Document:

atax-ex103_33.htm

Exhibit 10.3

 

BOND EXCHANGE,

REIMBURSEMENT, PLEDGE AND SECURITY AGREEMENT

 

 

between

 

 

FEDERAL HOME LOAN MORTGAGE CORPORATION

 

 

 

and

 

 

 

ATAX TEBS IV, LLC

as Sponsor

 

 

Relating to

 

 

Freddie Mac

Multifamily M Certificates

Series M-045

 

 

 

Dated as of August 1, 2018

 

 

TABLE OF CONTENTS

 

	
 
	
 
	
Page

	
ARTICLE I

	
DEFINITIONS AND INTERPRETATION

	
 
	
 
	
 

	
Section 1.1
	
Definitions
	
2

	
Section 1.2
	
Interpretation
	
9

	
 
	
 
	
 

	
ARTICLE II

	
REPRESENTATIONS, COVENANTS, WARRANTIES AND CONDITIONS

	
 
	
 
	
 

	
Section 2.1
	
Representations and Warranties
	
10

	
Section 2.2
	
Other Representations and Warranties by the Sponsor and Representations and Warranties by Freddie Mac.
	
23

	
Section 2.3
	
Conditions
	
26

	
Section 2.4
	
Breach of Representations and Warranties
	
29

	
 
	
 
	
 

	
ARTICLE III

	
COVENANTS OF THE SPONSOR

	
 
	
 
	
 

	
Section 3.1
	
Freddie Mac Closing Fee and Closing Expenses; Other Closing Costs and Initial Deposits
	
31

	
Section 3.2
	
Reimbursement of Credit Advances
	
31

	
Section 3.3
	
Scheduled Payments and Deposits
	
31

	
Section 3.4
	
[Reserved]
	
31

	
Section 3.5
	
Payment of Costs, Fees and Expenses
	
32

	
Section 3.6
	
Application and Timing of Payments
	
33

	
Section 3.7
	
[Reserved]
	
34

	
Section 3.8
	
Payment of Prepayment/Substitution Premium
	
34

	
Section 3.9
	
Substitution of Credit Enhancement
	
35

	
Section 3.10
	
Additional Provisions Regarding Prepayment/Substitution Premium
	
35

	
Section 3.11
	
[Reserved]
	
35

	
Section 3.12
	
Indemnification
	
35

	
Section 3.13
	
Freddie Mac Not Liable
	
36

	
Section 3.14
	
[Reserved]
	
36

	
Section 3.15
	
Other Covenants of Sponsor
	
36

	
Section 3.16
	
Liability of the Sponsor
	
38

	
Section 3.17
	
Waivers and Consents
	
38

	
Section 3.18
	
Subrogation
	
39

	
Section 3.19
	
Substitution
	
39

	
Section 3.20
	
[Reserved].
	
42

	
Section 3.21
	
Optional Series Termination Date..
	
42

	
Section 3.22
	
CRA Credit
	
42

	
Section 3.23
	
Release Event Upon Bond Event of Default
	
42

	
Section 3.24
	
Loans by Guarantor or Its Affiliates
	
43

	
Section 3.25
	
Credit Advances; Real Estate Taxes
	
43

	
Section 3.26
	
Substitution Upon Sale of Pre-Selected Mortgaged Property
	
43

	
Section 3.27
	
[Reserved]
	
44

	
Section 3.28
	
Common Owner Mortgaged Properties
	
44

i

	
 
	
 
	
 

	
ARTICLE IV

	
AGREEMENT TO EXCHANGE

	
 
	
 
	
 

	
Section 4.1
	
Exchange
	
44

	
Section 4.2
	
Mandatory Delivery; Ownership; Registration of Transfer
	
44

	
Section 4.3
	
Failure to Deliver
	
45

	
 
	
 
	
 

	
ARTICLE V

	
[RESERVED]

	
 
	
 
	
 

	
ARTICLE VI

	
UNIFORM COMMERCIAL CODE SECURITY AGREEMENT

	
 
	
 
	
 

	
ARTICLE VII

	
EVENTS OF DEFAULT; REMEDIES

	
 
	
 
	
 

	
Section 7.1
	
Events of Default
	
45

	
Section 7.2
	
Remedies; Waivers
	
47

	
Section 7.3
	
Rights with Respect to Defaults under Bond Mortgages; Bond Purchase Loan
	
48

	
Section 7.4
	
No Remedy Exclusive
	
50

	
 
	
 
	
 

	
ARTICLE VIII

	
PLEDGE, SECURITY AND CUSTODY OF PLEDGED SECURITY COLLATERAL

	
 
	
 
	
 

	
Section 8.1
	
Pledged Security Collateral
	
50

	
Section 8.2
	
Delivery of Pledged Security Collateral
	
51

	
Section 8.3
	
[Reserved]
	
51

	
Section 8.4
	
Amounts Received on Purchased Bonds
	
51

	
Section 8.5
	
Release of Purchased Bonds
	
51

	
Section 8.6
	
[Reserved]
	
51

	
Section 8.7
	
Loss to Pledged Security Collateral
	
51

	
Section 8.8
	
[Reserved]
	
51

	
Section 8.9
	
Ownership Restrictions
	
51

	
Section 8.10
	
Representations and Warranties of the Sponsor to the Pledge Custodian
	
51

	
Section 8.11
	
Custody Account
	
52

	
Section 8.12
	
Appointment and Powers of the Pledge Custodian
	
52

	
Section 8.13
	
Successor Pledge Custodian
	
53

	
Section 8.14
	
Qualifications of Pledge Custodian
	
54

	
Section 8.15
	
Application of Proceeds
	
54

	
Section 8.16
	
No Additional Waiver Implied by One Waiver
	
54

	
Section 8.17
	
Cooperation
	
55

	
Section 8.18
	
Termination
	
55

	
Section 8.19
	
Representations and Warranties of the Pledge Custodian
	
55

	
 
	
 
	
 

	
ARTICLE IX

	
MISCELLANEOUS

	
 
	
 
	
 

	
Section 9.1
	
Counterparts
	
55

	
Section 9.2
	
Amendments, Changes and Modifications
	
56

ii

	
Section 9.3
	
Payment Procedure
	
56

	
Section 9.4
	
Payments on Business Days
	
56

	
Section 9.5
	
Governing Law; Severability
	
56

	
Section 9.6
	
Notices
	
56

	
Section 9.7
	
Further Assurances and Corrective Instruments
	
58

	
Section 9.8
	
Term of this Agreement
	
58

	
Section 9.9
	
Assignments; Transfers; Third-Parties Rights
	
58

	
Section 9.10
	
Headings
	
58

	
Section 9.11
	
Limitation on Personal Liability
	
58

	
Section 9.12
	
Consent of Freddie Mac
	
59

	
Section 9.13
	
Disclaimer; Acknowledgments
	
59

	
Section 9.14
	
Entire Agreement
	
59

	
Section 9.15
	
Survival of Representation and Warranties
	
59

	
Section 9.16
	
Waiver of Claims
	
59

	
Section 9.17
	
Waivers of Jury Trial
	
60

	
 
	
 
	
 

	
Schedule A:
	
Mortgaged Properties and Yield Maintenance Period
	
 

	
Schedule A-1:
	
Bonds
	
 

	
Schedule A-2:
	
Pre-Selected Bonds
	
 

	
Schedule B:
	
Qualifications to Representations and Warranties
	
 

	
Exhibit I:
	
Mortgaged Properties with State Agency Letters
	
 

	
Exhibit II:
	
Mortgaged Properties and First Optional Redemption Dates
	
 

 

 

 

iii

BOND EXCHANGE, REIMBURSEMENT, PLEDGE AND SECURITY AGREEMENT

THIS BOND EXCHANGE, REIMBURSEMENT, PLEDGE AND SECURITY AGREEMENT dated as of August 1, 2018 (this “Agreement”) by and between the FEDERAL HOME LOAN MORTGAGE CORPORATION (“Freddie Mac”), a shareholder-owned government-sponsored enterprise organized and existing under the laws of the United States, and ATAX TEBS IV, LLC, a limited liability company organized and existing under the laws of the State of Delaware, as Sponsor (the “Sponsor”).

R E C I T A L S:

1.Freddie Mac has agreed with the Sponsor to exchange certain Certificates described below for various series of multifamily housing revenue bonds owned by the Sponsor, the interest on which is excludable from the gross income of certain holders for federal income tax purposes and which have been issued by various state and local governmental entities (as further identified on Schedule A-1, the “Bonds”).

2.Freddie Mac will deposit and pool the Bonds pursuant to a Series Certificate Agreement dated as of the date hereof (together with the Standard Terms attached thereto, the “Series Certificate Agreement”) between Freddie Mac, in its corporate capacity, and Freddie Mac, as Administrator.  

3.Pursuant to the Series Certificate Agreement, Freddie Mac has agreed to provide credit enhancement with respect to the Bonds and the related Certificates issued thereunder.

4.The Sponsor will arrange for the initial placement of the Class A Certificates and the subordinate Class B Certificates will be initially registered in the name of and retained by the Sponsor, subject to transfer in accordance with Section 3.15 hereof.

5.The Class B Certificates will provide first loss support for Freddie Mac, as Freddie Mac shall have the right to receive and reimburse itself from Available Funds under the Series Certificate Agreement prior to the distribution of any such funds to the Holders of Class B Certificates.  Freddie Mac will additionally be secured by the Sponsor's pledge of any Purchased Bonds held for the benefit of Freddie Mac pursuant to Article VIII.  In addition, in order to vest in Freddie Mac the right to control remedies with respect to the Bonds, the Sponsor will cause Freddie Mac to be appointed or otherwise hold all rights as Bondholder Representative under the Bond Documents and the Bond Mortgage Documents contemporaneously with the execution hereof for all Bonds.

6.The Guarantor is providing the Guaranty to guaranty certain of the Sponsor’s obligations hereunder.

7.The Class A Certificates will be issued at the Term Extended Rate as set forth in the Series Certificate Agreement.

NOW, THEREFORE, in consideration of the Recitals and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Freddie Mac and the Sponsor do hereby agree as follows:

 

Article I

DEFINITIONS AND INTERPRETATION

Section 1.1Definitions.  All initially capitalized terms included in the Recitals above and not specifically defined in this Agreement shall have the meanings therefor contained in Exhibit A to the Series Certificate Agreement.  Unless otherwise expressly provided in this Agreement or unless the context clearly requires otherwise, the following terms shall have the respective meanings set forth below for all purposes of this Agreement.

“Administrator” means Freddie Mac in its capacity as Administrator under the Series Certificate Agreement and its successors or assigns in such capacity.

“Agreement” means this Bond Exchange, Reimbursement, Pledge and Security Agreement, as the same may be amended, modified or supplemented from time to time.

"Agreement Regarding Financial Monitors" means the Agreement dated as of the date hereof by and between Freddie Mac and Burlington Capital Real Estate, LLC, as financial monitor with respect to certain of the Bonds, and acknowledged and agreed to by the Sponsor, as the same may be amended, modified or supplemented from time to time.

"Berrendo Bonds" means Public Finance Authority Multifamily Housing Revenue Bonds (Berrendo Square Apartments Project) Series 2015A.

"Bond Custody Agreement" means the Custody Agreement dated as of the date hereof by and among U.S. Bank National Association, as custodian and America First Multifamily Investors, L.P., as depositor thereunder, as the same may be amended, modified or supplemented from time to time.

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

“Bondholder Representative” means Freddie Mac as assignee or holder, as applicable, of all rights to control remedies as “Bondholder Representative”, “Controlling Party”, “Servicing Agent”, “Significant Bondholder” or majority owner of the Bonds, as applicable, under the Bond Documents.

“Bond Event of Default” means, with respect to an issue of Bonds, the occurrence of a default under the related Bond Documents (following any applicable grace period or notice and cure period but only to the extent provided in the related Bond Documents).

“Bond Mortgage Documents” means, with respect to each Bond Mortgage Loan, the Bond Mortgage, the Bond Mortgage Note, the LURA, the Loan Agreement and any related documents evidencing the obligations of the Owner under the Bond Mortgage Note or securing payment or performance of such obligations or otherwise pertaining to such obligations, 

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including any HUD Document, as each such document, agreement or instrument may be amended, modified or supplemented from time to time.

“Bond Purchase Loan” shall have the meaning set forth in Section 7.3(b).

“Bonds” means the tax-exempt multifamily housing revenue bonds listed on Schedule A-1 hereto.  Where the context requires, "Bonds" also means the related Custodial Receipts representing beneficial ownership in such tax-exempt multifamily housing revenue bonds which have been deposited into the Series Pool in exchange for the related Certificates.

“Breach” shall have the meaning set forth in Section 2.4(a).

“Certificates” means the Class A Certificates and the Class B Certificates, as applicable.

“Class A Certificates” means the Class A Certificates designated as such and issued pursuant to the Series Certificate Agreement.

“Class B Certificates” means the Class B Certificates designated as such and issued pursuant to the Series Certificate Agreement. 

“Class B Owners” means the Sponsor, any transferee from the Sponsor or any other Person so long as it owns an interest in any Class B Certificate.

“Closing Date” means the date the Series Certificate Agreement is delivered by Freddie Mac in its corporate capacity and as Administrator thereunder.

"Concord at Little York Bonds" means the Public Finance Authority Multifamily Housing Revenue Bonds (Concord at Little York Apartments Project) Series 2015A.

"Concord at Williamcrest Bonds" means the Public Finance Authority Multifamily Housing Revenue Bonds (Concord at Williamcrest Apartments Project) Series 2015A.

“Credit Advance” means any advance by Freddie Mac under this Agreement or the Series Certificate Agreement, including but not limited to (i) an advance to pay principal or interest distributable with respect to any Class A Certificates or Bond, (ii) any advance to cure a Breach, (iii) any advance in connection with a Mandatory Tender Event pursuant to Section 6.04 of the Series Certificate Agreement, (iv) an advance in connection with a Release Event pursuant to Section 3.08 of the Series Certificate Agreement, (v) an advance to pay any portion of the Fee Component or any other fee due and owing that the Sponsor fails to cause to be paid in accordance with the Sponsor Documents, the non-payment of which jeopardizes the security pledged hereunder, (vi) any advance to pay property taxes due but unpaid or any other unpaid assessments or impositions with respect to a Mortgaged Property and (vii) any advance in connection with an Enforcement Action.

