c)(iii), and immediately prior to the distribution of Bonds or
sales proceeds, as applicable, to the Holders, both Losses and Capital Losses
will be allocated (i) first, to the Holders of Class B Certificates and Class A
Certificates on a pro rata basis in proportion to the Aggregate Outstanding
Certificate Balances until their Capital Account Balances have been reduced to
zero; and (ii) thereafter, to the Sponsor.

 

(c)           Notwithstanding anything to the contrary contained in this
Article XI, any “partner nonrecourse deductions” within the meaning of
Section 1.704-2(i)(2) of the Regulations will be allocated to the partner
bearing the economic risk of loss for the related debt, in the manner required
by Section 1.704-2(i)(1) of the Regulations.

 

(d)           Any Loss (or item thereof) not otherwise allocated pursuant to
this Article XI will be allocated to the Sponsor.

 

Section 11.05       Special Allocations.  (a)  Notwithstanding anything to the
contrary contained in this Article XI, no allocation of a loss or deduction will
be made to a Holder to the extent such allocation would cause or increase an
Adjusted Capital Account Deficit with respect to such Holder.  In the event that
any Holder unexpectedly receives adjustments, allocations or distributions
described in Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations,
items of income and gain will be specially allocated to each such Holder in an
amount and manner sufficient to eliminate, to the extent required by the
Regulations, the Adjusted Capital Account Deficit of such Holder as quickly as
possible.  In no event, however, will any item or items of Series Pool income
that represent Market Discount be allocated to any Holder of a Class A
Certificate.  This Section 11.05(a) is intended to constitute a “qualified
income offset” within the meaning of Section 1.704-1(b)(2)(ii)(d)(3) of the
Regulations and will be interpreted consistently therewith.

 

(b)           (i)            Notwithstanding anything to the contrary contained
in this Article XI, if there is a net decrease in “partnership minimum gain”
within the meaning of Section 1.704-2(d)(1) of the Regulations during any Fiscal
Year, each Holder who has a share of the partnership minimum gain will be
specially allocated items of Series Pool income and gain in an

 

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amount equal to such Holder’s share of the net decrease in partnership minimum
gain, subject to any modifications deemed appropriate by Freddie Mac to comply
with the minimum gain chargeback requirement of Section 1.704-2(f) of the
Regulations.  This subsection is intended to comply with the “partnership
minimum gain chargeback” requirement of Section 1.704-2(f) of the Regulations
and will be interpreted consistently therewith.

 

(ii)           Notwithstanding anything to the contrary contained in this
Article XI, except as otherwise provided in Section 1.704-2(i)(4) of the
Regulations, if there is a net decrease in “partner nonrecourse debt minimum
gain” within the meaning of Section 1.704-2(i)(3) of the Regulations,
attributable to “partner nonrecourse debt” within the meaning of
Section 1.704-2(b)(4) of the Regulations during any Fiscal Year, each Holder who
has a share of the partner nonrecourse debt minimum gain attributable to such
partner nonrecourse debt, determined in accordance with Section 1.704-2(i)(5) of
the Regulations, will be specially allocated items of Series Pool income and
gain for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an
amount equal to such Holder’s share of the net decrease in partner nonrecourse
debt minimum gain attributable to such partner nonrecourse debt, determined in
accordance with Section 1.704-2(i)(4) of the Regulations.  Allocations pursuant
to the previous sentence will be made in proportion to the respective amounts
required to be allocated to each Holder pursuant thereto.  The items to be so
allocated will be determined in accordance with Sections 1.704-2(i)(4) and
1.704-2(j)(2) of the Regulations.  This subsection is intended to comply with
the “partner minimum gain chargeback” requirement of Section 1.704-2(i)(4) of
the Regulations and will be interpreted consistently therewith.

 

(c)           To the extent an adjustment to the adjusted tax basis of any
Series Pool Assets pursuant to Section 734(b) of the Code or Section 743(b) of
the Code is required, pursuant to Section 1.704-1(b)(2)(iv)(m) of the
Regulations, to be taken into account in determining Capital Accounts, the
amount of such adjustment to the Capital Accounts of each of the Holders will be
treated as an item of gain (if the adjustment increases the basis of the
Series Pool Asset) or loss (if the adjustment decreases such basis) in respect
of the relevant Series Pool Assets and such gain or loss will be specially
allocated to the Holders in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Section of the
Regulations.

 

(d)           The allocations set forth in Sections 11.05(a), (b) and
(c) (collectively, the “Regulatory Allocations”) are intended to comply with
certain requirements of Section 1.704-1(b) of the Regulations.  By its purchase
of a Class A Certificate or Class B Certificates, each Holder acknowledges that
the Regulatory Allocations may not be consistent with the manner in which the
Holders intend to divide Series Pool distributions.  Accordingly, the Holders
agree that the Regulatory Allocations will be offset with subsequent allocations
of income, gain, loss, or deduction pursuant to this
Section 11.05(d) (collectively, the “Offsetting Allocations”), so that the net
amount of any Regulatory Allocations and Offsetting Allocations pursuant to this
Article XI will, to the greatest extent possible, be equal to the net amount
that would have been allocated to each Holder pursuant to the provisions of this
Article XI if the Regulatory Allocations had not occurred.

 

(e)           If the Partnership Factors apply, notwithstanding any other
provision of the Series Certificate Agreement, during each Fiscal Year the
Sponsor will be allocated a percentage of

 

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Profits, Capital Gains, Market Discount Gain, Losses and Capital Losses, and of
each other item of income, gain, loss, deduction or credit not less than the
Minimum Sponsor Percentage.

 

(f)            If the Sponsor has a deficit balance in its Capital Account
following a Series Termination Event and the liquidation of its Certificate
(after giving effect to all contributions, distributions, allocations and other
Capital Account adjustments for all Fiscal Years, including the Fiscal Year
during which such liquidation occurs), the Sponsor will be treated, as obligated
to restore the amount of such deficit balance to the Series Pool by the end of
such Fiscal Year or, if later, within 90 days after the date of such
liquidation, but only to the extent of the Sponsor’s legal obligations, if any,
to Freddie Mac and other creditors of the Series Pool.

 

Section 11.06       Tax Allocations; Code Section 704(c).  (a)  For Federal
income tax purposes, except as provided in this Section 11.06, each item of
income, gain, loss, deduction and credit of the Series Pool will be allocated
consistent with the allocations described in Sections 11.03 through 11.05.

 

(b)           If there is a difference between the adjusted tax basis of any
Series Pool Asset and its fair market value when such asset was contributed to
the Series Pool, allocations of gain or loss and amortization of bond premium
with respect to such asset, as computed for tax purposes, will be made among the
Holders in a manner which takes such difference into account in accordance with
Section 704(c) of the Code and Section 1.704-1(b)(4)(i) of the Regulations.

 

(c)           All liabilities of the Series Pool (both recourse and nonrecourse)
(including any reimbursement obligations under the Reimbursement Agreement) will
be allocated to the Sponsor.  Excess nonrecourse liabilities, if any, will be
allocated to the Sponsor.

 

(d)           Any elections or other decisions relating to such allocations will
be made by Freddie Mac in any manner that reasonably reflects the purpose and
intention of the Series Certificate Agreement. Allocations pursuant to this
Section are solely for purposes of Federal, state and local taxes and will not
affect, or in any way be taken into account in computing, any Holder’s Capital
Account or share of Profits, Capital Gains, Losses, Capital Losses, other items
or distributions pursuant to any provision of the Series Certificate Agreement.

 

Section 11.07       Allocation Among Holders.  Except as otherwise provided, all
amounts allocated to transferring Holders will be allocated among them in
accordance with the interests held by each such Holder from time to time. 
Subject to applicable Regulations, all items of income, gain, expense or loss
that are allocated pursuant to this Article XI for a Fiscal Year allocable to
any Certificates will be allocated between the transferor and the transferee
based on an interim closing of the Series Pool’s books.

 

Section 11.08       Tax Matters; Tax Election.  It is the intention of the
parties that the Series Pool will be classified as a partnership for all
Federal, state and local tax purposes.  Each Holder and transferee of
Certificates acknowledges that it will treat the Series Pool as a partnership
for Federal, State and local income tax purposes and that it intends and expects
to be treated as a partner for such purposes.  No Person is authorized to elect
under Section 301.7701-3(c) of the Regulations or any applicable State or local
law to have the Series Pool classified as a corporation for Federal or any
applicable State or local income tax purposes.  Freddie Mac will have the
discretion to make, or if necessary, to instruct the Administrator to take the
necessary

 

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steps to make, a Monthly Closing Election on behalf of the Series Pool, in which
case the Sponsor and each Holder of Certificates (by their purchase of
Certificates) will be deemed to have consented to the Monthly Closing Election. 
The Series Pool, the Sponsor and each Holder of Certificates (by their purchase
of Certificates) agrees to comply with any special tax reporting requirements
applicable to the Monthly Closing Election.  Additionally, Freddie Mac may at
its discretion and with the consent of the Sponsor and to the extent permitted
by applicable law, file a Section 761 Election to exclude the Series Pool from
the application of all of the provisions of Subchapter K of Chapter 1 of the
Code.  Each Holder, by virtue of acquiring a Certificate in a Series of
Certificates, consents, pursuant to Section 761 of the Code, to the Section 761
Election.  The Sponsor will be liable for any penalties and interest on
penalties imposed on the Series Pool relating to the Section 761 Election.  The
parties hereto agree that Freddie Mac will not act as or be deemed to be a
partner for Federal, state or local tax purposes by virtue of its execution and
delivery of the Liquidity Facility.  Freddie Mac agrees to timely file the
necessary or appropriate elections and all tax returns and tax reports
consistent with and based upon this Section 11.08 and neither Freddie Mac nor
any Holder will take any position on any tax return or report or in any
proceeding or audit which is inconsistent with this Section 11.08.

 

Section 11.09       Accounting Method.  The Series Pool will compute its income
on the accrual method of accounting.

 

Section 11.10       Tax Matters Partner.  (a)  If Freddie Mac is one of the
Holders of Class B Certificates or if permitted by applicable law, Freddie Mac
will file any required federal, state or local tax returns for the Series Pool,
and will act as the “Tax Matters Partner” for the Series Pool in the manner
specified in the Regulations.  In any other case, the Holder of the Class B
Certificates having the largest Current Class B Certificate Balance is
designated as the partner responsible for filing such tax returns and as Tax
Matters Partner for the Series Pool.  Such Holder, however, by its acceptance of
its Class B Certificate, agrees to designate Freddie Mac as its agent and
attorney-in-fact in the performance of all the duties required of, or permitted
to be taken by, the partner responsible for filing such tax returns and the Tax
Matters Partner for the Series Pool and, if requested by Freddie Mac, to execute
a power of attorney to this effect.  Freddie Mac agrees to prepare such tax
returns and, if permitted by applicable law, to sign and file such tax returns
on behalf of the Series Pool.  To the extent required by law, Freddie Mac will
provide Holders with copies of any such tax returns.  Freddie Mac will represent
the Series Pool to the extent permitted by law in connection with any inquiry,
examination or audit of the Series Pool affairs by tax authorities.

 

(b)           Each Registered Holder and Holder by acceptance of its Certificate
agrees (i) to hold the Tax Matters Partner and Freddie Mac (and any officer,
director, agent, employee, member, stockholder, or Affiliate of Freddie Mac)
harmless from, and (ii) in connection with any action taken at the request of
such Registered Holder or Holder, to indemnify the Tax Matters Partner and
Freddie Mac (and any officer, director, agent, employee, member, stockholder, or
Affiliate of Freddie Mac) against, any actual out-of-pocket loss, liability,
expense, damages or injury suffered, sustained or incurred to the extent that
they are a direct result of any acts, omissions, or alleged acts or omissions
arising out of the activities or actions of the Tax Matters Partner and Freddie
Mac in connection with the performance of its duties as Tax Matters Partner or
as agent or attorney-in-fact for the Tax Matters Partner, including but not
limited to any penalties or interest thereon assessed under the Code or other
applicable tax laws, judgments, fines, amounts paid in settlement, reasonable
attorneys’ fees and expenses and other costs or

 

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expenses incurred in connection with the defense of any actual or threatened
action, proceeding or claim, unless such acts, omissions or alleged acts or
omissions constitute fraud, gross negligence, or willful misconduct by Freddie
Mac and the Tax Matters Partner, respectively.

 

Section 11.11       Compliance with Code Requirements.  The Administrator will
comply with all requirements of the Code and other applicable tax laws with
respect to the withholding from any payments made by it on any Certificates of
any applicable back-up withholding taxes or other withholding taxes imposed
thereon and with respect to any applicable information reporting requirements
(e.g., Form 1099-B) in connection therewith; provided however, that with respect
to any applicable withholding and reporting requirements relating to original
issue discount or market discount, Freddie Mac will provide the Administrator
with any calculations pertaining thereto.

 

ARTICLE XII

AMENDMENTS

 

Section 12.01       Amendments.  (a)  Except as provided in Section 12.01(b),
without the consent of the Holders of any Class A Certificates, the Standard
Terms and the Series Certificate Agreement may be amended for any one or more of
the following purposes if the conditions provided in Section 12.01(c) have been
satisfied:

 

(I)            TO CURE ANY FORMAL DEFECT, OMISSION, INCONSISTENCY OR AMBIGUITY
IN A MANNER NOT MATERIALLY ADVERSE TO THE HOLDERS OF CLASS A CERTIFICATES;

 

(II)           TO GRANT TO OR CONFER UPON THE ADMINISTRATOR FOR THE BENEFIT OF
THE HOLDERS ANY ADDITIONAL RIGHTS, REMEDIES, POWERS OR AUTHORITY THAT MAY
LAWFULLY BE GRANTED OR CONFERRED AND THAT ARE NOT CONTRARY TO OR INCONSISTENT
WITH THE STANDARD TERMS OR SERIES CERTIFICATE AGREEMENT OR THE RIGHTS OF THE
ADMINISTRATOR HEREUNDER AS THERETOFORE IN EFFECT;

 

(III)          TO MODIFY, AMEND OR SUPPLEMENT THE STANDARD TERMS OR
SERIES CERTIFICATE AGREEMENT AS REQUIRED BY THE RATING AGENCY TO OBTAIN OR
MAINTAIN A RATING OR RATINGS FOR THE CLASS A CERTIFICATES;

 

(IV)          TO MODIFY, AMEND OR SUPPLEMENT THE STANDARD TERMS OR
SERIES CERTIFICATE AGREEMENT IN ANY OTHER RESPECT WHICH IS NOT MATERIALLY
ADVERSE TO THE HOLDERS OF THE CLASS A CERTIFICATES AFTER THE EFFECTIVE DATE OF
THE CHANGE AND WHICH DOES NOT INVOLVE A CHANGE DESCRIBED IN SECTION 12.01(B).

 

When Freddie Mac gives the Administrator a Depositor Order, the Administrator
will enter into any amendment permitted hereby if the Administrator determines
the amendment is in acceptable form.

 

(b)           The Standard Terms may be amended in order to amend any of the
provisions relating to (i) distributions and payments from the Distribution
Account and Bond Payment Subaccounts, (ii) the determination of the Reset Rate
and changes in the Reset Rate, (iii) the Tender Option or Tender Option
Termination Events or (iv) this Section 12.01(b), if the conditions provided in
Section 12.01(c) have been satisfied, provided, that such amendments

 

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will be subject to the consent of 100% of the Holders of Class A Certificates
affected thereby.  The Standard Terms may also be amended in order to amend any
other provision not addressed by the prior sentence or by Section 12.01(a), if
the conditions provided in Section 12.01(c) have been satisfied, provided that
any such amendment will be subject to the consent of Holders representing not
less than 51% of the Current Class A Certificate Balance affected thereby.

