Document:

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

 

	
  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

 

	
  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

 

	
  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

 

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.

 

 

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

 

(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

 

(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

 

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

 

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

 

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

 

(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:

 

9

 

(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 

 

10

 

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.

 

11

 

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 

 

12

 

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;

 

13

 

(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

 

14

 

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)

 

(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.

 

15

 

(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 

 

16

 

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.

 

17

 

(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 

 

18

 

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 

 

19

 

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 

 

20

 

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.

 

21

 

(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

 

22

 

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 

 

23

 

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 

 

24

 

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 

 

25

 

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.

 

26

 

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

 

27

 

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 

 

28

 

(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 

 

29

 

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.

 

30

 

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.

 

31

 

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 

 

32

 

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 

 

33

 

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 

 

34

 

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,

 

35

 

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).

 

36

 

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 

 

37

 

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, 

 

38

 

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 

 

39

 

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.

 

40

 

(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.

 

41

 

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 

 

42

 

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.

 

43

 

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 

 

44

 

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.

 

45

 

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,

 

46

 

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 

 

47

 

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 

 

48

 

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.

 

49

 

(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.

 

50

 

(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 

 

51

 

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 

 

52

 

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 

 

53

 

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 

 

54

 

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 

 

55

 

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.

 

56

 

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.

 

57

 

(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 

 

58

 

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, 

 

59

 

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, 

 

60

 

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

 

61

 

(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 

 

62

 

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

 

63

 

“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 

 

64

 

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]

 

65

 

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 

 

 

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

 

“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

 

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

 

“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

 

“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

 

“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

 

“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

 

“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

 

“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

 

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)

 

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 

(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

 

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

 

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

 

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)

 

 

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

 

“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

 

“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)

 

 (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

 

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:

 

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.

 

23

 

“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.

 

24

 

“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.

 

25

 

“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.

 

26

 

“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.

 

27

 

“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.

 

28

 

“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.

 

29

 

“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.

 

30Exhibit 10.4

 

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 M013

$598,061,333 Class A
Certificates

$31,476,912 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 with an Initial
Certificate Balance of $598,061,333 and the Class B Certificates will be
issued with an Initial Certificate Balance of $31,476,912 in substantially the
forms set forth in Exhibit B and Exhibit C to the Standard
Terms.  Upon initial issuance, the Class A
Certificates shall be registered in the name of CEDE & Co., as nominee
for DTC.  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 the Class A
Certificates shall be the Term Reset Rate Method.  The initial Term Reset Rate with respect to
the Class A Certificates shall be 5.20%. 
Such Term Reset Rate shall be in effect from the Date of Original Issue
to June 15, 2022.

 

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 the following:

 

	
   

  	
   

  	
  CUSIP Number

  
	
  Class A Certificates

  	
   

  	
  31397PQ37

  
	
  Class B Certificates

  	
   

  	
  31397PQ45

  

 

Section 10.            The provisions of the Standard Terms related to the Holdback
Requirement and the establishment and operation of the Bond Payment Subaccount –
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 are the
series pools with the designations “Series M012” and “Series M014”.

 

Section 14.            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 15.            The Maximum Reset Rate will be calculated using the Weighted
Average Bond Rate.

 

2

 

Section 16.            The following definitions shall apply with respect to the
Certificates:

 

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

 

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

 

“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, 2019.

 

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

 

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

 

“Proportional
Amount” - shall mean initially $598,061,333 Class A
Certificates to $31,476,912 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 17.            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

  

 

3

 

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.

 

 

[Signatures
follow]

 

4

 

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 M013]

 

 

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 M013]

 

 

APPENDIX A

 

STANDARD TERMS

 

 

EXECUTION

 

[Osprey/Tax-Exempt]

 

FREDDIE MAC

MULTIFAMILY VARIABLE RATE CERTIFICATES

SERIES M013

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

 

	
  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

  	
   

  	
  [Reserved]

  	
   

  	
  18

  
	
  Section 4.11

  	
   

  	
  Credit Enhancement

  	
   

  	
  18

  
	
  Section 4.12

  	
   

  	
  Confirming Credit
  Facility

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  RESET
  RATES; RESET RATE METHOD; RESET DATES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.01

  	
   

  	
  Determination of
  Reset Rates, Reset Rate Methods and Reset Dates

  	
   

  	
  20

  
	