“Credit Enhancement” has the meaning set forth in the Series Certificate Agreement.

"Custodial Receipts" means the custodial receipts issued pursuant to the Bond Custody Agreement.

3

“Custody Account” means a trust account in the name of the Pledge Custodian, as collateral agent for Freddie Mac, as further described in Section 8.11.

"Custody Documents" means the Bond Custody Agreement and the Custodial Receipts.

“Data Tape” means the data tape dated August 2, 2018 submitted by or on behalf of the Sponsor to Freddie Mac with respect to the Bonds and the Mortgaged Property.

“Default Rate” means the base rate or prime rate of Citibank, N.A. until such time as another “Money Center” bank is designated by Freddie Mac in its discretion by notice to the Sponsor, plus four percent (4%).

“Discount Rate” means, for purposes of calculating the Prepayment/Substitution Premium under Section 3.8(a), the interest rate, as of the date which is five Business Days prior to the applicable Yield Maintenance End Date for the applicable Bond, which shall be found among the Daily Treasury Yield Curve Rates (commonly known as “Constant Maturity Treasury” rates) for an obligation with a maturity date corresponding to the applicable Yield Maintenance End Date, as reported on the U.S. Department of the Treasury website, expressed as a decimal to two digits.  If no published Constant Maturity Treasury rate matches the remaining applicable Yield Maintenance Period, Freddie Mac shall interpolate as a decimal to two digits the interest rate between (a) the Constant Maturity Treasury rate with a maturity closest to, but shorter than, the expiration date of the applicable Yield Maintenance Period, and (b) the Constant Maturity Treasury rate with a maturity closest to, but longer than, the expiration date of the applicable Yield Maintenance Period, as follows:

A = the Treasury Constant Maturity rate with a maturity closest to, but shorter than, the expiration date of the Yield Maintenance Period 

B = the Treasury Constant Maturity rate with a maturity closest to, but longer than, the expiration date of the Yield Maintenance Period

C = number of months to maturity for the Treasury Constant Maturity rate with a maturity closest to, but shorter than, the expiration date of the Yield Maintenance Period

D = number of months to maturity for the Treasury Constant Maturity rate with a maturity closest to, but longer than, the expiration date of the Yield Maintenance Period

E = number of months remaining in the Yield Maintenance Period

In the event the U.S. Department of the Treasury ceases publication of the Constant Maturity Treasury rates, the Discount Rate shall equal the yield on the first U.S. Treasury security that is not callable or indexed to inflation, which matures after the expiration date of the applicable Yield Maintenance Period.

“Enforcement Action” means, with respect to any Mortgaged Property, the advertising of or commencement of any foreclosure or trustee’s sale proceedings, the exercise of any power of sale, the obtaining of or seeking of the appointment of a receiver, the taking of possession or 

4

control or the collecting of rents, the commencement of any suit or other legal, administrative, or arbitration proceeding against the Mortgaged Property or the Owner based upon any of the Bond Mortgage Documents, or the taking of any other enforcement or remedial action against the Owner arising under or connected with the Mortgaged Property.

“Event of Default” means the occurrence of an event of default as described in Section 7.1.

“Fee Component” means, with respect to each Bond Mortgage Loan, the regular, ongoing fees due from time to time to the Issuer, the Bond Trustee and the rebate analyst, as such fees are set forth in the applicable Indenture.

“Foreclosure” shall be deemed to have occurred when title to the Mortgaged Property encumbered by a Bond Mortgage is acquired in the name of the Bond Trustee, Freddie Mac, the Sponsor, the Bondholder Representative, or the designee of any such party or in a third party purchaser’s name through foreclosure or deed-in-lieu.

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

“Freddie Mac Fee” means the fee payable to Freddie Mac for providing the Credit Enhancement, and for serving as Administrator and Pledge Custodian.  Such fee shall be an amount equal to one-twelfth of 0.70% (seventy basis points) times the Current Class A Certificate Balance, and shall be calculated on the basis of a 360-day year consisting of twelve (12) thirty (30) day months.  Such fee shall be payable as provided in Section 3.3 and shall accrue monthly based upon the Current Class A Certificate Balance as of the first day of each month.  If an Administrator or Pledge Custodian other than Freddie Mac is appointed, Freddie Mac will allocate a portion of the Freddie Mac Fee to the payment of the fees of such substitute Administrator or Pledge Custodian.  The Freddie Mac Fee does not include fees for extraordinary services of the Administrator or Pledge Custodian.

“Freddie Mac Purchase Notice” has the meaning set forth in Section 7.3(b).

“Freddie Mac Reimbursement Amount” means the amounts that the Sponsor is required to cause to be paid to Freddie Mac pursuant to this Agreement to reimburse Freddie Mac for any Credit Advances, which amounts shall be equal to the sum of all Credit Advances not previously reimbursed on behalf of the Sponsor, together with any interest thereon, late charges, default interest and other amounts payable to Freddie Mac under this Agreement (except any share of collected late charges that the Servicer is entitled to retain as additional servicing compensation) as a result of a default under the Owner Documents, and shall be paid as provided in Sections 3.2 and 3.3 of this Agreement.

“Government Obligations” means direct and general obligations of the United States of America or obligations of any agency or instrumentality of the United States of the payment of the principal and interest of which are guaranteed by the full faith and credit of the United States of America.

5

“Guaranty” means the Limited Support Agreement dated as of the date hereof between the Guarantor and Freddie Mac, as amended, supplemented or restated.

“Guarantor” means America First Multifamily Investors, L.P., a Delaware limited partnership, and any permitted successor or assign thereof under the Guaranty.

“Guide” means the Freddie Mac Multifamily Seller/Servicer Guide, as amended from time to time.

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

“Indenture” means, with respect to each issue of Bonds, the Trust Indenture or the Indenture of Trust, as applicable, between the Issuer and Bond Trustee or the Resolution of the Issuer pursuant to which the Bonds are issued and secured, as the same may be amended, modified or supplemented from time to time.

“Issuer” means, with respect to each issue of Bonds, the governmental entity that issued such Bonds, and its successors.

"Laurel Bonds" means the Public Finance Authority Multifamily Housing Revenue Bonds (Laurel Crossings Apartments Project) Series 2015A.

“Losses” shall have the meaning set forth in Section 3.12.

“LURA” shall have the meaning set forth in Section 2.1(gg).

“Mandatory Tender Event” shall mean each event defined as a “Mandatory Tender Event” in Section 6.04 of the Series Certificate Agreement.

“Moody’s” means Moody’s Investors Service, Inc., a corporation organized and existing under the laws of the State of Delaware, and its successors and assigns, if such successors and assigns shall continue to perform the functions of a securities rating agency.

“Mortgaged Property” means any of the properties listed as a Mortgaged Property in Schedule A attached hereto.

“Obligations” means the obligations of the Sponsor (a) to pay or cause to be paid all amounts, including fees, costs, charges and expenses payable under this Agreement, and (b) to pay or cause to be paid all amounts, and to observe and perform each of the terms, conditions and provisions of, the Sponsor Documents.

“Offering Circular” means in each case, the preliminary and final Offering Circular (together with the related Offering Circular Supplement) related to the sale of the Class A Certificates.

6

"Optional Series Termination Date" means August 15, 2029, or the 15th day of any August thereafter (or if such date is not a Business Day, the immediately succeeding Business Day).

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

“Owner Documents” means, with respect to each Bond Mortgage Loan, the Bond Documents and the Bond Mortgage Documents.

“Person” means an individual, estate, trust, corporation, partnership, limited liability company or any other organization or entity (whether governmental or private).

“Pledge Custodian” means Freddie Mac, or any successor thereto as provided in Article VIII.

“Pledged Security Collateral” has the meaning set forth in Section 8.1.

“Prepayment/Substitution Premium” means, when such premium is due and payable pursuant to Section 3.8(a) hereof, an amount equal to the present value (discounted at the applicable Discount Rate) of the monthly payments of the Freddie Mac Fee that would have been earned assuming scheduled principal payments of the Bond(s) during the remainder of the applicable Yield Maintenance Period for the applicable Bond(s) had the redemption, funding, Release Event, substitution or mandatory tender not occurred.

“Pre-Selected Bonds” means the Bonds indicated on Schedule A-2 that have been pre-selected by the Sponsor as of the Closing Date as being eligible for substitution from the Series Pool pursuant to Sections 3.19 and 3.26 due to the sale of the related Pre-Selected Mortgaged Property to an unrelated third party.  Only four of such Pre-Selected Deposited Assets may actually be substituted and released based on such circumstances.

“Pre-Selected Mortgaged Property” means a Mortgaged Property related to an Pre-Selected Bond.

“Purchase Date” means any date on which the Class A Certificates are subject to mandatory tender in accordance with the provisions of Section 6.04 of the Series Certificate Agreement.

“Purchase Price” means, with respect to any Class A Certificate required to be purchased pursuant to Section 6.06 of the Series Certificate Agreement, the balance of such Class A Certificate plus interest accrued thereon to the Purchase Date.

“Purchased Bond” means a Bond purchased by Freddie Mac on behalf of the Sponsor from monies paid by Freddie Mac pursuant to the Credit Enhancement following the occurrence of a Release Event.

“Rating Agency” has the meaning provided in the Series Certificate Agreement.

“Released Bond” has the meaning set forth in Section 3.19 hereof.

7

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

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.

“Series Certificate Agreement” means the Series Certificate Agreement as defined in Recital 2 hereof, as amended, restated or supplemented.

“Series Pool” means a discrete pool formed by Freddie Mac consisting of the Bonds and other Assets therein described with respect to which Freddie Mac has elected partnership status, as set forth in the Series Certificate Agreement.

“Servicer” means the eligible servicing institution designated by Freddie Mac, or its successor, as servicer of each Bond Mortgage Loan.  Initially, NorthMarq Capital, LLC shall act as the Servicer.

“Servicing Agreement” means the Servicing Agreement dated as of the date hereof between the Servicer and Freddie Mac concerning the servicing of the Bond Mortgage Loans and the Bonds, as the same may be amended from time to time, including any replacement Servicing Agreement entered into with a successor servicer.

“Servicing Fee” means the monthly fee due the Servicer under the Servicing Agreement in an amount equal to one-twelfth of 0.04% (four basis points) times the outstanding principal balance of each Bond Mortgage Loan, calculated on the basis of a 360-day year consisting of twelve (12) thirty (30) day months.

“Sponsor Documents” means this Agreement, the Series Certificate Agreement, the Servicing Agreement, the Remarketing Agreement, the Guaranty, the Custody Documents, the Subordinate Bonds Custody Agreement, Agreement Regarding Financial Monitors, and any other agreement, instrument or certificate executed by the Sponsor or by the Guarantor in connection with the transactions contemplated thereby.

“Sponsor Paid Expenses” has the meaning set forth in Section 8.3(c).

"Subordinate Bonds Custody Agreement" means the Subordinate Bonds Custody Agreement dated as of the date hereof by and between the Guarantor and U.S. Bank National Association, as custodian, and acknowledged by the Sponsor, with respect to the Subordinate Bonds, as the same may be amended, supplemented or restated from time to time.

"Subordinate Bonds" means the subordinate bonds listed on Exhibit A to the Subordinate Bonds Custody Agreement. 

“Substitute Bond” means an issue of multifamily housing revenue bonds substituted for an issue of Bonds pursuant to Section 3.19.

“Substitute Property” means a multifamily housing project that is substituted for a Project pursuant to Section 3.19.

8

“Tax Certificate” means the Tax Certificate, the Non-Arbitrage Certificate and Tax Agreement or any similar agreement or certificate executed by the Owner certifying to or agreeing to comply with the requirements of Section 103 of the Internal Revenue Code of 1986, as amended, in connection with the issuance of the related Bonds.

“Term” has the meaning set forth in Section 9.8.

“Terminating Mandatory Tender Date” shall have the meaning set forth in the Series Certificate Agreement.

“Title Insurance Policy” means, with respect to any Mortgaged Property, the title insurance policy insuring the lien of the related Bond Mortgage.

“Total Release Price” means an amount equal to the Release Purchase Price plus Hypothetical Gain Share, if any.

“Underwriting Package” means the documents and reports submitted by the Sponsor to Freddie Mac and relied upon by Freddie Mac in its decision to execute and deliver the Series Certificate Agreement.

“UCC Collateral” has the meaning set forth in Article VI hereof.

“Uniform Commercial Code” or “U.C.C.” means the Uniform Commercial Code as from time to time in effect in each applicable jurisdiction.

“Yield Maintenance End Date” means, either (a) August 15, 2028 with respect to events of the type set forth in Sections 3.8(a)(i), 3.8(a)(iv) and 3.8(a)(v) or (b) the applicable date indicated on Schedule A with respect to each Bond with respect to events of the type set forth in Sections 3.8(a)(ii) and 3.8(a)(iii).

“Yield Maintenance Period” means, with respect to each Bond, the period beginning on the Closing Date and ending on the applicable Yield Maintenance End Date.

Section 1.2Interpretation.  In this Agreement, unless the context otherwise requires, words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders.  Unless the context shall otherwise indicate, words importing the singular number shall include the plural number and vice versa, and words importing persons shall include partnerships, corporations and associations, including public bodies, as well as natural persons.  The terms “hereby”, “hereof”, “hereto”, “herein”, “hereunder”, and any similar terms, as used in this Agreement, refer to this Agreement.  Any reference in this Agreement to an “Exhibit”, a “Section”, a “Subsection”, a “Paragraph” or a “subparagraph” shall, unless otherwise explicitly provided, be construed as referring, respectively, to an Exhibit attached to this Agreement, a section of this Agreement, a subsection of the section of this Agreement in which the reference appears, a paragraph of the subsection within this Agreement in which the reference appears, or a subparagraph of the paragraph within which the reference appears.  All Recitals set forth above and all Exhibits attached to or referred to in this Agreement are incorporated by reference into this Agreement.  Any reference to an executed agreement or instrument herein shall be to such agreement or instrument as amended, supplemented or restated in accordance with its terms.