 

The Administrator is authorized and agrees to join in the execution of any such
amendment and to make any further appropriate agreements and stipulations that
may be contained in such amendment when Freddie Mac requests such execution if
the conditions to such amendment have been satisfied.

 

(c)           No amendment to the Standard Terms or the Series Certificate
Agreement will be effective (x) without the prior written consent of the
Sponsor, (y) without the consent of the Remarketing Agent to the extent the
Remarketing Agent is adversely affected thereby and (z) until all of the
following conditions have been satisfied:

 

(i)            Freddie Mac and the Administrator have received an Opinion of Tax
Counsel satisfactory to each of them to the effect that such amendment does not
adversely affect any of the prior opinions relating to federal income taxation
pertaining to the Certificates;

 

(ii)           The Required Class B Certificate Consent has been delivered to
the Administrator; and

 

(iii)          Each applicable Rating Agency has confirmed its rating on the
Class A Certificates.

 

The Administrator will promptly provide notice to the Sponsor, the Remarketing
Agent and each applicable Rating Agency of any amendments to the Standard Terms
or the Series Certificate Agreement.

 

Section 12.02       Execution of Amendments.  In executing any amendment
permitted by this Article XII, the Administrator will be entitled to receive,
and (subject to Sections 10.01 and 10.03) will be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by the Series Certificate Agreement.  The Administrator
may, but will not be obligated to, enter into any such amendment that affects
the Administrator’s own rights, duties, liabilities or immunities under the
Series Certificate Agreement or otherwise.

 

Section 12.03       Effect of Amendment.  Upon the execution of any amendment
pursuant to the provisions of this Article XII, the Series Certificate Agreement
will be deemed modified and amended with respect to all Certificates, and the
respective rights, limitations of rights, obligations and immunities under the
Series Certificate Agreement of the Administrator, Freddie Mac, the Holders of
Certificates and any other affected secured parties under the Series Certificate
Agreement will thereafter be determined, exercised and enforced under the
Series Certificate Agreement subject in all respects to such amendment, and all
the terms and conditions of any such amendment will be deemed part of the terms
and conditions of the Series Certificate Agreement for all purposes.

 

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Section 12.04       Reference in Certificates to Amendments.  Certificates
authenticated and delivered after the execution of any amendment pursuant to
this Article XII may, and if required by the Administrator will, bear a notation
in form approved by the Administrator as to any matter provided for in such
amendment.  New Certificates that are modified to conform to such amendment may
be prepared and executed by Freddie Mac and authenticated and delivered by the
Administrator in exchange for Outstanding Certificates.

 

ARTICLE XIII

TERMINATION

 

Section 13.01       Termination.  (a)  The respective obligations of Freddie
Mac, the Administrator, the Remarketing Agent and the Sponsor created under the
Series Certificate Agreement will terminate (other than Freddie Mac’s remaining
obligations under Section 4.11 and the obligation of the Administrator to
enforce such remaining obligations, and to make payment to the Holders, and
except with respect to the duties and obligations set forth in Sections 3.04(a),
3.05, 3.09, 4.02(d), 11.08, 11.10, 11.11, 13.02(b) and 14.09, which will survive
any termination of the Series Certificate Agreement) upon the earliest of the
following events (each of which is a “Series Termination Event”):

 

(I)            THE SERIES EXPIRATION DATE;

 

(II)           THE EXCHANGE DATE ON WHICH ALL CERTIFICATES ARE EXCHANGED FOR
EITHER BONDS OR SALES PROCEEDS IN CONNECTION WITH A TENDER OPTION TERMINATION
EVENT OR A LIQUIDITY FAILURE;

 

(III)          THE MANDATORY TENDER DATE ARISING IN CONNECTION WITH A LIQUIDITY
PROVIDER TERMINATION EVENT, A CLEAN-UP EVENT, THE CREDIT ENHANCEMENT EXPIRATION
DATE, OR, IF APPLICABLE, FOLLOWING A SPONSOR ACT OF BANKRUPTCY (COLLECTIVELY, A
“TERMINATING MANDATORY TENDER DATE”); OR

 

(IV)          THE DATE ON WHICH THE OPTIONAL DISPOSITION RIGHT HAS BEEN
EXERCISED WITH RESPECT TO THE LAST CLASS A CERTIFICATE (UNLESS SUCH CLASS A
CERTIFICATE HAS BEEN REMARKETED).

 

Any termination of the Series Certificate Agreement on the Series Expiration
Date will be effected as provided in Section 13.02.  Any termination of the
Series Certificate Agreement on the Exchange Date following the occurrence of a
Tender Option Termination Event will be effected as provided in Sections 7.01
and 13.04.  Any termination of the Series Certificate Agreement on the Exchange
Date following the occurrence of a Liquidity Failure will be effected as
described in as provided in Sections 6.06(c)(iii), 13.01(b) and 13.04.  Any
termination of the Series Certificate Agreement upon the occurrence of a
Terminating Mandatory Tender Date will be effected as provided in Sections
13.01(b) and 13.03.  Any termination of the Series Certificate Agreement on the
date on which the Optional Disposition Right has been exercised with respect to
the last Class A Certificate described above will be effected as provided in
Sections 7.05 and 13.01(b).  The Administrator will promptly provide notice to
Freddie Mac, the Sponsor, the Remarketing Agent and each applicable Rating
Agency of any Series Termination Event.

 

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(b)           On the Exchange Date, the applicable Terminating Mandatory Tender
Date, or the applicable Optional Disposition Date described in
Section 13.01(a)(iv), (i) the amounts, if any, on deposit in the Bond Payment
Subaccount—Interest, or Bond Payment Subaccount—Principal, to the extent not
previously distributed, will be distributed to the Holders based on their
respective Current Certificate Balances and in accordance with their positive
Capital Account Balances, and (ii) the amount in the Bond Payment Subaccount –
Holdback, will be distributed to the Holders of Class B Certificates.

 

(c)           So long as the Sponsor maintains the Minimum Sponsor Interest and
a Series Termination Event has not occurred, the Series Pool will continue in
full force and effect.  The Series Pool will not terminate prior to the
occurrence of a Series Termination Event.

 

Section 13.02       Final Distribution on the Series Expiration Date.  (a)  The
Administrator will give written notice to the Holders of the pending termination
of the obligations and responsibilities of Freddie Mac, the Administrator, the
Remarketing Agent and the Sponsor under the Series Certificate Agreement when
the Series Expiration Date occurs.  Such written notice will specify (i) the
date on which the Administrator expects the final payment or distribution of
principal will be made, but only upon presentation and surrender of such
Certificates for cancellation at the principal office of the Administrator
specified in such notice, (ii) the expected amount of such final payment or
distribution, and (iii) that the Regular Record Date otherwise applicable with
respect to such payment or distribution is not applicable, and that such payment
or distribution will be made only to the Holders presenting and surrendering
such Certificates at the principal office of the Administrator specified in such
notice.

 

Even though a Certificate is surrendered when the final distribution of
principal with respect to that Certificate is made, if interest or redemption
premium with respect to such Certificate will be distributable pursuant to the
Series Certificate Agreement on a date after such final distribution of
principal, the Administrator will make such distribution from amounts deposited
with respect to such interest or redemption premium in the related Distribution
Account in accordance with the Series Certificate Agreement.

 

(b)           Even after the Series Certificate Agreement terminates on the
Series Expiration Date, any funds not distributed to any Holder of Certificates
on the Redemption Date established for the final distribution on such
Certificates because of the failure of such Holder to tender its Certificates
will, on such Redemption Date, be set aside and credited to the account of the
applicable non-tendering Holder.  If any Certificates as to which notice of the
pendency of the final distribution has been given as described in the second
preceding paragraph have not been surrendered for cancellation within six months
after the time specified in such notice, the Administrator will mail a second
notice to the remaining non-tendering Holders to surrender their Certificates
for cancellation in order to receive the final distribution with respect to
their Certificates.  If within one year after the second notice all Certificates
have not been surrendered for cancellation, the Administrator will, directly or
through an agent, make a reasonable effort to contact the remaining
non-tendering Holders concerning surrender of their Certificates.  The costs and
expenses of maintaining the funds and of contacting such Holders will be paid
out of the assets remaining in such funds prior to any distribution to such
Holders.  If within two years after the second notice any Certificates have not
been surrendered for cancellation, the Administrator will thereafter hold such
amounts for the benefit of such Holders, subject to any applicable escheat
statutes.  Any amounts held as described above will not be invested.  No

 

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interest will accrue or be payable to any Holder on any amount held as a result
of the Holder’s failure to surrender its Certificates for final payment in
accordance with this paragraph.

 

If the Aggregate Outstanding Class B Certificate Balance has not been reduced to
zero after the final distributions pursuant to the provisions of Article IV and
this Section 13.02 have been effected, all Class B Certificates will nonetheless
be surrendered at the principal office of the Administrator.  On the
Series Expiration Date or as soon as practicable thereafter, the Bonds will be
sold to the extent necessary to pay any accrued and unpaid expenses of the
Series Pool (including, but not limited to, any unpaid Administrator Fee,
Administrator Advances, Daily Administrator Advance Charges, Freddie Mac Fee,
Servicing Fee, Special Servicing Fee and Remarketing Agent Fee).  The remaining
Bonds will be (i) distributed to the Pledge Custodian to be held pursuant to the
Reimbursement Agreement or (ii) liquidated with the proceeds to be applied to
effect a Special Adjustment Event with respect to a related Series Pool, with
such action (i) or (ii) to be determined as provided in Section 8.8 of the
Reimbursement Agreement.

 

Section 13.03       Terminating Mandatory Tender Date.  (a)  The Administrator
will give written notice to the Registered Holders of the pending termination of
the obligations and responsibilities of Freddie Mac, the Sponsor, the
Remarketing Agent and the Administrator under the Series Certificate Agreement
on a Terminating Mandatory Tender Date together with the notice of Mandatory
Tender provided in Article VI.

 

(b)           By the close of business on the related Terminating Mandatory
Tender Date, the Administrator will liquidate the Series Pool in accordance with
the following provisions.  On the second Business Day immediately preceding the
Terminating Mandatory Tender Date, the Administrator will solicit (1) at least
three commitments to purchase the Bonds from Persons, other than Specified
Parties, which customarily provide such bids, including but not limited to
investment dealers and brokers that customarily deal in municipal bonds and
(2) a commitment to purchase the Bonds from any interested Specified Parties,
provided, however, that none of the Sponsor Parties may purchase the Bonds if
any of the Sponsor Parties could receive any of the gain from such sale as
either the Holder of Class B Certificates or Class A Certificates.  (In
connection, with any proposed sale of the Bonds, the Sponsor shall direct the
Administrator to pay one hundred percent of the potential gain realized on the
proposed sale to the Holders of the Class A Certificates (other than any of the
Sponsor Parties) if a Sponsor Affiliate is the successful bidder.)  If the Bonds
can be sold for a price that is at least equal to the sum of the amounts
specified in clauses (A) through (C) of the next subparagraph (the “Terminating
Mandatory Tender Date Required Exchange Price”), the Series Pool will be
liquidated in accordance with the provisions of the next subparagraph.  If the
Bonds cannot be sold for a price that is at least equal to the Terminating
Mandatory Tender Date Required Exchange Price, the Series Pool will be
liquidated in accordance with the provisions of Section 13.03(c).

 

If the Bonds can be sold for a price that is at least equal to the Terminating
Mandatory Tender Date Required Exchange Price, the Administrator will sell the
Bonds on the Terminating Mandatory Tender Date to the party that has committed,
by the close of the Administrator’s business on the Business Day preceding the
Terminating Mandatory Tender Date, to purchase the Bonds at the Commitment
Price.  Immediately upon the disposition of the Bonds in accordance with this
subparagraph, the Administrator will distribute the liquidation proceeds from
the sale of Bonds: (A) first, to pay any accrued and unpaid expenses of the
Series Pool (including, but not limited to any Administrator Fee, Freddie Mac
Fee, Administrator Advance,

 

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Daily Administrator Advance Charges, Servicing Fee, Special Servicing Fee and
Remarketing Agent Fee); (B) second, the Hypothetical Gain Share, if any,
calculated by the Administrator, to the extent unpaid by any Holder or Holders
of Class B Certificates at their election after inquiry by the Administrator;
(C) third, to reimburse Freddie Mac for all amounts owed under the Reimbursement
Agreement, including all amounts with respect to the Pledged Class A
Certificates arising as of such Terminating Mandatory Tender Date; (D) fourth,
to pay to the Holders of Class B Certificates an amount equal to their Current
Certificate Balance; and (E) fifth, to pay to the Holders of Class B
Certificates the amount of each such Holder’s remaining Capital Account Balance
(after taking into account all allocations pursuant to Article XI of these
Standard Terms and previously distributed pursuant to clause (D)) as determined
by Freddie Mac in accordance with Section 11.02 (including Gain Share and Market
Discount Share).

 

(c)           On the Terminating Mandatory Tender Date, if the Bonds cannot be
sold for the Terminating Mandatory Tender Date Required Exchange Price, the
Administrator will sell the Bonds to the extent necessary to pay (i) any accrued
and unpaid expenses of the Series Pool (including, but not limited to,
Administrator Fee, Freddie Mac Fee, Administrator Advances, Daily Administrator
Advance Charges, Servicing Fee, Special Servicing Fee and Remarketing Agent Fee)
and (ii) Hypothetical Gain Share, if any, as calculated by the Administrator, to
the extent unpaid by any Holder or Holders of Class B Certificates at their
election after inquiry by the Administrator.  The remaining Bonds will be
distributed to the Pledge Custodian to be held pursuant to the Reimbursement
Agreement.

 

(d)           The Administrator will calculate and pay Hypothetical Gain Share,
if any, in addition to the Purchase Price on the Terminating Mandatory Tender
Date to the Holders of Class A Certificates tendered on the Terminating
Mandatory Tender Date from (i) first, amounts provided by the Holders of Class B
Certificates to the Administrator on such Terminating Mandatory Tender Date at
their election after inquiry by the Administrator and (ii) second, from sales
proceeds as described in Section 13.03(b) or (c).

 

(e)           When the distributions required pursuant to Section 13.03 have
been completed, all Class A Certificates and Class B Certificates will be
canceled.

 

Section 13.04       Exchange Date.  (a)  The Administrator will provide written
notice of the pending termination of the responsibilities of Freddie Mac, the
Sponsor, the Remarketing Agent and the Administrator under the
Series Certificate Agreement arising from an Exchange Date.  The termination of
the Series Pool will be governed by the applicable provisions in the following
paragraphs.

 

(b)           Liquidity Failure or Tender Option Termination Event (Other than
Taxability).  If the Exchange Date arises from a Liquidity Failure or a Tender
Option Termination Event (other than a Tender Option Termination Event described
in Section 7.01(a)(ii) hereof) the following provisions will govern.

