Document:

exv10wdd

 

EXHIBIT 10dd

ROWAN COMPANIES, INC.

2004 PROFIT SHARING PLAN

	 	 	 
	Eligibility

	 	All previous corporate or drilling division option recipients, plus all other qualifying division office

employees (approximately 330 total employees)
	 
	 	 
	Measurement

	 	Drilling EBITDA, defined as GAAP-based EBITDA from Drilling segment operations
	Criteria
	 	 
	 
	 	 
	

	 	GAAP is Generally Accepted Accounting Principles.
	

	 	EBITDA is Earnings Before Interest, Taxes, Depreciation and Amortization.
	 
	 	 
	Award

	 	Pool dollars allocated to participants in proportion to Base Pay, as defined below

(all participants receive same % of Base Pay)
	 
	 	 
	Cap

	 	2004 Pool capped at $5 million, subject to Committee/Board discretion
	 
	 	 
	Base Pay

	 	W-2 earnings, less any bonus and value attributable to stock options

[Information omitted regarding target levels with respect to specific
quantitative or qualitative performance related-factors, or factors or criteria
involving confidential commercial or business information, the disclosure of
which would have an adverse effect on the registrant.]exv10wee

 

EXHIBIT 10ee

ROWAN COMPANIES, INC.

2004 BONUS PLAN

	 	 	 
	Eligibility

	 	Executive and other officers, managers and certain key
employees (approximately 75 employees), arranged in
6 Tiers generally by salary and/or responsibility level
	 
	 	 
	Measurement Criteria

	 	Drilling EBITDA, defined as
GAAP-based EBITDA from Drilling segment operations, relative to Budget

	 
	 	 
	Bonus Target

	 	Bonus Target varies for each of 6 Tiers, with equal
percentage for each member of a Tier:

	 	 	 	 	 
	

	 	Tier I — 75% of Base Pay

Tier II — 55%

Tier III — 40%

	 	Tier IV — 25%

Tier V — 15%

Tier VI — 10%

	 	 	 
	Offset

	 	Any Bonus Award is offset by Profit Sharing Award (thus,
Bonus Target is maximum total award under both plans)

[Information omitted regarding target levels with respect to specific
quantitative or qualitative performance related-factors, or factors or criteria
involving confidential commercial or business information, the disclosure of
which would have an adverse effect on the registrant.]exv10w1

 

EXHIBIT 10.1

AMENDED AND RESTATED

MASTER RECOURSE AGREEMENT

AMONG

FANNIE MAE,

MUNICIPAL MORTGAGE & EQUITY, LLC

AND

MMACAP, LLC

DATED AS OF DECEMBER 1, 2000

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	PAGE	 
	ARTICLE I 
	 	 	 	 
	 
	 	 	 	 
	DEFINITIONS
	 	 	 	 
	 
	 	 	 	 
	SECTION 1.1 General Interpretative Principles
	 	 	4	 
	SECTION 1.2 Defined Terms
	 	 	4	 
	 
	 	 	 	 
	ARTICLE II
	 	 	 	 
	 
	 	 	 	 
	FIRST LOSS OBLIGATION; COLLATERALIZATION
	 	 	 	 
	 
	 	 	 	 
	SECTION 2.1 Mortgage Loans Subject to this Agreement
	 	 	17	 
	SECTION 2.2 First Loss Obligation; Collateral Requirement
	 	 	18	 
	SECTION 2.3 Principal Reductions
	 	 	19	 
	SECTION 2.4 Established Losses
	 	 	19	 
	SECTION 2.5 Releases Without Established Losses
	 	 	20	 
	SECTION 2.6 Subsequent Recoupment
	 	 	20	 
	SECTION 2.7 Bond Fund Initial Funding Requirements
	 	 	20	 
	 
	 	 	 	 
	ARTICLE III
	 	 	 	 
	 
	 	 	 	 
	SERVICING OF MORTGAGE LOANS; ADVANCES
	 	 	 	 
	 
	 	 	 	 
	SECTION 3.1 Servicing
	 	 	21	 
	SECTION 3.2 Delinquency Advances
	 	 	22	 
	SECTION 3.3 Servicing Advances
	 	 	22	 
	SECTION 3.4 Unavailability of Net Operating Income
	 	 	22	 
	SECTION 3.5 Decision Control
	 	 	22	 
	SECTION 3.6 Implementation of Course of Action
	 	 	28	 
	SECTION 3.7 Restructurings and Foreclosure
	 	 	29	 
	SECTION 3.8 Substitute Mortgage Loans
	 	 	29	 
	SECTION 3.9 Release of Mortgage Loans
	 	 	29	 
	 
	 	 	 	 
	ARTICLE IV
	 	 	 	 
	 
	 	 	 	 
	REPRESENTATIONS AND WARRANTIES
	 	 	 	 
	 
	 	 	 	 
	SECTION 4.1 Representations and Warranties of Recourse Provider
	 	 	30	 
	SECTION 4.2 Representations and Warranties of MuniMae
	 	 	33	 
	SECTION 4.3 Representations and Warranties of Fannie Mae
	 	 	34	 
	 
	 	 	 	 
	ARTICLE V
	 	 	 	 
	 
	 	 	 	 
	COVENANTS
	 	 	 	 
	 
	 	 	 	 
	SECTION 5.1 Performance of Obligations
	 	 	35	 

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TABLE OF CONTENTS

	 	 	 	PAGE	 
	SECTION 5.2 Estimated Losses
	 	 	35	 
	SECTION 5.3 Good Standing
	 	 	35	 
	SECTION 5.4 Further Assurances
	 	 	36	 
	SECTION 5.5 Compliance with Laws
	 	 	36	 
	SECTION 5.6 Reporting and Compliance Obligations
	 	 	36	 
	SECTION 5.7 Indebtedness
	 	 	38	 
	SECTION 5.8 Single-Purpose Entity
	 	 	38	 
	 
	 	 	 	 
	ARTICLE VI
	 	 	 	 
	 
	 	 	 	 
	FEES
	 	 	 	 
	 
	 	 	 	 
	SECTION 6.1 Fannie Mae Fee and Servicing Fee
	 	 	38	 
	 
	 	 	 	 
	ARTICLE VII
	 	 	 	 
	 
	 	 	 	 
	CERTAIN OBLIGATIONS
	 	 	 	 
	 
	 	 	 	 
	SECTION 7.1 General Indemnification
	 	 	38	 
	SECTION 7.2 Certain Environmental Expenses
	 	 	41	 
	SECTION 7.3 Payment of Costs and Expenses
	 	 	41	 
	SECTION 7.4 MuniMae’s Obligations
	 	 	42	 
	 
	 	 	 	 
	ARTICLE VIII
	 	 	 	 
	 
	 	 	 	 
	EVENTS OF DEFAULT AND REMEDIES
	 	 	 	 
	 
	 	 	 	 
	SECTION 8.1 Events of Default
	 	 	42	 
	SECTION 8.2 Remedies Available to Fannie Mae
	 	 	44	 
	SECTION 8.3 Remedies Not Exclusive
	 	 	46	 
	SECTION 8.4 Delay or Omission Not Waiver
	 	 	46	 
	SECTION 8.5 Restoration of Rights and Remedies
	 	 	46	 
	 
	 	 	 	 
	ARTICLE IX 
	 	 	 	 
	 
	 	 	 	 
	MISCELLANEOUS
	 	 	 	 
	 
	 	 	 	 
	SECTION 9.1 Benefit of Agreement; Successors and Assigns
	 	 	46	 
	SECTION 9.2 Notices
	 	 	49	 
	SECTION 9.3 Severability
	 	 	50	 
	SECTION 9.4 Entire Agreement; Amendments and Waivers
	 	 	50	 
	SECTION 9.5 Multiple Counterparts
	 	 	50	 
	SECTION 9.6 Termination of Master Recourse Agreement
	 	 	50	 
	SECTION 9.7 Survival
	 	 	50	 
	SECTION 9.8 Consent of Fannie Mae
	 	 	51	 
	SECTION 9.9 Servicer; Termination of Servicer; Amendments
	 	 	51	 
	SECTION 9.10 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial
	 	 	52	 

ii

 

TABLE OF CONTENTS

EXHIBIT A Mortgage Loan Certificate

EXHIBIT B Representations and Warranties

EXHIBIT C Decision Control Notice

iii

 

          THIS AMENDED AND RESTATED MASTER RECOURSE AGREEMENT (this “Agreement”), dated as of December 1, 2000, is made and entered into by and
among FANNIE MAE, a corporation organized and existing under the laws of the United States of
America (“Fannie Mae”), MUNICIPAL MORTGAGE & EQUITY, LLC, a Delaware limited liability company
(“MuniMae”) and MMACAP, LLC (formerly BlackCap, L.L.C. (“BlackCap”)), a Delaware limited liability
company (“Recourse Provider”). The meanings of capitalized terms used in this Agreement and not
otherwise defined are as set forth in Section 1.2 of this Agreement.

RECITALS

          A Pursuant to a Master Recourse Agreement dated as of November 1, 1996 (the “Recourse
Agreement”) by and between Fannie Mae, BLACKROCK CAPITAL FINANCE, L.P., a limited partnership
organized and existing under the laws of the State of Delaware
(“BCF”), and BlackCap, BlackCap, as
the recourse provider under the Recourse Agreement, agreed to take a first loss position with
respect to losses on certain Mortgage Loans Purchased by Fannie Mae to the extent and in the manner
provided in the Recourse Agreement.

          B. Pursuant to a Master Purchase Agreement, dated as of June 30,1997, MuniMae acquired all of the membership interests of BlackCap and assumed all of BlackCap’s rights, interest and obligations under the Recourse Agreement. Concurrently with the Master Purchase Agreement, BCF assigned and MuniMae assumed all of BCF’s rights, interest and obligations under the Recourse Agreement pursuant to the Assignment, Assumption and Consent Agreement dated as of June 30, 1997.

          C. Recourse Provider has agreed to take first loss risk on a pooled
basis with respect to losses on additional Mortgage Loans to the extent and in the manner
provided in this Agreement and, to secure Recourse Provider’s obligations under this
Agreement, Recourse Provider shall deliver Acceptable Collateral to Custodian in
accordance with the Custodial Agreement.

          D. Custodian, as collateral agent and bailee of Fannie Mae, will hold
and administer all Collateral, including Acceptable Collateral, pursuant to the Custodial
Agreement.

          E. Fannie Mae, MuniMae and Recourse Provider desire to amend and
restate the Recourse Agreement in its entirety in order to provide, among other things, for
certain remedies of Fannie Mae if Recourse Provider or MuniMae defaults under this
Agreement or the Custodial Agreement.

          NOW, THEREFORE, in consideration of the mutual covenants and undertakings set forth in this
Agreement, and other good and valuable consideration, the receipt and sufficiency of which is
acknowledged, Fannie Mae, MuniMae and Recourse Provider incorporate the above recitals and agree
that the Recourse Agreement shall be amended and restated, without novation, as follows:

          

4

 

ARTICLE I
DEFINITIONS

     SECTION 1.1 General Interpretative Principles.

          For purposes of this Agreement, except as otherwise provided or unless the context
otherwise requires:

          (a) the terms defined in Section 1.2 have the meanings assigned to
them in Section 1.2 and include the plural as well as the singular, and the use
of any gender shall be deemed to include the other gender;

          (b) references in this Agreement to “sections,” “subsections,”
“paragraphs” and other subdivisions without reference to a document are to designated
sections, subsections, paragraphs and other subdivisions of this Agreement;

          (c) a reference to a subsection without further reference to a section is
a reference to such subsection as contained in the same section in which the reference
appears, and this rule shall also apply to paragraphs and other subdivisions;

          (d) a reference to an Exhibit or a Schedule without a further reference
to the document to which the Exhibit or Schedule is attached is a reference to an Exhibit
or Schedule to this Agreement;

          (e) a reference to Fannie Mae forms, guides, memos, updates or
announcements shall mean such Fannie Mae forms, guides, memos, updates or
announcements as the same may be amended, supplemented, otherwise modified,
superseded or replaced from time to time;

          (f) the words “attorneys’ fees and expenses” and other words of
similar import shall mean the reasonable fees and expenses of counsel, including any
costs and expenses incurred by Fannie Mae’s in-house counsel;

          (g) the word “including” means “including by way of example and not
limitation.”

          The parties to this Agreement acknowledge that each party and their respective counsel have
participated in the drafting and revision of this Agreement and the related documents. Accordingly
the parties agree that any rule of construction which disfavors the drafting party shall not apply
in the interpretation of this Agreement and the related documents or any statement or supplement or
exhibit to this Agreement or the related documents.

     SECTION 1.2 Defined Terms.

     Capitalized terms in this Agreement shall have the following meanings:

5

 

     “Acceptable Collateral” shall have the meaning given that term in the Custodial
Agreement.

     “Affiliate” means, with respect to any Person, any Person directly or indirectly controlling,
controlled by or under common control with such Person. As used in this definition, the term
“control” means the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.

     “Agreement” means this Amended and Restated Master Recourse Agreement, as it may be amended,
supplemented or otherwise modified from time to time.

     “Asset Value” means, with respect to each Mortgage Loan, the dollar amount equal, as
applicable, to: (a) the proceeds of the sale to a third party (that is not Fannie Mae, MuniMae,
Recourse Provider, or any Affiliate of Fannie Mae, MuniMae or Recourse Provider) of the applicable
Mortgaged Property at a regularly conducted foreclosure sale or at a sale directed by a court of
competent jurisdiction in a bankruptcy proceeding or at any other commercially reasonable sale,
which sale results in or is immediately followed by the full and indefeasible release of all of
Fannie Mae’s obligations under the related Credit Enhancement Agreement (b) the proceeds of the
sale to a third party (that is not Fannie Mae, MuniMae, Recourse Provider, or any Affiliate of
Fannie Mae, MuniMae or Recourse Provider) of the Bonds, if any, and other obligations related to
the Mortgaged Property, which sale results in or is immediately followed by the full and
indefeasible release of all of Fannie Mae’s obligations under the related Credit Enhancement
Agreement; or (c) the appraised value of such Mortgaged Property, as of the Release Date, agreed to
by Fannie Mae and Recourse Provider; provided, however, that if they cannot agree, the appraised
value shall be as determined by “as-is” appraisal(s) conducted as provided below. Fannie Mae and
Recourse Provider shall each order a separate appraisal to be completed within sixty (60) days of
the Release Date. Each such appraisal shall value the Mortgaged Property as of the Release Date and
shall be completed by a qualified independent fee appraiser having experience in the area where the
Mortgaged Property is located and otherwise in accordance with the requirements and procedures set
forth in the DUS Guide for appraisals required prior to delivery of a Mortgage Loan to Fannie Mae.
Any such appraisal shall be an “as is” appraisal, as defined and required for this purpose by the
DUS Guide. If the lower of the two appraised values differs from the higher of the two appraised
values by 5% of the higher appraised value or less, then the Asset Value will be the average of the
two appraised values. If the two appraised values differ by more than such 5%, the two appraisers
cannot agree on a value and Fannie Mae and Recourse Provider cannot agree on a value, then Fannie
Mae and Recourse Provider shall select a third appraiser, who will be engaged by Fannie Mae (and
paid from the Collateral Account), to conduct an independent appraisal within sixty (60) days and
value the Mortgaged Property as of the Release Date in accordance with the requirements and
procedures described in this definition. The third appraisal shall be binding upon Recourse
Provider and Fannie Mae. If Recourse Provider fails to cause an appraisal to be conducted as
provided above, the appraised value of a Mortgaged Property shall be determined exclusively by an
appraiser

6

 

selected by Fannie Mae and otherwise using the procedures set forth in this definition, and
Recourse Provider waives any right to challenge such valuation.

     “Bond Documents” means, with respect to any issue of Bonds, the Bonds, the indenture of trust,
the certificate trust agreement, the custody agreement or other document governing the terms of
such Bonds, the financing agreement, the regulatory agreement (or other agreement relating to
rental restrictions on the applicable Mortgaged Property), the tax certificate (or other applicable
agreement) relating to arbitrage in connection with use of the proceeds of such Bonds, the
remarketing agreement executed in connection with such Bonds and any other agreement executed in
connection with such Bonds, as each such agreement or instrument may be amended, supplemented or
otherwise modified from time to time.

     “Bonds” means, with respect to a particular Mortgage Loan, the tax-exempt multifamily revenue
bonds issued pursuant to applicable law to finance or refinance the related Mortgaged Property;
provided that if a trustee holds such bonds pursuant to a certificate trust agreement or custody
agreement, “Bonds” shall mean any certificates of participation, custodial receipts or partnership
or other interests of the holders thereof and shall not mean the underlying multifamily housing
revenue bonds.

     “Borrower” means, with respect to any Mortgage Loan, each Person(s) obligated under the
Mortgage Loan Documents executed and delivered with respect to a Mortgage Loan. With respect to any
Bond for which Fannie Mae provides Credit Enhancement, the term Borrower shall also include any
Person(s) obligated under the Bond Documents executed and delivered with respect to such Bond.

     “Borrower Default” means a Borrower Payment Default or a Borrower Performance
Default.

     “Borrower Payment Default” means the failure of a Borrower to pay when due and in full any
payment(s) required with respect to the related Mortgage Loan or related Bond, if applicable,
including, but not limited to, principal, interest, late charges, default interest, prepayment
premiums, principal reserve fund payments, escrows or other collateral accounts for taxes,
insurance premiums and assessments, other collateral accounts and the replacement reserve account,
if applicable. For example, scheduled principal and interest payments are past due on the second
day after payment is required to be made under the related Bond Documents or Mortgage Loan
Documents, as applicable.

     “Borrower Performance Default” means the failure of a Borrower to perform any covenant or
other obligation under the related Mortgage Loan, other than a failure that constitutes a Borrower
Payment Default, which constitutes an event of default under any of the Bond Documents or Mortgage
Loan Documents after the application of any applicable grace period.