9

Article II

REPRESENTATIONS, COVENANTS, WARRANTIES AND CONDITIONS

Section 2.1Representations and Warranties.  As of the Closing Date, the Sponsor represents and warrants the following as to each Bond Mortgage and, as applicable, the related Bond Documents with respect to the Bonds.  The Sponsor acknowledges that such representations and warranties (as qualified by Schedule B hereto), together with the other representations, covenants, warranties and agreements of the Sponsor contained in this Agreement, are relied upon by Freddie Mac and serve as a basis for the agreement of Freddie Mac to exchange the Certificates for the Bonds, and the undertakings of Freddie Mac contained in the Series Certificate Agreement with respect to the Credit Enhancement.  Freddie Mac acknowledges that, except for the representations and warranties contained in Subsections 2.1(uu), 2.2(a)(iii), 2.2(a)(iv), 2.2(a)(v), 2.2(a)(vi) and 2.2(a)(vii), although the Sponsor has undertaken such review of each Bond Mortgage and Bond Documents with respect to the Bonds as it deems appropriate, the warranties and representations set forth in this Agreement are intended solely to allocate risk between the Sponsor and Freddie Mac and to establish the circumstances under which Freddie Mac may exercise certain remedies under this Agreement, are not personal assurances by the Sponsor that all matters represented and warranted to are factually correct or true as to each such Bond or Bond Mortgage, as applicable, and may not be the basis for a claim of personal liability, except as otherwise provided in Section 9.11(b) herein.  The representations and warranties contained in Subsections 2.1(uu), 2.2(a)(iii), 2.2(a)(iv), 2.2(a)(v), 2.2(a)(vi) and 2.2(a)(vii) are intended to be personal assurances that the matters warranted to in those Subsections are factually correct, and any breach thereof may be the basis for a claim of personal liability against the Sponsor.

For the purposes of the representations and warranties made by the Sponsor in this Article II:  (i) “diligent inquiry” and “due diligence” shall mean that the Sponsor has conducted such inquiry and diligence as would customarily be conducted by a Freddie Mac approved “Delegated Lender” contemplating making or purchasing mortgage loans on properties comparable to the properties securing the Bond Mortgage Loans, determined at the time the inquiry or diligence in question was conducted or should have been conducted; (ii) “constructive knowledge” shall mean knowledge obtainable (even if not actually obtained), assuming the exercise of either (a) reasonable care or diligence, or (b) diligent inquiry and due diligence in accordance with (i) above, as applicable; (iii) “employees” of the Sponsor shall include any employees of the Sponsor and of any Affiliates who have provided services to the Sponsor in connection with the transaction contemplated by this Agreement; (iv) “best knowledge” shall mean the best knowledge (which shall include actual knowledge and constructive knowledge in accordance with (ii) above) of the employees of the Sponsor and attorneys for the Sponsor working on the transaction contemplated by this Agreement; (v) “actual knowledge” shall mean the actual knowledge (excluding constructive knowledge) of the employees of the Sponsor and attorneys for the Sponsor working on the transaction contemplated by this Agreement; and (vi) “Sponsor Affiliates” means the Guarantor, and any other entity controlled by, or under common control with, any of them.

(a)Rent Schedule; Data Tape.  The rent schedules submitted to Freddie Mac contain no material errors of which the Sponsor has knowledge, and accurately states the gross potential rents, the actual leased rents, the rent concessions provided (if any), and 

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the rent subsidies (if any) for each Mortgaged Property as of the effective date thereof, and all other information regarding the Mortgaged Property contained in the Data Tape provided to Freddie Mac regarding the Mortgaged Property is true, complete and correct in all material respects.

(b)Location of Improvements.  All improvements to the Mortgaged Property that have been included in its appraised value lie within the boundaries of the land as described in the legal description attached to the related Bond Mortgage, or to the extent that any such improvements encroach onto any adjoining land, each such encroachment falls within the exceptions for encroachments set forth in Guide Chapter 16 except as set forth on Schedule B.  No improvements on neighboring properties encroach onto the Mortgaged Property, or all such encroachments fall within the exceptions for encroachments set forth in Guide Chapter 16.

(c)No Damage.  There exists no unrepaired or unrestored damage to the Mortgaged Property from fire or other casualty since the date of the Bond Mortgage that would materially and adversely affect its value as security for the Bond Mortgage, or, if such damage exists, sufficient funds have been escrowed to fully restore the Mortgaged Property to the same size and density as existed prior to such casualty, and such restoration is permitted under all applicable building and zoning laws and regulations.

(d)Mortgaged Property Condition and Operation.  

(i)The Mortgaged Property is in good and habitable condition except as noted on Schedule B.

(ii)To Sponsor’s best knowledge, there is no material uncured violation at the Mortgaged Property of any building or housing code or similar law or ordinance.

(iii)Except for the Mortgaged Properties listed on Schedule B which are currently undergoing rehabilitation, all repairs and improvements to the Mortgaged Property required by the related repair escrow agreement have been completed in accordance with the terms thereof.

(iv)Sponsor has completed a site inspection of the Mortgaged Property within 6 months of the Closing Date.  Sponsor’s inspection of the Mortgaged Property did not disclose any conditions that would materially adversely affect the value of the Mortgaged Property, which were not taken into account in the appraisal of the Mortgaged Property, including, but not limited to, environmental hazards, needed repairs, tenancy issues, the condition of adjoining properties and other similar matters.

(v)The Mortgaged Property is adequately served by public water and sewer systems and all necessary public utilities.

(vi)The Mortgaged Property is in material compliance with all applicable statutes, rules and regulations, including, but not limited to, subdivision, health, safety, fire and building codes.  The Mortgaged Property is in 

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material compliance with all regulatory agreements and restrictive covenants which affect the Mortgaged Property.  The physical configuration of the Mortgaged Property is not in material violation of the Americans with Disabilities Act.

(vii)The Mortgaged Property is located in one of the fifty (50) states, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the U.S. Virgin Islands or other territories or possessions of the United States.

(viii)The Mortgaged Property consists of five (5) or more dwelling units.  (For the purposes of this representation and warranty, a “dwelling unit” must include both a kitchen and a bathroom.)

(ix)No Mortgaged Property is operated as a manufactured housing park.

(x)If the Mortgaged Property includes any retail, commercial or other non-residential units (“mixed uses”), (A) (1) it is a single structure; or (2) it consists of multiple structures, some of which contain mixed uses, but none of which are exclusively retail or commercial; or (3) it consists of multiple structures, most of which are entirely residential, but one (or a small number) of which consists of retail stores primarily intended to serve residents of the Mortgaged Property; and (B) gross income from non-residential uses does not exceed 20% of the Mortgaged Property’s gross income; and (C) the area devoted to non-residential uses does not exceed 20% of the Mortgaged Property.

(xi)No Mortgaged Property is a Seniors Housing Property (as defined in the Guide).

(e)Condemnation.  No part of the Mortgaged Property has been taken by condemnation or any similar proceeding since the date of the Bond Mortgage, and, to the best of Sponsor’s knowledge, there is no pending or threatened (in writing) condemnation or similar proceeding with respect to all or any part of the Mortgaged Property.

(f)Authorization and Execution of Documents.  The Bond Mortgage and all documents delivered in connection with the Bond Mortgage have been validly authorized and executed by the parties thereto.  With respect to each Mortgaged Property, all documents delivered in connection with the Bond Mortgage and the related issue of Bonds have been validly authorized and executed by the parties thereto. 

(g)Loan Proceeds; Settlement Statement.  To Sponsor’s best knowledge, all proceeds of the Bond Mortgage for any Mortgaged Property have been disbursed directly to, or for the account of, the Owner in a manner that satisfied the requirements of the Bond Documents other than the Mortgaged Properties set forth on and as described on Schedule B.

(h)Insurance.  The Mortgaged Property is covered by hazard, flood, liability and rent loss insurance that meets the requirements of the Guide as of the applicable Closing Date except as set forth on Schedule B.  Without limiting the generality of the 

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foregoing, for any Bond Mortgage secured by a Mortgaged Property located in whole or in part in a Special Flood Hazard Area (“SFHA”) identified by the Federal Emergency Management Agency, (i) each building that lies within the SFHA is covered by flood insurance in an amount at least equal to the least of (A) its insurable replacement cost, (B) its prorated portion of the unpaid principal balance of the related Bonds as of the Closing Date in the case of a Mortgaged Property, or (C) the maximum limit of coverage available under the National Flood Insurance Program, and (ii) the community where the Mortgaged Property is located participates in the National Flood Insurance Program.

(i)Delinquencies and Defaults.  Except as described on Schedule B, (i) all payments due under the terms of the Bond Mortgage Documents have been made, and there have been no delinquencies of 30 days or more since the origination of the Bond Mortgage, (ii) there are no material non-monetary defaults under the terms of the Bond Mortgage Documents, and (iii) there have been no material non-monetary defaults which have remained uncured for 30 days or more since the date of the origination of the Bond Mortgage.  No Bond Mortgage Document is cross-defaulted, and no Bond Mortgage is cross-collateralized, with any other transaction, except as disclosed to, and approved by, Freddie Mac prior to the date hereof.

(j)Form 8038.  Form 8038 relating to each series of Bonds that was “reissued” (for federal tax purposes) or is a new issue with respect to the Mortgaged Property has been or will be timely filed with the Internal Revenue Service.

(k)Bond Mortgage Ownership.  Each Bond Trustee is the sole owner and holder (except for certain reserved rights of the Issuer) of the Bond Mortgage related to the issue of Bonds for which it is the Bond Trustee.  The Bond Trustee’s interest in each such Bond Mortgage is free and clear of any third party security interests, claims and encumbrances of any kind (except for certain reserved rights of the Issuer).

(l)Third-Party Reports.  The Sponsor has provided or caused to be provided to Freddie Mac all third party reports in its possession relating to the Mortgaged Property or the Owner, including, without limitation, any credit report, appraisal, engineering report, environmental report or audit, title insurance policy, flood zone determinations and surveys.  With respect to each such report, the Sponsor represents and warrants that (i) a Sponsor Affiliate has examined the report, (ii) the preparer of the report is appropriately qualified, (iii) to the Sponsor’s best knowledge, the report is complete and accurate, and (iv) to the extent the report is being obtained by the Sponsor in connection with the Closing Date, is prepared in the manner and obtained from a qualified source as required by the Guide.

(m)Undisclosed Information about Owner.  Except as disclosed to Freddie Mac in writing, the Sponsor has no actual knowledge of any fact or circumstance affecting the Owner or the Mortgaged Property that materially and adversely affects the Owner’s ability to meet its obligations under the Bond Mortgage in a timely manner.  

(n)Insolvency.  Except as specifically described on Schedule B, no bankruptcy, insolvency, reorganization or comparable proceeding has ever been instituted by or against the Owner or any guarantor or indemnitor of the Owner’s obligations at any 

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time during the last seven (7) years, and no such proceeding is now pending against any such party.

(o)Information from Owner.  No information provided by the Owner or any guarantor is untrue, inaccurate or misleading in any material and adverse respect, and the description of the Owner, and each principal of the Owner, contained in the Data Tape is true, complete and correct in all material respects.

(p)Negligence.  To Sponsor’s best knowledge, there has been no negligent act or omission by the Sponsor, any principal of the Sponsor, any Sponsor Affiliate or any employee of the Sponsor or Sponsor Affiliate that has a material adverse effect on the value of the Bond Mortgage.

(q)Enforceability.  The Bond Mortgage and the related Bond Mortgage Documents are enforceable in accordance with their terms, subject to the effect of bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to or affecting the enforcement of creditors, rights generally, and general principles of equity (whether such enforcement is considered in a proceeding at law or in equity) and any other qualifications set forth in any legal opinion delivered at the closing of the Bond Mortgage relating to such enforceability.  The Owner has no rights of offset, defense, counterclaim or rescission with respect to the Bond Mortgage Documents.  The Sponsor has complied with all applicable laws, regulations and administrative requirements, state, local and federal, which would affect in any material respect the enforceability of the Bond Mortgage Documents against the Owner, and the Bond Mortgage Documents comply with all applicable laws, regulations and requirements with respect to usury.

(r)Title; First Lien.  Except as indicated on Schedule B, the Owner holds its interest in the Mortgaged Property in fee simple.  The lien of each Bond Mortgage is insured by one or more lender’s title insurance policies insuring the applicable Bond Trustee, and its successors and assigns, as to the first priority lien (except as noted on Schedule B with respect to the Bonds of a subordinate series) of such Bond Mortgage in the aggregate principal amount of the Bonds to which it relates, subject only to: (i) the lien of current real property taxes, ground rents, water charges, sewer rents and assessments not yet due and payable; and (ii) the exceptions (general and specific) set forth in such title policies, including all covenants, conditions and restrictions, rights of way, easements and other matters of public record, none of which, individually or in the aggregate, materially interferes with (A) the current use of the Mortgaged Property or the security intended to be provided by such Bond Mortgage, (B) the Owner’s ability to pay its obligations when they become due, or (C) the value of the Mortgaged Property.  No new liens or other matters of record have been filed against the Mortgaged Property since the date of the applicable title insurance policy that would not be insured by the title insurance policy as being subordinate to the lien of the Bond Mortgage, and no such lien, individually or in the aggregate, materially interferes with (A) the current use of the Mortgaged Property or the security intended to be provided by such Bond Mortgage, (B) the Owner’s ability to pay its obligations when they become due, or (C) the value of the Mortgaged Property or such lien has been released.  Each such title policy contains all endorsements as are required as of the date hereof by Section 29.1(g) of the Guide, or 

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equivalent affirmative insurance, and otherwise conforms in all respects with the Guide except as set forth on Schedule B.  The Sponsor has made no claims under any of such title insurance policies.

(s)Taxes Paid.  All taxes, water and sewer charges, ground rents, governmental assessments and other similar charges having a lien, or which would create a lien upon the Mortgaged Property if unpaid by their payment due date, have been paid, or amounts sufficient to cover the same in the ordinary course have been escrowed under the Bond Mortgage Documents consistent with the requirements of such Bond Mortgage Documents.