 

(i)            On the Business Day immediately preceding such Exchange Date, the
Administrator will solicit (1) at least three commitments to purchase the Bonds
from Persons, other than Specified Parties, which customarily provide such bids,
including but not limited to investment dealers and brokers that customarily
deal in municipal bonds and (2) a commitment to purchase the Bonds from any
interested Specified Parties,

 

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provided, however, that none of the Sponsor Parties may purchase the Bonds if
any of the Sponsor Parties could receive any of the gain from such sale as
either the Holder of Class B Certificates or Class A Certificates.  (In
connection, with any proposed sale of the Bonds, the Sponsor shall direct the
Administrator to pay one hundred percent of the potential gain realized on the
proposed sale to the Holders of the Class A Certificates (other than any of the
Sponsor Parties) if a Sponsor Affiliate is the successful bidder.)  If the Bonds
can be sold for a price that is at least equal to the sum of the amounts
specified in clauses (A) through (C) of the next subparagraph (the “Termination
(Other than Taxability) Required Exchange Price”), the Series Pool will be
liquidated in accordance with the provisions of the next subparagraph.  If the
Bonds cannot be sold for a price that is at least equal to the Termination
(Other than Taxability) Required Exchange Price, the Series Pool will be
liquidated in accordance with the provisions of Section 13.04(b)(iii).

 

(ii)           If the Bonds can be sold for a price that is at least equal to
the Termination (Other than Taxability) Required Exchange Price, the
Administrator will sell the Bonds on the Exchange Date to the party that has
committed, by the close of the Administrator’s business on the Business Day
preceding the Exchange Date, to purchase the Bonds at the Commitment Price. 
Immediately upon the disposition of the Bonds in accordance with this
subparagraph, the Administrator will distribute the liquidation proceeds from
the sale of Bonds: (A) first, to pay any accrued and unpaid expenses of the
Series Pool (including, but not limited to any Administrator Fee, Freddie Mac
Fee, Administrator Advance, Daily Administrator Advance Charges, Servicing Fee,
Special Servicing Fee and Remarketing Agent Fee); (B) second, to pay the Holders
of Class A Certificates an amount equal to their Current Certificate Balances
plus the accrued but unpaid Required Class A Certificate Interest Distribution
Amount thereon; (C) third, to pay to the Holders of Class B Certificates an
amount equal to their Current Certificate Balance; (D) fourth, to pay to Holders
of Class A Certificates the amount of each such Holder’s Capital Account Balance
(after taking into account all allocations pursuant to Article XI of these
Standard Terms and amounts previously distributed pursuant to clause (B)) as
determined by Freddie Mac in accordance with Section 11.02 (generally, Gain
Share as calculated pursuant to the Series Certificate Agreement); and
(E) fifth, to pay to the Holders of Class B Certificates the amount of each such
Holder’s remaining Capital Account Balance (after taking into account all
allocations pursuant to Article XI of these Standard Terms and previously
distributed pursuant to clause (C)) as determined by Freddie Mac in accordance
with Section 11.02 (including Gain Share and Market Discount Share).

 

(iii)          If the Bonds cannot be sold for a price that is at least equal to
the Termination (Other than Taxability) Required Exchange Price, the Series Pool
will be liquidated as follows on the Exchange Date:

 

(A)          With respect to each Bond, the Administrator will sell a principal
amount of such Bond equal to the portion of the Outstanding Bond Balance
necessary to generate proceeds sufficient to pay any accrued and unpaid expenses
of the Series Pool (including, but not limited to any Administrator Fee, Freddie
Mac Fee, Administrator Advances, Daily Administrator Advance Charges, Servicing
Fee, Special Servicing Fee and Remarketing Agent Fee), determined by multiplying
the sum of such expenses by the ratio of the Outstanding Bond Balance to the
Aggregate Outstanding Bond Balance; and

 

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(B)           After completing the sale required pursuant to preceding clause
(A), the Administrator will distribute each Bond, on a pari passu basis, to the
Holders of Class A Certificates and the Holders of Class B Certificates as
follows: (i) to the Holders of Class A Certificates, on a pro rata basis, the
product of (A) the remaining Outstanding Bond Balance and (B) the ratio of their
Current Certificate Balance to the Aggregate Outstanding Certificate Balance;
and (ii) to the Holders of Class B Certificates, on a pro rata basis, the
product of (A) the remaining Outstanding Bond Balance and (B) the ratio of their
Current Certificate Balance to the Aggregate Outstanding Certificate Balance.

 

(iv)          Upon the completion of the distributions required pursuant to the
preceding two subparagraphs, all Class B Certificates and Class A Certificates
will be canceled.

 

(c)           Tender Option Termination Event for Taxability.  (i)  If the
Exchange Date arises from a Tender Option Termination Event as described in
Section 7.01(a)(ii) hereof, the following provisions will govern.  By the close
of business on the Exchange Date, the Administrator will use its best efforts to
sell the Affected Bonds.  On the Business Day immediately preceding such
Exchange Date, the Administrator will solicit (1) at least three commitments to
purchase the Affected Bonds from Persons, other than Specified Parties, which
customarily provide such bids, including but not limited to investment dealers
and brokers that customarily deal in municipal bonds and (2) a commitment to
purchase the Bonds from any interested Specified Parties, provided, however,
that none of the Sponsor Parties may purchase the Bonds if any of the Sponsor
Parties could receive any of the gain from such sale as either the Holder of
Class B Certificates or Class A Certificates.  (In connection, with any proposed
sale of the Bonds, the Sponsor shall direct the Administrator to pay one hundred
percent of the potential gain realized on the proposed sale to the Holders of
the Class A Certificates (other than any of the Sponsor Parties) if a Sponsor
Affiliate is the successful bidder.)  If the Affected Bonds can be sold for a
price that is at least equal to the sum of the amounts specified in clauses
(A) through (C) of the next subparagraph (the “Taxability Termination Required
Exchange Price”), the Series Pool will be liquidated in part in accordance with
Section 13.04(c)(ii).  If the Affected Bonds cannot be sold for a price that is
at least equal to the Taxability Termination Required Exchange Price, the
Series Pool will be liquidated in part in accordance with the provisions of
Section 13.04(c)(iii).

 

(ii)           If the Affected Bonds can be sold for a price that is at least
equal to the Taxability Termination Required Exchange Price, the Administrator
will sell Affected Bonds on the Exchange Date to the party that has committed,
by the close of the Administrator’s business on the Business Day preceding the
Exchange Date, to purchase the Affected Bonds at the Commitment Price. 
Immediately upon the disposition of the Affected Bonds in accordance with this
subparagraph, the Administrator will distribute the liquidation proceeds from
the sale of Affected Bonds: (A) first, to pay any allocable accrued and unpaid
expenses of the Series Pool (including, but not limited to any Administrator
Fee, Freddie Mac Fee, Administrator Advances, Daily Administrator Advance
Charges, Servicing Fee, Special Servicing Fee and Remarketing Agent Fee),
determined by multiplying the sum of such expenses by the ratio of the principal
balance of the Affected Bonds to the Aggregate Outstanding Bond Balance;
(B) second, to pay the Holders of Class A Certificates an amount equal to the
sum of (1) the product of the principal balance of the Affected Bonds and the
ratio of their Current Certificate Balances to the Aggregate Outstanding
Certificate Balance and (2) the accrued but unpaid Required Class A

 

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Certificate Interest Distribution Amount thereon; (C) third, to pay to the
Holders of Class B Certificates an amount equal to the product of the principal
balance of the Affected Bonds and the ratio of their Current Certificate
Balances to the Aggregate Outstanding Certificate Balance; (D) fourth, to pay to
Holders of Class A Certificates Gain Share determined by Freddie Mac in
accordance with Section 11.02; and (E) fifth, to pay the balance to the Holders
of Class B Certificates.

 

(iii)          If the Affected Bonds cannot be sold for a price that is at least
equal to the Taxability Termination Required Exchange Price, the Series Pool
will be liquidated in part as follows on the Exchange Date:

 

(A)          With respect to each Affected Bond, the Administrator will sell the
portion of the outstanding balance necessary to generate proceeds sufficient to
pay any allocable accrued and unpaid expenses of the Series Pool (including, but
not limited to any Administrator Fee, Freddie Mac Fee, Administrator Advances,
Daily Administrator Advance Charges, Servicing Fee, Special Servicing Fee and
Remarketing Agent Fee), determined by multiplying the sum of such expenses by
the ratio of the outstanding balance of such Bond to the Aggregate Outstanding
Bond Balance; and

 

(B)           After completing the sale required pursuant to preceding clause
(A), the Administrator will distribute each Affected Bond, on a pari passu
basis, to the Holders of Class A Certificates and the Holders of Class B
Certificates as follows: (1) to the Holders of Class A Certificates on a pro
rata basis, the product of (a) the remaining outstanding balance of such
Affected Bond and (b) the ratio of their Current Certificate Balance to the
Aggregate Outstanding Certificate Balance; and (2) to the Holders of Class B
Certificates, on a pro rata basis, the product of (a) the remaining outstanding
balance of such Affected Bond and (b) the ratio of their Current Certificate
Balance to the Aggregate Outstanding Certificate Balance.

 

(iv)          Upon the completion of the distributions required pursuant to this
Section 13.04(c), (A) corresponding adjustments will be made to Capital Account
Balances and Current Certificate Balances to reflect such distributions, (B) a
corresponding adjustment will be made to the Liquidity Commitment, (C) the
Affected Certificates will be deemed canceled and then Outstanding Certificates
with Current Certificate Balances reflecting such adjustments will not be
considered Affected Certificates for purposes of the Series Certificate
Agreement, and (D) the related Tender Option Termination Event will no longer be
considered to be continuing for purposes of the Series Certificate Agreement.

 

ARTICLE XIV

 

MISCELLANEOUS

 

Section 14.01       Acts of Holders.  (a)  Any request or other action provided
by the Series Certificate Agreement to be given or taken by Holders may be
evidenced by one or more instruments of substantially similar tenor signed by
such Holders or their agents; and, except as otherwise expressly provided in the
Series Certificate Agreement, such action will become effective when such
instrument or instruments are delivered to the Administrator and Freddie Mac. 
(Such an instrument is sometimes referred to in the Series Certificate Agreement
as the

 

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“action” of the Holders signing such instrument).  Proof of execution of any
such instrument, or of the appointment of any such agent, will be sufficient for
any purpose of the Series Certificate Agreement and (subject to Section 10.01)
conclusive in favor of the Administrator and Freddie Mac, if made in the manner
provided in this Section.

 

(b)           Any action by the Holder of any Certificate will bind its
successor Holder whether or not notation of such action is noted upon such
Certificate.

 

Section 14.02       Notices.  Unless otherwise specified, all communications
under the Series Certificate Agreement must be in writing and will be deemed
duly given if personally delivered to, mailed by first-class mail, postage
prepaid, or sent by Electronic Notice and confirmed by first-class mail, postage
prepaid, addressed to: (i) in the case of Freddie Mac, Federal Home Loan
Mortgage Corporation, 8100 Jones Branch Drive, Mail Stop B4Q, McLean, Virginia
22102, Attention:  Director of Multifamily Loan Accounting, Telephone No.: (703)
903-2000, Facsimile No.:  (703) 714-3273; Federal Home Loan Mortgage
Corporation, 8200 Jones Branch Drive, McLean, Virginia 22102, Attention: 
Associate General Counsel – Multifamily Legal Department, Telephone No.: (703)
903-2000, Facsimile: No.:  (703) 903-2885; Federal Home Loan Mortgage
Corporation, 8100 Jones Branch Drive, Mail Stop B4F, McLean, Virginia 22102,
Attention:  Director of Multifamily Loan Servicing, Telephone No.: (703)
714-3003, Facsimile No.: (703) 903-2000; and (ii) in the case of the Remarketing
Agent, as provided in the Remarketing Agreement or, as to each such Person, at
such other address designated by such Person in a written notice to each other
such Person.

 

Section 14.03       Notices to Holders; Waiver.  Unless otherwise specified,
wherever the Series Certificate Agreement provides for notice to Registered
Holders of any event, such notice will be deemed to be sufficiently given
(whether or not received) if given by mail, first-class postage prepaid, to each
Registered Holder at such Registered Holder’s address as it appears on the
Certificate Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice.  In any case where
notice to Registered Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Registered
Holder will affect the sufficiency of such notice with respect to any other
Registered Holder, and any notice that is mailed in the manner provided in this
Section will conclusively be presumed to have been properly given.  In addition,
the Administrator will provide to the Registered Holders, upon the request of
the Holders of Certificates, the names and contacts of the Holders that have
been provided by the Remarketing Agent (to the extent that the Remarketing Agent
can ascertain the identity of the beneficial owners without expense and through
the use of commercially reasonable methods) and certain notices as prescribed by
the Remarketing Agreement.

 

Section 14.04       Successors and Assigns.  All covenants and agreements of
Freddie Mac set forth in the Series Certificate Agreement will bind its
successors and assigns.

 

Section 14.05       Severability.  If any provision of the Series Certificate
Agreement or the Certificates is determined to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions will not in any way be affected or impaired thereby.

 

Section 14.06       Benefits of Series Certificate Agreement.  Nothing in the
Series Certificate Agreement or in the Certificates, express or implied, will
give to any Person, other

 

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than the parties to the Series Certificate Agreement and their successors, the
Remarketing Agent and the Holders, any benefit of any legal or equitable right,
remedy or claim under the Series Certificate Agreement.

 

Section 14.07       Governing Law.  The Series Certificate Agreement and each
Certificate will be construed, and the rights and obligations of Freddie Mac and
the Administrator under the Series Certificate Agreement will be determined, in
accordance with federal statutory or common law (“Federal law”).  Insofar as
there may be no applicable rule or precedent under Federal law, and insofar as
to do so would not frustrate the purposes of any provision of the Freddie Mac
Act, the local law of the State of New York will be deemed reflective of Federal
law.  The parties agree that any legal actions between Freddie Mac and the
Administrator or the Holders regarding each party under the Series Certificate
Agreement will be originated in the United States District Court in and for the
Eastern District of Virginia, and the parties hereby consent to the jurisdiction
and venue of said Court in connection with any action or proceeding initiated
concerning the Series Certificate Agreement.

 

Section 14.08       Counterparts.  The Series Certificate Agreement may be
executed in any number of counterparts, each of which so executed will be deemed
to be an original, but all such counterparts will together constitute but one
and the same instrument.

 

Section 14.09       Non-Petition Covenants.  The Administrator, in its
individual capacity, agrees, and it is a condition to the appointment of any
successor Administrator, co-Administrator or separate Administrator, and to the
appointment of the Certificate Registrar, that the Person so appointed will
agree, in its individual capacity, and the Sponsor agrees, that it will not, at
any time, consent, petition or otherwise invoke the process of the United
States, any state or other political subdivision thereof, or any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of, or pertaining to, government for the purpose of commencing or
sustaining a case by or against Freddie Mac or the Series Pool under a federal
or state bankruptcy, insolvency or similar law, or for the appointment of a
receiver of Freddie Mac or the Series Pool, or all or any part of their
respective property or assets, or ordering the winding up or liquidation of the
affairs of Freddie Mac or the Series Pool.  Freddie Mac agrees that it will not,
at any time, consent, petition or otherwise invoke the process of the United
States, any state or other political subdivision thereof, or any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of, or pertaining to, government for the purpose of commencing or
sustaining a case by or against the Series Pool under a federal or state
bankruptcy, insolvency or similar law, or for the appointment of a receiver of
the Series Pool or all or any part of the Series Pool’s property or assets, or
ordering the winding up or liquidation of the affairs of the Series Pool.  Each
such agreement will survive any termination of the Series Certificate Agreement
and the subsequent removal of such Person from its capacity under the
Series Certificate Agreement.