7

 

     “Business Day” means any day except a Saturday, a Sunday or any other day on which
Fannie Mae, Custodian or the Federal Reserve Bank of New York is not open for business.

     “Collateral” means Acceptable Collateral, any other funds, securities or other assets on
deposit in the Collateral Account and any other funds, securities or other assets in which Recourse
Provider has an interest delivered to or otherwise held by Custodian or Fannie Mae under the
Custodial Agreement (including any amounts at any time credited or due to Recourse Provider from
Fannie Mae).

     “Collateral Account” means the Collateral Account established in the Custodial Agreement.

     “Collateral Requirement” means, with respect to all Mortgage Loans and as of any date of
calculation, the Collateral Requirement specified in the most recent Mortgage Loan Certificate:

(1)   less:

(a) with respect to all Mortgage Loans for which Established Losses
have been determined after the date of such Mortgage Loan Certificate,
the aggregate of such Established Losses; provided that if an Established
Loss has been determined for a Mortgage Loan and any Payment
Obligation is then due and owing to Fannie Mae, the amount by which the
Collateral Requirement shall be reduced pursuant to this clause (a) with
respect to such Mortgage Loan shall be zero;

(b) with respect to all Mortgage Loans (other than Mortgage Loans
included in clause (a) above) Released after the date of such Mortgage
Loan Certificate, the aggregate of all Release Amounts, if any; and

(c) the aggregate of all Principal Reductions;

(2)   plus:

     any subsequent recoupments with respect to Established Losses and/or
Principal Reductions received pursuant to Section 2.6 of this Agreement

     Provided, however, that, as of any date of calculation, the Collateral Requirement shall be
reduced by the amount, if any, that the Collateral Requirement exceeds the Unpaid Principal Balance
of all the Mortgage Loans subject to this Agreement as of the date of such calculation.

     “Credit Enhancement” means the issuance of a security or the provision of the Credit
Enhancement Agreement with respect to a Mortgage Loan and/or Bond related to such Mortgage Loan.

8

 

     “Credit Enhancement Agreement” means an agreement or security under the terms of which
Fannie Mae agrees to make certain payments with respect to one or more Mortgage Loans and/or Bonds
related to such Mortgage Loans.

     “Custodial Agreement” means the Amended and Restated Custodial Agreement, dated as of December
1, 2000, among Fannie Mae, Recourse Provider and Custodian, as such agreement may be amended,
supplemented or otherwise modified from time to time.

     “Custodian” means First Tennessee Bank National Association or any successor serving as
Custodian under the Custodial Agreement.

     “Date of Borrower Default” means, as to any Mortgage Loan, the date of the first uncured
Borrower Payment Default or Borrower Performance Default.

     “Decision
Control” means the right, subject to and in accordance with
the terms of Section 3.5, of Fannie Mae or Recourse Provider, as the case may be, to decide upon a course of action for
dealing with any Defaulted Mortgage Loan.

     “Decision Control Notice” shall have the meaning assigned to such term in Section
3.5.

     “Defaulted Mortgage Loan” means any Mortgage Loan with respect to which an uncured Borrower
Payment Default or Borrower Performance Default exists or the related Mortgaged Property is held as
REO.

     “Delinquency Advances” means the payments made in accordance with Section 3.2, in
monthly amounts equal to (a) the principal (including any principal reserve fund payments if
required for a mandatory redemption of Bonds) due and owing under a Mortgage Loan, or (b) the
principal (including any mandatory redemptions) due and owing on Bonds issued with respect to a
Mortgage Loan which has become REO, with, in either case, interest calculated at the rate of
interest on the related Note that would have been due on the Mortgage Loan if it were current or
had not become REO, which payments are in each case made solely pursuant to Recourse Provider’s
obligations to Fannie Mae under this Agreement and not with respect to the Borrower’s obligations
under that Mortgage Loan. So long as otherwise not included, Delinquency Advances shall include
interest as provided in Section 3.1.

     “Delivery Date” means the date on which any Mortgage Loan is accepted under this Agreement as
evidenced by the execution of a Mortgage Loan Certificate for such Mortgage Loan by Recourse
Provider and Fannie Mae.

     “DUS Guide” means the Fannie Mae Multifamily Delegated Underwriting and Servicing Guide, as
such guide may be amended or supplemented from time to time by Fannie Mae, including any DUS
Lender Memos, announcements or guide updates.

     “Effective Date” means the date on which the Credit Enhancement Agreement with respect to any
particular Mortgage Loan or the related Bonds was issued or became effective.

9

 

     “Environmental Matters” means any matters relating to the generation, manufacture, use,
storage, handling, transportation and/or disposal of hazardous substances or wastes, chemical
substances or conditions with respect to the atmosphere, soil, surface and ground waters, wetlands,
stream sediments and vegetation and any similar matters.

     “Established Loss” means, with respect to any Mortgage Loan or REO, an amount determined
as of the Release Date for such Mortgage Loan as follows:

(a) The sum of:

(i) the Unpaid Principal Balance of such Mortgage Loan (reduced by
any amounts paid under the related Credit Enhancement Agreement and
unreimbursed from the Collateral Account) as of the earlier of (1) the day
preceding the date of Foreclosure, or (2) the Release Date;

(ii) all amounts paid by Fannie Mae pursuant to the related
Credit Enhancement Agreement and unreimbursed from the Collateral
Account; and

(iii) all Servicing Advances and Delinquency Advances with respect to
interest paid by Recourse Provider with respect to such Mortgage Loan or
REO for up to twenty-four (24) months after such Mortgage Loan became a
Defaulted Mortgage Loan and unreimbursed from the Collateral Account;

(b) minus, the sum of:

(i) either (1) the Asset Value of such Mortgage Loan, or (2) in the
event the Release Date is determined pursuant to clause (b) of the
definition of Release Date, the principal amount of the Substitute
Mortgage Loan; and

(ii) any amount recovered on or prior to the Release Date from a
guaranty, indemnification or similar obligation made with respect to the
Mortgage Loan or the related Bonds that benefits Fannie Mae or Recourse
Provider.

     “Estimated Loss,” in connection with each Mortgage Loan with respect to which a Borrower
Default has occurred, shall be the actual loss or Estimated Loss (as herein determined) with
respect to such Mortgage Loan. Estimated Loss will be the number by which (A) the sum of (v) the
Unpaid Principal Balance of the Mortgage Loans together with accrued and unpaid interest thereon
and (w) estimated Servicing Advances and Delinquency Advances exceeds (B) the sum of the estimated
market value for (x) the related Mortgaged Property and (y) the value of all collateral that is a
pledge of real or personal property as further security for the related Mortgage Loan. For purposes
of determining Estimated Loss, estimated market value (for each Mortgaged Property) will

10

 

be determined by dividing the net operating income from each project by a capitalization rate
for the local real estate submarket in which the affected project is located, each as calculated by
the Recourse Provider or Servicer and approved by Fannie Mae. Fannie Mae shall make the final
determination of estimated losses in its reasonable discretion.

     “Event of Default” means any one or more of the events described in Section
8.1.

     “Expiry Date,” with respect to any Mortgage Loan, means the date which is twenty-four (24)
months after the date such Mortgage Loan becomes a Defaulted Mortgage Loan, or such later date as
shall be mutually agreed upon in writing by Fannie Mae and Recourse Provider.

     “Fannie Mae Fee” means, in the aggregate, a monthly fee in an amount equal to the percentage
of the Unpaid Principal Balance of each Mortgage Loan as set forth in the Mortgage Loan Certificate
for such Mortgage Loan. If a Foreclosure occurs with respect to a Mortgage Loan and for so long as
no Substitute Mortgage Loan is put in place with respect to the related Mortgaged Property, such
fee will continue to be due and payable with respect to such Mortgage Loan until the earlier of the
Expiry Date or the Release Date of such Mortgage Loan, to be calculated based upon the Unpaid
Principal Balance of such Mortgage Loan as of the date such Foreclosure is initiated, less any
Principal Reductions with respect to such Mortgage Loan.

     “Federal Funds Effective Rate” for a day means the rate currently set forth on P.118 of the
Dow Jones Telerate Service or any page as may replace P.118 of that service or such other service
or services as may be nominated by the Federal Reserve System or the U.S. Department of the
Treasury for the purpose of displaying such rate. The monthly average of the daily Federal Funds
Effective Rates for each calendar month will be calculated by adding the daily Federal Funds
Effective Rate for each day in such calendar month and dividing such sum by the actual number of
days in such month. The rate assigned to any day which is not a Business Day will be the Federal
Funds Effective Rate on the Business Day immediately preceding such day. In the event that Fannie
Mae has determined that the Federal Funds Effective Rate is no longer available, Fannie Mae shall
select a replacement index that has performed, or that Fannie Mae expects to perform, in a manner
substantially similar to the Federal Funds Effective Rate. Any determination by Fannie Mae of the
unavailability of the Federal Funds Effective Rate and Fannie Mae’s selection of a replacement
index shall be final and binding.

     “Foreclosure” means a proceeding pursuant to which the lien of a Security Instrument is
satisfied or released by foreclosure (whether by power of sale or judicial proceeding), deed in
lieu of foreclosure or by any other comparable instrument.

     “GAAP” means generally accepted accounting principles in effect in the United States of
America from time to time.

11

 

     “Governmental Body” means any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or foreign.

     “Indemnified Party” shall have the meaning given that term in Section 7.1 (a).

     “Indemnity Payment” shall have the meaning given that term in Section 7.1(d).

     “Indebtedness” of any Person at any date means, without duplication, (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of property or services (other
than current trade liabilities incurred in the ordinary course of business and payable in
accordance with customary practices), (b) any other indebtedness of such Person which is evidenced
by a note, bond, debenture or similar instrument, (c) all obligations of such Person under any
lease of property, real or personal, the obligations of the lessee in respect of which are required
in accordance with GAAP to be capitalized on a balance sheet of the lessee or to be otherwise
disclosed as such in a note to such balance sheet, (d) all obligations of such person in respect of
acceptances issued or created for the account of such Person, (e) all liabilities secured by any
lien on any property owned by such Person even though such Person has not assumed or otherwise
become liable for the payment thereof, and (f) all Indebtedness of another guaranteed by such
Person; “Indebtedness,” however, shall exclude endorser liability on checks endorsed in the
ordinary course of such Person’s business.

     “Insurance Policy” means the Bond Insurance Policy, dated as of December 28, 2000, and the
Reinsurance Policy, dated as of December 28, 2000, securing the Recourse Provider’s and MuniMae’s
payment obligations under this Agreement and any other insurance policy which in form and substance
is acceptable to Fannie Mae and which is delivered with opinions, certificates and other ancillary
documents acceptable to Fannie Mae and otherwise constitutes Acceptable Collateral.

     “Mortgaged Property” means the property that secures all or any part of a Mortgage Loan, which
consists of the land, as described in the related Security Instrument, and all buildings and other
improvements, including the multifamily housing project, made to and located on the land, together
with all fixtures, equipment and furniture affixed or attached thereto or located thereon, all as
more specifically provided in the applicable Security Instrument.

     “Mortgage Loan” means (i) a multifamily mortgage loan that has been Purchased by Fannie Mae
and/or (ii) those rights in a multifamily mortgage loan and related Bonds and any and all other
rights, including, but not limited to, all rights of the holders of Bonds and all rights of the
Servicer under the related Mortgage Loan Documents, that have been assigned or otherwise
transferred to Fannie Mae in consideration for the provision of Credit Enhancement by Fannie Mae,
and in connection with which the Recourse Provider assumes the loss sharing obligations under this
Agreement and deposits Collateral under the Custodial Agreement and with respect to which a
Mortgage Loan Certificate is executed by Fannie Mae, MuniMae and Recourse

12

 

Provider; provided that a mortgage loan and any other such rights shall cease to be a
Mortgage Loan after the Release Date with respect to such Mortgage Loan.

     “Mortgage
Loan Certificate” means a certificate, in the form of
Exhibit A, delivered by
Recourse Provider and MuniMae to Fannie Mae with respect to one or more Mortgage Loans; provided,
however, that such Mortgage Loan Certificate shall only be effective upon execution by Fannie Mae,
indicating its acceptance of the Mortgage Loans under this Agreement.

     “Mortgage Loan Documents” means the Note, the Security Instrument, any loan agreement, any
financing agreement and any and all other documents executed and delivered with respect to a
Mortgage Loan including, any and all documents in which Fannie Mae has been assigned an interest,
and any security for, such Mortgage Loan.

     “Non-indemnifiable Claims” means claims or losses related to the Mortgaged Properties by any
Person (other than the trustee with respect to the related Bonds, investors in the related Bonds or
the applicable Bond issuer) arising from accidents or other similar events typically covered by
casualty insurance.

     “Note” means a promissory note, including any addenda thereto, any loan agreement, any
financing agreement, any reimbursement agreement and any other document that evidences the
debt secured by one or more Security Instruments in connection with a Mortgage Loan.

     “Objection” shall have the meaning given that term in Section 3.5(e).

     “Payment Obligation” means all obligations of Recourse Provider under this Agreement to make
payments to Fannie Mae, including but not limited to, payments relating to Established Losses,
Principal Reductions, Delinquency Advances and Servicing Advances, in accordance with the terms of
this Agreement.

     “Person” means an individual, corporation, partnership, association, trust, limited liability
company or any other entity or organization, including a Governmental Body or political subdivision
or an agency or instrumentality thereof.

     “Potential Event of Default” means the occurrence of any event which with the passage of time
or the giving of notice, or both, would give rise to an Event of Default.

     “Principal Reduction” means the aggregate of all amounts paid, other than Delinquency Advances
or regularly scheduled principal payments, to reduce the Unpaid Principal Balance of a Mortgage
Loan and cause a corresponding reduction in Fannie Mae’s obligations under the Credit Enhancement
Agreement with respect to such Mortgage Loan; but only to the extent such principal reduction is
made, or approved in writing, by Fannie Mae.

     “Purchase” means, when used in connection with a Mortgage Loan, defined in clause (i) of
the definition thereof, the purchase of such Mortgage Loan by Fannie Mae by issuance of a
security or the provision of a Credit Enhancement Agreement with

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respect to such Mortgage Loan (if Fannie Mae does not purchase such Mortgage Loan by issuance
of a security in connection with providing such Credit Enhancement Agreement).

     “Release Amount” means, with respect to a Mortgage Loan, the dollar amount specified as such
with respect to that Mortgage Loan in a Mortgage Loan Certificate, which dollar amount may be
changed for any Mortgage Loan in a subsequently delivered Mortgage Loan Certificate.

     “Released” means, when applied to a Mortgage Loan, that (a) the Borrower’s obligations
thereunder are fully paid and finally released, the preference period under applicable federal and
state bankruptcy laws has passed, the related Security Instrument has been indefeasibly released or
fully reconveyed and Fannie Mae’s obligations under the Credit Enhancement Agreement related to
such Mortgage Loan have been fully and indefeasibly released (including without limitation payment
to Fannie Mae of all unreimbursed amounts paid by Fannie Mae under such Credit Enhancement
Agreement), (b) the Mortgage Loan is transferred to another party and Fannie Mae’s obligations under
the Credit Enhancement Agreement related to such Mortgage Loan have been fully and
indefeasibly released (including without limitation payment to Fannie Mae of all
unreimbursed amounts paid by Fannie Mae under such Credit Enhancement Agreement),
(c) the Mortgage Loan is transferred to another party and, even though Fannie Mae’s
obligations under the Credit Agreement related to such Mortgage Loan have not been,
fully released, Fannie Mae consents in its discretion to the release of such Mortgage Loan
from this Agreement, (d) Fannie Mae’s obligations under the Credit Enhancement relate
to such Mortgage Loan have otherwise been fully released or Fannie Mae has consented
in writing to the release of such Mortgage Loan from the Agreement; or (e) the Mortgage
Loan is transferred to or assumed by another party as a consequence of an uncured
Borrower Payment Default or Borrower Performance Default which transfer does not
result in the complete release of Fannie Mae’s obligations under the Credit Enhancement
Agreement with respect to such Mortgage Loan because a Substitute Mortgage Loan or a
new or modified Mortgage Loan has been included as a Mortgage Loan under this
Agreement.

     “Release Date” means the date on and as of which Recourse Provider shall be released from its
Payment Obligations with respect to a particular Mortgage Loan, which date shall be the earliest to
occur of the following:

(a) the date such Mortgage Loan is Released;

(b) the date on which such Mortgage Loan is transferred to another
party as a consequence of an uncured Borrower Payment Default or
Borrower Performance Default which transfer does not result in the
complete release of Fannie Mae’s obligations under the Credit
Enhancement Agreement (or a substitute Credit Enhancement Agreement)
with respect to such Mortgage Loan because a Substitute Mortgage Loan
or a new or modified mortgage loan has been included as a Mortgage
Loan under this Agreement; or

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(c) the
date on which Recourse Provider repurchases such Mortgage Loan pursuant to Section 3.9; or

(d) the date the lien of the Security Instrument with respect to such
Mortgage Loan has been extinguished as a result of a Foreclosure, Fannie
Mae’s obligations under the Credit Enhancement Agreement related to
such Mortgage Loan have been fully and indefeasibly released (including
without limitation payment to Fannie Mae of all unreimbursed amounts
paid by Fannie Mae under such Credit Enhancement Agreement) and the
Established Loss with respect to such Mortgage Loan has been paid.

     “REO” (Real Estate Owned) means any Mortgaged Property, title to which is acquired by or on
behalf of Fannie Mae through Foreclosure.

     “Restructuring” means a forbearance, loan modification, waiver or amendment of any Defaulted
Mortgage Loan, including, without limitation, a restructuring of a Mortgage Loan imposed by, or
otherwise consummated through, a bankruptcy proceeding.

     “Security Instrument” means each deed of trust, deed to secure debt or mortgage, including any
riders thereto, that secures all or any portion of the Note with respect to a Mortgage Loan.