  Section 5.02

  	
   

  	
  Weekly Reset Rate;
  Monthly Reset Rate

  	
   

  	
  21

  
	
  Section 5.03

  	
   

  	
  Term Reset Rate;
  Term Reset Date

  	
   

  	
  22

  
	
  Section 5.04

  	
   

  	
  Notice of Reset
  Rate

  	
   

  	
  25

  
	
  Section 5.05

  	
   

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

  	
   

  	
  25

  
	
  Section 5.06

  	
   

  	
  Maximum Reset Rate

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VI

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THE
  LIQUIDITY FACILITY; THE TENDER OPTION; MANDATORY TENDER

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.01

  	
   

  	
  Tender Option;
  Rights of Holders; Liquidity Facility

  	
   

  	
  26

  
	
  Section 6.02

  	
   

  	
  Funds Held by
  Administrator

  	
   

  	
  28

  
	
  Section 6.03

  	
   

  	
  Exercise of Tender
  Option

  	
   

  	
  28

  
	
  Section 6.04

  	
   

  	
  Mandatory Tender
  Events

  	
   

  	
  29

  
	
  Section 6.05

  	
   

  	
  Notice of
  Mandatory Tender

  	
   

  	
  29

  
	
  Section 6.06

  	
   

  	
  Funding
  Procedures; Payment of Purchase Price

  	
   

  	
  30

  
	
  Section 6.07

  	
   

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

  	
   

  	
  35

  
	
  Section 6.08

  	
   

  	
  Sole Sources of
  Payment of Purchase Price

  	
   

  	
  35

  

 

ii

 

	
  ARTICLE VII

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TENDER
  OPTION TERMINATION EVENTS AND CERTAIN MANDATORY TENDER 

  EVENTS; OPTIONAL DISPOSITION RIGHT

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.01

  	
   

  	
  Tender Option
  Termination Events

  	
   

  	
  35

  
	
  Section 7.02

  	
   

  	
  Special Adjustment
  Event

  	
   

  	
  36

  
	
  Section 7.03

  	
   

  	
  Liquidity Provider
  Termination Event

  	
   

  	
  37

  
	
  Section 7.04

  	
   

  	
  Sponsor Act of
  Bankruptcy

  	
   

  	
  38

  
	
  Section 7.05

  	
   

  	
  Optional
  Disposition Date

  	
   

  	
  38

  
	
  Section 7.06

  	
   

  	
  Clean-Up Event

  	
   

  	
  39

  
	
  Section 7.07

  	
   

  	
  Credit Enhancement
  Expiration Date

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THE
  REMARKETING AGENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.01

  	
   

  	
  Duties of the
  Remarketing Agent

  	
   

  	
  40

  
	
  Section 8.02

  	
   

  	
  Resignation or
  Removal of the Remarketing Agent

  	
   

  	
  40

  
	
  Section 8.03

  	
   

  	
  Successor
  Remarketing Agent

  	
   

  	
  40

  
	
  Section 8.04

  	
   

  	
  Merger or
  Consolidation of the Remarketing Agent

  	
   

  	
  41

  
	
  Section 8.05

  	
   

  	
  Notices by
  Remarketing Agent

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  IX

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EVENTS OF
  DEFAULT AND RIGHTS AND REMEDIES OF HOLDERS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.01

  	
   

  	
  Event of Default

  	
   

  	
  41

  
	
  Section 9.02

  	
   

  	
  Remedies

  	
   

  	
  41

  
	
  Section 9.03

  	
   

  	
  Waiver of Past
  Defaults

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THE ADMINISTRATOR; HOLDERS’
  LISTS AND REPORTS; 

  BONDHOLDER REPRESENTATIVE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.01

  	
   

  	
  Certain Duties and
  Responsibilities

  	
   

  	
  42

  
	
  Section 10.02

  	
   

  	
  Notice of
  Non-Monetary Default

  	
   

  	
  43

  
	
  Section 10.03

  	
   

  	
  Certain Rights of
  the Administrator

  	
   

  	
  44

  
	
  Section 10.04

  	
   

  	
  Parties that
  May Hold Certificates

  	
   

  	
  44

  
	
  Section 10.05

  	
   

  	
  Information
  Regarding Holders

  	
   

  	
  44

  
	
  Section 10.06

  	
   

  	
  Corporate Administrator
  Required; Eligibility

  	
   