 

[End of Standard Terms]

 

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EXHIBIT A

DEFINITIONS

 

A-1

--------------------------------------------------------------------------------

 

[Osprey/Tax-Exempt]

 

Exhibit A to Standard Terms

 

Freddie Mac
Multifamily Variable Rate Certificates
Series M012

 

DEFINITIONS

 

 “Accreted Price” means, with respect to any Bond, the Deposit Price, adjusted
for (i) the amortization of bond premium or the accrual of original issue
discount, if any, as determined under applicable Code provisions, and (ii) the
Accrued Market Discount, if any, calculated with respect to such Bond.

 

“Accrual Commencement Date” means the date upon which interest begins accruing
on the Certificates.

 

“Accrual Period” means (a) as to the First Payment Date, the period that begins
on (and includes) the Accrual Commencement Date, and ends on (and excludes) the
first day of the month in which such Payment Date occurs and (b) as to any other
Payment Date, the calendar month preceding that Payment Date; provided if a Term
Reset Rate Method is in effect with respect to the Class A Certificates or any
specified Subclass thereof, each calendar month will be deemed to consist of 30
days.  The Accrual Period for each Payment Date ends fifteen days prior to the
related Payment Date except when the fifteenth day is not a Business Day, in
which event the Accrual Period ends more than fifteen days in advance of such
Payment Date.

 

“Accrued Interest on the Bonds” means the amount set forth in the
Series Certificate Agreement representing the portion of the interest on the
Bonds that accrued prior to the Accrual Commencement Date.

 

“Accrued Market Discount” means, with respect to any Bond that is a “market
discount bond” as defined in Section 1278(a) of the Code, determined as of the
date such Bond is transferred to the Series Pool, the accrued market discount as
defined in Section 1276(b) of the Code, calculated on a straight-line basis
(without regard to whether the election set forth in Section 1276(b)(2)(A) of
the Code had been made) and assuming no election has been made under
Section 1278(b) of the Code.

 

“Act of Bankruptcy” shall mean a Person (i) is dissolved (other than pursuant to
a consolidation, amalgamation or merger); (ii) becomes insolvent or is unable to
pay its debts or fails or admits in writing its inability generally to pay its
debts as they become due; (iii) makes a general assignment, arrangement or
composition with or for the benefit of its creditors; (iv) institutes or has
instituted against it a proceeding seeking a judgment of insolvency or
bankruptcy or any other relief under any bankruptcy, insolvency, reorganization,
liquidation or dissolution law or other similar law affecting creditors’ rights,
or a petition is presented for its winding-up or liquidation; (v) has a
resolution passed for its winding-up or liquidation (other than pursuant to a
consolidation, amalgamation or merger); (vi) seeks or becomes subject to the
appointment of a receiver, administrator, conservator, liquidator, custodian,
trustee or other similar official for it or for all or substantially all of its
assets; (vii) has a secured party or other

 

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creditor take possession of all or substantially all of its assets or has a
distress, execution, attachment, sequestration or other legal process levied,
enforced or sued on or against all or substantially all of its assets;
(viii) causes or is subject to any event with respect to it which, under the
applicable laws of any jurisdiction, has an analogous effect to any of the
events specified in the preceding clauses (i) to (vii) (inclusive); or
(ix) takes any action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the foregoing acts.

 

“Adjusted Capital Account Deficit” will mean, with respect to any Holder, the
deficit balance, if any, in such Holder’s Capital Account (as hereinafter
defined) as of the end of the relevant Fiscal Year, after giving effect to the
following adjustments:

 

(A)           CREDIT TO SUCH CAPITAL ACCOUNT ANY AMOUNTS WHICH SUCH HOLDER IS
OBLIGATED TO RESTORE OR IS DEEMED TO BE OBLIGATED TO RESTORE PURSUANT TO THE
PENULTIMATE SENTENCES OF SECTIONS 1.704-2(G)(1) AND 1.704-2(I)(5) OF THE
REGULATIONS; AND

 

(B)           DEBIT TO SUCH CAPITAL ACCOUNT THE ITEMS DESCRIBED IN SECTIONS
1.704-1(B)(2)(II)(D)(4), (5) AND (6) OF THE REGULATIONS.

 

“Administrator” means Freddie Mac, until a successor Person has been appointed
the Administrator pursuant to the applicable provisions of the
Series Certificate Agreement, and thereafter “Administrator” means such
successor Person.

 

“Administrator Advance” means an advance by the Administrator to Holders of
Class A Certificates pursuant to Section 4.09 of the Standard Terms.

 

“Administrator Advance Charges” means charges for the benefit of the
Administrator in the aggregate amount of the Daily Administrator Advance
Charges.

 

“Administrator Fee” means the annual or monthly fee payable to the Administrator
for serving in such capacity as provided in the Reimbursement Agreement.

 

“Affected Bond” means, (i) in the case of a Tender Option Termination Event
other than relating to a determination that interest on any of the Bonds is
includable in the gross income of the recipients for federal income tax
purposes, each Bond; and (ii) in the case of a Tender Option Termination Event
relating to such a tax determination, each Bond giving rise to such event.

 

“Affected Certificate” means, upon the occurrence of a Tender Option Termination
Event, each Certificate until the distributions required by Section 13.04 of the
Standard Terms have been made.

 

“Affiliate” means, with respect to any specified Person, any other Person
controlling, controlled by or under common control with such specified Person. 
For the purposes of this definition, “control”, when used with respect to any
specified Person, means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms “controlling” and
“controlled” have meanings correlative to the foregoing.

 

“Aggregate Outstanding Bond Balance” means the aggregate of the Outstanding Bond
Balances.

 

2

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“Aggregate Outstanding Certificate Balance” means, as of any date of
determination, the sum of the Aggregate Outstanding Class A Certificate Balance
and the Aggregate Outstanding Class B Certificate Balance.

 

“Aggregate Outstanding Class A Certificate Balance” means, as of any date of
determination, the aggregate of the Current Class A Certificate Balances.

 

“Aggregate Outstanding Class B Certificate Balance” means, as of any date of
determination, the aggregate of the Current Class B Certificate Balances.

 

“Agreement” means the Series Certificate Agreement, into which is incorporated
the Standard Terms, including all exhibits, schedules, supplements, appendices
and amendments to each.

 

“Assets” and “Series Pool Assets” means (i) the Bonds and all Bond Payments made
from and after the Date of Original Issue and certificates and instruments, if
any, representing the Bonds, (ii) the Distribution Account (including any
amounts or Permitted Investments held therein), (iii) the Credit Enhancement and
the Liquidity Facility and (iv) all proceeds of the foregoing of every kind and
nature.

 

“Authorized Denomination” has the meaning provided in the Series Certificate
Agreement.

 

“Available Funds” means with respect to any Payment Date, the sum of the deposit
into the Distribution Account or related subaccount pursuant to Section 4.02 of
the Standard Terms and any other funds available to the Administrator for
payment to the Holders, including Administrator Advances; provided that
Administrator Advances may only be treated as Available Funds for the purpose of
making payments of the Required Class A Certificate Interest Distribution
Amount.

 

“Available Interest Amount” means, as of any date of determination, accrued and
to accrue Bond interest from the beginning of the Accrual Period to the next
Reset Date, described as follows.  Available Interest Amount is only used in the
context of establishing the Maximum Reset Rate where all the Bonds are not fixed
rate bonds and is only calculated on a Reset Date.  Accrued and to accrue Bond
interest will be determined on a Bond by Bond basis as the product of the Bond
Rate and the related Outstanding Bond Balance, calculated for each preceding day
in the applicable Accrual Period and each day up to and including the next Reset
Date; however, if the Bond Rate has not been determined for any day up to and
including the next Reset Date, then the Bond Rate for such day will be deemed to
be the minimum stated rate of interest on the Bonds.  Available Interest Amount
will never be more than interest on the Bonds regardless of any calculation
previously made.  Available Interest Amount is expressed as the variable “AIA”
in the following formula:(1)

--------------------------------------------------------------------------------

 (1)  Example 1:

Assumptions:       1.             Bonds bear interest at BMA and are reset on
the same day as a Weekly Reset Date.

2.             The applicable Weekly Reset Date is the beginning of the third
reset period following the beginning of the Accrual Period, so there are 14 days
of prior interest accrual.

 

3

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AIA =     AI+TAI

where

AI =            accrued interest for each preceding day in the Accrual Period

TAI =         interest that will accrue for each day up to and including the
next Reset Date (but only at the minimum stated interest unless the interest
rate is known)

 

“Available Remarketing Class A Certificates” means (i) Tendered Class A
Certificates, (ii) Class A Certificates subject to Mandatory Tender (A) on a
Term Effective Date (that is not a Reset Rate Method Change Date), (B) on a
Reset Rate Method Change Date relating to a change (but not a continuation) in
the Reset Rate Method from a Weekly Reset Rate Method or a Monthly Reset Rate
Method to a Monthly Reset Rate Method or a Term Reset Rate Method, and (C) on a
Reset Rate Method Change Date relating to a change (but not a continuation) in
the Reset Rate Method from a Term Reset Rate Method or a Monthly Reset Rate
Method to a Weekly Reset Rate Method or Monthly Reset Rate Method, and
(iii) Class A Certificates with respect to which the Holder thereof has
exercised the Optional Disposition Right.  Available Remarketing Class A
Certificates do not include Pledged Class A Certificates that are purchased in
connection with a Special Adjustment Event.

 

“Bankruptcy Code” means the United States Bankruptcy Code of 1978, as amended in
1986 and as it may be further amended from time to time (Title 11 of the United
States Code), and any successor statute thereto.

 

“Bankruptcy Coverage Payments” means any payments that are made in accordance
with the Credit Enhancement with respect to amounts recovered after disgorgement
pursuant to the Bankruptcy Code or under any applicable banking laws.

--------------------------------------------------------------------------------

3.             During the first accrual week, BMA interest was 2.0%; during the
second accrual week, BMA interest was 2.5%.  BMA is established for the third
week at 2.3%.

4.             $100,000,000 in Outstanding Bond Balance

Interest Accruals: 1.            First Week = $100,000,000 times 2% divided by
365 times 7 = $38,356.16

2.             Second Week = $100,000,000 times 2.5% divided by 365 times 7 =
$47,945.20

3.             Third Week = $100,000,000 times 2.3% divided by 365 times 7 =
$44,109.58

So Available Interest Amount = $130,410.94

 

Example 2:

Same assumptions except that the Reset Date is a Monthly Reset Date in a 31 day
month.

Interest accruals are the same.  Note that because we cannot determine the BMA
for the last 10 days of the month, no additional accrued interest on the Bonds
can be projected and taken into account.

So Available Interest Amount is the same as Example 1, or $130,410.94

 

Example 3:

Same assumptions except that the Reset Date is a Term Reset Date with a period
of 6 months.

Interest accruals are the same as in Example 1.

So Available Interest Amount is the same as Example 1, or $130,410.94

 

4

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“Bond Counsel” means any attorney at law, or firm of attorneys, of nationally
recognized standing in matters pertaining to the exclusion from gross income of
interest on bonds for federal income tax purposes, issued by states and
political subdivisions, and which is acceptable to Freddie Mac and to the
Sponsor.

 

“Bond Documents” means, with respect to any Bond or Underlying Bond, as
applicable, the trust indenture, ordinance, resolution and any other agreements
or instruments pursuant to which such Bond or Underlying Bond, as applicable,
has been issued or secured (including any loan agreement, note, mortgage, deed
of trust or any rate cap or interest rate protection agreement delivered to the
applicable Bond Trustee) or governing the operation of the Project financed by
such Bond or Underlying Bond, as applicable, as the same may be amended or
supplemented from time to time.

 

“Bondholder Representative” means Freddie Mac, in its capacity as bondholder
representative, controlling party or majority owner of the Bonds, as applicable,
under the Bond Documents.

 

“Bond Interest Payment Date” means the dates in each year on which interest is
paid on the Bonds.  Such dates are set forth in the Series Certificate
Agreement.

 

“Bond Mortgage” means, with respect to each Project, the multifamily deed of
trust or mortgage, as applicable, assignment of rents, security agreement and
fixture filing delivered on the closing date for the related Bonds or Underlying
Bonds, as applicable, together with all riders and addenda, from the Owner of
the Project granting a first priority mortgage and security interest in the
Project to secure the repayment of the Bond Mortgage Loan, which Bond Mortgage
has been assigned by the Issuer to the Bond Trustee pursuant to the Indenture.

 

“Bond Mortgage Loan” means, with respect to each issue of Bonds or Underlying
Bonds, as applicable, the loan by the Issuer to the Owner with respect to the
Project in an amount equal to the aggregate principal amount of such issue of
Bonds or Underlying Bonds, as applicable.

 

“Bond Mortgage Documents” means, with respect to each Bond Mortgage Loan, the
Bond Mortgage, the Bond Mortgage Note, the LURA, the Loan Agreement and any
related documents evidencing the obligations of the Owner under the Bond
Mortgage Note or securing payment or performance of such obligations or
otherwise pertaining to such obligations, including any HUD Document, as each
such document, agreement or instrument may be amended, modified or supplemented
from time to time.

 

“Bond Mortgage Note” means, with respect to each Bond Mortgage Loan, the
promissory note from the Owner to the Issuer, including all riders and addenda,
evidencing the Owner’s obligation to repay the Bond Mortgage Loan, as the same
may be amended, modified or supplemented from time to time, which Bond Mortgage
Note has been assigned by the Issuer to the Bond Trustee.

 

“Bond Payment Subaccount—Holdback” means the subaccount of the Distribution
Account established pursuant to Section 4.02(a) of the Standard Terms into which
payments up to the amount of the Holdback Requirement are deposited by the
Administrator.

 

5

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“Bond Payment Subaccount—Interest” means the subaccount of the Distribution
Account established pursuant to Section 4.02(a) of the Standard Terms into which
interest payments on the Bonds are deposited by the Administrator.

 

“Bond Payment Subaccount—Principal” means the subaccount of the Distribution
Account established pursuant to Section 4.02(a) of the Standard Terms into which
principal and Bond Redemption Premium payments on the Bonds and Hypothetical
Gain Share are deposited by the Administrator.

 

“Bond Payments” means any payments of principal, Bond Redemption Premium or
interest on any Bond (whether derived from amounts paid by or on behalf of the
Issuer of or other obligor on the Bond, Freddie Mac, or otherwise) other than
Bankruptcy Coverage Payments.

 

“Bond Rate” means, with respect to any Bond, as of any date of determination,
the then applicable rate of interest payable on such Bond.

 

“Bond Redemption Date” means, with respect to any Bond, the date on which such
Bond is redeemed in whole or in part pursuant to the applicable Bond Documents.

 

“Bond Redemption Premium” means, with respect to any Bond, any portion of a
payment made in connection with the redemption of all or a portion of the
Outstanding Bond Balance that is in excess of the sum of (i) the Outstanding
Bond Balance or the portion of such Outstanding Bond Balance that was redeemed,
as the case may be, and (ii) interest accrued at the Bond Rate on the applicable
Outstanding Bond Balance (if any) from and including the last Bond Interest
Payment Date to but excluding the Bond Redemption Date.