     “Servicer” means the Person servicing the Mortgage Loans and/or Bonds and REO pursuant to the
terms of the Servicing Agreement; provided, however, that the term Servicer shall not refer to
Recourse Provider even if it is servicing the Mortgage Loans and REO under the Servicing Agreement.

     “Servicing Advances” means the payments made in accordance with Section 3.3 for any
Mortgage Loan, including any Mortgage Loan that becomes REO, for (a) all taxes and assessments
against the related Mortgaged Property (but not paid from Borrowers’ escrows), (b) all insurance
premiums for insurance for the related Mortgaged Property to insurance carrier(s) acceptable to
Fannie Mae, in accordance with the DUS Guide (but not paid from Borrowers’ escrows), (c) any
payments necessary to preserve and protect such Mortgaged Property or the related Bonds or the
Credit Enhancement Agreement with respect to the related Bonds, including without limitation, any
fees, costs and expenses required to be paid with respect to the related Bonds, to the extent not
included in the interest rate on the Note, and other items (other than principal and interest) owed
or expended with respect to such Mortgaged Property, (d) any payments necessary to exercise any
legal or equitable remedies (other than Foreclosure) against the Borrower or the Mortgaged Property
(including reasonable attorney, appraisal or other professional fees and expenses), (e) any
Approved Expenses (as defined in the Special Servicing Agreement applicable to the Mortgage Loan or
REO Property), and (f) any costs and expenses, limited as provided below, paid or incurred with
respect to such Mortgage Loan, including any such Mortgage Loan that becomes REO: (i) to commence
and pursue Foreclosure and appointment of a receiver, (ii) to restructure a Mortgage Loan on the
related Mortgage Property and/or to refinance, refund or otherwise restructure any

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Bonds issued with respect to a Mortgage Loan, if such costs are directly related to such
Foreclosure or restructuring of the Mortgage Loan and/or refinancing, refunding or otherwise
restructuring any related Bonds, (iii) to commence and pursue collection under a guaranty or
similar obligation, including exceptions to non-recourse under the Mortgage Loan, under the
documents assigned to or otherwise benefiting Fannie Mae, and (iv) to manage and sell REO.
Servicing Advances shall not include reductions in the principal amount and/or prepayments to be
made with respect to a Mortgage Loan, and are limited to reasonable attorneys’ fees and expenses,
recordation and transfer fees, environmental assessments, appraisal costs (but only if obtained in
connection with bankruptcy proceedings or under the written direction of Fannie Mae), reasonable
sales brokerage fees for the value of the Mortgaged Property and the market and similar costs
necessary to achieve Foreclosure, appointment of a receiver, restructuring or sale of REO, all as
approved by Fannie Mae. In each case, such payments are to be made solely pursuant to Recourse
Provider’s obligations to Fannie Mae under this Agreement and not as surety or guarantor with
respect to the Borrower’s obligations under the Mortgage Loan. Fannie Mae reserves the right not to
allow or include amounts for expenses or costs paid or incurred that exceed reasonable and
customary expenses or costs for the market area in which the Mortgaged Property is located.
Servicing Advances do not include any out-of-pocket costs and expenses for routine servicing
obligations (such as travel or site inspections) for which the Servicer is compensated through the
Servicing Fee or costs, losses or other items that the Servicer or Recourse Provider agrees to hold
Fannie Mae harmless against under representations, warranties or indemnification under this
Agreement, the Servicing Agreement or otherwise or advances made in connection with litigation or
other proceedings that Fannie Mae did not approve or authorize under the terms of this Agreement;
provided, however, that specific travel in connection with the management and disposition of a
Mortgage Loan or an REO requested by Fannie Mae or, if it has Decision Control, Recourse Provider,
other than the initial site inspection of any special servicer after a Special Servicing Activation
Notice (as defined in the Servicing Agreement) with respect to post-default special servicing shall
be included as a reimbursable Servicing Advance. Maintenance of REO is intended to be accomplished
without over-improvement in comparison with similar properties in the same market as the REO
property, and with maximizing the physical and economic occupancy of the REO at or above the
occupancy level of comparable property located in the same market as the REO. Servicing Advances
have to be consistent with the “servicing standard” set forth in and documented as required by the
Servicing Agreement. So long as otherwise not included, Servicing Advances shall include interest
as provided in Section 3.1 and shall be available to pay fees of the Servicer up to eight (8) basis
points per annum.

     “Servicing Agreement” means, with respect to all Mortgage Loans and REO, any agreement
regarding the servicing of the Mortgage Loans and REO, including any sub-servicing agreement,
either (a) as between Fannie Mae and Recourse Provider or a third party designated from time to
time by Fannie Mae as the Servicer of the Mortgage Loans and REO, or (b) as assigned to Fannie Mae,
as each such agreement may be amended, supplemented or otherwise modified from time to time in
accordance with its terms; provided, however, that the Servicing Agreement may be a Fannie Mae
guide or announcement made applicable to the Mortgage Loans and REO by an agreement among Fannie
Mae, Recourse Provider and the Servicer.

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     “Servicing Fee” means the Servicing Fee payable to the Servicer in accordance with the
terms of this Agreement and the Servicing Agreement, including any fee payable to any special
servicer under any Special Servicing Agreement.

     “Single-Purpose” means, with respect to a Person, that such Person at all times since its
formation: (a) has been a duly formed and existing partnership, corporation or limited liability
company, as the case may be; (b) has been duly qualified in each jurisdiction in which such
qualification was at such time necessary for the conduct of its business; (c) has complied with the
provisions of its organizational documents and the laws of its jurisdiction of formation in all
material respects; (d) has observed all customary formalities regarding its existence; (e) has
accurately maintained its financial statements, accounting records and other partnership, corporate
or limited liability company documents separate from those of any other Person subject to
appropriate consolidation (for accounting purposes) with those of other Affiliates in accordance
with GAAP; (f) has not commingled its assets or funds with those of any other Person; (g) has
accurately maintained its own bank accounts, payroll and books and accounts separate from those of
any other Person; (h) has paid its own liabilities from its own separate assets; (i) has identified
itself in all dealings with the public under its own name and as a separate and distinct entity;
(j) has not identified itself as being a division or a part of any other Person; (k) has not
identified any other Person as being a division or a part of such
Person; (l) has been adequately
capitalized in light of its contemplated business operations; (m) has not assumed, guaranteed or
become obligated for the liabilities of any other Person (except in connection with the endorsement
of negotiable instruments in the ordinary course of business) or held out its credit as being
available to satisfy the obligations of any other Person, except as otherwise permitted in this
Agreement and so long as such other Person is not an Affiliate of such Single-Purpose Person; (n)
has not made loans or advances to any other Person; (o) has not entered into and was not a party to
any transaction with any Affiliate of such Person, except in the ordinary course of business and on
terms which are no less favorable to such Person than would be obtained in a comparable
arm’s-length transaction with an unrelated third party; (p) has conducted its own business in its
own name; (q) has paid the salaries of its own employees, if any, and maintained a sufficient
number of employees in light of its contemplated business operations; (r) has allocated fairly and
reasonably .any overhead for shared office space; (s) has used stationery, invoices and checks
separate from those of any other Person; (t) has not pledged its assets for the benefit of any
other entity; (u) has not engaged in a non-exempt prohibited transaction described in Section
406 of the Employee Retirement Income Security Act of 1974, as amended, or Section 4975
of the Internal Revenue Code of 1986, as amended; (v) has not acquired obligations or securities of
its partners or Affiliates; and (w) has corrected any known misunderstanding regarding its separate
identity.

     “Special Servicing Agreement” means, with respect to all Mortgage Loans and REO, any agreement
regarding the special servicing of the Mortgage Loans and REO, either (a) as between Fannie Mae and
Recourse Provider or a third party designated from time to time by Fannie Mae as the special
servicer of the Mortgage Loans and REO, or (b) as assigned to Fannie Mae, as each such agreement
may be amended, supplemented or otherwise modified from time to time in accordance with its terms.

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     “Substitute Mortgage Loan” means a new mortgage loan made to facilitate a Restructuring
or the sale of REO in the event the related Bonds remain outstanding and Fannie Mae’s Credit
Enhancement Agreement with respect to such new Mortgage Loan remains outstanding or a replacement
Credit Enhancement Agreement is provided.

     “Taxability Determination” means, with respect to a series of Bonds, (a) a final judgment or
order of a court of original jurisdiction, a final order of any other court of competent
jurisdiction or a final ruling or decision of the Internal Revenue Service, in any such case to the
effect that the interest on any Bonds of such series (other than interest on Bonds which were
issued as taxable Bonds or interest for any period during which Bonds are held by a “substantial
user” of any facility financed with the proceeds of the Bonds or a “related person,” as such terms
are used Section 147(a) of the Internal Revenue Code of 1986, as amended) is not excludable
for federal income tax purposes from the gross incomes of the recipients thereof subject to federal
income taxes, or (b) the occurrence of an act or event relating to or questioning the exclusion
from gross income for federal income tax purposes of the interest on such Bonds, which (i) with
respect to floating rate Bonds, results in the remarketing agent’s being unable or unwilling to
remarket such Bonds or which results in a determination by the remarketing agent that such Bonds
can only be remarketed at an interest rate comparable to similar taxable obligations, or (ii) with
respect to Bonds which bear interest at a fixed rate, results in such Bonds being unable to be
refunded or remarketed, or which results in a determination that a refunding or a remarketing of
the original Bonds can only occur at an interest rate comparable to similar taxable obligations.
With respect to clause (a) above, a judgment or order of a court or a ruling or decision of
the Internal Revenue Service shall be considered final only if no appeal or action for judicial
review has been filed and the time for filing such appeal or action has expired.

     “Transaction Documents” means this Agreement, the Custodial Agreement, each Servicing
Agreement, each Credit Enhancement Agreement, each Mortgage Loan Certificate, the Mortgage Loan
Documents and the Bond Documents.

     “Unpaid Principal Balance” means, as of the date of determination and with respect to each
Mortgage Loan, the principal amount remaining unpaid under the terms of the applicable Mortgage
Loan Documents; provided, however, in situations were Fannie Mae provides Credit Enhancement on the
Bonds relating to such Mortgage Loan, “Unpaid Principal Balance” shall mean the principal amount
remaining unpaid under the terms of the applicable Mortgage Loan Documents or, if greater, the
outstanding principal balance of such Bonds.

ARTICLE II

FIRST LOSS OBLIGATION; COLLATERALIZATION

	   	  SECTION 2.1 Mortgage Loans Subject to this Agreement.

     A mortgage loan or Bond with respect to which Fannie Mae provides Credit Enhancement
shall become a Mortgage Loan for purposes of this Agreement upon the Recourse Provider’s (a)
delivery to Fannie Mae of a Mortgage Loan Certificate with

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respect to such Mortgage Loan, (b) delivery of Collateral to Custodian, in accordance with the
terms of the Custodial Agreement, in an amount sufficient to cause the Collateral Requirement to be
met as of the Delivery Date, and (c) making of the representations and warranties of Recourse
Provider set forth in Section 4.1. In connection with each Mortgage Loan, MuniMae shall
make the representations and warranties set forth in Section 4.2, including those set forth in
Exhibit B with respect to such Mortgage Loan and shall sign a Mortgage Loan Certificate with
respect to such Mortgage Loan. Notwithstanding anything in this Agreement to the contrary, Fannie
Mae shall be under no obligation to execute a Mortgage Loan Certificate with respect to any
mortgage loan or Bond and shall have the right in its sole discretion to determine whether or not
to accept any mortgage loan or Bond under this Agreement; provided, however, that the Collateral
Requirement for the Mortgage Loans referred to in a Mortgage Loan Certificate and in all Mortgage
Loan Certificates delivered prior to the date thereof shall not increase until such time as
Recourse Provider and MuniMae shall deliver a new Mortgage Loan Certificate to Fannie Mae. Any
errors in or omissions from the applicable Mortgage Loan Certificate shall not diminish in any
respect Recourse Provider’s or MuniMae’s obligations as provided in this Agreement in respect of
such Mortgage Loan.

	 	   	SECTION 2.2 First Loss Obligation; Collateral Requirement.

          (a) Notwithstanding the endorsement of any Note by Recourse
Provider or any other Person “without recourse,” Recourse Provider acknowledges and
agrees that it shall be liable for the payment of all (i) Established Losses pursuant to
Section 2.4, and (ii) Principal Reductions pursuant to Section 2.3, and
Recourse Provider and MuniMae acknowledge and agree that they shall be jointly and severally liable for
the payment of all (i) Delinquency Advances pursuant to Section 3.2, (ii) Servicing
Advances pursuant to Section 3.3, and (iii) other amounts owed with respect to the
Mortgage Loans all as provided under this Agreement, and otherwise shall be bound by
and subject to all the terms and provisions of the Transaction Documents and, subject to
the recourse limitations set forth in
Section 2.3, Section 2.4, Section 3.2 and
Section 3.3,
Fannie Mae shall have the right to exercise any and all of its rights and remedies against
Recourse Provider and MuniMae under the same.

          (b) In order to secure all payment obligations, including the Payment
Obligation of the Recourse Provider, under this Agreement, Recourse Provider and
MuniMae acknowledge and agree that they shall at all times during the term of this
Agreement maintain with Custodian under the Custodial Agreement Acceptable
Collateral in an amount equal to the Collateral Requirement. Notwithstanding such
collateralization, Recourse Provider and MuniMae’s obligations (i) for breaches of their
respective representations and warranties under this Agreement, the Mortgage Loan
Certificates and the Custodial Agreement, (ii) for indemnification under Section 7.1 (a)
and Section 7.1(b), (iii) for the payment of the Servicing Advances and Delinquency
Advances, (iv) for payments under Section 6.1, and (v) for the payment of out-of-pocket
expenses, charges, costs and fees under Section 2.4(b), Section 3.5(g), Section 8.2 and
Section 9.1(b) and (c) shall in each case be fully recourse against Recourse Provider and
MuniMae, as applicable, and not limited to recourse against any particular assets,

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including the Acceptable Collateral, but the Acceptable Collateral shall be available if
Fannie Mae so desires to satisfy the obligations identified in this sentence.

     SECTION 2.3 Principal Reductions.

          The Recourse Provider shall be obligated to pay Principal Reductions in the manner set forth
in this Agreement. To the extent Recourse Provider has Decision Control and no Event of Default or
Potential Event of Default exists, five (5) Business Days after Recourse Provider notifies Fannie
Mae in writing that it desires to make a Principal Reduction, Recourse Provider shall pay such
Principal Reduction or pay such amount from Acceptable Collateral required to be held under the
Custodial Agreement in the manner provided in the Custodial Agreement. To the extent that Principal
Reductions are paid or caused to be paid by Recourse Provider, the Collateral Requirement will be
reduced as provided in the definition of such term. Fannie Mae will accomplish such reduction by
directing Custodian to pay the amount of such Principal Reduction to the party necessary to be paid
in order to accomplish the Principal Reduction. So long as Fannie Mae has Decision Control with
respect to any Mortgage Loan or an Event of Default exists, Fannie Mae shall be entitled to direct
the Custodian to pay from the Acceptable Collateral a Principal Reduction with respect to such
Mortgage Loan or with respect to any Mortgage Loan upon on Event of Default in the event not paid
by the Recourse Provider. Notwithstanding the foregoing, payment of Principal Reductions shall not
exceed, in the aggregate, the Collateral Requirement immediately prior to the date such Principal
Reduction is made.

     SECTION 2.4 Established Losses.

          (a) Recourse Provider shall be obligated to pay all Established Losses,
up to an amount not to exceed in the aggregate the Collateral Requirement. As of the
Release Date for each Mortgage Loan, Fannie Mae shall determine the amount of the
Established Loss with respect to such Mortgage Loan and notify Recourse Provider in
writing of the amount of such Established Loss. Funds in an amount equal to the
Established Loss with respect to such Mortgage Loan, less amounts previously
distributed to pay amounts included in the Established Loss, shall be paid by Recourse
Provider to Fannie Mae or in the event not paid by Recourse Provider will be paid from
the Acceptable Collateral under the terms of the Custodial Agreement. The amount of
Acceptable Collateral required to be held under the Custodial Agreement shall thereupon
be reduced by the amount of such Established Loss and the Collateral Requirement will
be reduced as provided in the definition of such term. Notwithstanding the foregoing,
payment to Fannie Mae for Established Losses shall not exceed, in the aggregate, the
Collateral Requirement immediately prior to the Release Date.

          (b) Recourse Provider shall pay all reasonable out-of-pocket expenses,
charges, costs and fees incurred by Fannie Mae in connection with the review of
documents and other materials and the performance of calculations as necessary to verify
the Established Losses, Estimated Losses and the Collateral Requirement. To the extent
such resources are available to Fannie Mae internally, Fannie Mae will use its reasonable

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          efforts to use such internal resources to perform any calculations necessary to verify
Established Losses, Estimated Losses and the Collateral Requirement.

          (c) If, as of the Release Date for any Mortgage Loan, the aggregate amount of the
Delinquency Advances and Servicing Advances paid or reimbursed by MuniMae or Recourse Provider with
respect to such Mortgage Loan exceeds the lesser of (x) the Established Loss with respect to such
Mortgage Loan and (y) the Collateral Requirement as of such date, Fannie Mae or Custodian shall
make a reimbursement payment to the Recourse Provider in the amount of such excess within 10
Business Days after the payment of the Established Loss with respect to such Mortgage Loan.
Notwithstanding the above, Fannie Mae shall be under no obligation to make a reimbursement payment
for any Delinquency Advances or Servicing Advances in the event that an Event of Default, including
a nonpayment of an Established Loss or Principal Reduction, exists. Upon recovering a reimbursement
payment, Recourse Provider shall have the responsibility to allocate the payment between MuniMae
and Recourse Provider in a fair and equitable manner based on the amount paid by each such party
with respect to such Mortgage Loan and Fannie Mae shall be relieved of any and all liability to
further reimburse either MuniMae or Recourse Provider for payments made by such parties with
respect to such Mortgage Loan.