(t)Equal Opportunity.  The purchase of the Bonds by the Sponsor or its Affiliates did not violate any applicable federal, state and local laws and regulations, which if violated would materially and adversely affect the enforceability of the Bond Mortgage, including but not limited to each of the following and regulations issued under each of the following:

(i)Title VIII of the Civil Rights Act of 1968, as amended, 42 U.S.C. §§3601 et seq.  (1996).

(ii)Title VII of the Consumer Credit Protection Act, as amended, 15 U.S. C. §§1691 - 1691f (1996).

(iii)Section 527 of the National Housing Act, as amended, 12 U.S.C. §1735f-5 (1996).

(u)Status.  The Sponsor has complied with all laws relating to licensing, qualification to do business and approval to originate mortgages in the state in which the Mortgaged Property is located to the extent necessary to ensure the validity and enforceability of the Bond Mortgage Documents and performance of the Sponsor’s obligations under this Agreement.

(v)Environmental.  Except as disclosed to Freddie Mac in environmental reports delivered to Freddie Mac or as listed on Schedule B, there is not now nor has there ever been:

(i)any storage, disposal or discharge of hazardous materials or substances on or affecting the Mortgaged Property,

(ii)any event or condition with respect to the Mortgaged Property, that constitutes a material violation of any applicable local, state, or federal environmental or public health law, or 

(iii)any pending or threatened (in writing) environmental or public health litigation or administrative action by any private party or public authority with respect to the Mortgaged Property.

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(w)Interest Computation.  Each Indenture with respect to the related Bonds provides for computation of interest on the basis of a 360-day year comprised of twelve 30-day months to the maturity date of the Bonds.  Each Bond Mortgage Note provides for computation of interest on the basis of a 360-day year comprised of twelve 30-day months to the maturity date of the Bond Mortgage Note.

(x)Bond Requirements.  Except as indicated on Schedule B:

(i)any Bonds originally issued as “draw-down” Bonds have been completely drawn down;

(ii)all Bonds are secured by a recorded mortgage or deed of trust granted by the related Owner in favor of the related Bond Trustee (or granted to the Issuer and then assigned to the related Bond Trustee);

(iii)all Bonds bear interest at fixed rate to maturity or an earlier reset date (and in the case of any earlier reset date, will bear interest at a fixed rate thereafter to be determined in accordance with the related Bond Documents), and there are no other interest rate modes under the related Bond Documents or if there are other interest rate modes the Bonds can only be converted to such mode with the prior written consent of the Bondholder Representative;

(iv)with respect to each series of Bonds, neither the Issuer nor the Trustee nor any other third party may direct or cause an acceleration or redemption of the Bonds or the related Bond Mortgage Loan or a foreclosure of the lien of the related Bond Mortgage pursuant to the terms of the related Bond Documents or Bond Mortgage Documents based on a failure to pay the fees or expenses or any other amounts owed to the Issuer, the Trustee or any such third party without the prior consent of the Bondholder Representative;

(v)no third-party credit facility (other than the Freddie Mac Credit Enhancement) or liquidity facility is in effect with respect to any series of Bonds;

(vi)no interest rate swap or cap or other interest rate hedge is in effect with respect to any series of Bonds; and

(vii)no forward or standby bond purchase agreement is in effect with respect to any series of Bonds.

(y)Ineligible Bond Mortgages.  The Bond Mortgage, the Bond Mortgage Documents and the Mortgaged Properties include none of the following features that would be applicable during the term of this Agreement, except as described on Schedule B:

(i)A principal balance that includes capitalization of interest, taxes, hazard insurance premiums or late charges.

(ii)[Reserved].

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(iii)A Mortgaged Property in which any of the residential space is master leased to a single lessee or is master leased for military housing.  

(iv)A Mortgaged Property more than 20 percent of which is used for student and/or military housing.

(v)A lender equity participation feature.

(vi)A Mortgaged Property with physical occupancy below 90 percent.

(vii)A ground lease.

(viii)A Mortgaged Property that is encumbered by financing that is on a parity with, or subordinate to, the Bonds or the Bond Mortgage (including any separate series of parity or subordinate bonds), except for subordinate financing which meets the requirements of the Guide for “soft” subordinate financing.  Except for the Subordinate Bonds, no other subordinate bonds are outstanding with respect to a Mortgaged Property.

(ix)A Mortgaged Property that has not converted to the permanent phase or otherwise stabilized under the related Bond Mortgage Documents.

(z)Title Insurance.  Each Title Insurance Policy in effect with respect to the related Bond Mortgage is identical to the policy previously submitted to Freddie Mac by the Sponsor.  There are no conditions or encumbrances that have not been disclosed to the title insurer and that would provide a reasonable basis for the title company refusing to honor a claim.  To the knowledge of Sponsor, there are no liens or encumbrances affecting the Bond Mortgage or the Mortgaged Property that are not identified in Section 2.1(r), in Schedule B to the Title Insurance Policy or in the title report delivered to Freddie Mac in connection with this transaction arising during the period from the effective date of the Title Insurance Policy to the Closing Date.

(aa)Survey.  Except as set forth on Schedule B, the survey delivered to Freddie Mac as part of the Underwriting Package correctly depicts for the Mortgaged Property the boundary lines, improvements and exceptions to title that can be shown on a survey required to be shown on a survey under the ALTA/ACSM requirements for urban surveys, and otherwise meets the requirements of the Guide.

(bb)Single Tax Parcel.  The Mortgaged Property consists of property identified as all of a single tax parcel or, if identified as multiple tax parcels, the Mortgaged Property constitutes the entirety of those tax parcels.  Any tax parcel or parcels within which the Mortgaged Property is located does not include property that is not subject to the Bond Mortgage.

(cc)Access.  Except as set forth on Schedule B, the Mortgaged Property does not share ingress and egress through an easement or private road, or share on-site or off-site recreational facilities and amenities that are not located on the Mortgaged Property and under the exclusive control of the Owner; or where there is shared ingress and egress or amenities, there exists an easement or joint use and maintenance agreement, such 

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agreement meets the requirements of the Guide, and such agreement (i) provides that access to and use and enjoyment of the easement or private road and/or recreational facilities and amenities is perpetual, (ii) specifies the Owner’s responsibilities and share of expenses, and (iii) states that the failure to pay any maintenance fee will not result in a loss of usage of the easement.

(dd)Zoning.  The overall character of the existing use of the Mortgaged Property is consistent with the zoning classification of the Mortgaged Property, except to the extent such use may constitute a legal nonconforming use.  Except as disclosed to Freddie Mac in writing, the Mortgaged Property does not violate any density or building setback requirements of the applicable zoning law, and reconstruction of the Mortgaged Property in its current configuration would be permitted by applicable zoning laws following destruction of part or all of the Mortgaged Property by fire or other casualty or, in lieu thereof, building law and ordinance insurance coverage satisfying the requirements of the Guide as of the Closing Date has been provided.  The Mortgaged Property otherwise meets the requirements of the Guide relating to zoning, and no proceedings are pending or, to the best of Sponsor's knowledge, threatened that would result in a change of the zoning of the Mortgaged Property.

(ee)Bond Information.  The information with respect to the Bonds set forth on Schedule 1 to the Series Certificate Agreement and Appendix A to the Offering Circular Supplement is true and correct in all material respects.

(ff)Owner Liability.  Except as set forth in the Bond Mortgage and the documents related thereto, the Owner of the Mortgaged Property has no outstanding or continuing payment obligations to the Sponsor, the Issuer or the Bond Trustee, and, to Sponsor’s knowledge, the Sponsor, the Issuer and the Bond Trustee have not breached any obligation or duty owed to the Owner under the Bond Mortgage Documents or at law or in equity the regulatory agreement or other similar agreement imposing operating restrictions on the Mortgaged Property.

(gg)LURA and Bond Documents.  (i) The use and operation of the Mortgaged Property is currently in compliance with the provisions of the land use restriction agreement, the regulatory agreement or other similar agreement (including any such agreement constituting or executed in connection with a Housing Assistance Payment contract from the U.S. Department of Housing and Urban Development) imposing operating restrictions on the Mortgaged Property executed in connection with the Bonds (the “LURA”), and no prior violations have occurred that would result in any related tax exempt bonds becoming taxable, loss or material diminution in value of the tax credits, forfeiture or reversion of title to the Mortgaged Property or other material loss or risk of loss on the part of the Owner or the Mortgaged Property; (ii) to the best of Sponsor’s knowledge, there have been no actions, claims, demands or proceedings brought against the Owner or related to the Mortgaged Property arising out of any violations or claimed violations of any tax regulatory agreement; (iii) no circumstances exist which, with the giving of notice or the expiration of any applicable grace or cure period, would constitute an event of default under the Bond Documents or the Custody Documents; (iv) there are no fees currently due and owing under the Bond Documents or the Custody Documents which have not been paid; and (v) no claims for indemnification under the Bond 

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Documents or the Custody Documents have been made or are pending, and no basis for such a claim for indemnification exists.

(hh)Nonexistent Documents.  Except as indicated on Schedule B, none of the following documents is currently in effect with respect to the Bond Mortgage or the Mortgaged Property:

(i)A mortgage note or any other obligation payable to the Sponsor or any its Affiliates.

(ii)Except as disclosed in writing to Freddie Mac, an assignment of rents or leases in favor of the Sponsor or its Affiliates.

(iii)An escrow agreement for the benefit of the Sponsor or its Affiliates creating or governing the tax and insurance escrow, any repair escrow or any other escrow fund with respect to the Bond Mortgage (except pursuant to the Sponsor Documents) or the Mortgaged Property (other than the Mortgaged Properties set forth on Schedule B and in the amounts set forth on Schedule B). 

(ii)Perfection of Security Interest.  Financing statements have been filed in all locations necessary to perfect a security interest in all of the Mortgaged Property described in the financing statements, including all furniture, fixtures, equipment, accounts, contracts rights, condemnation and casualty proceeds, general intangibles and all other personal property related to the ownership or operation of the Mortgaged Property, described in those financing statements, to the extent that applicable law permits a security interest in such collateral to be perfected by filing.

(jj)Single Asset Requirements.  In the case of each of the Mortgaged Properties, except as disclosed to Freddie Mac on Schedule B, the Bond Mortgage prohibits the applicable Owner from owning substantial assets other than its Mortgaged Property and prohibits the applicable Owner from engaging in any business enterprises other than the operation of its Mortgaged Property.  To the Sponsor’s best knowledge, each Owner is in compliance with the above-described provision of its Bond Mortgage.

(kk)Flood Zone Determination.  The Flood Zone Determination form for the Mortgaged Property was prepared on the basis of the legal description of the Mortgaged Property and, notwithstanding any street address specified on the form, the determination evidenced by the form is applicable to all buildings comprising the Mortgaged Property.

(ll)Federal Income Tax Matters.  To Sponsor’s best knowledge, (1) no Owner has taken any action, omitted to take any action, or permitted any action to be taken that would impair the exclusion from gross income for federal income tax purposes of the interest payable on any of the Bonds, and (2) no Owner is in violation of any material requirement of any tax certificate relating to the Bonds.

(mm)Payment of Fee Component.  Payment of the Fee Component with respect to each Bond Mortgage Loan is current and no such fees are currently due and payable.

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(nn)State Allocating Agency Requirements.  The only operating restrictions imposed on any Mortgaged Property by any state tax credit or volume cap allocating agency not reflected in the regulatory agreements, restrictive covenants or similar instruments recorded against the Mortgaged Properties are the California Debt Limit Allocation Committee's letters related to the Mortgaged Properties listed on Exhibit I, complete and accurate copies of which have been provided to Freddie Mac.

(oo)Rebate.  No rebate is due and owing with respect to the Bonds related to any Mortgaged Property.

(pp)Exemption from Real Property Taxes.  Except as indicated on Schedule B, the Mortgaged Property has qualified for an exemption from, and has not been subject to, payment of real property taxes since the date the Owner acquired the Mortgaged Property and to Sponsor’s best knowledge (i) the Owner is in compliance with the requirements of the regulatory agreement applicable to the Mortgaged Property, (ii) the Mortgaged Property qualifies for exemption from real property taxes for the current real property tax year, (iii) no event has occurred which would cause the Mortgaged Property to lose its current exemption from real property taxes, and (iv) the exemption from real property taxes is in effect through the maturity date of the related Bonds.

(qq)Amortization Schedules.  The amortization schedules included in the Data Tape do not contain material errors of which the Sponsor has knowledge, and accurately state the maturity and the principal and interest payments for the applicable Bond Mortgage Loan and related Bond as of each monthly payment date.

(rr)Optional Redemption at Par.  The first date on which the Bonds are permitted to be redeemed at par is set forth in Exhibit II.

(ss)Tax Credit Matters.  Except as indicated on Schedule B, a Form 8609 has been issued by the applicable tax credit allocating agency with respect to each Mortgaged Property evidencing the final allocation of tax credits with respect thereto in an amount such that no adjustment to or repayment of any tax credit investor’s capital contribution is necessary, and all tax credit investor capital contributions have been fully funded to the Owner.

(tt)Laundry and Other Leases.  Each laundry or telecommunications lease in effect with respect to a Mortgaged Property is in compliance with applicable requirements of the Guide, or the nature of any noncompliance is such that it would neither materially interfere with the security provided by the related Bond Mortgage, nor materially impair the value of the Mortgaged Property.

(uu)Ownership of Bonds.  (1) The Bonds are genuine and outstanding.  The Sponsor has all necessary power and authority to transfer, and has duly authorized by all necessary action the transfer of, the Bonds to the Custodian pursuant to the Custody Agreement.  Immediately prior to such transfers, the Sponsor owned the Bonds free and clear of any lien, pledge, encumbrance or other security interest, and has not sold, assigned or pledged any of its interest in the Bonds to any Person except in accordance 

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with the Sponsor Documents, and has not entered into any agreement to effect such a sale, assignment or pledge except as contemplated hereby.  Upon such transfers, the Sponsor releases all right, title and interest in and to the Bonds (such release by the Sponsor in connection with its transfer of ownership of the Bonds in no way limits its rights to direct the funding of Release Events in certain cases or take other actions with respect to the Bonds as described in the Sponsor Documents).