 

“Bond Trustee” means, with respect to any Bond or Underlying Bond, as
applicable, the financial institution designated as trustee for such Bond and
any separate paying agent therefor, pursuant to the applicable Bond Documents. 
The term “Bond Trustee” will also be deemed to refer to, with respect to any
series of Bonds, any separate paying agent for that series of Bonds.

 

“Bonds” means, collectively, the securities identified in the Series Certificate
Agreement on the Date of Original Issue and “Bond” shall mean any one of such
Bonds.  The term “Bonds” shall include municipal securities as well as custodial
receipts, trust receipts or any other similar instrument evidencing an ownership
interest in municipal securities held in a pass-through arrangement.

 

“Business Day” means any day other than (i) a Saturday or a Sunday, (ii) a day
on which federal government offices located in the District of Columbia
generally are closed, (iii) a day on which the Federal Reserve Bank of New York
(or other agent acting as Freddie Mac’s fiscal agent) is authorized or obligated
by law or executive order to remain closed, (iv) a day on which the Freddie Mac
permanent home office is closed, (v) a day on which DTC is authorized or
obligated by law or executive order to remain closed or (vi) a day on which
(a) banking institutions in the City of New York or in the city in which the
principal office of the Administrator, the Remarketing Agent or Freddie Mac is
located are closed or (b) the New York Stock Exchange is authorized or obligated
by law or executive order to be closed.

 

6

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“Capital Account” means the capital account established and maintained for each
Holder pursuant to Section 11.02 of the Standard Terms.

 

“Capital Account Balance” means the Capital Account balance for each Holder
adjusted pursuant to Section 11.02 of the Standard Terms for all events having
occurred immediately prior to the time of determination.

 

“Capital Contribution” will mean the amount of money, and the Fair Market Value
of any property other than money, contributed to the Series Pool pursuant to
Article II of the Standard Terms by a Holder or any amount paid by the Sponsor
pursuant to Section 3.04 or 3.05 of the Standard Terms or otherwise contributed
to the Series Pool by the Sponsor.  Any amounts paid by the initial purchasers
of Certificates to acquire Certificates, including any amounts representing
accrued interest, will be deemed to have been contributed to the Series Pool.

 

“Capital Gains” and “Capital Losses” will mean gains or losses from the
Disposition of Bonds but will not include Market Discount Gain.

 

“Certificate Payment Amount” means for any Payment Date and Class of
Certificates, the aggregate payment to be made to Holders of such Class of
Certificates, which payment is equal to the amounts provided in Article IV of
the Standard Terms.

 

“Certificate Register” means the register maintained by the Certificate
Registrar that provides for the registration of Certificates and transfers of
Certificates.

 

“Certificate Registrar” means the certificate registrar and transfer agent with
respect to the Certificates, which will be Freddie Mac unless otherwise
indicated in the Series Certificate Agreement.

 

“Certificates” means the Class A Certificates and the Class B Certificates.

 

“Class” means the class designation, either Class A or Class B, borne by any
Certificate.

 

“Class A Certificate” means a Certificate designated as such issued pursuant to
the Series Certificate Agreement, evidencing an ownership interest in the Bonds.

 

“Class A Certificate Notional Accelerated Principal Paydown Amount” means, if
specified as applicable in the Series Certificate Agreement, with respect to any
Payment Date, to the extent of remaining Available Funds, the amount identified
on the Notional Accelerated Principal Amortization Schedule that corresponds to
such Payment Date, together with all such amounts for prior Payment Dates
remaining unpaid.  To the extent remaining Available Funds are not sufficient to
pay in full to the Holders of Class A Certificates such current and prior
amounts, any unpaid amounts will be deferred until the next Payment Date.

 

“Class A Holder” means a Holder of a Class A Certificate.

 

“Class B Certificate” means a Certificate designated as such issued pursuant to
the Series Certificate Agreement, evidencing an ownership interest in the Bonds.

 

7

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“Class Factor” means for any month with respect to the Class A Certificates, a
truncated eight-digit decimal that, when multiplied by the Initial Certificate
Balance of such Class, will equal its Current Certificate Balance.  The
Class Factor for any month reflects the payments of principal to be made on the
Payment Date in the same month.

 

“Clean-Up Event” means a Mandatory Tender of the Class A Certificates pursuant
to Section 6.04 of the Standard Terms, at the election of Freddie Mac or the
Sponsor at any time after the Aggregate Outstanding Bond Balance is not more
than 5% of the Aggregate Outstanding Bond Balance on the Date of Original Issue.

 

“Clean-Up Notice” means the notice given to the Administrator pursuant to
Section 7.06 of the Standard Terms.

 

“Code” means the Internal Revenue Code of 1986, as it may be amended from time
to time, and any successor statute thereto.

 

“Commission” means the Securities and Exchange Commission, as constituted from
time to time, created under the Securities Exchange Act.

 

“Commitment Price” means, with respect to any date of determination, the highest
cash purchase price for the Bonds subject to sale or distribution on such date
obtained by the Administrator by soliciting in good faith (i) at least three
commitments to purchase such Bonds from Persons (other than Specified Parties)
that customarily provide such bids, including, but not limited to, investment
dealers and brokers that customarily deal in municipal bonds and
(ii) commitments to purchase the Bonds from any interested Specified Parties.

 

“Covered Payment” means those certain payments to be made by Freddie Mac if
required in connection with an Owner Act of Bankruptcy pursuant to the Credit
Enhancement.

 

“Credit Enhancement” means the guaranty of Freddie Mac set forth in Section 4.11
of the Standard Terms.

 

“Credit Enhancement Expiration Date” means, if applicable, the date set forth in
the Series Certificate Agreement on which the Credit Enhancement expires.

 

“Current Certificate Balance” means the Current Class A Certificate Balance or
the Current Class B Certificate Balance, as appropriate.

 

“Current Class A Certificate Balance” means with respect to any Class A
Certificate, as of any date of determination, its Initial Certificate Balance
minus the sum of all amounts previously distributed to the Holder of such
Certificate (or any Predecessor Certificate) with respect to principal payments
on the Bonds, payments arising from a Release Event, and Class A Certificate
Notional Accelerated Principal Paydown Amounts, if applicable.  For purposes of
calculating interest accrual on the Current Class A Certificate Balance with
respect to any Payment Date and related Accrual Period, and determining the
Maximum Reset Rate, the payment of principal on the Class A Certificates on any
Payment Date during the related Accrual Period shall be deemed paid on the first
day of such Accrual Period rather than on the Payment Date when actually paid.

 

8

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“Current Class B Certificate Balance” means with respect to any Class B
Certificate, as of any date of determination, its Initial Certificate Balance
thereof (i) minus the sum of all amounts previously distributed to the Holder of
such Certificate (or any Predecessor Certificate) with respect to principal
payments on the Bonds and payments arising from a Release Event; (ii) plus,
(A) on each Payment Date, the amount obtained by multiplying the Class A
Certificate Notional Accelerated Principal Paydown Amounts, if any, distributed
to the Holders of Class A Certificates under Section 4.03(a)(v) of the Standard
Terms on such Payment Date by the ratio of the Current Certificate Balance of
such Class B Certificate to the Aggregate Outstanding Class B Certificate
Balance.

 

“Daily Administrator Advance Charge” means, for any day, the amount of
outstanding Administrator Advances on such day multiplied by the prime rate in
effect on such date and divided by 365.  Prime rate will equal the prime or base
lending rate of major banks as published in the Wall Street Journal.

 

“Date of Original Issue” means the day on which the Certificates are first
executed, authenticated and delivered by the Administrator.

 

“Delivery Office” means the office of the Administrator located at Freddie Mac,
1551 Park Run Drive, MS D5B, McLean, Virginia 22102, Attention:  Office of the
Registrar, or such other address as the Administrator may designate from time to
time by notice to the Registered Holders, the Remarketing Agent and Freddie Mac.

 

“Deposit Price” means, with respect to any Bond, the Federal income tax basis of
such Bond determined in accordance with the Code at the time of transfer and
deposit as set forth in the Series Certificate Agreement with respect to Bonds
transferred and deposited on the Date of Original Issue.

 

“Depositor Order” means a written order or request signed in the name of Freddie
Mac by any Responsible Officer of Freddie Mac.

 

“Disposition” means, with respect to any Bond, any redemption, maturation, sale
or other disposition of such Bond, or portion thereof, that results in the
realization of gain or loss under applicable Code provisions.

 

“Disposition Gain” means, with respect to a Disposition of any Bond or portion
thereof, the excess, if any, of the amount realized from such Disposition as
determined under applicable Code provisions, over the Accreted Price of such
Bond (including, if applicable, any Bond Redemption Premium) or portion of such
Bond.

 

“Disposition Loss” means, with respect to a Disposition of any Bond, or portion
thereof, the excess, if any, of the Accreted Price of such Bond, or portion
thereof, over the amount realized from such Disposition, as determined under
applicable Code provisions.

 

“Distribution Account” means, collectively, the segregated subaccounts
established and maintained pursuant to Section 4.02 of the Standard Terms.

 

9

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“Documents” means, collectively, the Series Certificate Agreement, the
Remarketing Agreement, the Reimbursement Agreement and the Certificates; and the
term “Document” will mean any of the foregoing.

 

“DTC” means The Depository Trust Company or any successor securities depository
institution selected or approved by Freddie Mac.

 

“DTC Participant” means a member of, or participant in, DTC, as provided in the
rules and regulations of DTC.

 

“Electronic Notice” means notice given by telecopy, facsimile transmission,
electronic mail (“e-mail”) or other similar electronic means of communication.

 

“Event of Default” means:

 

(a)           The Administrator defaults in the payment to Holders of the
applicable Certificate Payment Amount or Freddie Mac defaults in the payment of
any amount pursuant to the Credit Enhancement or the Liquidity Facility when the
same is due and payable as provided in the Series Certificate Agreement, and
such default continues for a period of three (3) Business Days; or

 

(b)           Freddie Mac or the Administrator fails to observe or perform any
other of its covenants set forth in the Series Certificate Agreement, and such
failure continues for a period of 60 days after the date on which written notice
of such failure, requiring Freddie Mac or the Administrator to remedy the same,
has been given to Freddie Mac or the Administrator, as appropriate, by the
Holders representing not less than 60% of the then outstanding unpaid principal
balance of the Class A Certificates or Class B Certificates, as applicable.

 

“Excess Accrued Net Interest Amount” means, as of any date of determination, the
excess of accrued interest on the Bonds over the sum of the accrued interest on
the Class A Certificates for each prior day in any Accrual Period.  This
definition is used in establishing the Maximum Reset Rate where all the Bonds
are fixed rate bonds after the excess amount is converted to an interest rate
related to the Class A Certificates as provided in the definition of Excess
Accrued Net Interest Amount Rate.  The calculation of Excess Accrued Net
Interest Amount is determined as (i) the aggregate amount of interest calculated
at the applicable Bond Rate on the Outstanding Bond Balance of each related Bond
for each preceding day in the Accrual Period over (ii) the sum of the aggregate
amount of interest calculated at the applicable Reset Rate on the Aggregate
Outstanding Class A Certificate Balance for each such day (whether or not
distributed to Holders).

 

“Excess Accrued Net Interest Amount Rate” means, with respect to the
determination of the Maximum Reset Rate where all the Bonds are fixed rate bonds
the following:  a per annum rate equal to the product of (i) the quotient
obtained by dividing (a) 365 (or 366 in a leap year) by (b) the number of
calendar days during which a Reset Rate will be in effect and (ii) the quotient
(expressed as a percentage of the Aggregate Outstanding Class A Certificate
Balance) obtained by dividing (a) the Excess Accrued Net Interest Amount as of
the relevant day of determination

 

10

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by (b) the Aggregate Outstanding Class A Certificate Balance as of such day. 
This rate is expressed as the variable “ER” in the following:(2)

 

[g323281mv09i001.jpg]

where

D =          number of calendar days during which a Reset Period will be in
effect

EA =       Excess Accrued Net Interest Amount

CLA =    Aggregate Outstanding Class A Certificate Balance

 

“Exchange Date” means the date on which the Series Pool is liquidated in whole
or in part in accordance with Section 13.04 of the Standard Terms, which date
will be designated by Freddie Mac and will occur within five Business Days after
the occurrence of a Tender Option Termination Event or Liquidity Failure.

 

“Exchanging Holder” means each related holder of class B certificates of another
Series as described in Section 7.02(c) of the Standard Terms.

 

“Exercise Notice” means the notice delivered by a DTC Participant through which
a Class A Certificate is held for a Holder of Class A Certificates on the
records of DTC to the Remarketing Agent and the Administrator pursuant to
Section 6.03 of the Standard Terms in connection with the exercise of the Tender
Option.

 

“Fair Market Value” for any asset will mean its fair market value as determined
in good faith by the Remarketing Agent pursuant to a valuation made (i) on the
basis of current bid prices for such asset, (ii) if bid prices are not available
for such asset, on the basis of current bid prices for comparable assets,
(iii) by determining the value of such asset on the bid side of the market by
appraisal, or (iv) by any combination of the foregoing.  For purposes of the
foregoing, the Remarketing Agent will utilize the services of Persons which are
not the Administrator, the

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(2)  Example 1:

Assumptions = 1.         Weekly Reset Rate

2.         Excess Accrued Net Interest Amount:  $50,000

3.         Aggregate Outstanding Class A Certificate Balance: $80,000,000

 

 

365 

X

$50,000       

 

 

 

 

 

 

7

 

$80,000,000

 

 

 

 

 

(52.1428) (0.000625)

 

 

 

 

 

.03258

 

 

 

 

 

Example 2:

Assumptions:          Same assumptions except that there is a Monthly Rate

 

 

365

X

$50,000

 

 

 

 

 

 

30

 

$80,000,000

 

 

 

 

 

(12.1666) (0.000625)

 

 

 

 

 

.00760

 

 

 

 

 

11

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Remarketing Agent, Freddie Mac, any Holder of Class B Certificates or any
Affiliate of any such Person.

 

“First Optional Disposition Date” means the date set forth as such in the
Series Certificate Agreement.

 

“First Payment Date” means the initial Payment Date on which interest is
scheduled to be payable on the Certificates, as set forth in the
Series Certificate Agreement.

 

“Fiscal Year” will mean the fiscal year of the Series Pool for financial
accounting purposes and for Federal, state and local income tax purposes, or
such shorter period for which income tax returns must be prepared.  Such Fiscal
Year initially will be the calendar year, unless a different Fiscal Year is
required by Section 706(b) of the Code and the Regulations thereunder.

 

“Fitch” means Fitch, Inc. and its successors.

 

“Freddie Mac” means Federal Home Loan Mortgage Corporation, a shareholder-owned
government-sponsored enterprise organized and existing under the laws of the
United States.

 

“Freddie Mac Act” means Title III of the Emergency Home Finance Act of 1970, as
amended, 12 U.S.C. §§ 1451-1459.

 

“Freddie Mac Fee” means the fees due Freddie Mac under the Reimbursement
Agreement for providing the Credit Enhancement and the Liquidity Facility.