     SECTION 2.5 Releases Without Established Losses.

          In the event that as of the Release Date for a Mortgage Loan there are no Established
Losses and no Delinquency Advances or Servicing Advances to be reimbursed with respect to such
Mortgage Loan and no Event of Default or Potential Event of Default exists, then the amount of
Acceptable Collateral required to be held under the Custodial Agreement shall be reduced by the
Release Amount of such Mortgage Loan as provided in the Custodial Agreement and the Collateral
Requirement will be reduced as provided in the definition of such term.

     SECTION 2.6 Subsequent Recoupment.

          If Servicer or Fannie Mae receives a subsequent payment in connection with any
Established Loss or Principal Reduction, or related to any payment obligation of Recourse Provider
or MuniMae theretofore paid, then Servicer or Fannie Mae, as the case may be, shall, so long as no
Event of Default exists and no Borrower Default exists with respect to the Mortgage Loan to which
such subsequent payment relates, pay the amount of such subsequent payment to the party that made
such payment, otherwise such amount shall be deposited into the Collateral Account, provided,
however, that if such payment is received in connection with (i) a payment under the Insurance
Policy, such amount may, at the discretion of Fannie Mae, be returned to the issuer of the
Insurance Policy so long as the amount covered by the Insurance Policy is increased accordingly, or
(ii) funds received from Collateral other than the Insurance Policy, the Servicer or Fannie Mae, as
the case may be, shall deliver to the Custodian for deposit in the Collateral Account the amount of
such subsequent payment; provided, however, that if applicable law otherwise requires the money to
be held or applied in a different manner, then such money will be held as required by such
applicable law.

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     SECTION 2.7 Bond Fund Initial Funding Requirements.

          MuniMae has agreed to provide to Fannie Mae a wire transfer of immediately available funds, on
or prior to the date such funds are needed to fund the respective Bond Fund Initial Funding
Requirements for The Industrial Development Authority of Kansas City, Missouri, Multifamily Housing
Revenue Refunding Bonds (Locarno Apartments Project), Series 1996A (the “Locarno Bonds”), and The
Industrial Development Authority of the City of Independence, Missouri, Multifamily Housing Revenue
Refunding Bonds (Independence Ridge Apartments Project), Series 1996A (the “Independence Bonds”),
the aggregate amount of $29,000. Fannie Mae shall, subsequent to the receipt of such funds from
MuniMae, remit from its own funds to Boatmen’s Trust Company in its separate capacities as Trustee
for the Locarno Bonds and the Independence Bonds, the respective amounts of $14,000 and $15,000 to
fund the Bond Fund Initial Funding Requirements for the Locarno Bonds and the Independence Bonds on
the date it is requested by MuniMae to make such funding and is provided with wiring instructions.
Fannie Mae shall be obligated to make such payment only to the extent it received the equivalent
amount from MuniMae. In no event shall Fannie Mae have any obligation to fund any shortfall in
either Bond Fund Initial Funding Requirement. Fannie Mae further agrees, pursuant to Section
6.13(a) of the respective Indentures for the Locarno Bonds and the Independence Bonds, after receipt
of MuniMae’s written request to request reimbursement of the Bond Fund Initial Funding
Requirements, and, to the extent Fannie Mae is otherwise reimbursed pursuant to such Section 6.13
for all other amounts owing thereto, Fannie Mae shall remit to MuniMae upon receipt the amounts
received as reimbursement for payment of the Bond Fund Initial Funding Requirements. As of the date
of this Agreement, the requirements of this Section 2.7 have been satisfied in full.

ARTICLE III

SERVICING OF MORTGAGE LOANS; ADVANCES ...

     SECTION 3.1 Servicing.

          The Mortgage Loans and REO will be serviced by Recourse Provider or by the Servicer in
accordance with the terms and provisions set forth in the Servicing Agreement. All payments of
Delinquency Advances and Servicing Advances required to be made by Recourse Provider or MuniMae
with respect to a Mortgage Loan under this Agreement shall be made through the Servicer unless
Recourse Provider is then acting as servicer under the Servicing Agreement, then through the
Recourse Provider. To the extent that any Delinquency Advance or Servicing Advance is made by the
Servicer from its own funds in any month, interest shall accrue on the amount of such Delinquency
Advance or Servicing Advance at a rate equal to the rate specified in the Servicing Agreement, but
in no event greater than the Federal Funds Effective Rate plus two percent (2%), until the Servicer
is reimbursed in full by Recourse Provider or MuniMae. The amount of such interest paid to the
Servicer calculated at a rate equal to the Federal Funds Effective Rate, but no greater, shall be
deemed to be a part of the Delinquency

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Advance or Servicing Advance, as applicable. Notwithstanding the fact that Recourse
Provider and MuniMae are only entitled to include interest at the Federal Funds Effective Rate in
Delinquency Advances and Servicing Advances, interest shall accrue to the Servicer until it is
fully reimbursed for all Delinquency Advances and Servicing Advances made with its own funds at the
rate specified in the Servicing Agreement, but in no event greater than the Federal Funds Effective
Rate, plus 2%.

     SECTION
3.2 Delinquency Advances.

          Recourse Provider and MuniMae shall each jointly and severally be obligated to make
Delinquency Advances (or reimburse Servicer for Delinquency Advances) for each Mortgage Loan such
that the Credit Enhancement Agreement related to such Mortgage Loan will not be called upon for
payment by Fannie Mae (other than, in the case of a Credit Enhancement Agreement in the form of a
mortgage-backed security, passing through the amount advanced by Recourse Provider). On and after
the earlier of the Expiry Date or the Release Date with respect to a Mortgage Loan, neither
Recourse Provider nor MuniMae shall be obligated to make any future Delinquency Advances for that
Mortgage Loan. Recourse Provider and MuniMae each acknowledge and agree that they shall not be
entitled to make Delinquency Advances directly from any Collateral held in the Collateral Account.

     SECTION 3.3 Servicing Advances.

          Recourse Provider and MuniMae shall each jointly and severally be obligated to make Servicing
Advances (or reimburse Servicer for Servicing Advances) for each Mortgage Loan when any such
amounts are due (and prior to the imposition of any penalties or charges). Subject to the next
sentence, after a Date of Borrower Default with respect to any Mortgage Loan, Recourse Provider and
MuniMae shall remain obligated to make Servicing Advances when any such amounts are due (and prior
to the imposition of any penalties or charges). On and after the earlier of the Expiry Date or the
Release Date with respect to a Mortgage Loan, neither Recourse Provider nor MuniMae shall be
obligated to make any future Servicing Advances for that Mortgage Loan. Recourse Provider and
MuniMae each acknowledge and agree that they shall not be entitled to make Servicing Advances
directly from any Collateral held in the Collateral Account.

     SECTION 3.4 Unavailability of Net Operating Income.

          Recourse Provider’s and MuniMae’s obligation to make Delinquency Advances and Servicing
Advances shall not be reduced by net operating income, amounts held in any replacement
reserve account or other amounts with respect to a Mortgaged Property that, under the
provisions of applicable state law, are not then available for use by Fannie Mae.

     SECTION 3.5 Decision Control.

          (a) Subject to the provisions of this Section 3.5, Recourse Provider shall be
entitled to Decision Control with respect to any Defaulted Mortgage Loan;

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provided that all of the following conditions are met with respect to such
Defaulted Mortgage Loan:

(i) Recourse Provider shall deliver and submit its determination of
Estimated Losses within 10 days of the Date of Borrower Default with
respect to such Mortgage Loan.

(ii) if Fannie Mae determines that the Estimated Losses, as
determined by Fannie Mae based upon Recourse Provider’s determination or
otherwise pursuant to this Agreement, with respect to all Mortgage Loans
for which a Borrower Default has occurred and an Established Loss has not
been determined and paid, exceed the Collateral Requirement, then, fifteen
(15) days following the date Fannie Mae determines Estimated Losses and
provides written notice to Recourse Provider of Estimated Losses, Recourse
Provider shall (1) increase the Collateral Requirement by an amount equal
to such deficiency between the Estimated Losses and the Collateral
Requirement, (2) deliver to Custodian pursuant to the terms of the
Custodial Agreement Acceptable Collateral in an amount sufficient to cause
the Acceptable Collateral held under the Custodial Agreement to equal such
increased Collateral Requirement, and (3) execute and deliver a revised
Mortgage Loan Certificate to Fannie Mae indicating a Collateral Requirement
equal to such increased Collateral Requirement.

(iii) no Event of Default or Potential Event of Default exists; and

(iv) Recourse Provider shall not have delivered to Fannie Mae a
notice (a “Decision Control Notice”) in the form of
Exhibit C to this
Agreement relinquishing Decision Control with respect to all the Mortgage
Loans.

          If
all of the conditions set forth in subsections (a)(i),
(a)(ii), (a)(iii) and (a)(iv) of this Section 3.5 are not satisfied on the applicable dates or the
Recourse Provider has delivered a Decision Control Notice, then Fannie Mae shall have Decision
Control with respect to the applicable Defaulted Mortgage Loan. So long as Recourse Provider
retains Decision Control with respect to any Defaulted Mortgage Loan, Recourse Provider shall
calculate Estimated Losses on the dates such Estimated Losses are required to be calculated under
Section 5.2 and deliver and submit to Fannie Mae its determination of Estimated Losses within 10
days of such calculation date. If Fannie Mae determines that Estimated Losses, as determined by
Fannie Mae based on Recourse Provider’s determination or otherwise pursuant to this Agreement,
exceed the Collateral Requirement then Recourse Provider shall not be entitled to retain Decision
Control with respect to any Defaulted Mortgage Loan unless fifteen (15) days following the date
Fannie Mae determines Estimated Loss and provides written notice to Recourse Provider, Recourse
Provider (1) increases the Collateral Requirement by an amount equal to such

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deficiency between Estimated Losses and the Collateral Requirement, (2) delivers to
Custodian pursuant to the terms of the Custodial Agreement Acceptable Collateral in an amount
sufficient to cause the Acceptable Collateral held under the Custodial Agreement to equal such
Collateral Requirement, and (3) executes and delivers a revised Mortgage Loan Certificate to Fannie
Mae indicating a Collateral Requirement equal to such increased Collateral Requirement.

          To the extent Fannie Mae has Decision Control as a result of Recourse Provider providing a
Decision Control Notice or otherwise as provided herein, Fannie Mae shall be entitled to take all
action relating to such Mortgage Loan, including but not limited to requiring MuniMae and Recourse
Provider to pay or use amounts available from Acceptable Collateral to pay Delinquency Advances,
Servicing Advances, Established Losses and Principal Reductions and to pay costs, expenses and
other obligations of Recourse Provider and MuniMae to the extent provided in this Agreement.
Notwithstanding anything herein to the contrary, upon receipt of a Decision Control Notice, Fannie
Mae shall be entitled to Decision Control with respect to all Mortgage Loans including Mortgage
Loans with respect to which Recourse Provider had Decision Control prior to the giving of the
Decision Control Notice.

          Upon a determination that Recourse Provider has Decision Control with respect to a Defaulted
Mortgage Loan, Fannie Mae shall notify the special servicer for such Mortgage Loan that Recourse
Provider is the “Approval Party” for such Mortgage Loan under the Special Servicing Agreement
applicable to such Mortgage Loan.

          (b) Regardless of whether Recourse Provider or Fannie Mae has Decision Control with
respect to a Defaulted Mortgage Loan, Fannie Mae shall have no obligation to agree to any course of
action proposed by Recourse Provider nor shall Fannie Mae execute and deliver any Mortgage Loan
Documents or any other documents (regardless of whether Fannie Mae has agreed to a proposed course
of action for such Defaulted Mortgage Loan) and Recourse Provider shall not take any proposed
course of action if, in Fannie Mae’s sole judgment, the proposed course of action, or the terms of
the proposed Mortgage Loan Documents, as applicable, may reasonably be expected to:

(i) affect the tax-exempt status of the Bonds related to such
Mortgaged Property or any certificate representing an interest in a trust
to which the Bonds have been transferred, based upon the advice of
nationally recognized bond counsel selected by Fannie Mae, or materially
affect the marketability of the applicable Bonds, based upon the advice of
an investment banking entity with substantial experience in the public
finance area selected by Fannie Mae;

(ii) result in the refunding, reissuance or acceleration of any
Bonds;

(iii) result in any forbearance, amendment, modification or waiver
under any provision of the Bond Documents which requires

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Fannie Mae’s consent, or interfere with Fannie Mae’s rights to provide consents and/or
approvals, give directions or take actions (other than requesting mandatory redemption or
acceleration of the applicable Bonds) to the extent Fannie Mae is entitled to exercise such consent
or approval rights, give such directions or take such actions in accordance with the terms of the
related Credit Enhancement Agreement and Bond Documents and such consent, approval, direction or
action is in connection with (1) an event of default under any such document, (2) the maintenance
of the tax-exempt status of the related Bonds, (3) the purchase of a substitute mortgage-backed
security in lieu of redemption of Bonds or any substitution of a mortgage-backed security, (4) the
redemption of the related Bonds without prepayment of the related Credit Enhancement Agreement, (5)
the removal or replacement of parties to the related Bond Documents, including without limitation,
any trustee, remarketing agent or tender agent, or (6) any amendment to the related Bond Documents
to modify the definition of permitted or eligible investments or to modify the flow of funds;

(iv) increase or otherwise detrimentally affect the obligations of Fannie Mae under any Credit
Enhancement Agreement or any other document under which Fannie Mae may be obligated in connection
with the related Bonds;

(v) constitute a Potential Event of Default or an Event of Default;

(vi) cause a reduction of the principal or other amounts due under a Mortgage Loan
(other than Principal Reductions) or adversely affect the enforceability of the Mortgage Loan
Documents (as the related Mortgage Loan is proposed to be modified) or the rights and
remedies available against the Borrower thereunder;

(vii) result in Fannie Mae (or any assignee or nominee of Fannie Mae) taking title (by
Foreclosure or otherwise) to a property which Fannie Mae reasonably believes may not be in
compliance with any federal, state or local law, statute or ordinance, rule or regulation, decree,
order and/or permit relating to Environmental Matters; or

(viii) result in Fannie Mae being subject to claims, counterclaims or proceedings by any Person
that, in Fannie Mae’s reasonable judgment, may have a material adverse impact on Fannie Mae, its
business, operations or reputation (by way of example and not limitation, a Borrower’s general
denial or questioning of amounts

26

 

owed or paid or the timing of payments under a Mortgage Loan or any
other mortgage loan would not alone preclude Recourse Provider’s exercising
Decision Control, but a class action or a discrimination claim or
counterclaim or a proceeding before the Department of Housing and Urban
Development or the Department of Justice would be handled solely by Fannie
Mae).

          Fannie Mae shall also have the right to disapprove any Mortgage Loan Documents or other
documents submitted for Fannie Mae approval and execution if the terms of such documents are
inconsistent in any material respect with the terms set forth in the proposed course of action
submitted to Fannie Mae for such Mortgage Loan pursuant to subsection (d) below.

          (c) Notwithstanding anything in this Agreement to the contrary, in no
event shall Recourse Provider having Decision Control preclude Fannie Mae from (i) if
the related Credit Enhancement Agreement is a collateral agreement, accelerating a
Mortgage Loan under the terms and conditions of the related Mortgage Loan Documents
or accelerating such related Credit Enhancement Agreement under the terms and
conditions thereof in the event that Fannie Mae has made a payment with respect to such
related Credit Enhancement Agreement which payment has not been reimbursed to
Fannie Mae within the time period required by the terms of such Credit Enhancement
Agreement or any related reimbursement agreement, (ii) if the related Credit
Enhancement Agreement is a mortgage-backed security, accelerating the related
Mortgage Loan under the terms and conditions of the related Mortgage Loan Documents
and prepaying the mortgage-backed security if required by the terms of such mortgage-backed security or the indenture pursuant to which the mortgage-backed security was
issued, (iii) taking any action or refraining from taking any action necessary to avoid a
default by Fannie Mae under any Credit Enhancement Agreement, or (iv) providing
consents and/or approvals, giving directions or taking actions (other than requesting
mandatory redemption or acceleration of the applicable Bonds) to the extent Fannie Mae
is entitled to exercise such consent or approval rights, give such directions or take such
actions in accordance with the terms of the related Credit Enhancement Agreement and
Bond Documents and such consent, approval, direction or action is in connection with (1)
an event of default under any such document, (2) the maintenance of the tax-exempt
status of the related Bonds, (3) the purchase of a substitute mortgage-backed security in
lieu of redemption of Bonds or any substitution of a mortgage-backed security or other
Credit Enhancement Agreement, (4) the redemption of the related Bonds without
prepayment of the related Credit Enhancement Agreement, (5) the removal or
replacement of parties to the related Bond Documents, including without limitation, any
trustee, remarketing agent or tender agent, or (6) any amendment to the related Bond
Documents to modify the definition of permitted or eligible investments or to modify the
flow of funds.

          (d) At any time when Recourse Provider has Decision Control with
respect to a Defaulted Mortgage Loan, Recourse Provider shall propose an initial course
of action with respect to such Defaulted Mortgage Loan and deliver written notification
of its proposal to Fannie Mae within ninety (90) days of the date on which the Servicer

27

 

gives notice to Recourse Provider that the Mortgage Loan has become a Defaulted
Mortgage Loan; provided, however, that such notice shall be presumed given upon the date the
Mortgage Loan became a Defaulted Mortgage Loan if the Servicer is an Affiliate of Recourse
Provider. Such proposal shall be consistent in all material respects with the terms of this
Agreement and of the Servicing Agreement. In addition, in making a proposal, Recourse Provider
shall consider whether any of the circumstances described in subsection (b) above may
result from implementation of the proposal, and shall specifically notify Fannie Mae in writing of
any possible violation of the circumstances set forth in this Agreement or the Servicing Agreement
of which Recourse Provider has knowledge; provided, however, that Recourse Provider shall be duly
diligent in investigating such matters. If Recourse Provider fails to submit an initial proposed
course of action to Fannie Mae within the ninety (90) day-period referenced above, Fannie Mae shall
have Decision Control with respect to such Mortgage Loan regardless of whether or not the tests set
forth in subsection (a) above were met, unless Fannie Mae and-Recourse Provider shall
otherwise mutually agree in writing.