  	
  44

  
	
  Section 10.07

  	
   

  	
  Resignation

  	
   

  	
  45

  
	
  Section 10.08

  	
   

  	
  Preservation of
  Information; Communications to Holder

  	
   

  	
  46

  
	
  Section 10.09

  	
   

  	
  Bondholder
  Representative

  	
   

  	
  48

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PROFITS
  AND LOSSES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 11.01

  	
   

  	
  Tax Information

  	
   

  	
  48

  
	
  Section 11.02

  	
   

  	
  Capital Accounts

  	
   

  	
  48

  
	
  Section 11.03

  	
   

  	
  Allocations of
  Profits, Market Discount Gains and Capital Gains

  	
   

  	
  49

  
	
  Section 11.04

  	
   

  	
  Allocations of
  Losses and Capital Losses

  	
   

  	
  49

  

 

iii

 

	
  Section 11.05

  	
   

  	
  Special
  Allocations

  	
   

  	
  50

  
	
  Section 11.06

  	
   

  	
  Tax Allocations;
  Code Section 704(c)

  	
   

  	
  52

  
	
  Section 11.07

  	
   

  	
  Allocation Among
  Holders

  	
   

  	
  52

  
	
  Section 11.08

  	
   

  	
  Tax Matters; Tax
  Election

  	
   

  	
  52

  
	
  Section 11.09

  	
   

  	
  Accounting Method

  	
   

  	
  53

  
	
  Section 11.10

  	
   

  	
  Tax Matters Partner

  	
   

  	
  53

  
	
  Section 11.11

  	
   

  	
  Compliance with
  Code Requirements

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  XII

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  AMENDMENTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 12.01

  	
   

  	
  Amendments

  	
   

  	
  54

  
	
  Section 12.02

  	
   

  	
  Execution of
  Amendments

  	
   

  	
  55

  
	
  Section 12.03

  	
   

  	
  Effect of
  Amendment

  	
   

  	
  55

  
	
  Section 12.04

  	
   

  	
  Reference in
  Certificates to Amendments

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  XIII

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TERMINATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 13.01

  	
   

  	
  Termination

  	
   

  	
  56

  
	
  Section 13.02

  	
   

  	
  Final Distribution
  on the Series Expiration Date

  	
   

  	
  57

  
	
  Section 13.03

  	
   

  	
  Terminating
  Mandatory Tender Date

  	
   

  	
  58

  
	
  Section 13.04

  	
   

  	
  Exchange Date

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  XIV

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 14.01

  	
   

  	
  Acts of Holders

  	
   

  	
  62

  
	
  Section 14.02

  	
   

  	
  Notices

  	
   

  	
  63

  
	
  Section 14.03

  	
   

  	
  Notices to
  Holders; Waiver

  	
   

  	
  63

  
	
  Section 14.04

  	
   

  	
  Successors and
  Assigns

  	
   

  	
  63

  
	
  Section 14.05

  	
   

  	
  Severability

  	
   

  	
  63

  
	
  Section 14.06

  	
   

  	
  Benefits of
  Series Certificate Agreement

  	
   

  	
  63

  
	
  Section 14.07

  	
   

  	
  Governing Law

  	
   

  	
  64

  
	
  Section 14.08

  	
   

  	
  Counterparts

  	
   

  	
  64

  
	
  Section 14.09

  	
   

  	
  Non-Petition
  Covenants

  	
   

  	
  64

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  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

 

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.

 

 

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 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
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, 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, 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.

 

(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 

 

2

 

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.

 

(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.

 

3

 

(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, 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.

 

(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.

 

4

 

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 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 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

 

5

 

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

 

6

 

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

 

7

 

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

 

(c)           to pay any other amounts required to be paid by it pursuant
to the Documents.

 

8

 

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:

 

(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 

 

9

 

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 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 

 

10

 

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.

 

11

 

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 

 

12

 

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 Reset Rate in effect for each such
day, 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 Reset Rate in effect for each such day, 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;

 

13

 

(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 each Redemption Date, 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:

 

(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 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

THAN ZERO]

 

and where:

 

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

 

14

 

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)

 

(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;

 

(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.

 

15

 

(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 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.

 

16

 

(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.

 

(b)           Repayment of
Administrator Advances.  Unreimbursed Administrator Advances will be
repaid from amounts deposited in the Bond Payment Subaccount-

 

17

 

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         [Reserved].