 

“Gain Share” means, (i) first, with respect to the Holders of Class A
Certificates that have had their Certificates redeemed or exchanged (to the
extent applicable to such a redemption or exchange pursuant to the operative
provisions of the Series Certificate Agreement), the product of (a) 10% of the
Disposition Gain and (b) the ratio of the Aggregate Outstanding Class A
Certificate Balance to the Aggregate Outstanding Certificate Balance (as
determined immediately prior to the redemption or exchange, as applicable, of
Certificates); and (ii) second, with respect to the Holders of Class B
Certificates, the remaining Disposition Gain.  Gain Share with respect to the
Holders of the Class A Certificates for any one Bond is expressed as the
variable “GS” in the following formula:

 

GS =        (.10)(DG)(      CLA       )

     CLA+CLB

 

where

DG =       Disposition Gain

CLA =    Aggregate Outstanding Class A Certificate Balance

CLB =     Aggregate Outstanding Class B Certificate Balance

 

Example:

Assumptions:

 

1.

 

Disposition Gain = (2%)($50,000,000 Bonds)

 

 

2.

 

Aggregate Outstanding Class A Certificate Balance = $80,000,000

 

 

3.

 

Aggregate Outstanding Class B Certificate Balance = $20,000,000

(.10)(1,000,000)(          80,000,000          )

 

12

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80,000,000+20,000,000

(100,000)(.8) = $80,000

In this example the Holders of Class A Certificates receive $80,000 and the
Holders of Class B Certificates receive the balance, or $920,000.

 

“Global Class A Certificate” means with respect to any Series of book-entry
Class A Certificates, a global certificate executed and authenticated by the
Administrator, substantially in the form attached to the Standard Terms,
evidencing all of the Class A Certificates of such Series or all the Class A
Certificates of any specified Subclass.  If the rules and regulations of DTC (or
a successor securities depository, including, if designated by Freddie Mac, the
Federal Reserve Bank) so require, a Series of book-entry Class A Certificates
may be evidenced by more than one Global Class A Certificate which, together,
will evidence all of the Class A Certificates of such Series, and which,
together, will constitute the “Global Class A Certificate” for such Series.

 

“Grant” means to pledge or grant a lien upon or a security interest in, or a
right of set-off to, the Administrator pursuant to a Series Certificate
Agreement.  A Grant of a security interest in the Bonds, or any other
instrument, will include all rights but none of the obligations of the granting
party.

 

“Holdback Requirement” means, on each Payment Date, the amount designated as
such in the Series Certificate Agreement; provided, however, that the Holdback
Requirement may be changed by Freddie Mac in accordance with the
Series Certificate Agreement or the Registered Holders of not less than 51% of
the Aggregate Outstanding Class B Certificate Balance with the written consent
of Freddie Mac, by written notice to the Administrator not less than ten
(10) Business Days prior to any Payment Date.

 

“Holder” means (i) with respect to a Class A Certificate, a Person who is listed
as the beneficial owner of such Class A Certificate in the records of a DTC
Participant or Indirect DTC Participant and (ii) with respect to a Class B
Certificate, the beneficial owner of such Class B Certificate.

 

“HUD Document” means, with respect to any Mortgaged Property, any interest rate
reduction agreement, housing assistance payment agreement or similar document
delivered by or on behalf of the Department of Housing and Urban Development to
provide support for rent or mortgage payments.

 

“Hypothetical Gain Share” means, for any Class A Certificate, with respect to a
Release Event Date, an Optional Disposition Date or a Mandatory Tender Date
relating to a Liquidity Provider Termination Event, a Sponsor Act of Bankruptcy
(if applicable), a Credit Enhancement Expiration Date (if applicable) or a
Clean-Up Event, (i) the product of (a) the aggregate of, for each Bond, (1) the
second highest bid (not including accrued interest) obtained after the
Remarketing Agent solicits three bids to purchase such Bond from Persons that
customarily provide such bids, other than the Administrator, Freddie Mac, the
Remarketing Agent, any Holder of Class B Certificates, or any Affiliate of any
such Person, including but not limited to investment dealers and brokers that
customarily deal in municipal bonds, determined for the Business Day immediately
preceding the Release Event Date, Optional Disposition Date, or Mandatory Tender
Date, as applicable, minus (2) the Accreted Price of such Bond and (b) the ratio
of the Current Certificate Balance of such Class A Certificate to be tendered to
the

 

13

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Aggregate Outstanding Certificate Balance and (c) 0.10, minus (ii) any
Hypothetical Gain Share previously paid to any Holder of such Class A
Certificate.  However, in no event may the Hypothetical Gain Share be less than
zero, provided that, with respect to any particular Bond, the subtraction
described in (a) for purposes of determining the aggregate may result in a
number that is less than zero, and this negative number will be used for
purposes of calculating the aggregate amount described in (a).  Hypothetical
Gain Share is expressed as the variable “HGS” in the following formula:(3)

 

[g323281mv09i002.jpg]

 

where

MV =          second highest bid obtained from qualified bidder

AP =           Accreted Price for that Bond

ACAC =     Current Certificate Balance of applicable Class A Certificate

CLA =         Aggregate Outstanding Class A Certificate Balance

CLB =         Aggregate Outstanding Class B Certificate Balance

HGSPP =    Hypothetical Gain Share previously paid to any Holder of the
applicable Class A Certificate

 

In the event of a determination of Hypothetical Gain Share in connection with an
Optional Disposition Date, any bids shall be obtained on the basis of minimum
authorized denominations of the Bonds, and only from bidders who are
creditworthy in the reasonable judgment of Freddie Mac.

 

“Indirect DTC Participant” means an entity holding securities through a DTC
Participant as described in the rules and regulations of DTC.

--------------------------------------------------------------------------------

 

 (3)  Example:

Assumptions:

 

1.

 

Market Value of First Bond = (110%)(10,000,000)

 

 

2.

 

Accreted Price of First Bond = (100%)($10,000,000)

 

 

3.

 

Current Certificate Balance of applicable Class A Certificate = $5,000,000

 

 

4.

 

Aggregate Outstanding Class A Certificate Balance = $20,000,000

 

 

5.

 

Aggregate Outstanding Class B Certificate Balance = $10,000,000

 

 

6.

 

Market Value of Second Bond = (100%)($10,000,000)

 

 

7.

 

Accreted Price of Second Bond = (100%)($10,000,000)

 

 

8.

 

Market Value of Third Bond = (98%)($10,000,000)

 

 

9.

 

Accreted Price of Third Bond = (100%)($10,000,000)

 

 

10.

 

Previously paid applicable Hypothetical Gain Share = $2,000 (100%)

Bond 1:

 

((110%)($10,000,000)-(100%)($10,000,000))(         $5,000,000          )(.10) =
$16,666

 

 

 

($20,000,000+$10,000,000)

 

 

 

 

Bond 2:

 

((100%)($10,000,000)-(100%)($10,000,000))(         $5,000,000          )(.10) =
zero

 

 

 

($20,000,000+$10,000,000)

 

 

 

 

 

 

Bond 3:

 

((98%)($10,000,000)-(100%)($10,000,000))(          $5,000,000            )(.10)
= ($3,333)

 

 

 

($20,000,000+$10,000,000)

 

 

Aggregating the hypothetical gain share

Bond 1 + Bond 2 + Bond 3 - HGSPP

$16,666 + 0 + (-$3333)-($2,000) = $11,333

 

14

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“Initial Certificate Balance” means the initial certificate balance of any
Certificate set forth on the face of such Certificate.

 

“Investment Company Act” means the Investment Company Act of 1940, as amended
from time to time, and any successor statute thereto.

 

“Investor Letter” means the investor letter executed by each Holder of Class B
Certificates in the form attached to the Standard Terms or as otherwise approved
by Freddie Mac.

 

“Issuer” means, with respect to each Bond or Underlying Bond, as applicable, the
entity specified as the Issuer in the Series Certificate Agreement.

 

“Knowledge” means actual knowledge.

 

“Letter of Representations” means the letter of representations from Freddie Mac
to DTC in connection with each Series Certificate Agreement, relating to the
Certificate or, if applicable, any blanket letter of representations from
Freddie Mac to DTC, and any amendment or replacement of such letter.

 

“Lien” means a lien, charge, security interest, mortgage, pledge, encumbrance,
or other type of preferential arrangement (including the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement).

 

“Liquidity Commitment” means, with respect to the Liquidity Facility, the amount
for which Freddie Mac is obligated to honor demands for payment under the
Liquidity Facility.

 

“Liquidity Facility” means the agreement of Freddie Mac set forth in
Section 6.01(b) of the Standard Terms to pay the Purchase Price of certain
Class A Certificates.

 

“Liquidity Failure” means the failure of Freddie Mac to comply with its
obligations in accordance with the provisions of the Liquidity Facility, and the
continuance of such failure for three (3) Business Days, to pay the Purchase
Price of Class A Certificates subject to Mandatory Tender, Tendered Class A
Certificates whose Holders have exercised the Tender Option or Class A
Certificates whose Holders have exercised their Optional Disposition Right.

 

“Liquidity Provider” means Freddie Mac.

 

“Liquidity Provider Termination Event” means the occurrence of a “Termination
Event” under the Reimbursement Agreement.

 

“Liquidity Provider Termination Notice” means the notice given to the
Administrator by Freddie Mac pursuant to Section 7.03 of the Standard Terms.

 

“Loan Agreement” means, with respect to any issue of Bonds or Underlying Bonds,
as applicable, the loan agreement, financing agreement or other agreement
providing for the Bond Mortgage Loan from the Issuer to the Owner.

 

15

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“LURA” means with respect to any issue of Bonds or Underlying Bonds, as
applicable, the land use restriction agreement, tax regulatory agreement or
other similar agreement imposing operating restrictions on the related Project.

 

“Mandatory Class A Principal Payment Date” means the earlier of
(a) April 15, 2019 or (b) the date, if any, on which (i) the redemption of the
entire Current Class B Certificate Balance other than Class B Certificates equal
in Current Certificate Balance to the Minimum Sponsor Interest occurs, and
(ii) there are no Holder(s) of Class A Certificates with a Current Class A
Certificate Balance in the aggregate at least equal to the amount of principal
to be distributed on the ensuing Redemption Date that have elected under
Section 4.10 of the Standard Terms to receive principal distributions pursuant
to Section 4.03(b) of the Standard Terms.

 

“Mandatory Tender” means the obligation of the Holders of Class A Certificates
to tender such Certificates for purchase pursuant to Section 6.04 of the
Standard Terms, subject to the right to retain such Certificates pursuant to
Section 6.07 of the Standard Terms.

 

“Mandatory Tender Date” means any date on which Class A Certificates, other than
Affected Certificates, are subject to Mandatory Tender pursuant to Section 6.04
of the Standard Terms following the occurrence of a Mandatory Tender Event.

 

“Mandatory Tender Event” means any of the events set forth in Section 6.04 of
the Standard Terms.

 

“Mandatory Tender Notice” means the notice given by the Administrator to the
Registered Holders of the occurrence of a Mandatory Tender Event pursuant to
Section 6.05 of the Standard Terms.

 

“Market Discount Gain” means, with respect to a Disposition of any Bond or
portion of a Bond, the amount of any gain recognized for federal income tax
purposes on such Disposition, to the extent such gain does not exceed the
Accrued Market Discount, if any, on such Bond or portion thereof.

 

“Market Discount Share” means 100% of the Market Discount Gain, which will be
allocated solely to the Holders of Class B Certificates.

 

“Maximum Reset Rate” is to be calculated by the Remarketing Agent on any Reset
Date immediately before determining the applicable Reset Rate.  The Maximum
Reset Rate is to be calculated, as applicable, using one of two different
methods.  One method applies only if all the Bonds are fixed rate bonds and the
other method applies if any of the Bonds are not fixed rate bonds.

 

The Maximum Reset Rate, if all the Bonds are fixed rate bonds, is equal to the
Excess Accrued Net Interest Amount Rate, if any, plus a rate determined by
dividing the product of the lowest Bond Rate (unless the Series Certificate
Agreement provides for use of the Weighted Average Bond Rate) times the
Aggregate Outstanding Bond Balance by the Aggregate Outstanding Class A
Certificate Balance as of such day.  For any Reset Rate Method other than a
Weekly Reset Rate method, the calculation will not include the Excess Accrued
Net Interest Amount Rate because the Maximum Reset Rate is calculated on a Reset
Date and there will be no Excess Accrued Net Interest Amount on a Reset Date for
a Monthly Reset Rate Method or a

 

16

--------------------------------------------------------------------------------

 

Term Reset Rate Method.  This Maximum Reset Rate is expressed as the variable
MRR(FRB) in the following formula:(4)

 

[g323281mv09i003.jpg]

--------------------------------------------------------------------------------

 (4)  Example 1:

Assumptions:       1.     Aggregate Outstanding Bond Balance:  $100,000,000

2.      Lowest Bond Rate:  6.5%

3.      Aggregate Outstanding Class A Balance:  $80,000,000

4.      Aggregate Outstanding Class B Balance:  $20,000,000

5.      Not a leap year

6.      Weekly Reset Rate; 7 days previously accrued interest for Class A
Certificates at 3.8%

7.      The applicable Weekly Reset Date is the second such Reset Date in the
Accrual Period

 

STEP ONE:

Bond Interest on $100,000,000@6.5% for 7 days = $124,657.53

Accrued interest on Class A Certificates for 7 days @3.8% = $58,301.37

($124,657.53)-($58,301.37) = $66,356.16

STEP TWO:

convert that amount to an annual interest rate related to Class A Certificates:

365  X    EA

  7           CLA

(52.1428)(.00082945) = 4.324995%

 

STEP THREE:  Convert Bond interest to an interest rate related to Class A
Certificates

(LBR)(BB)

     CLA

 

(.065)(100,000,000)

      80,000,000

8.125%

 

STEP FOUR:  add STEP TWO and STEP THREE

4.324995%+8.125% = 12.449995%

 

Example 2:

1.             Same assumptions as first six assumptions

2.             14 days of accrued interest on Class A Certificates at 3.8% and
the applicable Weekly Reset Date is the third Weekly Reset Date in the Accrual
Period

 

STEP ONE:

Bond interest on $100,000,000@6.5% for 14 days = $249,315.07

Accrued interest on Class A Certificates @3.8% for 14 days = $116,602.74

($249,315.07)-($116,602.74)=$132,712.33

 

STEP TWO:

convert that amount to an annual interest rate related to Class A Certificates

 

365  X    EA

  D          CLA

 

365  X    $132,712.33

  7           $80,000,000

 

(52.1428)(.00165890) = 8.649991%

 

STEP THREE:  Convert Bond interest to interest rate related to Class A
Certificates.  Same result as Example 1 = 8.125%

 

STEP FOUR:         add STEP TWO and STEP THREE

8.649991% + 8.125% = 16.774991%

 

17

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This Maximum Reset Rate is determined in four steps.

 

STEP ONE:            the Excess Accrued Net Interest Amount is determined, which
is the excess of accrued interest on the underlying Bonds over the sum of
interest on the Class A Certificates, in each case, for each prior day in the
Accrual Period.

 

STEP TWO:          the Excess Accrued Net Interest Amount is converted to an
annual rate of interest (the Excess Accrued Net Interest Amount Rate) related to
the Class A Certificates.  This excess rate is expressed as the variable “ER” in
the following formula:

 

[g323281mv09i004.jpg]

where

D =          Number of calendar days during which a Reset Period will be in
effect

EA =       Excess Accrued Net Interest Amount

CLA =    Aggregate Outstanding Class A Certificate Balance

 

STEP THREE:  interest on the Bonds at the lowest Bond Rate is converted to an
interest rate related to the Class A Certificates.  This converted rate is
expressed in the following formula:

 

(LBRxBB)

     CLA

where

LBR =     Lowest Bond Rate

BB =       Aggregate Outstanding Bond Balance

 

STEP FOUR:         add the rates obtained in STEP TWO and STEP THREE.