          During the period in which Recourse Provider and Fannie Mae are evaluating the course of
action being proposed with respect to a Defaulted Mortgage Loan, if Recourse Provider believes in
its reasonable judgment that any action to be taken with respect to such Defaulted Mortgage Loan
will either (i) result in a violation of the MBS Requirements set forth in the related Servicing
Agreement, or (ii) result in any of the events described in Subsection (b) above, Recourse
Provider shall not take or direct the Servicer to take any action without the prior written consent
of Fannie Mae.

          (e) Fannie Mae shall notify Recourse Provider in writing if it believes that any
proposal made by Recourse Provider with respect to a Defaulted Mortgage Loan may reasonably be
expected to result in any of the events described in subsection (b) above or to conflict
with this Agreement (an “Objection”) within ten (10) Business Days of receipt of Recourse
Provider’s written proposal. Fannie Mae’s failure to deliver such written notice of Objection
within such ten (10) Business Day period shall be deemed to be agreement with Recourse Provider’s
written proposal.

          In the event Fannie Mae delivers a notice of Objection to a course of action proposed by
Recourse Provider, Recourse Provider and Fannie Mae shall consult with each other and attempt to
reach agreement as to the course of action to be taken. Within ten (10) Business Days of Recourse
Provider’s receipt of Fannie Mae’s notice of Objection, Recourse Provider shall submit a revised
proposal with respect to the course of action to be taken, which proposal shall be consistent in
all material respects with the terms of this Agreement and of the Servicing Agreement and shall
address the bases for Fannie Mae’s Objection. If Recourse Provider fails to submit a revised
proposal within said ten (10) Business Day period or if Fannie Mae delivers a notice of Objection
to such revised proposal, Fannie Mae shall have Decision Control with respect to the Mortgage Loan
in question, unless Fannie Mae and Recourse Provider shall otherwise mutually agree in writing.
Fannie Mae shall agree or object to such revised proposal within ten (10) Business Days of its
receipt thereof by the delivery of written notice to Recourse Provider, subject to the terms of
this Section 3.5. Fannie Mae’s failure to deliver such

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written notice within such ten (10) Business Day period shall not be deemed to
constitute agreement with such revised proposal.

          (f) Notwithstanding anything to the contrary contained in this
Agreement, no later than the date which is four (4) months prior to the Expiry Date for
any Mortgage Loan, either (i) such Mortgage Loan shall have been Released, or (ii)
Recourse Provider shall have made a written proposal to Fannie Mae, demonstrating to
the reasonable satisfaction of Fannie Mae that either (1) the Credit Enhancement
Agreement with respect to such Mortgage Loan shall be fully and indefeasibly released
by such Expiry Date, or (2) the Recourse Provider is requesting that the Expiry Date be
extended and has provided assurances to Fannie Mae that the payment of the Fannie Mae
Fee and the Servicing Fee with respect to such Mortgage Loan shall be guaranteed or
otherwise provided for during any agreed upon period past such Expiry Date. Fannie
Mae shall respond to any written proposal made by Recourse Provider pursuant to this
subsection (f) within (10) Business Days of receipt thereof and if Fannie Mae does not
accept such proposal, its response shall set forth the reasons therefor. If Fannie Mae does
not accept such proposal, Recourse Provider and Fannie Mae shall consult with each
other and attempt to reach agreement as to the course of action to be taken by Recourse
Provider in order to meet Fannie Mae’s objections. However, if Recourse Provider has
not made any proposal or has not responded or Fannie Mae is not reasonably satisfied by
Recourse Provider’s proposal by the date which is three (3) months prior to the Expiry
Date, Fannie Mae shall have Decision Control with respect to the Mortgage Loan in
question.

          (g) Recourse Provider shall pay all reasonable out-of-pocket expenses,
charges, costs and fees incurred by Fannie Mae in connection with (i) the determination
of which party has Decision Control with respect to any Mortgage Loan, and (ii) the
evaluation of a proposed course of action submitted pursuant to this Section 3.5 with
respect to a Defaulted Mortgage Loan and the review of any mortgage loan or other
documents submitted to Fannie Mae for approval in accordance with the terms of this
Agreement, including the review of any proposed Mortgage Loan Certificate and the
mortgage loans described therein, it being acknowledged that such costs may include the
fees of bond counsel and other counsel to evaluate the effect of any proposal or existing
circumstance. Notwithstanding the foregoing, Fannie Mae agrees that for each Defaulted
Mortgage Loan, it will consult with Recourse Provider and provide Recourse Provider an
estimate of any such out-of-pocket expenses, charges, costs and fees incurred by Fannie
Mae in connection with such Defaulted Mortgage Loan, within a reasonable period of
time after such out-of-pocket expenses, charges, costs and fees equal $7,500. It is
understood that upon a receipt of a Decision Control Notice by Fannie Mae, Recourse
Provider shall not be obligated for any expenses, charges, costs and fees pursuant to this
subsection (g) incurred after receipt of such Decision Control Notice.

     SECTION 3.6 Implementation of Course of Action.

          If
it is determined in accordance with the terms of Section 3.5 that Recourse Provider has
Decision Control with respect to a Defaulted Mortgage Loan and Fannie Mae has not objected (or has
failed to respond within the time limit specified in

29

 

the first paragraph of
Section 3.5(e)) to the course of action proposed by Recourse Provider, then
Recourse Provider or, at the direction of Recourse Provider, the Servicer (if there is a third
party Servicer), shall pursue the chosen course of action in compliance with the terms and
conditions of the Servicing Agreement. If it has been determined that Fannie Mae has Decision
Control with respect to a Defaulted Mortgage Loan or in the event Recourse Provider has sent a
Decision Control Notice pursuant to Section 3.5, Fannie Mae shall implement or direct the
Servicer to implement the course of action chosen by Fannie Mae in its discretion. Fannie Mae shall
provide notice to Recourse Provider of such course of action provided that the failure to provide
such notice shall not affect any of Recourse Provider’s obligations or any of Fannie Mae’s rights
under this Agreement.

     SECTION 3.7 Restructurings and Foreclosure.

          Subject to the terms of this Agreement and the Servicing Agreement, including, without
limitation, those provisions of this Agreement relating to Decision Control, Recourse Provider or
the Servicer (if there is a third party Servicer) shall take all necessary action with respect to
Defaulted Mortgage Loans, including, without limitation, negotiating Restructurings and instituting
and completing Foreclosure. Notwithstanding the foregoing, if the Credit Enhancement Agreement with
respect to any Mortgage Loan is a mortgage-backed security issued by Fannie Mae, such Mortgage Loan
shall not be Restructured unless it is first Released. Each Mortgaged Property that is subject to
Foreclosure may become REO, and Fannie Mae and/or Recourse Provider will take action to dispose of
such REO consistent with the terms of this Agreement and the Servicing Agreement.

     SECTION 3.8 Substitute Mortgage Loans.

          Upon satisfaction of all conditions to being a Mortgage Loan under this Agreement, including
execution of a Mortgage Loan Certificate by Fannie Mae, any Substitute Mortgage Loan will be
included within the term Mortgage Loans for all purposes of this Agreement.

     SECTION 3.9 Release of Mortgage Loans.

          (a) Recourse Provider shall have the right to cause the release of or to purchase, in
whole but not in part, any Mortgage Loan following the first uncured Borrower Payment Default,
provided that, (i) to the extent that any Mortgage Loan is cross-defaulted and/or
cross-collateralized with any other Mortgage Loan, unless otherwise provided in the Mortgage Loan
Certificate, neither of such Mortgage Loans shall be released unless the other Mortgage Loan is
also released and (ii) in connection with any Mortgage Loan that is a mortgage-backed security
issued by Fannie Mae, unless otherwise agreed to by Fannie Mae, at least one hundred twenty (120)
days have elapsed since the date of the Borrower Payment Default under such Mortgage Loan. In
addition, upon 30 days written notice, Fannie Mae may require MuniMae to cause the release of or to
purchase, in whole but not in part, any Mortgage Loan following an Event of Default caused by a
breach of the representations and warranties made by MuniMae in Exhibit B

30

 

to this Agreement with respect to such Mortgage Loan. In order to accomplish such release or
purchase, Recourse Provider or MuniMae, as applicable, shall defease or otherwise retire all of the
related Bonds or cause all of Fannie Mae’s obligations under the related Credit Enhancement
Agreement to be fully and indefeasibly released and, in connection with the three Mortgage Loans
Purchased by Fannie Mae in accordance with the Recourse Agreement (as defined in paragraph A of the
Recitals), shall pay to Fannie Mae the amount of any prepayment premium, calculated using the
applicable non default rate of interest on the related Note, that would be payable by the related
Borrower if such Mortgage Loan were prepaid on such date plus any other fees or interest on the
related Bonds until Fannie Mae’s obligations under the related Credit Enhancement Agreement are
fully and indefeasibly released. Recourse Provider or MuniMae, as applicable, shall also reimburse
Fannie Mae for all amounts paid by Fannie Mae with respect to such Mortgage Loan or the related
Credit Enhancement Agreement, together with interest thereon at an interest rate of the Federal
Funds Effective accruing from the date on which Fannie Mae makes a payment with respect to any
Mortgage Loan or related Credit Enhancement Agreement through the date of reimbursement.
Notwithstanding the foregoing, if the Credit Enhancement Agreement with respect to any Mortgage
Loan Purchased by Fannie Mae is a mortgage-backed security issued by Fannie Mae, the purchase price
for such Mortgage Loan shall be equal to (a) the Unpaid Principal Balance of such Mortgage Loan as
of the date of repurchase, plus (b) the amount of any accrued but unpaid interest on the related
Note until the last day of the month during which the repurchase is made and all other sums (except
late charges and default interest) then due under such Mortgage Loan, plus (c) the amount of any
prepayment premium, calculated using the applicable non-default rate of interest on the related
Note, that would be payable by the related Borrower if such Mortgage Loan were prepaid on such
date, plus (d) any other fees or interest on the related Bonds until Fannie Mae’s obligations under
the related Credit Enhancement Agreement are fully and indefeasibly released.

          (b) MuniMae and/or Recourse Provider may not voluntarily release or
purchase any Mortgage Loan except in the event that the long term debt rating of Fannie
Mae, after giving effect to any explicit or implied Federal guaranty, is below A- by
Standard & Poors Corporation (or its successor) or A3 by Moody’s Investers Service (or
its successor). Notwithstanding anything herein to the contrary, to the extent a Mortgage
Loan is released or reduced other than (i) pursuant to Section 3.9(a) above, (ii) in
connection with a condemnation or casualty loss, (iii) as a result of scheduled
amortization, (iv) pursuant to the first sentence of this Section 3.9(c) or (v) in connection
with a determination of an Established Loss, the Recourse Provider and MuniMae jointly
and severally agree to pay the Termination Fee set forth in the Mortgage Loan Certificate
with respect to such Mortgage Loan.

          (c) In order to effect any release or purchase of a Mortgage Loan,
Recourse Provider must make arrangements satisfactory to Fannie Mae to have the Credit
Enhancement Agreement with respect to such Mortgage Loan fully and indefeasibly
released, and must reimburse Fannie Mae for all amounts paid by Fannie Mae with
respect to such Mortgage Loan or the related Bonds or Credit Enhancement Agreement.
Any Established Losses or Principal Reductions with respect to any repurchased and
released Mortgage Loan shall be settled as provided in Section 2.4 or Section
2.3, as

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applicable. Nothing in this Agreement or the other Transaction Documents shall be construed to
prohibit Recourse Provider from purchasing the related Bonds in connection with releasing or
purchasing a Mortgage Loan.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

     SECTION 4.1 Representations and Warranties of Recourse Provider.

          Recourse Provider represents and warrants to Fannie Mae on the date of execution by
Recourse Provider of this Agreement and on each Delivery Date that:

          (a) Organization and Good Standing. Recourse Provider is a Single
Purpose limited liability company of the type set forth in the first paragraph of this
Agreement duly organized, validly existing and in good standing under the laws of its
state of its formation.

          (b) No Violation. Neither the execution and delivery by Recourse
Provider of the Transaction Documents to which it is a party, nor the consummation by
Recourse Provider of the transactions contemplated in such Transaction Documents, will
conflict with or result in a breach or violation of, or constitute a default (or an event
which would, with notice or the lapse of time, or both, would constitute a default) under,
the organizational documents of Recourse Provider or any of the provisions of any
applicable law, rule, regulation, judgment, decree, demand or order (of any court or
Governmental Body) binding on Recourse Provider or its properties, or any of the
provisions of any indenture, mortgage, contract, instrument or other document to which
Recourse Provider is a party or by which it is bound, or result in the creation or
imposition of any lien, charge or encumbrance upon any of its property pursuant to the
terms of any such indenture, mortgage, contract, instrument or other document. Recourse
Provider is not otherwise in violation of any law, rule, regulation, judgment, decree,
demand or order (of any court or Governmental Body), which violation, in Recourse
Provider’s good faith and reasonable judgment, is likely to affect materially and
adversely either the ability of Recourse Provider to perform its obligations under the
Transaction Documents to which it is a party or the financial condition of Recourse
Provider.

          (c) Authorization and Enforceability. The execution and delivery
by Recourse Provider of the Transaction Documents to which it is a party, the
consummation of the transactions contemplated by such Transaction Documents and the
performance and compliance by Recourse Provider with the terms of such Transaction
Documents are within the power of Recourse Provider and have been duly authorized by
all necessary action on the part of Recourse Provider. All organizational resolutions and
consents necessary for Recourse Provider to enter into and consummate all transactions
contemplated by the Transaction Documents have been obtained. The Transaction
Documents to which Recourse Provider is a party have been duly executed and delivered
by Recourse Provider and constitute the legal, valid and binding obligation of Recourse
Provider enforceable against Recourse Provider in accordance with its terms, subject to

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any applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general
applicability relating to or affecting creditor’s rights from time to time in effect and to the
exercise of judicial discretion in accordance with general principles of equity, whether applied by
a court of law or a court of equity. Recourse Provider has not failed to obtain any consent,
approval, authorization or order of, and has not failed to cause any registration or qualification
with, any court or Governmental Body having jurisdiction over Recourse Provider, which consent,
approval, authorization, order, registration or qualification is required for, and the absence of
which would materially and adversely affect, the legal and valid execution, delivery and
performance of the Transaction Documents to which Recourse Provider is a party.

          (d) Approvals and Permits. Recourse Provider possesses such
certificates, authorizations, licenses and permits issued by the appropriate Governmental
Bodies necessary to conduct the business now operated by it and Recourse Provider has
not received any notice of proceedings relating to the revocation or modification of any
such certificate, authorization, license or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would materially and adversely
affect the conduct of the business, operations, financial condition or income of Recourse
Provider and its Affiliates considered as one enterprise.

          (e) No Litigation and Adverse Conditions. No litigation is pending
or, to the best of Recourse Provider’s knowledge, threatened against Recourse Provider
which, if determined adversely to Recourse Provider, would prohibit Recourse Provider
from entering into the Transaction Documents to which it is a party or, in Recourse
Provider’s good faith and reasonable judgment, is likely to materially and adversely
affect either the ability of Recourse Provider to perform its obligations under the
Transaction Documents or the financial condition of Recourse Provider. Recourse
Provider has no knowledge of any recent adverse financial condition or event with
respect to itself that, in Recourse Provider’s good faith and reasonable judgment, is likely
to materially and adversely affect its ability to perform its obligations under the
Transaction Documents.

          (f) Employment Practices. The employment practices, policies and
programs of Recourse Provider comply with the requirements of Executive Order 11246,
to the extent applicable to Recourse Provider, as it relates to equal employment
opportunity and non-discrimination practices.

          (g) Recourse Provider Information. Recourse Provider understands,
agrees and acknowledges that the information Recourse Provider is proving Fannie Mae
is being provided by Recourse Provider in order to induce Fannie Mae to undertake
certain transactions and therefore Fannie Mae is relying upon the accuracy and
completeness of the Recourse Provider information. Recourse Provider represents and
warrants that such information is accurate and complete in all material respects.

          (h) Mortgage Loans. Recourse Provider makes each of the representations and warranties
set forth in Exhibit B to this Agreement to Fannie Mae with respect to each Mortgage Loan
on the Delivery Date of such Mortgage Loan.

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          (i) Acts of Recourse Provider with Respect to Mortgage Loans.
Recourse Provider represents and warrants to Fannie Mae that, as of the date of this Agreement and
as of the Delivery Date for each Mortgage Loan, no acts, conduct or omissions of any Person have
occurred in respect of the Mortgage Loans that will subject Fannie Mae to any claims, suits,
actions, judgments or liabilities of any nature whatsoever with respect to the Mortgage Loans.

     SECTION 4.2 Representations and Warranties of MuniMae.

          MuniMae represents and warrants to Fannie Mae on the date of execution by MuniMae of this
Agreement and on each Delivery Date that:

          (a) Organization and Good Standing. MuniMae is a limited liability
company duly organized, validly existing and in good standing under the laws of its state
of organization.