(2) The Custodial Receipts are genuine and outstanding.  The Sponsor has all necessary power and authority to transfer, and has duly authorized by all necessary action the transfer of, the Custodial Receipts to Freddie Mac.  Immediately prior to such transfers, the Sponsor owned the Custodial Receipts free and clear of any lien, pledge, encumbrance or other security interest, and has not sold, assigned or pledged any of its interest in the Custodial Receipts to any Person other than Freddie Mac, and has not entered into any agreement to effect such a sale, assignment or pledge except as contemplated hereby.  Upon such transfers, the Sponsor has released all right, title and interest in and to the Custodial Receipts (such release in connection with the transfer of ownership of the Custodial Receipts in no way limits the Sponsor's rights to direct the funding of Release Events in certain cases or take other actions with respect to the Custodial Receipts as described in the Sponsor Documents).

(vv)Earthquake Insurance.  With respect to each Mortgaged Property located in Seismic Risk Zone 3 or 4, a seismic analysis has been conducted by a recognized firm experienced in conducting such analyses, and no such analysis showed a Mortgaged Property with a probable maximum loss of greater than 40%.  For each such Mortgaged Property with respect to which the applicable seismic analysis shows a probable maximum loss of greater than 20%, but not greater than 40%, earthquake insurance is currently maintained by the related Owner with a deductible not in excess of $50,000 from an insurance company with a rating meeting the requirements of the Guide for the applicable size of the Bond Mortgage Loan related to the Mortgaged Property with Freddie Mac named as a loss payee or additional insured.

(ww)Owner Status.  Neither the Owner nor any principal of an Owner is a person or entity that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control.

(xx)Replacement Reserves.  The replacement reserve requirements with respect to each Mortgaged Property as set forth in the related Bond Documents and Bond Mortgage Loan Documents, are fully funded.  All bond-level replacement reserves and tax and insurance escrows are held by the applicable Bond Trustee.

(yy)Condominium.  Each Mortgaged Property which is subject to a condominium regime is in compliance with applicable requirements of the Guide, or the nature of any noncompliance is such that it would neither materially interfere with the security provided by the related Bond Mortgage, nor materially impair the value of the Mortgaged Property.

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(zz)Owner Principals.  Sponsor has performed due diligence on the Owner Principals and based on such due diligence:

(i)No Owner Principal (A) is on any Prohibited Parties Lists, (B) has been convicted of any violation of the AML Laws, or (C) has been the subject of a final enforcement action relating to the AML Laws.

(ii)No Non-U.S. Equity Holder (A) is on the OFAC Lists, (B) has been convicted of a violation of the AML Laws, or (C) has been the subject of a final enforcement action relating to the AML Laws.

For purposes of the foregoing representation the following definitions apply:

“AML Laws” means applicable federal anti-money laundering laws and regulations including 18 U.S.C. §§ 1956 and 1957, as amended.

“FHFA” means the Federal Housing Finance Agency.

“Non-U.S. Equity Holder” means any Person with a collective equity interest, whether direct or indirect of 10% or more in Owner, and which is either (a) an individual who is not a citizen of the United States, or (b) an entity formed outside the United States).

“OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control.

“OFAC Lists” means either one of the following:

 

(i)The OFAC Specially Designated Nationals and Blocked Persons List.

 

(ii)The OFAC Consolidated Sanctions List.

 

“Owner Principal” means any of the following:

(i)Any general partner of Owner (if Owner is a partnership).

(ii)Any manager or managing member of Owner (if Owner is a limited liability company).

(iii)Any Person (limited partner, member or shareholder) with a collective direct or indirect equity interest in Owner equal to or greater than 25%.

(iv)Any guarantor of all or any portion of the Bonds or of any obligations of Owner under the Bond Mortgage Documents.

(v)Any direct owner of the Owner or if such owner is a pass-through entity, then the first Person that is not a pass-through entity.

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(vi)The ultimate individuals or entities that directly or indirectly own or control the Owner.

“Prohibited Parties List” means any one or more of the following:

(i)The OFAC Specially Designated Nationals and Blocked Persons List.

(ii)The OFAC Consolidated Sanctions List.

(iii)FHFA Suspended Counterparty Program List.

Section 2.2Other Representations and Warranties by the Sponsor and Representations and Warranties by Freddie Mac.

(a)The Sponsor represents and warrants as of the Closing Date with respect to each Bond Mortgage Loan and Mortgaged Property related to the Bonds and the Sponsor Documents, as follows:

(i)To Sponsor’s best knowledge, the information contained in the Underwriting Package is true and accurate in all material respects and does not omit information in the possession of the Sponsor to make the provided information complete and accurate.

(ii)All copies of documents delivered to Freddie Mac under Section 2.3 of this Agreement are true and accurate copies of the originals.  The Sponsor has in its possession no documents described in Section 2.3 of this Agreement for which either originals or copies have not been delivered to Freddie Mac.

(iii)The Sponsor Documents to which it is a party have been duly authorized by the Sponsor, are valid and binding agreements of the Sponsor, and are enforceable against the Sponsor in accordance with their terms except as may be limited by bankruptcy, insolvency, reorganization, moratoria, liquidation or readjustment of debt or similar laws now or hereafter affecting the enforcement of creditors’ rights generally, and as may be limited by the effect of general principles of equity regardless of whether such enforcement is considered in a proceeding at law or in equity.  The Guaranty has been duly authorized by the Guarantor, is a valid and binding agreement of the Guarantor, and is enforceable against the Guarantor in accordance with its terms except as may be limited by bankruptcy, insolvency, reorganization, moratoria, liquidation or readjustment of debt or similar laws now or hereafter affecting the enforcement of creditors’ rights generally, and as may be limited by the effect of general principles of equity regardless of whether such enforcement is considered in a proceeding at law or in equity.

(iv)Since December 31, 2017, which is the date of the Guarantor’s most recent financial statements submitted to Freddie Mac, there has been no material adverse change in the general financial position of the Guarantor.  For the purposes of this representation and warranty, the “general financial position of the Guarantor” shall be deemed to exclude any short-term adverse changes that occur solely as a result of daily interest rate fluctuations.

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(v)The Sponsor (A) is a limited liability company duly organized and existing pursuant to the laws of the State of Delaware, (B) has the power and authority to own its properties and to carry on its business as now being conducted and as contemplated by the Sponsor Documents and (C) has the power and authority to execute and perform all the undertakings in the Sponsor Documents and the other transactions and agreements contemplated by the Sponsor Documents.  The Guarantor (1) is a limited partnership duly organized and existing pursuant to the laws of Delaware, (2) has the power and authority to own its properties and to carry on its business as now being conducted and as contemplated by the Guaranty and (3) has the power and authority to execute and perform all the undertakings in the Guaranty.  

(vi)The execution and performance by the Sponsor of the Sponsor Documents to which it is a party and other agreements required pursuant to such agreements, and by the Guarantor of the Guaranty (A) will not violate in any material respect or, as applicable, have not violated in any material respect any provision of any law, rule or regulation or any order of any court or other agency or government applicable to the Sponsor or the Guarantor and (B) will not violate in any material respect, or as applicable, have not violated in any material respect any provision of any indenture, agreement or other instrument to which the Sponsor or Guarantor, as applicable, is a party or is otherwise subject, or, except as otherwise provided in the Sponsor Documents, result in the creation or imposition of any material lien, charge or encumbrance of any nature.

(vii)Neither the Sponsor nor the Guarantor is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement or instrument to which it is a party which default would in Sponsor’s good faith and reasonable judgment materially adversely affect the transactions contemplated by the Sponsor Documents or the Guaranty.  There is no action, suit or proceeding at law or in equity or by or before any governmental instrumentality or other agency now pending or threatened in writing against or affecting the Sponsor or the Guarantor or any of its properties or rights, which, if adversely determined, would in Sponsor’s good faith and reasonable judgment (A) materially impair the right of the Sponsor or the Guarantor to carry on its business as now conducted or (B) have a material adverse effect on the financial condition of the Sponsor or the Guarantor.

(viii)Neither Sponsor nor any applicable Sponsor Affiliate, with respect to any period during which it has acted as Bondholder Representative under the Bond Documents, has taken, or omitted to take, any action that, if taken or omitted, would jeopardize or adversely affect the tax-exempt status of the interest payable on the Bonds.

(ix)Guarantor, as Bondholder Representative, is authorized under the Bond Documents to assign its rights, privileges and obligations as Bondholder Representative to Freddie Mac and in such capacity Freddie Mac is the sole party authorized to exercise or direct remedies with respect to the Bond Mortgage.

(x)None of the Bond Documents requires or obligates the Bondholder Representative to pay the fees and expenses of any party, including any obligations of the 

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Owner, or to pay capitalized interest or any other costs during any construction rehabilitation period for any Mortgaged Property.

(xi)Each Owner has established all escrows and reserves required by the Bond Mortgage and the Owner Documents.

(xii)None of the Sponsor or the Guarantor nor the individuals who work for them, whether as employees, agents or independent contractors who have been, prior to the Closing Date, actively engaged in conducting Sponsor’s or Guarantor’s operations with the Owner, has:

(A)made any written representation to Freddie Mac or the Servicer respecting the Owner, the Bond Mortgage or the Mortgaged Property that it knew or now knows is materially untrue or misleading and that has a materially adverse effect on the value of the Bond Mortgage or the Mortgaged Property, or

(B)omitted to provide any written information to Freddie Mac or the Servicer that it knew or now knows, which omission renders the written information provided to Freddie Mac or the Servicer in connection with the Owner, the Bond Mortgage or the Mortgaged Property materially untrue or misleading and that has a materially adverse effect on the value of the Bond Mortgage or the Mortgaged Property.

The Sponsor and Freddie Mac agree that the individuals who provided such written information to them shall not incur personal liability arising from providing such written information.

(b)By its execution and delivery of the Series Certificate Agreement, Freddie Mac will be deemed to have represented and warranted as of the Closing Date as follows:

(i)It is a shareholder-owned government-sponsored enterprise organized and existing under the laws of the United States of America.

(ii)Each of this Agreement and the Series Certificate Agreement (the “Freddie Mac Documents”) is a valid and binding obligation of Freddie Mac, the making and performance of which by Freddie Mac have been duly authorized by all necessary corporate and other action, and neither the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of the Freddie Mac Documents by Freddie Mac, conflicts with, results in a breach of, or is a default under, in any material respect, any of the terms, conditions or provisions of any legal restriction or any instrument to which Freddie Mac is now a party or by which Freddie Mac is bound, or constitutes a violation of any law regulating the affairs of Freddie Mac or internal governing documents of Freddie Mac, and will not result in the creation of any prohibited encumbrance upon any of its assets.

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Section 2.3Conditions.  The obligation of Freddie Mac to exchange the Certificates for the Bonds, execute and deliver the Series Certificate Agreement and provide the Credit Enhancement is subject to the satisfaction of the following conditions precedent on or prior to the Closing Date:

(a)Final Documentation Delivery with respect to each Bond Mortgage on a Mortgaged Property.  The Sponsor has completed final delivery of the documentation in respect of each Bond Mortgage on a Mortgaged Property that relates to the Bonds by delivering or causing to be delivered the following (to the extent not previously delivered) to Freddie Mac, Legal Division, 8200 Jones Branch Drive, Mail Stop 204, McLean, VA 22102 Attention:  Associate General Counsel, an accurate, complete and legible copy of the following documents, including all assignments of such documents:

(i)The Bond Mortgage.

(ii)The closing transcript from the original issue of the related Bonds and from any subsequent refunding issue, if applicable.

(iii)Each financing statement that purports to perfect a security interest related to the Bond Mortgage or the related Bonds.

(iv)The Title Insurance Policy insuring the Bond Mortgage and naming the applicable Bond Trustee as the insured, in a form approved by Freddie Mac.

(v)Each document listed as an exception to coverage in Schedule B to the title insurance policy to the extent requested by Freddie Mac.

(vi)A survey approved by Freddie Mac.

(vii)Each legal opinion received by the Sponsor and the Issuer from counsel to the Owner and the guarantor(s), if any, in a form acceptable to Freddie Mac. 

(viii)All laundry leases and commercial leases and copies of all related subordination agreements.

(ix)Evidence satisfactory to Freddie Mac of insurance coverage including, as determined to be applicable by Freddie Mac, hazard, earthquake (unless waived by Freddie Mac), rent loss or business interruption, building ordinance, liability and (if any structure forming part of the Mortgaged Property is located in a special flood hazard area identified by the Federal Emergency Management Agency) flood insurance coverage.

(x)If a flood zone determination has been made by a third party on or after January 2, 1996, a copy of the flood zone determination, which must be on the Standard Flood Hazard Determination Form issued by the Federal Emergency Management Agency.

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(xi)The rent schedule certified by the Owner as true and correct, most recently received by the Sponsor and acceptable to Freddie Mac.

(xii)Any separate assignment of leases and rents related to the Bond Mortgage, if any.

(xiii)Each guaranty of the obligations of the Owner with respect to the Bond Mortgage Loan.

(xiv)To the extent obtained by the Sponsor or applicable Sponsor Affiliate, each replacement reserve agreement and repair escrow agreement or comparable agreements, relating to the Mortgaged Property.

(xv)A completed questionnaire by the Bond Trustee in form and scope satisfactory to Freddie Mac.