 

Notwithstanding the foregoing, if all the Bonds are fixed rate bonds and the
Series Certificate Agreement provides that the Maximum Reset Rate shall be
determined using the Weighted Average Bond Rate, then in STEP THREE, instead of
the lowest Bond Rate, the calculation shall use the Weighted Average Bond Rate. 
For purposes of this calculation, the Bond Rate for any Bond shall be adjusted
to reflect premium, if any, allocated to the Class B Certificates.

 

The Maximum Reset Rate, if any of the Bonds are not fixed rate bonds, is equal
to the product of (i) the quotient of the number of days in the year divided by
the number of days in which a Reset Rate will be in effect times (ii) the
quotient of (a) the Available Interest Amount minus the aggregate amount of
interest accrued at the applicable Reset Rate on the Aggregate Outstanding
Class A Certificate Balance for each preceding day in the Accrual Period divided
by (b) the Aggregate Outstanding Class A Certificate Balance; provided however,
that the Class A Certificates will never accrue more interest than the Available
Interest Amount, regardless of any calculation previously made.  Unlike the
formula for determining the Maximum Reset Rate where all Bonds are fixed rate
Bonds, this calculation will apply to all Reset Rate Methods because the
determination of the Available Interest Amount includes both accrued interest on
the Bonds and Interest on the Bonds that will accrue over the balance of the
applicable Reset Period,

 

18

--------------------------------------------------------------------------------

 

to the extent that amount is known.  This Maximum Reset Rate is expressed as the
variable MRR(NFRB) in the following formula:(5)

 

--------------------------------------------------------------------------------

(5)  Example 1:

Assumptions:       1.             Weekly Reset for Class A Certificates

2.             Available Interest Amount the same as Example 1 under definition
of Available Interest Amount

3.             Not a leap year

4.             Aggregate Outstanding Class A Certificate Balance: $80,000,000

5.             Interest accrued on Class A Certificates at 2.0% during first
week and 2.5% during second week

 

365  X  ($130,410.94 – (69,041.10)

  7

                              

     $80,000,000

 

(52.1428)($61,369.84)

       $80,000,000

         3.9999% = Maximum Reset Rate

 

Example 2:

Assumptions:       1.             Weekly Reset for Class A Certificates

2.             Available Interest Amount assumptions

a.     Bonds bear interest at 90% of 30 day LIBOR; LIBOR is 3.0% for applicable
period and for this example, LIBOR is set on the same day as the first Weekly
Reset Date in the Accrual Period

b.     the applicable Weekly Reset Date is the beginning of the third reset
period so there are 14 days of prior interest accrual on the Class A
Certificates

c.     $100,000,000 in Outstanding Bond Balance

3.             Not a leap year

4.             Aggregate Outstanding Class A Certificate Balance: $80,000,000

5.       Interest accrued on Class A Certificates at 2.0% during first week and
2.5% during second week

 

STEP ONE:            establish Reset Rate period factor

365 = 52.1428

  7

 

STEP TWO:          determine the Available Interest Amount accruals on Bonds: 
$155,342.46

(21 days; 14 days have already accrued and since the rate is established for
next 7 days that period is included as well)

AIA = $155,342.46 then subtract Class A Certificates Accruals from AIA
$155,342.46 – $69,041.10 =$86,301.36

 

STEP THREE:       multiply STEP ONE times STEP TWO and convert to interest rate
related to Class A Certificates

 

(52.1428)($86,301.36)

        $80,000,000

5.62499% = Maximum Reset Rate

 

Example 3:

Assumptions:       1.             Same as Example 2 except that the applicable
Weekly Reset Date is the first one in the Interest

Accrual Period so there are no prior interest accruals on the Bonds or the
Class A Certificates

 

STEP ONE:            the applicable Reset Period factor is 52.1428

STEP TWO:          determine the Available Interest Amount Interest accruals on
Bonds:  $51,780.82

(7 days until next Weekly Reset Date since rate on Bonds is established)

 

19

--------------------------------------------------------------------------------

 

MRR(NFRB) = 365/6  (AIA-ACI)

D

 

where

 

D =       number of calendar days in which a Reset Period will be in effect

AIA =  Available Interest Amount

ACI =   Accrued Certificate Interest

 

This Maximum Reset Rate is determined in three steps.

 

STEP ONE:  establish the Reset Rate period factor

 

365

  D           D =      Number of calendar days in which a Reset Period will be
in effect

 

STEP TWO:  determine the Available Interest Amount; then subtract Accrued
Certificate Interest

 

STEP THREE: multiply STEP ONE times STEP TWO and convert product to interest
rate related to Class A Certificates by dividing by Aggregate Outstanding
Class A Certificate Balance

 

“Minimum Sponsor Interest” means, (i) if the Series Certificate Agreement
provides that the Partnership Factors apply, with respect to any day, an amount
equal to the lesser of one percent of the Aggregate Outstanding Certificate
Balance and $500,000 (adjusted for any capital

 

--------------------------------------------------------------------------------

AIA = $51,780.82

 

STEP THREE:       multiply STEP ONE times STEP TWO and convert to interest rate
related to Class A Certificates

(52.1428)($51,780.82)

       $80,000,000

3.337% = Maximum Reset Rate

 

Example 4:

Assumptions:       1.             Same as Example 3 except that $20,000,000 of
Bonds bear interest at 90% of 30 day LIBOR and $80,000,000 of Bonds are fixed
rate bonds bearing interest at 6.8%

STEP ONE:           the applicable Reset Period factor is 52.1428

STEP TWO:         determine the Available Interest Amount

Interest accruals on Bonds

$20,000,000 LIBOR-based Bonds =

($20,000,000)(2.7%)(7) = $10,356.16

365

 

($80,000,000)(6.8%)(7) = $104,328.76

365

AIA = ($10,356.16+$104,328.76) = $114,684.92

 

STEP THREE:  multiply STEP ONE and STEP TWO and convert to interest rate related
to Class A Certificates

 

(52.1428)($114,684.92)

$80,000,000

7.47499% = Maximum Reset Rate

 

20

--------------------------------------------------------------------------------

 

contributions (actual or deemed) by any Holder) or (ii) in all other cases, an
aggregate interest at all times in the capital of the Series Pool of $5,000.

 

“Minimum Sponsor Percentage” means, if the Series Certificate Agreement provides
that the Partnership Factors apply, one percent and in all other cases, “Minimum
Sponsor Percentage” will not apply to the related Series.

 

“Monthly Closing Election” means an election pursuant to Revenue Procedure
2003-84 (or any successor Revenue Procedure or other applicable Internal Revenue
Service guidance) that, if available, and if made on behalf of an eligible
Series Pool, permits items of income, gain, loss or deduction of the Series Pool
to be determined for federal income tax purposes on the basis of a monthly
closing of its books.

 

“Monthly Reset Date” means the Business Day immediately preceding the first day
of the next succeeding calendar month, provided that if the Reset Rate Method is
being changed to the Monthly Reset Rate Method, the Monthly Reset Date will be
the Business Day immediately preceding the Reset Rate Method Change Date.

 

“Monthly Reset Rate” means a Reset Rate that is determined by the Remarketing
Agent on a monthly basis as provided in Article V of the Standard Terms.

 

“Monthly Reset Rate Method” means the method used to determine the Monthly Reset
Rate in accordance with Article V of the Standard Terms.

 

“Moody’s” means Moody’s Investors Service, Inc., and its successors.

 

“Non-Monetary Default” means the occurrence of any default, other than the
failure to pay principal, premium or interest, on the Bonds or any document or
instrument related to the Bonds.

 

“Notice of Sponsor Bankruptcy” means the notice given to the Remarketing Agent
and Freddie Mac by the Administrator pursuant to Section 7.04 of the Standard
Terms.

 

“Notional Accelerated Principal Amortization Schedule” means, if applicable to a
Series, the schedule provided by Freddie Mac on the Date of Original Issue and
attached to the Series Certificate Agreement, which schedule contains the
Class A Certificate Notional Accelerated Principal Paydown Amount applicable to
each Payment Date, and which may be amended by Freddie Mac to the extent the
Remarketing Agent deems appropriate.

 

“Offering Circular” means the Offering Circular, including any Offering Circular
Supplement, describing the Class A Certificates.

 

“Official Action” means any formal action conducted by a Person, which results
in a written statement of action duly approved by an authorized committee or
governing body of such Person, as appropriate.

 

“Offsetting Allocations” will have the meaning set forth in Section 11.05(d) of
the Standard Terms.

 

21

--------------------------------------------------------------------------------

 

“Opinion of Counsel” means one or more written opinions of outside counsel for
Freddie Mac satisfactory to the Administrator and Freddie Mac, and which opinion
is addressed to the Administrator and Freddie Mac and is in form and substance
satisfactory to the Administrator and Freddie Mac.

 

“Opinion of Tax Counsel” means one or more written opinions of an attorney or
firm of attorneys duly admitted to the practice of law before the highest court
of any state of the United States of America and experienced in matters
pertaining to the tax-exempt status of interest on state and local obligations,
as well as to the status of interests in trusts, partnerships and other
structures containing such obligations, which counsel is satisfactory to the
Administrator and Freddie Mac and which opinion is addressed to the
Administrator and Freddie Mac, and is in form and in substance satisfactory to
the Administrator and Freddie Mac.

 

“Optional Disposition Date” means with respect to any Class A Certificate, the
First Optional Disposition Date and each Payment Date thereafter.

 

“Optional Disposition Price” means, with respect to any Class A Certificate, the
sum of the Purchase Price and the Hypothetical Gain Share.

 

“Optional Disposition Right” means the right of a Holder of a Class A
Certificate to tender such Class A Certificate in exchange for the Optional
Disposition Price in accordance with the provisions of Section 7.05 of the
Standard Terms.

 

“Outstanding” means, with respect to the Certificates, as of any date of
determination, all such Certificates previously executed, authenticated and
delivered under the Series Certificate Agreement except:

 

(i)            Certificates previously canceled by the Certificate Registrar or
the Administrator or delivered to the Certificate Registrar or the Administrator
for cancellation; and

 

(ii)           Certificates in exchange for which, or in lieu of which, other
Certificates have been executed, authenticated and delivered pursuant to the
Series Certificate Agreement, unless proof satisfactory to the Administrator is
presented that any such Certificates are held by a bona fide purchaser.

 

“Outstanding Bond Balance” means, with respect to any Bond, as of any date of
determination, the outstanding principal balance of such Bond as of the Date of
Original Issue, as set forth in the Series Certificate Agreement, minus any
payment of principal on such Bond received by the Administrator with respect to
such Bond after the Date of Original Issue and on or before such date of
determination.

 

“Owner” means, with respect to any Project, the owner of such Project and any
successor owner.

 

“Owner Act of Bankruptcy” means an Act of Bankruptcy arising with respect to an
Owner.

 

22

--------------------------------------------------------------------------------

 

“Partnership Factors” means the provisions of the Series Certificate Agreement
necessary for the arrangement created in the Series Certificate Agreement to be
treated as a partnership under the tax laws of certain states and which will
only apply to the Series Pool and the Certificates if the Series Certificate
Agreement so states, in connection with the application of the definitions of
“Minimum Sponsor Interest” and “Minimum Sponsor Percentage”, and Sections 3.05,
3.06, 7.04 and 11.05(e) of the Standard Terms.

 

“Paying Agent” means the Administrator or any other Person appointed as Paying
Agent by the Administrator in accordance with Section 4.04 of the Standard
Terms.

 

“Payment Date” means the fifteenth day of each calendar month, provided, that if
such day is not a Business Day, the Payment Date will occur on the next Business
Day.

 

“Permitted Investments” means shares of any money market mutual fund registered
under the Investment Company Act, which fund invests solely in tax-exempt
obligations, and which fund is rated in the highest rating category by S&P or
Moody’s.

 

“Person” means any individual, corporation, partnership, joint venture, limited
liability company, association, joint stock company, trust (including any
beneficiary thereof), unincorporated organization or government or any agency or
political subdivision thereof.

 

“Placement Agent” means the Placement Agent for the Class A Certificates
designated in the Remarketing Agreement.

 

“Pledge Custodian” means Freddie Mac or any other entity appointed by Freddie
Mac to serve in such capacity.

 

“Pledged Class A Certificate” means any (i) Available Remarketing Class A
Certificate purchased with funds derived from a demand on the Liquidity
Facility, which is registered in the name of the Pledge Custodian, pursuant to
Section 6.06(d) of the Standard Terms, and which is pledged to Freddie Mac as
security for the reimbursement obligation owed to Freddie Mac with respect to
such demand on the Liquidity Facility and (ii) any Class A Certificate purchased
in connection with a Special Adjustment Event and which is registered in the
name of the Pledge Custodian and pledged to Freddie Mac as security for the
obligations of the Sponsor under the Reimbursement Agreement.

 

“Predecessor Certificate” means, with respect to any Certificate, every previous
Certificate evidencing all or a portion of the same Initial Certificate Balance
as that evidenced by such Certificate.  For the purpose of this definition, any
Certificate executed, authenticated and delivered under Section 2.07 of the
Standard Terms in lieu of a lost, destroyed or stolen Certificate will be deemed
to evidence the same interest in the assets held by the Administrator.

 

“Preliminary Class A Certificate Rate” means the interest rate set pursuant to
Section 5.02(b) or 5.03(a) of the Standard Terms, as applicable.

 

“Principal Payment Election Notice” means any notice electing the receipt of
principal distributions delivered by or on behalf of Holders of a Subclass of
Class A Certificates pursuant to Section 4.10 of the Standard Terms.

 

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“Principal Payment Election Rescission Notice” means any notice rescinding the
election to receive principal distributions delivered by or on behalf of Holders
of a Subclass of Class A Certificates pursuant to Section 4.10 of the Standard
Terms.

 

“Proceeding” means any suit in equity, action at law or other judicial or
administrative proceeding.

 

“Profits” and “Losses” will mean, for each Fiscal Year or other period, an
amount equal to the Series Pool’s taxable income or loss for such Fiscal Year or
period, except for Market Discount Gains, Capital Gains and Capital Losses,
determined in accordance with Section 703(a) of the Code, which for this
purpose, will include all items of income, gain, loss or deduction required to
be stated separately pursuant to Section 703(a)(1) of the Code, with the
following adjustments:

 

(A)           ANY INCOME OF THE SERIES POOL THAT IS EXEMPT FROM FEDERAL INCOME
TAX AND NOT OTHERWISE TAKEN INTO ACCOUNT IN COMPUTING PROFITS OR LOSSES PURSUANT
TO THIS DEFINITION WILL BE ADDED TO SUCH TAXABLE INCOME OR LOSS;

 

(B)           ANY EXPENDITURES OF THE SERIES POOL DESCRIBED IN
SECTION 705(A)(2)(B) OF THE CODE OR TREATED AS SECTION 705(A)(2)(B) EXPENDITURES
PURSUANT TO SECTION 1.704-1(B)(2)(IV)(I) OF THE REGULATIONS, AND NOT OTHERWISE
TAKEN INTO ACCOUNT IN COMPUTING PROFITS OR LOSSES PURSUANT TO THIS DEFINITION
WILL BE SUBTRACTED FROM SUCH TAXABLE INCOME OR LOSS; AND

 

(C)           ANY AMOUNTS PAID BY THE SPONSOR PURSUANT TO SECTIONS 3.04 OR 3.05
OF THE STANDARD TERMS WILL BE TREATED AS PAYMENTS OF EXPENSES BY THE
SERIES POOL.