          (b) No Violation. Neither the execution and delivery by MuniMae of
the Transaction Documents to which it is a party, nor the consummation by MuniMae of
the transactions contemplated in such Transaction Documents, will conflict with or result
in a breach or violation of, or constitute a default (or an event which would, with notice
or the lapse of time, or both, would constitute a default) under, the partnership agreement
and other organizational documents of MuniMae or any of the provisions of any
applicable law, rule, regulation, judgment, decree, demand or order (of any court or
Governmental Body) binding on MuniMae or its properties, or any of the provisions of
any indenture, mortgage, contract, instrument or other document to which MuniMae is a
party or by which it is bound, or result in the creation or imposition of any lien, charge or
encumbrance upon any of its property pursuant to the terms of any such indenture,
mortgage, contract, instrument or other document. MuniMae is not otherwise in violation
of any law, rule, regulation, judgment, decree, demand or order (of any court or
Governmental Body), which violation, in MuniMae’s good faith and reasonable
judgment, is likely to affect materially and adversely either the ability of MuniMae to
perform its obligations under the Transaction Documents to which it is a party or the
financial condition of MuniMae.

          (c) Authorization and Enforceability. The execution and delivery
by MuniMae of the Transaction Documents to which it is a party, the consummation of
the transactions contemplated by such Transaction Documents and the performance and
compliance by MuniMae with the terms of such Transaction Documents are within the
power of MuniMae and have been duly authorized by all necessary action on the part of
MuniMae. All organizational resolutions and consents necessary for MuniMae to enter
into and consummate all transactions contemplated by the Transaction Documents have
been obtained. The Transaction Documents to which MuniMae is a party have been duly
executed and delivered by MuniMae and constitute the legal, valid and binding obligation
of MuniMae enforceable against MuniMae in accordance with its terms, subject to any
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general
applicability relating to or affecting creditor’s rights from time to time in effect and to
the
exercise of judicial discretion in accordance with general principles of equity, whether

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applied by a court of law or a court of equity. MuniMae has not failed to obtain any consent,
approval, authorization or order of, and has not failed to cause any registration or qualification
with, any court or Governmental Body having jurisdiction over MuniMae, which consent, approval,
authorization, order, registration or qualification is required for, and the absence of which would
materially and adversely affect, the legal and valid execution, delivery and performance of the
Transaction Documents to which MuniMae is a party.

          (d) Approvals and Permits. MuniMae possesses such certificates,
authorizations, licenses and permits issued by the appropriate Governmental Bodies
necessary to conduct the business now operated by it and MuniMae has not received any
notice of proceedings relating to the revocation or modification of any such certificate,
authorization, license or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and adversely affect the conduct
of the business, operations, financial condition or income of MuniMae and its Affiliates
considered as one enterprise.

          (e) No Litigation and Adverse Conditions. No litigation is pending
or, to the best of MuniMae’s knowledge, threatened against MuniMae which, if
determined adversely to MuniMae, would prohibit MuniMae from entering into the
Transaction Documents to which it is a party or, in MuniMae’s good faith and reasonable
judgment, is likely to materially and adversely affect either the ability of MuniMae to
perform its obligations under the Transaction Documents or the financial condition of
MuniMae. MuniMae has no knowledge of any recent adverse financial condition or
event with respect to itself that, in MuniMae’s good faith and reasonable judgment, is
likely to materially and adversely affect its ability to perform its obligations under the
Transaction Documents.

          (f) Employment Practices. The employment practices, policies and
programs of MuniMae comply with the requirements of Executive Order 11246, to the
extent applicable to MuniMae, as it relates to equal employment opportunity and non-discrimination practices.

          (g) MuniMae Information. MuniMae understands, agrees and
acknowledges that the information MuniMae is providing Fannie Mae is being provided
by MuniMae with respect to MuniMae and Recourse Provider in order to induce Fannie
Mae to undertake certain transactions and therefore Fannie Mae is relying upon the
accuracy and completeness of the MuniMae information. MuniMae represents and
warrants that such information is accurate and complete in all material respects.

          (h) Mortgage Loans. MuniMae makes each of the representations and warranties set forth
in Exhibit B to this Agreement to Fannie Mae with respect to each Mortgage Loan on the
Delivery Date of such Mortgage Loan.

          (i) Acts of MuniMae with Respect to Mortgage Loans. MuniMae represents and warrants to
Fannie Mae that, as of the date of this Agreement and as of the Delivery Date for each Mortgage
Loan, no acts, conduct or omissions of any Person have

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occurred in respect of the Mortgage Loans that will subject Fannie Mae to any claims, suits,
actions, judgments or liabilities of any nature whatsoever with respect to the Mortgage Loans.

     SECTION 4.3 Representations and Warranties of Fannie Mae.

          Fannie Mae represents and warrants to Recourse Provider and MuniMae on the date of
execution by Fannie Mae of this Agreement that:

          (a) Existence. Fannie Mae is duly organized and existing under the
Federal National Mortgage Association Charter Act, 12 U.S.C. Section 1716 et seq, as
amended from time to time.

          (b) Authorization; Enforceability. This Agreement has been duly
authorized, executed and delivered by Fannie Mae and, assuming due authorization,
execution and delivery of this Agreement by Recourse Provider and MuniMae, this
Agreement constitutes a valid and binding obligation of Fannie Mae, enforceable in
accordance with its terms, subject to any applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general applicability relating to or affecting
creditors’ rights from time to time in effect and to the exercise of judicial discretion in
accordance with general principles of equity, whether applied by a court of law or of
equity.

ARTICLE V

COVENANTS

     SECTION 5.1 Performance of Obligations.

          (a) Recourse Provider covenants to keep and perform faithfully all of
the covenants and undertakings contained in this Agreement, the Custodial Agreement
and each Mortgage Loan Certificate and applicable to Recourse Provider.

          (b) MuniMae covenants to keep and perform faithfully all of the
covenants and undertakings contained in this Agreement, the Custodial Agreement and
each Mortgage Loan Certificate and applicable to MuniMae.

     SECTION 5.2 Estimated Losses

          Following the occurrence of a Borrower Default, Recourse Provider shall calculate or
cause Servicer to calculate Estimated Losses as of each March 31 and September 30 following the
occurrence of a Borrower Default and shall include such Estimated Losses in a report to be provided
to Fannie Mae. Following the occurrence of a Borrower Default, if the Borrower Default is fully
cured and there are no unreimbursed Servicing Advances and Delinquency Advances, Recourse Provider
shall not be required to calculate or to cause Servicer to calculate Estimated Losses until there
is a subsequent Borrower Default.

     SECTION 5.3 Good Standing.

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          (a) Recourse Provider covenants to maintain its current condition of
good standing under all applicable laws and regulations and to commit no act that would
adversely alter the status of Recourse Provider as represented in
Section 4.1 (a). In
the
event Recourse Provider has not maintained such status, it shall immediately notify
Fannie Mae to such effect.

          (b) MuniMae covenants to maintain its current condition of good
standing under all applicable laws and regulations and to commit no act that would
adversely alter the status of MuniMae as represented in
Section 4.2(a). In the event
MuniMae has not maintained such status, it shall immediately notify Fannie Mae to such
effect.

     SECTION 5.4 Subordination Agreement.

          To the extent that the subordination agreements executed in connection with the Locarno
Apartments Project and/or the Independence Ridge Apartments Project are not acceptable to Fannie
Mae, Recourse Provider and/or MuniMae shall either (i) cause such subordination agreements to be
amended to include standstill language acceptable to Fannie Mae, (ii) execute and deliver new
subordination agreements substantially in the form attached to Exhibit B of this Agreement or (iii)
direct the related trustee not to exercise any remedies in connection with the subordinate loans so
long as such direction shall be legally binding on such trustee by no later than January 31, 2001.

     SECTION 5.5 Further Assurances.

          (a) Recourse Provider shall execute and deliver or cause to be
executed and delivered to Fannie Mae at any time or times at the reasonable request of
Fannie Mae, all documents, instruments, letters of direction, notices, reports, acceptances,
receipts, consents, UCC financing statements, waivers, affidavits and certificates as
Fannie Mae may reasonably request, in form satisfactory to Fannie Mae, in order to
consummate fully all of the transactions contemplated under this Agreement.

          (b) MuniMae shall execute and deliver or cause to be executed and
delivered to Fannie Mae at any time or times at the reasonable request of Fannie Mae, all
documents, instruments, letters of direction, notices, reports, acceptances, receipts,
consents, UCC financing statements, waivers, affidavits and certificates as Fannie Mae
may reasonably request, in form satisfactory to Fannie Mae, in order to consummate fully
all of the transactions contemplated under this Agreement.

     SECTION 5.6 Compliance with Laws.

          (a) Recourse Provider shall comply, throughout the term of this Agreement, with
any and all federal, state or local regulations that apply to any of its business operations and
shall take all appropriate action necessary to comply with applicable laws, rules and regulations,
as they may be amended from time to time. Without limiting the generality of the foregoing,
Recourse Provider must comply at all times with any local, state or federal law that relates to
fair housing, equal credit opportunity, truth in lending, wrongful discrimination in residential
lending and other

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similar laws and shall at all times comply with the terms of Executive Order 11246, in each case to
the extent applicable to Recourse Provider. Recourse Provider agrees to forward, promptly upon
receipt, any notices it receives of any such violation or non-compliance.

          (b) MuniMae shall comply, throughout the term of this Agreement, with any and all
federal, state or local regulations that apply to any of its business operations and shall take all
appropriate action necessary to comply with applicable laws, rules and regulations, as they may be
amended from time to time. Without limiting the generality of the foregoing, MuniMae must comply at
all times with any local, state or federal law that relates to fair housing, equal credit
opportunity, truth in lending, wrongful discrimination in residential lending and other similar
laws and shall at all times comply with the terms of Executive Order 11246, in each case to the
extent applicable to MuniMae. MuniMae agrees to forward, promptly upon receipt, any notices it
receives of any such violation or non-compliance.

     SECTION 5.7 Reporting and Compliance Obligations.

          (a) If Recourse Provider or MuniMae makes or experiences any material change in its
ownership, financial condition, business operations, structure, organization, activities or
purpose, other than a change made as a result of any action required of Recourse Provider or
MuniMae under this Agreement or the Custodial Agreement, Recourse Provider or MuniMae, as
applicable, shall promptly notify Fannie Mae (and, with respect to clauses (vii) and (ix)
below, Custodian) in writing of the change. Specifically, but without limiting the generality of
the foregoing, Recourse Provider or MuniMae, as applicable, shall promptly notify Fannie Mae in
writing if any of the following changes occur or are anticipated:

(i) any material adverse change in the financial condition of
Recourse Provider or MuniMae;

(ii) any significant change in the direct or indirect ownership of
Recourse Provider or MuniMae, including a sale, pledge or transfer of a
majority of or controlling ownership interest in Recourse Provider or
MuniMae;

(iii) the assumption by a regulatory agency of the management of any
of Recourse Provider’s or MuniMae’s operations;

(iv) any reorganization, merger or consolidation affecting
Recourse Provider or MuniMae;

(v) any change in Recourse Provider’s or MuniMae’s charter, articles
of incorporation or other organizational documents;

(vi) any legal or regulatory action (including any pending litigation
or judgment) that will, or could have, a material adverse financial or
business impact on Recourse Provider or MuniMae;

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(vii) any change in Recourse Provider’s name;

(viii) any change from federal to state regulation of Recourse Provider
or MuniMae or vice versa; and

(ix) any change in the principal business address of Recourse Provider
or MuniMae from its respective address set forth on the signature page
to this Agreement.

          (b) Recourse Provider shall submit to Fannie Mae, within ninety (90) days after the end
of each fiscal year of Recourse Provider, unaudited annual financial statements prepared in
accordance with GAAP, and within forty-five (45) days after the end of each fiscal quarter, if
available, and after the end of each semiannual period of Recourse Provider, unaudited financial
statements for such period prepared in accordance with GAAP.

          MuniMae shall submit to Fannie Mae, within ninety (90) days after the end of each fiscal year
of MuniMae, audited annual financial statements prepared in accordance with GAAP, and within
forty-five (45) days after the end of each fiscal quarter, if available, and after the end of each
semiannual period of MuniMae, unaudited financial statements for such period prepared in accordance
with GAAP.

          In addition, Recourse Provider shall deliver to Fannie Mae, promptly upon receipt, copies of
all notices or other communications delivered to Recourse Provider by any Governmental Body
regulating financial institutions similar to Recourse Provider relating to any official
investigation of the financial stability or credit practices of Recourse Provider or threatening
any action with respect thereto; provided, however, that Recourse Provider shall not be obligated
to deliver to Fannie Mae any documents, reports, notices or other materials which Recourse Provider
is prohibited by law or agreement from disclosing.

     SECTION 5.8 Indebtedness.

          Recourse Provider shall not incur or be obligated at any time with respect to aggregate
Indebtedness (other than under this Agreement and the Custodial Agreement), in excess of $50,000.

     SECTION 5.9 Single-Purpose Entity.

          Recourse Provider shall at all times maintain and conduct itself as a
Single-Purpose entity.

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ARTICLE VI

FEES

     SECTION 6.1 Fannie Mae Fee and Servicing Fee.

     Recourse Provider and MuniMae shall be jointly and severally obligated to pay to Fannie Mae
the Fannie Mae Fee at the times and in accordance with the procedures set forth in the Servicing
Agreement. Recourse Provider and MuniMae shall be jointly and severally obligated to pay to the
Servicer the Servicing Fee at the times and in accordance with the procedures set forth in the
Servicing Agreement. The payment of the Fannie Mae Fee and the Servicing Fee shall be an
independent obligation of each of Recourse Provider and MuniMae which is not conditioned or
dependent upon any other event or circumstance. Without relieving Recourse Provider and MuniMae
from its obligations under this Section 6.1, Fannie Mae agrees to accept payment of the Fannie Mae
Fee as to any Bonds which have been placed in a trust or custodial arrangement directly from the
trustee or custodian thereof.

ARTICLE VII

CERTAIN OBLIGATIONS

     SECTION 7.1 General Indemnification.

          (a) Indemnity
by Recourse Provider. Recourse Provider hereby covenants and agrees to
indemnify, hold harmless and defend Fannie Mae and its officers, directors, members, shareholders,
officials, agents, independent contractors and employees and each of them and each Person, if any,
who controls Fannie Mae within the meaning of either Section 15 of the Securities Act of
1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as amended (each an
“Indemnified Party”), from and against, any and all claims, losses, liabilities (including
penalties), actions, suits, judgments, demands, damages, costs, charges or expenses (including
reasonable fees and expenses of attorneys, consultants and auditors and costs of investigation) and
obligations whatsoever of any nature arising out of, relating to or in connection with: (i) the
Transaction Documents, the Mortgaged Properties or the transactions provided for in any of the
Transaction Documents; (ii) any act or omission of Recourse Provider or any of its agents,
servants, employees or licensees, in connection with the Mortgage Loans, the Bonds, the Mortgaged
Properties, this Agreement or the other Transaction Documents; (iii) the issuance, offer, sale,
resale or remarketing of any Bonds or any certifications or representations made by any Person
(other than any issuer of Bonds or the party seeking indemnification in connection therewith),
including, (1) any untrue statement or alleged untrue statement of a material fact contained in any
offering documents relating to any of the Bonds or arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, or (2) the violation by Recourse Provider of any
federal, state or local securities or real estate laws, rules or regulations in connection with the
issuance, offer, sale, resale or remarketing of any of the Bonds; (iv) any trustee’s acceptance or
administration of the trusts created by an indenture of trust and the exercise of its powers or
duties thereunder, and under any regulatory agreement or any other agreements in

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connection therewith to which it is a party; (v) errors, omissions, interruptions, losses or delays
in transmission or delivery of any messages by mail, cable, telegraph, telex, telephone or
otherwise; (vi) all reasonable costs, attorneys’ fees and expenses, other expenses or liabilities
incurred in connection with any such claim or proceeding referred to in clauses (i) through
(v) above and (vii) below; (vii) a Taxability Determination (including, without limitation, by
reason of any reduction in value of the Mortgaged Property resulting from a Taxability
Determination) and (viii) any breach or alleged breach of its representations and warranties made
in this Agreement (including each Mortgage Loan Certificate) or pursuant to this Agreement
(including each Mortgage Loan Certificate) and any act or omission of Recourse Provider; provided,
however, that the foregoing indemnification shall not be effective with respect to
Non-indemnifiable Claims and shall not be effective to the extent such liabilities are for claims
under any Credit Enhancement Agreement by the beneficiaries thereof, or are to be included within
Recourse Provider’s first loss obligations and are solely the result of the Borrower not making
required payments under the Mortgage Loan Documents, or are caused by the negligence or willful
misconduct of an Indemnified Party.

          (b) Indemnity by MuniMae. MuniMae hereby covenants and agrees to indemnify, hold
harmless and defend each Indemnified Party from and against, any and all claims, losses,
liabilities (including penalties), actions, suits, judgments, demands, damages, costs, charges or
expenses (including reasonable fees and expenses of attorneys, consultants and auditors and costs
of investigation) and obligations whatsoever of any nature arising out of, relating to or in
connection with: (i) any breach of its representations and warranties made in this Agreement
(including each Mortgage Loan Certificate) or pursuant to this Agreement (including each Mortgage
Loan Certificate) and any act or omission of MuniMae or any act taken or omitted at the direction
of MuniMae or any of its agents, servants, employees or licensees, in connection with the Mortgage
Loans, the Bonds, the Mortgaged Properties, this Agreement or the other Transaction Documents; (ii)
any breach or alleged breach of its representations and warranties made in Section 4.2 (h) and
(i); (iii) the resale or remarketing of any Bonds or any certifications or representations made
by MuniMae in connection with the Bonds (including any sale, resale or remarketing thereof),
including (1) any untrue statement or alleged untrue statement of a material fact contained in any
offering documents relating to any of the Bonds or arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, or (2) the violation by MuniMae of any federal, state
or local securities or real estate laws, rules or regulations in connection with the resale or
remarketing of any of the Bonds; and (iv) all reasonable costs, attorneys’ fees and expenses, other
expenses or liabilities incurred in connection with any such claim or proceeding referred to in
clauses (i) (ii) and (iii) above; provided, however, that the foregoing indemnification
shall not be effective to the extent such liabilities are for claims under any Credit Enhancement
Agreement by the beneficiaries thereof, or are to be included within Recourse Provider’s first loss
obligations and are solely the result of the Borrower not making required payments under the
Mortgage Loan Documents, or are caused by the negligence or willful misconduct of an Indemnified
Party.