(b)Final Documentation and Fee Delivery with Respect to this Agreement.  On or prior to the Closing Date, the following conditions precedent shall be satisfied prior to delivery by Freddie Mac of the Series Certificate Agreement:

(i)payment made or caused to be made by the Sponsor of (x) Freddie Mac’s fees, costs and expenses and (y) all other initial deposits, fees, costs and expenses which are due and payable by the Sponsor on or before the Closing Date in accordance with this Agreement and the other Sponsor Documents;

(ii)if applicable, delivery to the title insurance company for filing and/or recording in all applicable jurisdictions (or such filing and/or recording having been provided for in a manner satisfactory to Freddie Mac) of all documents, including, without limitation, duly executed and acknowledged copies of each Bond Mortgage, UCC-1 financing statements and other appropriate instruments, in form and substance satisfactory to Freddie Mac and in proper form for recordation as may be necessary, in the opinion of Freddie Mac, to perfect the lien created by the foregoing, and each applicable Owner Document (or evidence of the prior recordation of such documents) and the payment of all taxes, fees and other charges payable in connection with such execution, delivery, recording and filing;

(iii)there shall have occurred no material adverse change in the financial condition, business or prospects of any Owner, or in the physical condition, operating performance or value of the Owner’s Mortgaged Property from that shown in the Underwriting Package for the Bonds delivered to Freddie Mac by the Sponsor;

(iv)there shall exist no default or “Event of Default” under any of the Owner Documents with respect to any Mortgaged Property; and

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(v)receipt by Freddie Mac, on or prior to the Closing Date, of the following, each dated as of the Closing Date, except as otherwise agreed to in form and substance satisfactory to Freddie Mac in all respects:

(A)an executed copy of the Series Certificate Agreement, the Remarketing Agreement, and the satisfaction of all conditions precedent set forth in such documents;

(B)an executed counterpart of this Agreement;

(C)an executed copy of the Servicing Agreement and copies of any other servicing agreements or sub-servicing agreements applicable to the Bond Mortgage Loans;

(D)a pass-through opinion of Shearman & Sterling LLP to the effect that the interest on the Class A Certificates and the Class B Certificates are not includable in gross income to the holders thereof for federal income tax purposes to the same extent as though the holders of such certificates owned the Bonds;

(E)an opinion of special counsel to Freddie Mac with respect to the treatment of the Series Pool under applicable tax laws of the Commonwealth of Virginia, in form and substance acceptable to Freddie Mac;

(F)opinions of counsel to the Sponsor, the Guarantor and the Servicer dated the Closing Date and addressed to Freddie Mac, in form and substance acceptable to Freddie Mac;

(G)the most recent environmental report pertaining to the Mortgaged Property, and all related due diligence completed to Freddie Mac’s satisfaction;

(H)the most current survey relating to the Mortgaged Property in form and substance acceptable to Freddie Mac;

(I)such opinions of Bond Counsel as Freddie Mac shall require in form and substance satisfactory to Freddie Mac;

(J)[Reserved];

(K)an ACCORD 28, Evidence of Policy naming the Bond Trustee as loss payee and mortgagee under each fire or casualty insurance policy covering the Mortgaged Property and a certified copy of all such policies;

(L)to the extent not previously received by Freddie Mac and if applicable, a certificate from the Bond Trustee of each series of Bonds that were reissued prior to the Closing Date, stating that arbitrage calculations 

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to be done in connection with reissuance of the Bonds for each Mortgaged Property have been completed, and any amounts due and payable to the United States Treasury in connection therewith have been paid;

(M)the Guaranty;

(N)true and correct copies of rating letters from each Rating Agency rating the Class A Certificates;

(O)executed copies of each of the Custody Documents, the Subordinate Bonds Custody Agreement and the Agreement Regarding Financial Monitors;

(P)evidence of the transfer to, or delegation of, all the servicing arrangements applicable to the Bonds to the Servicer; and

(Q)such other documents, instruments, certificates, approvals (and, if requested by Freddie Mac, certified duplicates of executed copies thereof) or opinions as Freddie Mac may request.

Where subsection (a) requires delivery of a copy of a Bond Mortgage, the related financing statement or other filed or recorded document, the copy must show the recorder’s stamp, book and page number, or instrument number.

(c)Document Deliveries.  The delivery of copies required by Sections 2.3(a) and 2.3(b)(ii) above shall be carried out by or on behalf of the Sponsor, at no expense to Freddie Mac.  If the Sponsor fails to deliver to Freddie Mac any above-required documentation, Freddie Mac may order recorder-certified copies of the missing items that are recorded items, and the Sponsor shall reimburse Freddie Mac upon demand for all costs and expenses incurred by Freddie Mac in doing so.

Section 2.4Breach of Representations and Warranties.

(a)The Sponsor shall notify Freddie Mac within 15 days following a discovery by the Sponsor of a breach of any representation or warranty made by the Sponsor under this Agreement that materially and adversely affects the value of a Bond (a “Breach”).  Freddie Mac agrees to use its best efforts to provide notice to the Sponsor within 30 days following a discovery by Freddie Mac of a Breach; provided, however, that the failure of Freddie Mac to so notify the Sponsor of such a Breach shall not relieve the Sponsor of its obligation to cure such Breach upon receiving notice from Freddie Mac or obtaining knowledge thereof.

(b)Within 60 days after the earlier of (i) discovery by the Sponsor of a Breach, or (ii) the Sponsor’s receipt of notice from Freddie Mac of such Breach, the Sponsor shall (x) commence commercially reasonable efforts to cure such Breach in all material respects or (y) solely in the event such Breach cannot be cured by the Sponsor’s commercially reasonable efforts in accordance with the terms of this Section 2.4, provide a Substitute Bond for a Bond with respect to which a Breach has occurred, but only in accordance with the terms of Section 3.19 hereof.

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(c)Subject to the last sentence of this subsection (c), if a Breach is not cured by the Sponsor within 60 days after the discovery or receipt of notice of such Breach or a Substitute Bond is not provided, in each case as set forth in subsection (b) above, Freddie Mac shall have the right to pursue all remedies specified in this Section including, but not limited to, (i) the right to require the Sponsor to fund or cause the funding of the purchase from the Administrator of the series of Bonds related to the Breach, to the extent that Freddie Mac may exercise its purchase right following the occurrence of a Release Event with respect to the same (which funding by, or caused by, the Sponsor shall be accomplished via the exercise of such right of the Sponsor’s in accordance with Section 7.3(a) hereof and applicable provisions of the Series Certificate Agreement), and (ii) the right to require payment by the Sponsor of a Prepayment/Substitution Premium in connection with any such Release Event, which remedies in addition to the recovery of enforcement costs from the Sponsor, proceeding under the Guaranty, and taking action as provided in subsection (d) below shall be the sole rights and remedies available to Freddie Mac as the result of a Breach.  In the event the Breach is non-monetary and such that it can be corrected, but not within 60 days, Freddie Mac shall not pursue any remedies hereunder if corrective action is instituted by the Sponsor within such 60 days and diligently pursued until the Breach is cured, provided such Breach must be cured not later than the earlier of 90 days after the discovery or receipt of notice of such Breach as set forth in subsection 2.4(b) above.

(d)If Sponsor fails to cure a Breach, or provide a Substitute Bond as set forth in subsection (b) above, within the time provided in subsection (c) above, or fails to diligently prosecute the cure of such Breach, in Freddie Mac’s reasonable judgment, Freddie Mac, after written notice to the Sponsor, shall have the right, but not the obligation, to cure any such Breach, and any costs, fees or expenses so incurred by Freddie Mac shall be a Credit Advance and shall be paid by the Sponsor in accordance herewith.  Amounts expended by the Sponsor to cure a Breach shall be at the sole cost and expense of the Sponsor. 

(e)The representations and warranties in this Agreement, Freddie Mac’s right to rely on them, and the Sponsor’s liability for a Breach, shall not be affected or limited by any investigation (including any pre-purchase review of documentation) made by, or on behalf of, Freddie Mac, except to the extent that the Sponsor can establish that one or more of the following Freddie Mac employees had actual knowledge (as opposed to imputed knowledge arising from the receipt of the documents required to be delivered by the Sponsor hereunder) of such Breach prior to the Closing Date and did not inform the Sponsor of such Breach prior to the Closing Date:

Curtis Melvin and Christopher B. Propert

provided that the inclusion of Christopher B. Propert in the list of Freddie Mac employees shall not imply a waiver of the attorney-client privilege, which may be asserted by Freddie Mac.

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Article III

COVENANTS OF THE SPONSOR

Section 3.1Freddie Mac Closing Fee and Closing Expenses; Other Closing Costs and Initial Deposits.  The Sponsor shall pay, or cause to be paid, to Freddie Mac on the Closing Date a transaction fee of $150,000 together with Freddie Mac's expenses (including but not limited to printing costs in connection with the Offering Circular of $5,000 and the auditor’s fee in connection with the delivery of the comfort letter(s)), and the Sponsor shall also pay the fees and expenses of Freddie Mac’s outside counsel in accordance with the instructions of such counsel on the Closing Date.  The Sponsor shall also pay, or cause to be paid or funded, as applicable, on or before the Closing Date, all other fees, costs, expenses and initial deposits required to be paid or funded by the Sponsor under any other Sponsor Documents. 

Section 3.2Reimbursement of Credit Advances.  The Sponsor shall reimburse Freddie Mac the amount of each Credit Advance on the date such Credit Advance was made by Freddie Mac, together with interest on the Credit Advance that has accrued but has not been paid on the fifteenth day of the month in which such Credit Advance occurs, from the sources and in the priority established in accordance with the provisions of this Agreement and Section 4.03 of the Series Certificate Agreement or from the Pledged Security Collateral hereunder; provided, however, a Credit Advance that funded a Bond Purchase Loan pursuant to Section 7.3 shall be paid in accordance with the provisions thereof.

Section 3.3Scheduled Payments and Deposits.

(a)Monthly Payments.  The Sponsor shall pay, from the sources and in the priority established in accordance with the provisions of this Agreement and Section 4.03 of the Series Certificate Agreement, the following amounts on the fifteenth day of each month beginning on the fifteenth day of the first month following the Closing Date:

(i)Interest on Credit Advances.  Accrued but unpaid interest on any outstanding Credit Advances from the date such Credit Advance was made by Freddie Mac to the date on which the Credit Advance is reimbursed at the Default Rate; provided, however, that interest on a Credit Advance that funded a Bond Purchase Loan pursuant to Section 7.3 shall be accrued in accordance with the provisions thereof.

(ii)Freddie Mac Fee.  The accrued but unpaid Freddie Mac Fee.

(iii)Servicing Fee.  The accrued but unpaid Servicing Fee.

(b)Certain Third Party Fees.  To the extent not paid by the Owner with respect to any Bond Mortgage Loan, the Sponsor shall pay from the sources and in the priority established in accordance with the provisions of this Agreement and Section 4.03 of the Series Certificate Agreement the regular, ongoing fees due from time to time to the Bond Trustee and the rebate analyst appointed under the Indenture, as applicable, to the party entitled to payment thereof when such payment is due.

Section 3.4[Reserved]

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Section 3.5Payment of Costs, Fees and Expenses.  In addition to the Sponsor’s other obligations set forth in this Article III and in the other Sponsor Documents, the Sponsor shall pay, upon written demand, to Freddie Mac (from the sources and in the priority established in accordance with the provisions of this Agreement and Section 4.03 of the Series Certificate Agreement) all of the following:

(a)all fees, costs, charges and expenses (including the reasonable fees and expenses of attorneys, and the fees and expenses of accountants and other experts) incurred by Freddie Mac in connection with, or related to, the execution and delivery of the Series Certificate Agreement, the deposit of the Bonds with the Administrator and deposit of the Subordinate Bonds pursuant to the Subordinate Bonds Custody Agreement (including any fees, costs, charges or expenses associated with the re-registration and delivery of the Bonds or the Subordinate Bonds, or the review thereof, required pursuant to the Bond Custody Agreement), the sale of the Class A Certificates, and the preparation and review of the Sponsor Documents and all other documents related to the transactions contemplated by the Sponsor Documents, and the consummation of the transactions contemplated hereby and thereby and any tax or governmental charge imposed in connection with the execution and delivery of the Series Certificate Agreement;

(b)any and all fees, costs, charges and expenses incurred by Freddie Mac (including the reasonable fees and expenses of attorneys, and the fees and expenses of accountants and other experts) in connection with (i) any amendments, consents or waivers to this Agreement, the Sponsor Documents and any other documents related to the transactions contemplated by the Sponsor Documents (whether or not any such amendments, consents or waivers are entered into), (ii) any requests by the Sponsor for Freddie Mac to consider providing credit enhancement for any other certificate issue, (iii) any proposed hedge arrangement or proposed investments under the Series Certificate Agreement, (iv) any adjustment or conversion of the interest rate on the Class A Certificates, (v) any tender, purchase, refunding, reoffering or remarketing of the Bonds or the Certificates, (vi) any collection, disbursement or application of insurance or condemnation awards, proceeds, damages or other payments including, without limitation, all costs incurred in connection with the application of insurance or condemnation awards to restore or repair the Mortgaged Property, including, reasonable appraiser fees, (vii) the transfer, assignment and re-registration of the Bonds to Freddie Mac, (viii) any audit of any Mortgaged Property, the Bonds or the Certificates by the Internal Revenue Service, and (ix) requests by the Holder of the Class B Certificates for Freddie Mac's consent to transfer its interest in the Class B Certificates;

(c)interest, fines and penalties, any and all documentary stamp, recording, transfer, mortgage, intangible, filing or other taxes (other than income taxes) or fees and any and all liabilities incurred by Freddie Mac or the Servicer with respect to or resulting therefrom which may be payable in connection with the execution and delivery of, or the consummation or administration of any of the transactions contemplated by, or any amendment, supplement, or modification of, or any waiver or consent under or in respect of, or any filing of record, recordation, release or discharge of, this Agreement, the Sponsor Documents, the Owner Documents and any other documents related to the transactions contemplated by the Sponsor Documents or the Owner Documents;

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(d)any and all fees, costs, charges and expenses (including the reasonable fees and expenses of attorneys, and the fees and expenses of accountants and other experts) which Freddie Mac may pay or incur in connection with any payment under the Series Certificate Agreement, including payments of any fees and charges in connection with any accounts established to facilitate payments under the Series Certificate Agreement, or the performance of Freddie Mac’s obligations under the Series Certificate Agreement;

(e)any payments or advances made by Freddie Mac or the Servicer on behalf of the Sponsor pursuant to this Agreement, the other Sponsor Documents, the Owner Documents and any other documents related to the transactions contemplated by the Sponsor Documents or the Owner Documents;

(f)any and all fees, costs, or charges and expenses (including the reasonable fees and expenses of attorneys, and the fees and expenses of accountants and other experts) incurred by Freddie Mac or the Servicer in connection with the administration or enforcement or preservation of rights or remedies under the Sponsor Documents, the Owner Documents and any other documents related to the transactions contemplated by the Sponsor Documents or the Owner Documents or in connection with the foreclosure upon, sale of or other disposition of any security granted pursuant to the Sponsor Documents or the Owner Documents and any other documents related to the transactions contemplated by the Sponsor Documents or the Owner Documents;

(g)all out-of-pocket expenses (including reasonable expenses for legal services) of, or incident to, the preservation of rights under, or enforcement of, any of the provisions of this Agreement, or any actual or attempted sale, or any exchange, enforcement, collection, compromise or settlement of Collateral, and defending or asserting rights and claims of Freddie Mac in respect thereof, by litigation or otherwise;

(h)all reasonable out-of-pocket costs and expenses incurred by the Pledge Custodian in connection with the administration and enforcement of Article VIII of this Agreement; and

(i)interest at the Default Rate on any and all amounts referred to in Subsections (a) through (h) above from the date which is five (5) days following the date when due until payment of all such amounts in full,

provided, however, that the Freddie Mac Fee will compensate the Administrator for its fees (but not out of pocket expenses) for the performance of the Administrator’s duties pursuant to the Series Certificate Agreement.