 

Notwithstanding any of the foregoing, any items which are specially allocated
pursuant to Section 11.05 will not be taken into account in computing Profits or
Losses.

 

“Project” means the related multifamily development financed with proceeds of a
series of Bonds.

 

“Proportional Amount” means Current Certificate Balances of Class A Certificates
and/or Class B Certificates, depending on the context in which such term is
used, in the proportion set forth in the Series Certificate Agreement.

 

“Purchase Date” means any date on which the Class A Certificates, other than
Affected Certificates and Pledged Class A Certificates, are eligible for
purchase pursuant to an exercise of the Tender Option, as specified in
Section 6.03 of the Standard Terms.

 

“Purchase Price” means, with respect to any Class A Certificate, an amount equal
to the sum of (i) the Current Certificate Balance of such Class A Certificate
and (ii) the accrued and unpaid Required Class A Certificate Interest
Distribution Amount on such Current Certificate Balance to but not including the
Purchase Date; provided, that “Class A Certificates”, for purposes of this
definition, refers solely to Class A Certificates that are not Affected
Certificates.

 

“Purchase Price Excess” will have the meaning set forth in Section 6.06(b) of
the Standard Terms.

 

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“Rating Agency” shall mean each institution that at the request of Freddie Mac
provides a rating with respect to the Class A Certificates, as set forth in the
Series Certificate Agreement.  For purposes of the Series Certificate Agreement,
“applicable Rating Agency” refers to all institutions that are rating such
Class A Certificates at such time.

 

“Redemption Date” means any day on which payments of principal or Bond
Redemption Premium with respect to any Bond are to be distributed to Holders of
Certificates, which day will be a Payment Date.

 

“Redemption Notice” means a notice of a Redemption Date.

 

“Redemption Premium Payment” means the respective portions of the Bond
Redemption Premium payable to Holders in accordance with the definitions of
“Disposition Gain” and “Gain Share”.

 

“Redemption Record Date” means, with respect to a Redemption Date, the close of
business on the last day of the month prior to the month in which such
Redemption Date occurs.

 

“Registered Holder” means the Person in whose name a Certificate is registered
on the Certificate Register.

 

“Regular Record Date” means, with respect to any Payment Date, including a
Redemption Date, the last day of the month preceding the month in which such
Payment Date occurs.

 

“Regulations” means the Treasury Regulations promulgated under the Code, as such
regulations are in effect on the date of the Series Certificate Agreement.

 

“Regulatory Allocations” will have the meaning set forth in Section 11.05(d) of
the Standard Terms.

 

“Reimbursement Agreement” means the Reimbursement, Pledge and Security Agreement
between the Sponsor and Freddie Mac, as amended or supplemented.

 

“Release Event” means, with respect to any Bonds, the occurrence of (i) a Tax
Event with respect to such Bonds, (ii) an event of default pursuant to the
related Bond Documents, (iii) the failure of the related Project to achieve
Stabilization by the Required Stabilization Date (as such terms are defined in
the Reimbursement Agreement), (iv) a material adverse credit condition with
respect to the Bonds or under the related Bond Documents or Bond Mortgage
Documents, which condition results in such Bonds being treated as Specially
Serviced Bonds (as defined in the Reimbursement Agreement), (v) an Inaccuracy
(including a Repurchase Inaccuracy) (as such terms are defined in the
Reimbursement Agreement), or (vi) the termination of the Series.

 

“Release Event Date” means the Payment Date on which the payment of the Release
Purchase Price is to be made by the Administrator concurrent with the provision
of notice to the Holders that a Release Event has occurred.

 

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“Release Purchase Price” means, with respect to any Bond, an amount equal to the
then outstanding principal amount of such Bond plus accrued interest on such
Bond to, but not including, the Release Event Date.

 

“Remarketing Agent” means the remarketing agent named in the Series Certificate
Agreement, and its successors and assigns.

 

“Remarketing Agent Fee” will have the meaning set forth in the Remarketing
Agreement.

 

“Remarketing Agent Fee Rate” will have the meaning set forth in the Remarketing
Agreement.

 

“Remarketing Agent Notice” means the notice given by the Remarketing Agent to
the Administrator and Freddie Mac pursuant to Section 6.06(a)(iii) of the
Standard Terms with respect to remarketing proceeds received by the Remarketing
Agent related to remarketed Class A Certificates.

 

“Remarketing Agreement” means, with respect to each Series of Class A
Certificates, the Certificate Placement and Remarketing Agreement among Freddie
Mac, the Sponsor, the Placement Agent and the Remarketing Agent, as amended or
supplemented.

 

“Required Class A Certificate Interest Distribution Amount” means, subject to
Section 1.02 of the Standard Terms, with respect to any Class A Certificate and
for any Payment Date, the aggregate of the amounts of interest accrued for each
day in the Accrual Period related to

 

such Payment Date, at the Reset Rate in effect on each such day, on the Current
Certificate Balance of such Certificate for each such day.

 

“Required Class B Certificate Consent” means the prior consent of the Holders of
Class B Certificates representing at least 51% of the Aggregate Outstanding
Class B Certificate Balance.

 

“Reset Date” means a Weekly Reset Date, a Monthly Reset Date or a Term Reset
Date on which the Reset Rate is to be determined by the Remarketing Agent.

 

“Reset Rate” means the per annum rate at which interest accrues on the Current
Certificate Balance of the Class A Certificates (or any Subclass thereof) from
time to time, as determined from time to time by the Remarketing Agent pursuant
to Article V of the Standard Terms, subject to, on any day in an Accrual Period,
the Maximum Reset Rate for such day.

 

“Reset Rate Method” means, on any day, the method in effect for determining the
Reset Rate for a weekly, monthly or term interval, as applicable, pursuant to
Article V of the Standard Terms.

 

“Reset Rate Method Change Date” means any date on which a change in the Reset
Rate Method from a Weekly Reset Rate Method, a Monthly Reset Rate Method or a
Term Reset Rate Method to another Reset Rate Method takes effect pursuant to
Article V of the Standard Terms.

 

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“Reset Rate Method Change Notice” means the notice given to the Remarketing
Agent and the Administrator, and by the Administrator to the Registered Holders,
pursuant to Section 5.02(c) or Section 5.03(c) of the Standard Terms.

 

“Responsible Officer” means, as to Freddie Mac or the Administrator, any of the
President, any Vice President, any Managing Director, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of such entity.

 

“Retention Notice” means the notice delivered by or on behalf of a Holder of a
Class A Certificate pursuant to Section 6.07 of the Standard Terms.

 

“Section 761 Election” means the election to exclude the Series Pool from the
application of all of the provisions of Subchapter K of the Code, if such
election is permitted to be taken pursuant to the Regulations.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and any successor statute thereto.

 

“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute thereto.

 

“Selected by Lot” means, with respect to Class A Certificates held by DTC, the
procedure by which Holders of Certificates are selected to be affected by a
given action affecting less than all of the Holders under any CUSIP number are
selected, which procedure will be initiated by the Administrator by notifying
DTC of a requirement for such a selection.  With respect to such Certificates,
DTC will select, in such manner as it determines from a position

 

listing of the aggregate Current Certificate Balances of such Class A
Certificates as of the close of business on the date of such notice, the
interests in Class A Certificates held by DTC Participants with respect to which
such action will be taken.  DTC will give the DTC Participant(s) for the
interests so selected written notice of the selection, which will specify the
date and nature of such action and the aggregate Current Certificate Balance of
Class A Certificates to be selected.  Each such DTC Participant will thereupon
select, in such manner as it determines, the Holders with respect to whose
interests such action will be taken.  The Remarketing Agent will contact each
such DTC Participant to request such DTC Participant to disclose to the
Remarketing Agent the Holders so selected.  With respect to the Class B
Certificates and any Class A Certificates not held by DTC, “Selected by Lot”
means selected by the Administrator by lot or in such other manner as the
Administrator, in its discretion, deems fair.

 

“Series” means a separate series of Certificates issued pursuant to a
Series Certificate Agreement and having the numerical or other designation
specified therein.

 

“Series Certificate Agreement” means the Series Certificate Agreement into which
the Standard Terms have been incorporated, including all schedules, exhibits,
appendices and amendments, and pursuant to which the related Series Pool is
created and related Certificates are issued.

 

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“Series Expiration Date” means the date on which the final payment of principal
and interest with respect to the Class A Certificates has been distributed by
the Administrator pursuant to Article IV of the Standard Terms.

 

“Series Pool” means a discrete pool formed by Freddie Mac consisting of Assets
with respect to which Freddie Mac has elected partnership status.

 

“Series Termination Event” means the occurrence of any of the following events:

 

(i)            the Series Expiration Date;

 

(ii)           the Exchange Date on which all Certificates are exchanged for
Bonds or sales proceeds in connection with a Tender Option Termination Event or
a Liquidity Failure;

 

(iii)          the Mandatory Tender Date relating to a Mandatory Tender Event
arising in connection with a Liquidity Provider Termination Event, a Sponsor Act
of Bankruptcy (if applicable), the Credit Enhancement Expiration Date (if
applicable) or a Clean-Up Event; or

 

(iv)          the date on which the Optional Disposition Right has been
exercised with respect to the last Class A Certificate (unless such Class A
Certificate has been remarketed).

 

“Servicer” means the party designated as the Servicer in the Series Certificate
Agreement.

 

“Servicing Fee” means the fee payable to the Servicer in accordance with the
servicing arrangement between Freddie Mac and the Servicer.

 

“Special Adjustment Date” means the Mandatory Tender Date arising from a Special
Adjustment Event.

 

“Special Adjustment Event” means the occurrence of the receipt of principal paid
with respect to any “Class B Certificates” of another Series, as described in
Section 7.02 of the Standard Terms.

 

“Special Adjustment Event Notice” means the notice given to the Administrator by
Freddie Mac pursuant to Section 7.02 of the Standard Terms.

 

“Special Servicer” means the party designated as Special Servicer in the
Series Certificate Agreement.

 

“Special Servicing Fee” means the fee payable to the Special Servicer in
accordance with the special servicing arrangement between Freddie Mac and the
Special Servicer plus any expenses permitted under the Servicing Agreement.

 

“Specified Party” means, collectively, the Administrator, Freddie Mac, the
Remarketing Agent and any Holder of Class B Certificates or any Affiliate of any
such Person.

 

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“Sponsor” means the party designated as the Sponsor in the Series Certificate
Agreement.

 

“Sponsor Act of Bankruptcy” means an Act of Bankruptcy arising with respect to
the Sponsor.

 

“Sponsor Parties” means the Sponsor and its Affiliates.

 

“S&P” shall mean Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc, or its successor in interest.  If neither such
rating agency nor any successor remains in existence, “S&P” shall be deemed to
refer to such other nationally recognized statistical rating agency or other
comparable Person designated by Freddie Mac, notice of which designation shall
be given to the Administrator, the Sponsor and the Remarketing Agent, and
specific ratings of S&P referenced herein shall be deemed to refer to the
equivalent ratings of the party so designated.

 

“Standard Terms” means the Standard Terms of Series Certificate Agreement,
together with all exhibits, as it may be amended or supplemented from time to
time.

 

“State” means any one of the 50 states of the United States of America, or the
District of Columbia.

 

“Subclass” means any separate subclass of Class A Certificates specified to be
issued pursuant to a Series Certificate Agreement and indicated on the Schedule
attached thereto.

 

“Tax Event” means, with respect to any Bond (i) a determination that interest on
such Bond is includable in the gross income of the owners thereof for federal
income tax purposes, as a result of the entry of any decree or judgment by a
court of competent jurisdiction; or (ii) the taking of any official action by
the Internal Revenue Service, in either case, whether or not such decree,
judgment or action is appealable or deemed to be final under applicable
procedural law, which has the effect of a determination that interest on such
Bond is includable in gross income of the owners thereof for Federal income tax
purposes.

 

“Tender Advice” means the notice delivered by the Administrator to Freddie Mac
pursuant to Section 6.03 or 6.05 of the Standard Terms.

 

“Tender Option” means the right granted to the Holders of Class A Certificates
pursuant to Section 6.01(a) of the Standard Terms to tender or cause to be
tendered such Class A Certificates (other than Affected Certificates or Pledged
Class A Certificates) for purchase by the Administrator from amounts deposited
pursuant to Section 6.06 of the Standard Terms.

 

“Tender Option Termination Event” has the meaning provided in Section 7.01(a) of
the Standard Terms.

 

“Tender Option Termination Notice” means the notice given by the Administrator
to the Registered Holders pursuant to Section 7.01 of the Series Certificate
Agreement in connection with the occurrence of a Tender Option Termination
Event.

 

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“Tendered Class A Certificates” means any Certificate as to which an Exercise
Notice has been given.

 

“Term Effective Date” means the date on which a particular Term Reset Rate will
be effective.

 

“Term Reset Date” means the Business Day immediately preceding a Term Effective
Date.

 

“Term Reset Method Notice” means the notice given to the Remarketing Agent and
the Administrator, and given by the Administrator to the Registered Holders,
pursuant to Section 5.03(b) of the Standard Terms.

 

“Term Reset Rate” means a Reset Rate determined by the Remarketing Agent for a
specified term as provided in Article V of the Standard Terms.

 

“Term Reset Rate Method” means the method used to determine the Term Reset Rate
in accordance with Article V of the Standard Terms.

 

“Terminating Mandatory Tender Date” means a Mandatory Tender Date relating to a
Mandatory Tender Event arising in connection with a Liquidity Provider
Termination Event, a Clean-Up Event, Credit Enhancement Expiration Date (if
applicable) or, following a Sponsor Act of Bankruptcy (if applicable).

 

“UCC” means the Uniform Commercial Code as in effect in the relevant
jurisdiction.

 

“Underlying Bond” means a municipal security, note, bond or other evidence of
indebtedness issued by a State or local government unit the ownership of which
is evidenced by a custodial receipt, trust receipt or any other similar
instrument that evidences the ownership based on a pass-through arrangement.

 

“Vice President” means, with respect to Freddie Mac and the Administrator, any
Senior Vice President, Vice President, or Assistant Vice President.

 

“Weekly Reset Date” means Wednesday of each week, or if Wednesday is not a
Business Day, the immediately preceding Business Day, provided that, if the
Reset Rate Method is being changed to the Weekly Reset Rate Method, the initial
Weekly Reset Date will be the Business Day preceding the Reset Rate Change Date.

 

“Weekly Reset Rate” means a Reset Rate that is determined by the Remarketing
Agent on a weekly basis as provided in Article V of the Standard Terms.

 

“Weekly Reset Rate Method” means the method used to determine the Weekly Reset
Rate in accordance with Article V of the Standard Terms.

 

“Weighted Average Bond Rate” means, as of any date of determination, (i) the
aggregate of, for each Bond, the product of the Outstanding Bond Balance and the
related Bond Rate, divided by (ii) the Aggregate Outstanding Bond Balance,
expressed as a percentage.

 

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