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          (c) Fannie Mae Not Liable. Fannie Mae shall have no liability to
Recourse Provider, MuniMae or to any other Person as a result of any reduction of the
credit rating of any of the Bonds or any deterioration of Fannie Mae’s financial condition,
nor shall any such reduction or deterioration reduce or diminish in any respect Recourse
Provider’s or MuniMae’s obligations under this Agreement; provided, however, that
nothing in this paragraph (c) is intended to limit Fannie Mae’s liability under any Credit
Enhancement Agreement to the beneficiaries thereof.

          (d) Procedures. In the event that any action or proceeding is brought
against any Indemnified Party with respect to which indemnity may be sought, Recourse
Provider or MuniMae, as applicable, upon written notice from the Indemnified Party,
shall assume the investigation and defense thereof, including the employment of counsel
selected by Recourse Provider or MuniMae, as applicable, but acceptable to the
Indemnified Party, and shall assume the payment of all expenses related thereto, with full
power to litigate, compromise or settle the same in its discretion; provided that if such
settlement or compromise shall contain or infer an admission regarding, or relating in any
way to, any Indemnified Party, such Indemnified Party shall have the right to review and
approve or disapprove any such compromise or settlement. Each Indemnified Party shall
have the right, if such Indemnified Party shall conclude in good faith that a conflict of
interest exists, to employ separate counsel in any such action or proceeding and
participate in the investigation and defense thereof, and Recourse Provider or MuniMae,
as applicable, shall pay the reasonable fees and expenses of such separate counsel. If
separate counsel are employed as described above, Recourse Provider or MuniMae, as
applicable, and any such Indemnified Party agree to cooperate as may reasonably be
required in order to ensure the proper and adequate defense of any such action, suit or
proceeding, including making available to each other, and their counsel and accountants,
all books and records relating to such action, suit or proceeding. If any such counsel
determines that the rendering of such assistance will adversely affect the defense or
interests of its client, such counsel shall not be required to comply with the terms of the
immediately preceding sentence. The obligation of Recourse Provider or MuniMae, as
applicable, set forth in the preceding sentences shall be collectively referred to as the
“Indemnity Payment.” Such Indemnity Payment shall be due and payable within thirty
(30) days after Recourse Provider or MuniMae, as applicable, shall have received notice
that any of such costs, losses, damages or expenses are paid or incurred by Fannie Mae.
The obligation of Recourse Provider or MuniMae to pay the Indemnity Payment shall
constitute an obligation separate and distinct from any other obligation of Recourse
Provider to reimburse Fannie Mae under this Agreement. In the event Recourse Provider
or MuniMae, as applicable, fails to perform such obligation and make the Indemnity
Payment in accordance with this Section 7.1 when due, Fannie Mae shall have the right
to pursue any right or remedy it may have in law or at equity by reason of such failure.

          (e) Survival. The indemnity provisions of this Section 7.1 shall
survive the termination of this Agreement and Foreclosure or Release of the Mortgage
Loans or other disposition of the Mortgaged Properties; provided, however, that
following an assignment of the obligations of Recourse Provider or MuniMae made in
accordance with the terms of Section 9.1(b) or
Section 9.1(c), as applicable, the
assigning
party shall not remain liable under the indemnity provisions of this Section 7.1 for
items

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occurring or arising prior to the date of such assignment so long as all such obligations are
specifically assumed by the assignee; provided further, however, that in the event the assignee
does not agree to specifically assume MuniMae’s indemnification obligations in Sections
7.1(b)(ii) and (iv), such indemnification obligations shall remain the obligations of MuniMae
and MuniMae shall execute such acknowledgements and agreements as Fannie Mae may reasonably require
to evidence MuniMae’s continuing obligations under Section 7.l(b)(ii) and (iv).

     SECTION 7.2 Certain Environmental Expenses.

          Recourse Provider and MuniMae shall pay all costs and expenses related to or arising out of
the matters set forth on the Environmental Matters Schedule to any Mortgage Loan Certificate.

     SECTION 7.3 Payment of Costs and Expenses.

          Upon the execution and delivery of this Agreement, Recourse Provider and/or MuniMae shall pay
to or reimburse Fannie Mae for all reasonable out-of-pocket costs and expenses incurred by Fannie
Mae until the date of this Agreement in connection with the transactions contemplated by the
Transaction Documents, including without limitation, attorneys’ fees and expenses and fees payable
to consultants or others in connection with Fannie Mae’s review of each Mortgaged Property and the
documents pertaining thereto.

     SECTION 7.4 MuniMae’s Obligations.

          Except as otherwise specifically provided in this Agreement, the
obligations of MuniMae and Recourse Provider are several and not joint obligations and, except as
expressly set forth in this Section 7.4 or otherwise in this Agreement, MuniMae shall not
be liable for the performance of any of Recourse Provider’s obligations under this Agreement but
shall be liable solely with respect to the obligations specifically imposed upon MuniMae in this
Agreement. The parties to this Agreement agree that the payment obligations of MuniMae to Fannie
Mae under this Agreement are limited as follows: (a) to cure any breach of MuniMae’s
representations and warranties with respect to any Mortgage Loan as set forth in Exhibit B
to this Agreement or to purchase such Mortgage Loan in accordance with Section 3.9, (b) to
indemnify Fannie Mae as set forth in Section 7.1(b), (c) to pay the out-of-pocket expenses,
charges, costs and fees of Fannie Mae set forth in
Section 7.2, Section 8.2 and Section 9.1(c), (d) to the extent that Recourse Provider does not make such payments as required under
the terms of this Agreement, to pay the out-of-pocket expenses, charges, costs and fees of Fannie
Mae set forth in Section 2.4(b), Section 3.5(g) and
Section 9.1(b), and (e) to make
payment of all obligations specifically imposed upon MuniMae in this Agreement, including but not
limited to, its obligation to make Servicing Advances and Delinquency Advances. MuniMae
acknowledges and agrees that it shall not be entitled to make any of its payment obligations from
any Collateral held in the Collateral Account.

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ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES

     SECTION 8.1 Events of Default.

          Any one or more of the following acts or occurrences shall constitute an Event of Default
under this Agreement:

(a) Recourse Provider or MuniMae shall fail to deliver Acceptable
Collateral or otherwise shall fail to comply with any requirement of
Article II of this Agreement for a period of five (5) Business Days;

(b) Any representation, warranty or statement made or deemed to be
made by Recourse Provider or MuniMae (other than the representations
made by MuniMae in Exhibit B which are provided for in subsection
(d)
below) to Fannie Mae in any Transaction Document was incorrect in any
material respect when made;

(c) Any representation, warranty or statement made or deemed to be
made by MuniMae in Exhibit B to this Agreement was incorrect in any
material respect when made and, if (but only if) such breach has not yet
given rise to any damage or loss and if such breach is capable of being
cured (for the purposes of this subsection (d) the parties agree that the
representations and warranties capable of being cured are the
representations and warranties contained in Section III, Numbers 19, 22,
24, 25, 26, 40(i), 54(a) & (c) and 63 of Exhibit B), MuniMae fails to cure
any such breach for a period of thirty (30) days (except with respect to a
breach of the representation contained in Section III, Number 26 of
Exhibit B a period of ten (10) days only will be allowed) from the earliest
of the date (i) written notice of such breach shall have been given to
MuniMae by Fannie Mae, or (ii) MuniMae knew of such breach;
provided, however, that the thirty (30) day cure period for any such breach
that is capable of being cured may be extended if Fannie Mae agrees in
writing to such extension and MuniMae commences within the initial
thirty (30) day period, and thereafter diligently pursues to completion, a
course of action reasonably designed, in Fannie Mae’s judgment, to cure
or remedy such failure within the agreed upon time period;

(d) Recourse Provider’s failure to make any Payment Obligation
(other than as set forth in subsection (f) below) when due in accordance
with the terms of this Agreement or MuniMae’s failure to make payment
of any amount owed by MuniMae when due under this Agreement (other
than as set forth in subsection (g) below); provided, that, the payment of
Established Losses and Principal Reductions directly from the amounts on
deposit in the Collateral Account shall not constitute an Event of Default
and the payment of any other amounts, including but not limited to,
payments of Delinquency Advances and Servicing Advances directly from

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amounts on deposit in the Collateral Account shall nevertheless constitute an Event of Default;

(e) Recourse Provider’s failure to pay to Fannie Mae the out-of-pocket
expenses, fees, costs and charges which it is obligated to pay under this
Agreement (including, attorneys’ fees and expenses incurred by Fannie
Mae in connection herewith) within thirty (30) days of Recourse
Provider’s receipt of Fannie Mae’s request for payment of such amounts;

(f) MuniMae’s failure to pay to Fannie Mae the out-of-pocket
expenses, fees, costs and charges which it is obligated to pay under this
Agreement (including, attorneys’ fees and expenses incurred by Fannie
Mae in connection herewith) within thirty (30) days of MuniMae’s receipt
of Fannie Mae’s request for payment of such amounts;

(g) Recourse Provider’s or MuniMae’s failure to observe or perform
any covenant or agreement contained in any Transaction Document (other
than as set forth in subsections (a), (b), (c), (d), (e), or (f) above) for a
period of thirty (30) days after written notice of such failure has been
given to Recourse Provider or MuniMae, as applicable, by Fannie Mae,
unless Fannie Mae agrees in writing that such failure cannot be cured or
remedied within such thirty (30) day period, and Recourse Provider or
MuniMae, as applicable, commences within such thirty (30) day period,
and thereafter diligently pursues to completion, a course of action
reasonably designed, in Fannie Mae’s judgment, to cure or remedy such
failure;

(h) Either Recourse Provider or MuniMae shall become incapable of acting, or is determined to
be bankrupt or insolvent by a court or regulatory agency, or files a petition for reorganization
under any applicable federal, state or foreign bankruptcy, insolvency or similar law or makes an
assignment for the benefit of its creditors generally, or consents to the appointment of a
receiver, conservator, custodian or other similar official of all or substantially all of its
property, or admits in writing its inability to pay or meet its debts as they mature generally, or
if a receiver, conservator, custodian or other similar official is appointed for it or for all or
substantially all of its property and such appointment is not withdrawn within sixty (60) days, or
if an order of any court is entered for relief against it under the provisions of any applicable
federal, state or foreign bankruptcy, insolvency or similar law, or if any public officer takes
charge or control of Recourse Provider or MuniMae, as applicable, or of its property or affairs,
for more than sixty (60) days for the purpose of rehabilitation, conservation or liquidation;

(i) Recourse Provider’s acts or omissions in the performance of any of Recourse Provider’s
obligations under this Agreement or MuniMae’s acts or omissions in the performance of any of
MuniMae’s obligations under

45

 

this Agreement, that in either case constitute (i) material misrepresentation or
fraud, or (ii) negligence, in each case that has a material, adverse effect on
Fannie Mae’s rights or interests under this Agreement;

(j) The occurrence of an Event of Default under and as defined in
Section 9.l(b), (c), (d), (e) or (f) of the Custodial Agreement or an event
of default as result of actions or inactions of Recourse Provider under the
Servicing Agreement; and

(k) Recourse Provider or MuniMae shall repudiate the Custodial Agreement by
direct communication to Fannie Mae or Custodian or Recourse Provider or MuniMae
shall deliver a written repudiation of the Custodial Agreement to any other Person,
or, if Recourse Provider is acting as servicer under the Servicing Agreement, it
shall repudiate the Servicing Agreement by direct communication to Fannie Mae or it
shall deliver a written repudiation of the Servicing Agreement to any other Person.

          Notwithstanding anything to the contrary contained herein, any payments in connection with any
breaches of representations and warranties and/or indemnities of either the Recourse Provider or
MuniMae made directly from amounts on deposit in the Collateral Account shall nevertheless
constitute an Event of Default.

     SECTION 8.2 Remedies Available to Fannie Mae.

          Upon the occurrence of any Event of Default under this Agreement, Fannie Mae may
take, at its option, any one or more of the following steps:

(a) Require Recourse Provider to cure any default by Recourse
Provider within a designated period of time (which, in the case of a
non-monetary default, shall be no more than the applicable time periods
set forth in Section 8.1);

(b) Require MuniMae to cure any default by MuniMae within a
designated period of time (which, in the case of a non-monetary default,
shall be no more than the applicable time periods set forth in
Section 8.1);

(c) Require MuniMae to purchase or cause the release of each
Mortgage Loan as to which the Event of Default specifically relates in the
manner provided in Section 3.9;

(d) to the extent Recourse Provider is acting as servicer under the
Servicing Agreement, terminate Recourse Provider as servicer under the
Servicing Agreement, or terminate any third party Servicer of the
Mortgage Loans under the Servicing Agreement;

(e) To the extent Recourse Provider is acting as servicer under the
Servicing Agreement, require Recourse Provider to deliver to Custodian,

46

 

for a specified period of time, servicing income from each Mortgage Loan as to
which an Event of Default relates or, at Fannie Mae’s option, servicing income from
all Mortgage Loans, which servicing income shall, after the date of notice of such
requirement, be delivered to Custodian and held and applied as provided in the
Custodial Agreement;

(f) Exercise all remedies under the Custodial Agreement, including
the right to draw upon, liquidate or otherwise realize against all Collateral
held under the Custodial Agreement; provided, however, that the exercise
of such remedy shall not relieve Recourse Provider from its obligations
which are recourse to the Recourse Provider as provided in Section 2.2(b)
or relieve MuniMae of its obligations under this Agreement. To the extent
that Fannie Mae makes a draw under the Insurance Policy (as defined in
the Custodial Agreement) to satisfy any of the Recourse Provider’s or
MuniMae’s obligations in connection with a breach of any of their
respective representations and warranties, Fannie Mae may, in its sole
discretion, treat the amount of such draw as a Delinquency Advance;

(g) Take over Decision Control on any Mortgage Loan without regard
to whether Recourse Provider had Decision Control preceding the Event
of Default; or

(h) Take any other action at law or in equity that may appear necessary or
desirable to enforce any obligation, covenant or agreement of Recourse Provider or
MuniMae under the Transaction Documents.

          Recourse Provider and MuniMae shall pay all reasonable out-of-pocket expenses, charges, costs
and fees incurred by Fannie Mae in connection the nonperformance by Recourse Provider or MuniMae or
the enforcement against Recourse Provider or MuniMae of this Agreement, the Mortgage Loan
Certificates and the Custodial Agreement, including all costs, fees, charges or taxes incurred by
Fannie Mae by reason of any Event of Default or Potential Event of Default by Recourse Provider
under this Agreement.

     SECTION 8.3 Remedies Not Exclusive.

          Unless otherwise expressly provided, no remedy conferred in this Agreement or reserved to
Fannie Mae is intended to be exclusive of any other available remedy or remedies, but each and
every such remedy shall be cumulative and shall be in addition to every other remedy given in this
Agreement or now or hereafter existing at law or in equity.

     SECTION 8.4 Delay or Omission Not Waiver.

          No delay or omission of Fannie Mae to exercise any right or remedy under this Agreement upon
an Event of Default (except a delay or omission pursuant to a

47

 

written waiver) shall impair any such right or remedy or constitute a waiver of any such Event of
Default or acquiescence therein. Every right and remedy provided by this Article VIII or by
law to Fannie Mae may be exercised from time to time, and as often as may be deemed expedient by
Fannie Mae. In order to entitle Fannie Mae to exercise any remedy reserved to it in this
Article VIII, it shall not be necessary to give any notice, other than such notice as may
be required by this Article VIII.

     SECTION 8.5 Restoration of Rights and Remedies.

          If Fannie Mae shall have instituted any proceeding to enforce any right or remedy under
this Agreement and such proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to Fannie Mae, then and in every such case Fannie Mae, MuniMae and Recourse
Provider, subject to any determination in the proceeding, shall be restored severally and
respectively to their former positions, and thereafter all rights and remedies of Fannie Mae shall
continue as though no such proceeding had been instituted.

ARTICLE IX

MISCELLANEOUS

     SECTION 9.1 Benefit of Agreement; Successors and Assigns.

          (a) Benefit of Agreement. This Agreement shall inure to the benefit
of, and be enforceable by, Recourse Provider, MuniMae and Fannie Mae and their
respective successors and assigns, and nothing in this Agreement expressed or implied
shall be construed to give any other Person any legal or equitable rights under this
Agreement. It is the express intention of the parties to this Agreement that Recourse
Provider’s or MuniMae’s obligations to make Delinquency Advances and Servicing
Advances are solely for the benefit of Fannie Mae and its successors and assigns. The
payment by Recourse Provider or MuniMae of any Delinquency Advance or Servicing
Advance shall not release, diminish, relieve or otherwise affect the obligation of the
Recourse Provider or MuniMae from making all payments required by Recourse Provider
or MuniMae under the related Mortgage Loan.