Section 3.6Application and Timing of Payments.

(a)Application of Payments.  If the Servicer or Freddie Mac receives on any date less than the full amount that is due and payable on or before that date under Sections 3.2 through 3.5 of this Agreement, the amount received shall be applied in such order as Freddie Mac may, in its sole discretion, determine. 

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(b)Timing of Payments.  Any amount payable to Freddie Mac hereunder shall be deemed paid only to the extent immediately available funds for that purpose are received by Freddie Mac (in any capacity) by 2:00 p.m., Washington, D.C. time, on the due date.  Any such amount received after 2:00 p.m., Washington, D.C. time, on its due date shall be treated, and shall accrue interest, as if it were paid at 9:00 a.m., Washington, D.C. time, on the next Business Day.

Section 3.7[Reserved].

Section 3.8Payment of Prepayment/Substitution Premium.  (a) If the applicable Yield Maintenance Period has not expired, the Sponsor shall pay a Prepayment/Substitution Premium by remitting to Freddie Mac funds in the amount of such Prepayment/Substitution Premium from the sources and in the priority established in accordance with the provisions of this Agreement and Section 4.03 of the Series Certificate Agreement upon any of the following events:

(i)A redemption of a portion of the Class A Certificates as a result of a Release Event pursuant to Section 2.4(c) hereof.

(ii)A redemption of any of the Certificates during the Yield Maintenance Period, due to an involuntary prepayment upon acceleration of the Bond Mortgage Note and mandatory redemption of the Bonds under the terms of the applicable Indenture after a Bond Event of Default thereunder but only if and to the extent that a prepayment premium is paid by the Owner in connection with such prepayment of the Bond Mortgage Note; 

(iii)The occurrence of a substitution of a Substitute Bond due to a Bond Event of Default at the direction of the Sponsor in accordance with Section 3.19 hereof; 

(iv)The mandatory tender of the Class A Certificates pursuant to Section 6.04(a) or (b) of the Series Certificate Agreement relating to a Mandatory Tender Event as a result of a Credit Provider Termination Event or (if applicable) a Sponsor Act of Bankruptcy;

(v)Upon the substitution of a Substitute Bond for a Pre-Selected Bond in connection with a sale of the related Mortgaged Property as directed by the Sponsor in accordance with Sections 3.19 and 3.26 hereof.

(b)Premium Not Payable.  Except under the circumstances described in Section 3.8(a) hereof, no Prepayment/Substitution Premium shall be payable, including without limitation under the following circumstances:  any prepayment occurring as a result of (i) the application of any insurance proceeds or condemnation award under the Bond Mortgage, (ii) a voluntary prepayment of any Bond Mortgage Loan, (iii) redemption or other mandatory prepayment of any Bonds or the Class A Certificates as a result of the entry of any decree or judgment by a court of competent jurisdiction or the taking of any official action by the Internal Revenue Service or the Department of the Treasury, which decree, judgment or action shall be deemed to be final under applicable procedural law, which has the effect of a determination that the interest on such Bonds is includable in the gross income of the recipients thereof for Federal 

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income tax purposes, (v) a redemption of Class A Certificates in connection with a Clean-Up Event, or (vi) a Release Event pursuant to Section 3.21 hereof.

Section 3.9Substitution of Credit Enhancement .  The Sponsor acknowledges that it does not have the right to substitute credit enhancement for the Class A Certificates.  

Section 3.10Additional Provisions Regarding Prepayment/Substitution Premium.  The Sponsor recognizes that any prepayment of the unpaid principal balance of the Class A Certificates for any reason set forth in Section 3.8(a) hereof will result in Freddie Mac’s incurring loss, including loss of income, additional expense and frustration or impairment of Freddie Mac’s ability to meet its commitments to third parties.  The Sponsor agrees to pay from the sources and in the priority established in accordance with the provisions of this Agreement and Section 4.03 of the Series Certificate Agreement, upon demand, damages for the loss caused by any prepayment, and agrees that it is extremely difficult and impractical to ascertain the extent of such damages.  The Sponsor therefore acknowledges and agrees that the formula for calculating the Prepayment/Substitution Premium represents a reasonable estimate of the damages Freddie Mac will incur because of a prepayment.  The Sponsor further acknowledges that the Prepayment/Substitution Premium provisions of this Agreement are a material part of the consideration for the Series Certificate Agreement and the Credit Enhancement provided thereunder, and acknowledges that the terms of this Agreement are in other respects more favorable to the Sponsor as a result of the Sponsor’s voluntary agreement to the Prepayment/Substitution Premium provisions.  Freddie Mac acknowledges and agrees that the Prepayment/Substitution Premium shall be Freddie Mac’s sole compensation and remedy for such loss and damage. 

Section 3.11[Reserved].  

Section 3.12Indemnification.  The Sponsor shall indemnify and hold harmless Freddie Mac, in its corporate capacity and in its capacity as Pledge Custodian, and its officers, directors, officials, employees, agents, attorneys, accountants, advisors, consultants and servants, past, present or future (each, an “Indemnified Party”), from and against any and all claims, losses, liabilities, damages, penalties, judgments, costs or expenses (including court costs and reasonable attorneys’ fees) (collectively, “Losses”) arising from any act or omission of the Sponsor, any Sponsor Affiliate, or any of their respective agents, contractors, servants, employees or licensees in connection with any of the Bond Mortgage Loans, the Bond Mortgages, Mortgaged Properties, the Owner Documents, the Sponsor Documents, the Offering Circular, the Series Certificate Agreement in connection with the issuance of the Certificates or the remarketing of the Class A Certificates or in connection with any failure to cause the re-registration of all of the Bonds in the name of Freddie Mac and the delivery thereto as required pursuant to Section 4.2 hereof; together with all costs, reasonable counsel fees, expenses or liabilities incurred in connection with any such claim or proceeding brought thereon; except that the Sponsor shall not be required to indemnify any Indemnified Party for damages caused by the willful misconduct, negligence or unlawful acts of such Indemnified Party or for any claims, costs, counsel fees, expenses or liabilities incurred by an Indemnified Party as a result of any action taken by an Indemnified Party at the direction of Freddie Mac.  In the event that any action or proceeding is brought, or claim made, against any Indemnified Party, with respect to which indemnity may be sought hereunder, the Sponsor, upon written notice thereof from the Indemnified Party, shall assume the investigation and defense thereof, including the employment 

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of counsel reasonably acceptable to Freddie Mac and the payment of all expenses associated therewith.  The Indemnified Party shall have the right to approve a settlement to which it is a party and if the named parties to any such action include both the Sponsor and the Indemnified Party and the Indemnified Party has been advised by counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the Sponsor, to employ separate counsel in any such action or proceedings and to participate in the investigation and defense thereof, and the Sponsor shall pay or cause to be paid the reasonable fees and expenses of such separate counsel.  The provisions of this Section shall survive the termination of this Agreement.

Section 3.13Freddie Mac Not Liable.  None of Freddie Mac’s officials, officers, directors, members, shareholders, agents, attorneys, independent contractors or employees shall be responsible for, or liable to, the Sponsor or any of its officials, officers, directors, shareholders, members, partners, affiliates, independent contractors or employees for (a) any act or omission of Freddie Mac or any other Person made in good faith with respect to the validity, sufficiency, accuracy or genuineness of documents, or of any endorsement(s) thereon (except for documents and endorsements provided by Freddie Mac), even if such documents should be in fact, or prove to be in any or all respects, invalid, insufficient, fraudulent or forged; (b) the validity or sufficiency of any instrument transferring or assigning, or purporting to transfer or assign the Series Certificate Agreement or the rights or benefits under the Series Certificate Agreement or proceeds under the Series Certificate Agreement, in whole or in part, that may prove to be invalid or ineffective for any reason; (c) failure of the Administrator to comply fully with all conditions required in order to effect any applicable Credit Advance; (d) errors, omissions, interruptions or delays in transmission or delivery of any messages by the Administrator, by mail, cable, telegraph, telex, telecopier or otherwise that may be required under the Series Certificate Agreement; (e) any loss or delay by the Administrator in the transmission or otherwise of any document or draft required in order to make any Credit Advance; (f) failure of any trustee with respect to the Bonds to comply fully with all terms of the related Bond Documents; or (g) any consequences arising from causes beyond the control of Freddie Mac.  In furtherance, and not in limitation of the foregoing, Freddie Mac may accept documents that appear on their face to be valid and in order, without any responsibility for further investigation. None of the above shall affect, impair, or prevent the vesting of any rights or powers of Freddie Mac under this Agreement.

In furtherance and extension, and not in limitation, of the specific provisions set forth above, any action taken or omitted by Freddie Mac (including in its capacity as Bondholder Representative) under or in connection with the Sponsor Documents or any Owner Document, or any related certificates or other documents, if taken or omitted in good faith and not in contravention of the terms hereof, shall be binding upon the applicable Owner, the Bond Trustee, the Issuer, the Sponsor, any Sponsor Affiliate, the Administrator and the Pledge Custodian, and shall not, under any circumstance, put Freddie Mac under any resulting liability to any of them.

Section 3.14[Reserved].  

Section 3.15Other Covenants of Sponsor.

(a)Sponsor Documents.  Each of the covenants of the Sponsor set forth in the Sponsor Documents is hereby incorporated in this Agreement by this reference as if fully set 

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forth herein.  The Sponsor shall comply with all material terms and conditions of each Sponsor Document to which it is a party or by which it is bound and shall not, without the prior consent of Freddie Mac, provide directions or consents to the Bond Trustee or the Issuer except as otherwise permitted pursuant to the terms hereof and of the Servicing Agreement.

(b)Transfer of Project Ownership.  The Sponsor shall not consent to any transfer of ownership of any Mortgaged Property without the prior written consent of Freddie Mac.

(c)Tax–Exempt Status of the Certificates.  The Sponsor shall not take, or omit to take, any action within its power to take that, if taken or omitted, would jeopardize or adversely affect the exclusion of interest on the Certificates from gross income of the holders thereof for federal income tax purposes.

(d)Securities Acts.  The Sponsor shall not take, or omit to take, any action within its power to take that, if taken or omitted, would subject the Certificates to registration under the Securities Act of 1933, or the Series Certificate Agreement to registration under the Trust Indenture Act of 1939 or the Investment Company Act of 1940.

(e)Certain Actions With Respect to the Certificates.  The Sponsor shall not, without the prior written consent of Freddie Mac:

(i)appoint a “Successor Sponsor” (as defined in the Series Certificate Agreement);

(ii)provide its consent or waive any rights under the Series Certificate Agreement or any consents or waivers under the Bond Documents, the rights to which are granted to the Bondholder Representative or the Servicer except as otherwise permitted pursuant to the terms hereof and of the Servicing Agreement; 

(iii)consent to amendment to any partnership agreement or other applicable organizational document of an Owner to allow such Owner to own substantial assets other than its Mortgaged Property or to engage in any business activities other than activities related to the ownership and operation of its Mortgaged Property; or

(iv)permit any change in the ownership or control of the Sponsor from the ownership structure in place on the Closing Date, or permit any corporate reorganization to occur that would result in the Sponsor and the Guarantor not being under common control.

(f)Amendment of Organizational Documents Of Sponsor.  The Sponsor agrees not to amend its organizational documents without the prior consent of Freddie Mac.

(g)Restriction on Transfer of Class B Certificates.  The Sponsor shall not, without the prior written consent of Freddie Mac, in whole or in part, sell, assign, pledge, hypothecate or otherwise transfer its ownership interest (including any beneficial ownership interest) in the Class B Certificates or grant any liens, security interests, options or other charges or encumbrances with respect to the Class B Certificates.

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Section 3.16Liability of the Sponsor.  The obligation of the Sponsor to cause the Administrator and the Pledge Custodian, as applicable, to make any and all payments to Freddie Mac required by this Agreement  or any other Sponsor Document shall not be subject to diminution by set-off, recoupment, counterclaim, abatement or otherwise.  Until the latest of the date on which (i) all the  Class A Certificates have been fully paid in accordance with the Series Certificate Agreement, (ii) the Series Certificate Agreement has been terminated in accordance with its terms and (iii) all amounts due and owing to Freddie Mac under this Agreement or any other Sponsor Document shall have been paid, the Sponsor shall continue to have the obligation to perform and observe all of its obligations contained in this Agreement, the Sponsor Documents and all other documents contemplated hereby or thereby.