 

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).

 

18

 

(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 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.

 

19

 

(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 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 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.  The Remarketing Agent
will determine the Reset Rate for the Class A Certificates 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

 

20

 

the right to change
the initial Reset Rate Method or any subsequent Reset Rate Method to another
Reset Rate Method.

 

(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, 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, 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

 

21

 

applicable Reset
Rate will be the lesser of the previous Reset Rate or the Maximum Reset
Rate.  Six Business Days before any
Monthly 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, 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 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, 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, the initial Term
Reset Rate plus fifty basis points (0.50%)), 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 date that would have been the Term Reset
Date, the Class A Certificates will bear interest at the Weekly Reset
Rate.

 

22

 

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) 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 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, the initial Term Reset Rate plus fifty basis
points (0.50%)).

 

(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 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

 

23

 

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 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 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 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.

 

24

 

(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, 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.

 

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.

 

25

 

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 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

 

26

 

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 (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.

 

27

 

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
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).

 

28

 

(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.

 

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

 

29

 

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 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.

 

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.

 

30

 

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 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

 

31

 

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 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

 

32

 

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) from the Liquidity
Facility, as applicable, pursuant to Section 6.01(b) or 6.06(a), only
upon presentation and in each case 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 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

 

33

 

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, 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

 

34

 

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).

 

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

 

35

 

(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
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

 

36

 

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, 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.

 

37

 

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 Certificates held by and 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 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

 

38

 

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.

 

(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

 

39

 

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.

 

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 

 

40

 

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 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.

 

41

 

(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.

 

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

 

42

 

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 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.

 

43

 

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.

 

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, 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 

 

44

 

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, 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 

 

45

 

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 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 

 

46

 

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
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.

 

47

 

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.

 

(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.

 

48

 

(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.

 

(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 

 

49

 

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 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 

 

50

 

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 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.

 

51

 

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 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 

 

52

 

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 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 

 

53

 

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 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.

 

54

 

(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.

 

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.

 

55

 

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.

 

(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 

 

56

 

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 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 

 

57

 

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, 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 

 

58

 

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, 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 

 

59

 

(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

 

(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)

 

60

 

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 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 

 

61

 

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 “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.

 

62

 

(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 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.

 

63

 

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]

 

64

 

EXHIBIT
A

 

DEFINITIONS

 

A-1

 

[Osprey/Tax-Exempt]

 

Exhibit A
to Standard Terms

Freddie Mac

Multifamily Variable Rate Certificates

Series M013

 

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, 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 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.

 

2

 

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

 

“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” means, with respect to any Class A
Certificate, an initial certificate balance of at least $100,000 with integral
multiples of $1.00 in excess of $100,000, and 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, with respect to any
Certificate, necessary adjustments due to redemptions after the Date of
Original Issue.

 

“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

 

3

 

any calculation previously
made.  Available Interest Amount is
expressed as the variable “AIA” in the following formula:(1)

 

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.

 

(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.                                    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

 

“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.

 

“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

 

5

 

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.

 

“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

 

6

 

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.

 

“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.

 

7

 

“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.

 

“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

 

8

 

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
Accrual Period shall be deemed paid on the first day of such Accrual Period
rather than on the Payment Date when actually paid.

 

“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.

 

9

 

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

 

“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

 

10

 

by dividing (a) the Excess
Accrued Net Interest Amount as of the relevant day of determination 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)

 

	
   

  	
  

  

 

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

 

(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

 

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           )

  	
   

  
	
   

  	
  80,000,000+20,000,000

  	
   

  

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

 

12

 

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.  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

 

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)

 

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

 

“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

 

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

 

(4)  Example 1:

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

2.             Lowest Bond Rate:  6.5%

 

16

 

 

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.

 

(...continued)

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

 

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:

 

 

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, 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 

 

18

 

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)

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

 

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 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.

 

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

 

“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.

 

“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

 

21

 

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.

 

“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

 

22

 

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.

 

“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

 

23

 

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.

 

“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.

 

24

 

“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.

 

“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.

 

25

 

“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
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.

 

“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.

 

26

 

“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.

 

“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

 

27

 

(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.

 

“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 Party” 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.

 

28

 

“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.

 

“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.

 

“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.

 

29

 

“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.

 

30

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