          (b) Assignment by Recourse Provider. Recourse Provider may
assign or otherwise transfer any or all of its rights, interests or obligations under this
Agreement and the Custodial Agreement only with the prior written consent of Fannie
Mae; provided that Fannie Mae shall provide such consent so long as: (i) no Event of
Default of Potential Event of Default shall have, occurred and be continuing either
immediately before or immediately after giving effect to the proposed assignment, and
(ii) the assignee shall (1) assume in writing all of the obligations of Recourse Provider
under this Agreement and the Custodial Agreement, including without limitation, all of
covenants made by Recourse Provider in this Agreement and the Custodial Agreement,
(2) be a Single-Purpose entity, (3) be either an institution that is an “accredited investor”
as defined in Rule 501 of the Securities Act of 1933, as amended, or a “qualified
institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, as
amended, (4) provide to Fannie Mae an opinion of counsel acceptable to Fannie Mae to

48

 

the effect that the assumption of this Agreement and the Custodial Agreement has been duly
authorized, executed and delivered by such assignee, this Agreement and the Custodial Agreement are
the valid and binding agreements of such assignee enforceable against it in accordance with their
respective terms and addressing such other matters, including substantive nonconsolidation, as
Fannie Mae shall reasonably request, and (5) have experience in managing assets similar to the
Mortgage Loans (i.e., mortgage loans that are financed by tax-exempt multifamily revenue bonds) and
be affiliated with or have a contractual relationship with a Fannie Mae approved servicer that has
experience in servicing assets similar to the Mortgage Loans (i.e., mortgage loans that are
financed by tax-exempt multifamily revenue bonds).

          Any purported assignment by Recourse Provider without the prior written consent of Fannie Mae
in accordance with this Section 9.1(b) shall be void and shall not relieve Recourse
Provider of any of its obligations under this Agreement or the Custodial Agreement. Any assignment
made in accordance with this Section 9.1(b) shall relieve the assigning party of all of its
obligations under this Agreement and the Custodial Agreement from and after the date of the
assignment. The assigning party shall not be deemed to continue making any representations,
warranties and covenants under this Agreement or the Custodial Agreement after the date of the
assignment and shall not remain liable for any representations and warranties and, covenants made
prior to the assignment so long as all such obligations are specifically assumed by the assignee.

          Recourse Provider shall pay all reasonable out-of-pocket expenses, charges, costs and fees
incurred by Fannie Mae in connection with the assignment by Recourse Provider of any or all of its
rights, interests or obligations under this Agreement and the Custodial Agreement pursuant to this
Section 9.1(b).

          (c) Assignment by MuniMae. MuniMae may assign or otherwise transfer any or all of its
rights, interests or obligations under this Agreement to any Person, whether or not in connection
with any sale, assignment or transfer of its membership interest, equity or ownership in Recourse
Provider, only if:

          (A) (i) no Event of Default of Potential Event of Default shall have occurred and be
continuing either immediately before or immediately after giving effect to the proposed assignment,
(ii) the assignee shall (1) assume in writing all of the obligations of MuniMae under this
Agreement, including without limitation, all of covenants made by MuniMae in this Agreement except
for the representations and warranties set forth in Section 4.2, and (2) provide to Fannie
Mae an opinion of counsel acceptable to Fannie Mae to the effect that the assumption of this
Agreement has been duly authorized, executed and delivered by such assignee, this Agreement is the
valid and binding agreements of such assignee enforceable against it in accordance with its terms
and addressing such other matters as Fannie Mae shall reasonably request, and (iii) the prior
written consent of Fannie Mae is obtained, which consent shall not be unreasonably withheld and
shall be based upon the following factors (1) the financial ability and other capabilities of the
proposed assignee to perform the obligations of MuniMae under this Agreement, (2) the legal
structure and condition of the proposed assignee, (3) the reputation of the proposed assignee and
its controlling Persons generally, (4) the ability

49

 

of Fannie Mae to work with the proposed assignee and its controlling Person generally, and (5)
the net worth of the proposed assignee, which shall be not less than the amount set forth in
the most recent Mortgage Loan Certificate; or

          (B) (i) no Event of Default or Potential Event of Default shall have
occurred and be continuing either immediately before or immediately after giving effect
to the proposed assignment, and (ii) the prior written consent of Fannie Mae is obtained,
which consent shall not be withheld if the other requirements of this subsection (B)
are
satisfied and the assignee (1) shall assume in writing all of the obligations of MuniMae
under this Agreement, (2) shall provide to Fannie Mae an opinion of counsel acceptable
to Fannie Mae to the effect that the assumption of this Agreement has been duly
authorized, executed and delivered by such assignee, this Agreement is the valid and
binding agreement of such assignee enforceable against it in accordance with its terms
and addressing such other matters, as Fannie Mae shall reasonably request, and (3) is an
approved Fannie Mae lender under the Fannie Mae Multifamily Delegated Underwriting
and Servicing (DUS) product line, is sufficiently capitalized as determined by Fannie
Mae in accordance with the guidelines for capitalization for DUS lenders in the DUS
Guide to undertake the financial obligations being assumed hereunder as well as its other
obligations, and has experience in managing assets similar to the Mortgage Loans (i.e.,
mortgage loans that are financed by tax-exempt multifamily revenue bonds); or

          (C) (i) no Event of Default or Potential Event of Default shall have
occurred and be continuing either immediately before or after giving effect to the
proposed assignment, (ii) Recourse Provider shall have delivered a Decision Control
Notice pursuant to Section 3.5, (iii) the prior written consent of Fannie Mae is
obtained,
which consent shall not be withheld if the other requirements of this subsection (C)
are
satisfied and the assignee shall (1) assume in writing all of the obligations of MuniMae
under this Agreement (2) shall provide to Fannie Mae an opinion of counsel acceptable to
Fannie Mae to the effect that the assumption of this Agreement has been duly authorized,
executed and delivered by such assignee, this Agreement is the valid and binding
agreement of such assignee enforceable against it in accordance with its terms and
addressing such other matters as Fannie Mae shall reasonably request, and (3) has a
financial capacity and net worth reasonably determined by Fannie Mae to be sufficient to
undertake the obligations being assumed hereunder, taking into consideration, as
guidance, the net worth amount set forth in the most recent Mortgage Loan Certificate.

          Any purported assignment by MuniMae without the prior written consent of Fannie Mae in
accordance with this Section 9.1(c) shall be void and shall not relieve MuniMae of any of
its obligations under this Agreement and the Custodial Agreement. Any assignment made in accordance
with this Section 9.1(c) shall relieve the assigning party of all of its obligations under
this Agreement from and after the date of the assignment; provided, however, that in the event the
assignee does not agree to specifically assume MuniMae’s obligations with respect to the
representations and warranties in Section 4.2(i) and the indemnification obligations
related thereto in Section 7.1(b)(ii) and (iv), such obligations shall remain the
obligations of MuniMae and MuniMae shall execute such acknowledgements and agreements as Fannie Mae
may reasonably require to evidence MuniMae’s continuing obligations pursuant to Section

50

 

4.2(i) and Section 7.1(b)(ii) and (iv). The assigning party shall not be deemed to
continue making any representations, warranties and covenants under this Agreement after the date
of the assignment other than as set forth above in the preceding sentence and shall not, other than
as set forth above in the preceding sentence, remain liable for any representations and warranties
and, subject to Section 7.2(e), covenants made prior to the assignment, so long as all such
obligations are specifically assumed by the assignee.

          MuniMae shall pay all reasonable out-of-pocket expenses, charges, costs and fees incurred
by Fannie Mae in connection with the assignment by MuniMae of any or all of its rights,
interests or obligations under this Agreement pursuant to this
Section 9.1(c)

     SECTION 9.2 Notices.

          Each notice, request, instruction, demand, consent or other approval (collectively, “notices”
and singly “notice”) given under this Agreement shall be in writing to the other party at its
address set forth on the signature page of this Agreement or at such other address as such party
may designate by notice to the other party and shall be deemed given (a) three (3) Business Days
after mailing, by certified or registered U.S. mail, return receipt requested, postage prepaid, (b)
one (1) Business Day after delivery, fee prepaid, to a national overnight delivery service (such as
Federal Express, Purolator Courier or U.P.S. Next Day Air), (c) when delivered, if personally
delivered with proof of delivery thereof, or (d) on the date of transmission of notice sent by
facsimile machine if sent on a Business Day, otherwise on the next Business Day. If notice is sent
by facsimile machine, a copy also must be sent by one of the methods set forth in clauses (a)
through (c) above, but notice will be deemed given as provided in clause (d) above.

          Each party to this Agreement agrees that it will not refuse or reject delivery of any notice
given under this Agreement, that it will acknowledge, in writing, the receipt of the same upon
request by the other party and that any notice rejected or refused by it shall be deemed for all
purposes of this Agreement to have been received by the rejecting party on the date so refused or
rejected, as conclusively established by the records of the U.S. Postal Service or the delivery or
courier service.

     SECTION 9.3 Severability.

          If any provision of this Agreement shall be invalid, illegal or
unenforceable, such provision shall be severable from the remaining provisions of this Agreement,
and the validity, illegality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby. If any covenant, stipulation, obligation or agreement of Recourse
Provider or MuniMae contained in this Agreement shall for any reason be held to be in violation of
law, then such covenant, stipulation, obligation or agreement shall be deemed to be the covenant,
stipulation, obligation or agreement of Recourse Provider or MuniMae, as applicable, to the full
extent permitted by law.

51

 

     SECTION 9.4 Entire Agreement; Amendments and Waivers.

          This Agreement, the Mortgage Loan Certificates, the Custodial Agreement and the Servicing
Agreement constitute the entire agreement and supersedes all prior agreements and understandings,
both written and oral, between the parties to this Agreement with respect to the subject matter of
this Agreement. This Agreement may not be amended, changed, modified or waived except by a writing
executed by Recourse Provider, MuniMae and Fannie Mae.

     SECTION 9.5 Multiple Counterparts.

          This Agreement may be simultaneously executed in multiple counterparts, all of which
shall constitute one and the same instrument and each of which shall be, and shall be deemed to
be, an original.

     SECTION 9.6 Termination of Master Recourse Agreement.

          Subject
to the provisions of Section 8.1, Section 9.1 and Section 9.7,
this Agreement shall terminate on the date that MuniMae shall have completely satisfied all of its
obligations as set forth in Section 7.3 and Recourse Provider shall have completely and
fully satisfied all of its Payment Obligations with respect to all Mortgage Loans, no Mortgage
Loans remain outstanding and all Credit Enhancement Agreements have been released.

     SECTION 9.7 Survival.

          The terms and provisions of this Agreement shall continue unimpaired without regard to
any subsequent conveyance of any Mortgage Loan by Fannie Mae to a trust formed by or on behalf of
Fannie Mae for purposes of selling ownership interests in such Mortgage Loan under Fannie Mae’s
programs relating to Mortgage-Backed Securities. All covenants, representations, warranties and
obligations of Recourse Provider set forth in
Section 4.1, Article V, Article VI and
Article VII shall survive termination of this Agreement and Foreclosure or the Release Date
of the Mortgage Loans or other disposition of the Mortgaged Properties. The obligations of Recourse
Provider under Article III shall survive the termination of this Agreement (or the transfer
of servicing of all or any of the Mortgage Loans). All covenants, representations, warranties and
obligations of MuniMae in Section 4.2,
Article V, Article VI, Article VII and in
Exhibit B to this Agreement shall survive termination of this Agreement and Foreclosure or
the Release Date of the Mortgage Loans or other disposition of the Mortgaged Properties. The
obligations of MuniMae under Article III shall survive the termination of this Agreement
(or the transfer of servicing of all or any of the Mortgage Loans). Any assignment of the
obligations of Recourse Provider or MuniMae pursuant to the terms of
Section 9.1(b) or Section
9.1(c), as applicable, shall, subject to Section 7.1(e) and Section 9.1(b) or
Section 9.1(c), as applicable, operate to relieve the assigning party of all of its
obligations under this Agreement from and after the date of the assignment. Subject to Section
7.1(e) and Section 9.1 (b) and/or Section 9.1(c), as applicable, the assigning
party shall not be deemed to continue making any representations, warranties

52

 

and covenants under this Agreement after the date of the assignment and shall not remain liable for
any representations, warranties and covenants made prior to the date of the assignment so long as
all such obligations are specifically assumed by the assignee. The obligations of the assigning
party under Article V shall cease upon assignment even though the obligations of the
assigning party shall continue under Section 4.2(i) and Section 7.1 (a) (ii) and
(iv) and/or Section 7.1(b}(ii) and (iv), as applicable, as provided in Section
7.1(e) and Section 9.1(b) and/or Section 9.1(c), as applicable.

     SECTION 9.8 Consent of Fannie Mae.

          If any provision of this Agreement provides for the approval, consent, election,
determination, exercise of discretion, choice, designation, judgment or waiver of or by Fannie Mae
and if a basis for Fannie Mae granting such approval, consent, determination, election, exercise of
discretion, choice, designation, judgment or waiver is not otherwise stated (i.e., that such
approval, consent, election, determination, exercise of discretion, choice, designation, judgment
or waiver will be “reasonable”), then in each case such approval, consent, determination, election,
exercise of discretion, choice, designation, judgment or waiver will be given by Fannie Mae in its
sole and absolute discretion.

     SECTION 9.9 Servicer; Termination of Servicer; Amendments.

          Notwithstanding anything to the contrary contained in this Agreement (except for Section
8.2) and in the other Transaction Documents, Fannie Mae hereby agrees that it shall not
terminate or remove any Servicer at any time during which Recourse Provider has Decision Control
unless (a) the Servicer shall have failed to perform its obligations under the applicable Servicing
Agreement, or (b) the Servicer loses its designation as a Fannie Mae approved multifamily servicer.
Fannie Mae shall give five (5) Business Days prior notice to Recourse Provider of its decision to
terminate or remove a Servicer under clause (a) above; provided, however, that failure to
give such notice shall not prejudice Fannie Mae’s right to terminate or remove the Servicer. The
parties agree that each Servicer and any successor Servicer under the Transaction Documents shall
at all times be a Fannie Mae approved multifamily servicer.

          Fannie Mae hereby agrees that so long as no Event of Default or Potential Default exists under
this Agreement and so long as the Acceptable Collateral on deposit in the Collateral Account equals
or exceeds the Collateral Requirement, it shall not amend or modify the Servicing Agreement or the
Special Servicing Agreement related to any Mortgage Loan with respect to which Recourse Provider
has Decision Control to delete the concept of “Approval Party” or to substantially change the
rights of Recourse Provider relating to the application of Decision Control without the prior
written consent of Recourse Provider. Recourse Provider agrees that Fannie Mae may amend or modify
any Servicing Agreement or Special Servicing Agreement in any other respect without the consent of
Recourse Provider.

53

 

     SECTION 9.10 Governing Law; Submission to Jurisdiction; Waiver of Jury
Trial.

          THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE FEDERAL LAWS OF
THE UNITED STATES, AND, TO THE EXTENT THERE IS NO APPLICABLE FEDERAL LAW, THE LAWS OF THE DISTRICT
OF COLUMBIA WITHOUT GIVING EFFECT TO INTERNAL CHOICE OF LAW RULES. RECOURSE PROVIDER, MUNIMAE AND
FANNIE MAE SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF COLUMBIA AND OF ANY DISTRICT OF COLUMBIA COURT SITTING IN THAT JURISDICTION FOR
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF, OR RELATING TO, THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. RECOURSE PROVIDER, MUNIMAE AND FANNIE MAE IRREVOCABLY
WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY
SUCH PROCEEDING BROUGHT IN SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. RECOURSE PROVIDER,
MUNIMAE AND FANNIE MAE IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF, OR RELATING TO, THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

54

 

     IN WITNESS WHEREOF, the parties to this Agreement have caused it to be duly executed by their
authorized officers or representatives. This Agreement shall be effective as of the date of its
execution by Fannie Mae.

	 	 	 	 	 	 	 
	 	 	FANNIE MAE
	 	 	By: /s/ Wendell L. Johns    
	 
	 	 
	 	 	 	 
	 	 	Name: Wendell L. Johns
	 	 	Title: VP
	 
	 	 	 	 	 	 
	 	 	Address:	 	3900 Wisconsin Avenue, N.W.
	 	 	 	 	Drawer AM
	 	 	 	 	Washington, DC 20016
	

	 	 	 	Attention:
	 	Director Multifamily
	

	 	 	 	 	 	Operations
	

	 	 	 	Re:
	 	MuniMae/Black Rock

	

	 	 	 	 	 	Transaction
	 
	 	 	 	 	 	 
	

	 	Telephone:
	 	(202) 752-7405	 	 
	

	 	Telecopy:
	 	(202) 752-3542	 	 
	 
	 	 	 	 	 	 
	

	 	With a copy to:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	Fannie Mae

	 	 	 	 	3900 Wisconsin Avenue, N.W.
	 	 	 	 	Washington, DC 20016
	

	 	 	 	Attention:
	 	Vice President,
	

	 	 	 	 	 	Multifamily Asset
	

	 	 	 	 	 	Management
	

	 	 	 	Re:
	 	MuniMae/Black Rock
	

	 	 	 	 	 	Transaction
	 
	 	 	 	 	 	 
	

	 	Telephone:
	 	(202) 752-7405	 	 
	

	 	Telecopy:
	 	(202) 752-5016	 	 

Date: December 28, 2000

S-1

 

	 	 	 	 	 
	 	 	MMACAP, LLC
	 
	 	 	 	 
	

	 	By: /s/ Gary A. Mentesana
	

	 	 
	Date: December 28, 2000	 	Name: Gary A. Mentesana

	 	 	Title: Chief Financial Officer
	 
	 	 	 	 
	

	 	Address:
	 	218 North Charles Street
	

	 	 	 	Suite 500
	

	 	 	 	Baltimore, Maryland 21201
	 
	 	 	 	 
	

	 	Telephone:
	 	(410) 962-8044
	

	 	Facsimile:
	 	(410) 727-5387
	 
	 	 	 	 
	 	 	MUNICIPAL MORTGAGE & EQUITY, LLC
	 
	 	 	 	 
	

	 	By: /s/ Gary A. Mentesana
	

	 	 
	 	 	Name: Gary A. Mentesana

	 	 	Title: Chief Financial Officer
	 
	 	 	 	 
	

	 	Address:
	 	218 North Charles Street
	

	 	 	 	Suite 500
	

	 	 	 	Baltimore, Maryland 21201
	 
	 	 	 	 
	

	 	Telephone:
	 	(410) 962-8044
	

	 	Facsimile:
	 	(410) 727-5387
					
	Date: December 28, 2000

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