The obligations of the Sponsor under this Agreement shall be absolute, unconditional and irrevocable, and shall be paid and performed in accordance with the terms of this Agreement under all circumstances whatsoever, including, without limitation, the following circumstances: (a) any invalidity or unenforceability of any of the Owner Documents, the Sponsor Documents (other than the Series Certificate Agreement) or any other agreement or instrument related to the Owner Documents or the Sponsor Documents (other than the Series Certificate Agreement); (b) any waiver of, or any consent to or departure from, the terms of a Series Certificate Agreement, any of the Owner Documents or the Sponsor Documents, or any other agreement or instrument related to the Owner Documents or the Sponsor Documents, or any extensions of time or other modifications of the terms and conditions for any act to be performed in connection with the Series Certificate Agreement; (c) the existence of any claim, set-off, defense or other right that the Sponsor may have at any time against Freddie Mac, the Servicer, any Issuer, any Bond Trustee, the Guarantor, any Sponsor Affiliate, the Administrator, the Pledge Custodian, or any other Person, whether in connection with this Agreement, any of the other Owner Documents, the Sponsor Documents, the Guaranty, any Mortgaged Property, or any unrelated transaction; (d) the surrender or impairment of any security for the performance or observance of any of the terms of this Agreement, the Owner Documents or the Sponsor Documents; (e) any defect in title to any Mortgaged Property, any acts or circumstances that may constitute failure of consideration, destruction of, damage to or condemnation of any Mortgaged Property, commercial frustration of purpose, or any change in the tax or other laws of the United States of America or of any state or any political subdivision of the same, (f) the breach by Freddie Mac, the Servicer, any Issuer, any Bond Trustee, the Administrator, the Sponsor, any Sponsor Affiliate, the Pledge Custodian, or any other Person of its obligations under any Owner Document, the Guaranty or any Sponsor Document; or (g) any other circumstance, happening or omission whatsoever.

Section 3.17Waivers and Consents.  THE SPONSOR AGREES TO BE BOUND BY THIS AGREEMENT AND, TO THE EXTENT PERMITTED BY LAW, (A) WAIVES AND RENOUNCES ANY AND ALL REDEMPTION AND EXEMPTION RIGHTS AND THE BENEFIT OF ALL VALUATION AND APPRAISAL PRIVILEGES (EXCEPT AS EXPRESSLY PROVIDED IN THE SPONSOR DOCUMENTS) AGAINST THE INDEBTEDNESS AND OBLIGATIONS EVIDENCED BY THIS AGREEMENT AND THE OTHER SPONSOR DOCUMENTS OR BY ANY EXTENSION OR RENEWAL OF THIS AGREEMENT AND THE OTHER SPONSOR DOCUMENTS; (B) WAIVES PRESENTMENT AND DEMAND FOR PAYMENT, NOTICES OF NONPAYMENT AND OF DISHONOR, PROTEST OF DISHONOR AND NOTICE OF PROTEST; (C) WAIVES ALL NOTICES IN CONNECTION WITH THE DELIVERY AND ACCEPTANCE OF THIS AGREEMENT AND 

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THE OTHER SPONSOR DOCUMENTS AND ALL OTHER NOTICES IN CONNECTION WITH THE PERFORMANCE, DEFAULT OR ENFORCEMENT OF THE PAYMENT OF ANY OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER SPONSOR DOCUMENTS EXCEPT AS REQUIRED BY THIS AGREEMENT OR THE OTHER SPONSOR DOCUMENTS; (D) AGREES THAT ITS LIABILITIES UNDER THIS AGREEMENT AND THE OTHER SPONSOR DOCUMENTS SHALL BE UNCONDITIONAL AND WITHOUT REGARD TO THE LIABILITY OF ANY OTHER PERSON AND (E) AGREES THAT ANY CONSENT, WAIVER OR FORBEARANCE UNDER THIS AGREEMENT AND THE OTHER SPONSOR DOCUMENTS WITH RESPECT TO AN EVENT SHALL OPERATE ONLY FOR SUCH EVENT AND NOT FOR ANY SUBSEQUENT EVENT.

Section 3.18Subrogation.  The Sponsor acknowledges that, to the extent of any payment made by Freddie Mac in accordance with the Series Certificate Agreement pursuant to the Credit Enhancement and for which Freddie Mac has not been reimbursed, Freddie Mac is to be fully subrogated, to the extent of such payment and any additional interest due on any late payment, to the rights of the Sponsor to any moneys paid or payable under the applicable Bonds or the Certificates and all security therefor under the Owner Documents and the Sponsor Documents, including the Bond Mortgage.  The Sponsor agrees to such subrogation and further agrees to execute such instruments and to take such actions as, in the judgment of Freddie Mac, are necessary to evidence such subrogation and to perfect the rights of Freddie Mac to the extent necessary to provide reimbursement hereunder.

Section 3.19Substitution.  The Sponsor may at its option (subject to the conditions set forth below) substitute at any time, and from time to time, one issue of multifamily housing revenue bonds (each, a “Substitute Bond”) for (a) an issue of Bonds with respect to which a Bond Event of Default exists, or (b) a Pre-Selected Bond, solely if the Sponsor has elected to effect a substitution of such Pre-Selected Bond in connection with the sale of the related Pre-Selected Mortgaged Property pursuant to Section 3.26 hereof.  The Bonds available to be substituted for in accordance with the foregoing sentence (each, a “Released Bond”) shall be released from the Series Certificate Agreement in accordance with the terms thereof, and the Substitute Bond(s) shall be deposited with the Administrator pursuant to the terms of the Series Certificate Agreement in accordance with the terms thereof, if each of the following conditions is met:

(a)The Substitute Property meets all of Freddie Mac’s then applicable underwriting criteria, program, policy and documentation requirements unless waived in writing by Freddie Mac.  In furtherance and not in limitation of the foregoing, Freddie Mac in considering the eligibility of the Substitute Property under such criteria and requirements may take into account a variety of factors, including, but not limited to, local market conditions, portfolio concentration in the market where the Substitute Property is located, the condition and quality of the Substitute Property (which condition and quality shall not be less than the Mortgaged Property to be released (the “Released Project”)), the type of Substitute Property (which shall be of the same type as the Released Project), the internal risk rating for such Substitute Property as determined by Freddie Mac (which risk rating as so determined shall be equal to or better than the risk rating (as determined by Freddie Mac) for the Released Project) and pool diversification 

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(the determination of any proposed Substitute Property’s eligibility under such criteria and requirement to be in Freddie Mac’s sole and absolute discretion);

(b)Freddie Mac shall have been provided by the Servicer (or otherwise) all applicable third party reports required pursuant to the Guide or otherwise required by Freddie Mac, in its sole and absolute discretion, to evaluate the proposed Substitute Property including but not limited to:

(i)An environmental report on the proposed Substitute Property in all respects reasonably satisfactory to Freddie Mac;

(ii)An engineering report on the proposed Substitute Property in all respects reasonably satisfactory to Freddie Mac;

(iii)A survey of the Substitute Property, in all respects reasonably satisfactory to Freddie Mac; and

(iv)An appraisal on the Substitute Property in all respects reasonably satisfactory to Freddie Mac;

(c)Sponsor shall pay all out of pocket fees and expenses of Freddie Mac, including the reasonable costs and expenses of outside counsel in connection with such substitution;

(d)The Substitute Property shall be subject to satisfactory inspection by Freddie Mac;

(e)The underlying bond documents related to the Substitute Property meet Freddie Mac’s then-applicable program requirements in all material respects or are otherwise waived by Freddie Mac; 

(f)Unless waived by Freddie Mac, the terms of the Substitute Bond, including tax status, maturity, interest rate and interest mode, are substantially consistent with the terms of the Released Bond;

(g)After giving effect to such substitution, the geographic concentration of the Mortgaged Properties is not greater than that prior to the substitution;

(h)The ratio of the unpaid principal balance of the Substitute Bond to the value of the Substitute Property (the “Loan to Value Ratio” or “LTV”) at the time of the proposed substitution, as determined by Freddie Mac in accordance with its then current underwriting methodology, is less than or equal to the lesser of (i) the loan to value ratio of the Released Project as of the Closing Date or (ii) the loan to value ratio of the Released Project as of the date of the proposed release of the Released Project as determined by Freddie Mac in accordance with its then existing underwriting methodology and in all events the Loan to Value Ratio does not exceed 85%;

(i)The ratio of the net operating income and the annual debt service (the “Debt Service Coverage” or “DCR”) for the Substitute Property for the last twelve (12) 

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calendar months preceding the proposed substitution, calculated in accordance with Freddie Mac’s then-existing underwriting methodology, is greater than or equal to the greater of (i) the Debt Service Coverage for the Released Project as of the Closing Date for the Released Project or (ii) the current Debt Service Coverage for the Released Project for the prior twelve (12) calendar months, calculated in accordance with Freddie Mac’s underwriting methodology employed by Freddie Mac in determining the Debt Service Coverage for the Substitute Property and in all events the Debt Service Coverage is not less than 1.15%;

(j)No Event of Default shall exist and there shall have been no related Bond Event of Default with respect to such Substitute Bond during the immediately preceding twelve (12) month period;

(k)Contemporaneously with the request for a substitution, Sponsor shall pay (A) to the Servicer a $25,000 underwriting fee with respect to each new Bond to be underwritten, and (B) to Freddie Mac a deposit to cover associated third party costs and fees, as estimated by Freddie Mac, together with a mortgage review fee equal to the greater of $5,000 per substituted property or 0.10% of the unpaid principal balance of the Substitute Bond.  On or prior to the closing date for the substitution, the Sponsor shall pay Freddie Mac the balance, if any, of any third-party costs and fees incurred in excess of the initial deposit amount, plus a substitution fee (i) equal to the greater of $5,000 or 0.25% of the unpaid principal balance of the Substitute Bond(s) (with a credit for the mortgage review fee previously paid) for a substitution relating to a Bond Event of Default or (ii) equal to the greater of $50,000 or 0.50% of the unpaid principal balance of the Substitute Bond(s) (with a credit for the mortgage review fee previously paid) for a substitution relating to a substitution of a Pre-Selected Bond pursuant to Section 3.26.  In addition, the Sponsor shall pay the reasonable fees and out-of-pocket expenses of outside counsel, appraisers, environmental professionals and engineers, plus all reasonable out-of-pocket costs and expenses incurred by Freddie Mac in connection with the foregoing.  Such amounts shall be paid on or prior to the closing date of such substitution.  If such substitution fails to close, Sponsor shall pay Freddie Mac such reasonable fees and out-of-pocket expenses within (30) days of Sponsor’s receipt of invoices therefor;

(l)If the unpaid principal balance of the Substitute Bond is less than the unpaid principal balance of the Released Bond (a “Contraction”) the Sponsor shall pay any applicable Total Release Price with respect to the principal portion of the Released Bond that is in excess of the principal amount of the Substitute Bond(s) as and when required by the Series Certificate Agreement, and if the Contraction is greater than 5%, then, in addition to the fees required under Section 3.19(k) above, Sponsor shall pay or cause to be paid a Prepayment/Substitution Premium to Freddie Mac on the amount by which the unpaid principal balance of the Released Bond exceeds the unpaid principal balance of the Substitute Bond(s) on the date of substitution;

(m)The Sponsor and Freddie Mac shall have executed an addendum to this Agreement and any related agreements to reflect the substitution contemplated hereby; and

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(n)Freddie Mac shall have received an opinion of Bond Counsel acceptable to Freddie Mac to the effect that such substitution does not adversely affect the exclusion of interest accrued on the related Certificates from gross income of the holders thereof for federal income tax purposes.

(o)If requested by Freddie Mac, Freddie Mac shall have received a 704(b) analysis with respect to the ownership of the Substitute Property which is satisfactory to Freddie Mac in its sole discretion.

Section 3.20[Reserved].

Section 3.21Optional Series Termination Date. The Sponsor shall have the right, subject to the following terms and provided no Event of Default has occurred and is continuing, to direct Freddie Mac to exercise its right to cause a Release Event with respect to all (but not less than all) of the Bonds held under the Series Certificate Agreement on the Optional Series Termination Date by giving written notice of such election to Freddie Mac not less than ninety (90) days prior to the Optional Series Termination Date.  Freddie Mac shall only exercise its right to cause such a Release Event to occur on the Optional Series Termination Date if by no later than the fifth (5th) Business Day prior to such Optional Series Termination Date the Sponsor shall have either (i) caused to be deposited with Freddie Mac in immediately available funds an amount necessary to pay in full the resulting Total Release Price due under the terms of the Series Certificate Agreement, together with amounts sufficient to pay all Obligations of the Sponsor due hereunder and any obligations of the Sponsor due under any other Sponsor Document or (ii) the Sponsor shall have provided evidence of the establishment of an escrow arrangement for the payment of the same satisfactory to Freddie Mac, in its sole discretion.  Such monies provided by the Sponsor to Freddie Mac shall be applied as provided pursuant to the terms of the Series Certificate Agreement to effect such Release Event and the terms hereof to reimburse Freddie Mac for any amounts then due hereunder.

Section 3.22CRA Credit.  Freddie Mac is not allocating or recording, and will not allocate or record, its investment in the Bonds for the purposes of the Community Reinvestment Act of 1977 ("CRA").  Freddie Mac makes no representation or warranty as to the eligibility for CRA treatment with respect to the Certificates or the Bonds.

Section 3.23Release Event Upon Bond Event of Default.  In addition to the Sponsor’s rights under Section 3.19 hereof, if a material monetary event of default exists with respect to a series of Bonds (with respect to which the Sponsor or an Affiliate does not control the related Owner) and remains uncured for the shorter of (i) sixty (60) days or (ii) two consecutive scheduled payment dates (or such shorter period of time consented to by Freddie Mac), the Sponsor may direct Freddie Mac to declare a Release Event with respect to the related Bond and shall fund, or cause the funding of, the purchase of such Bond (which funding by, or caused by, the Sponsor shall be accomplished in accordance with Section 7.3(a) hereof and applicable provisions of the Series Certificate Agreement); provided, however, the Sponsor shall only have the right to cause a Release Event with respect to a Bond pursuant to this Section 3.23 if the Sponsor has funded, or caused the funding of, such Release Event within sixty (60) days of the date on which the right to direct a Release Event with respect to such Bond first arises under this Section 3.23.  

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Section 3.24Loans by Guarantor or Its Affiliates.  The Guarantor or an affiliate of the Guarantor may make a subordinate loan or loans to an Owner and enforce the terms of such loans if such loan is made in accordance with the terms of this Section 3.24.  Freddie Mac acknowledges that the making of such loan(s) by the Guarantor and their enforcement is not a breach of a covenant or a representation under this Agreement provided that: 

(a) the Guarantor shall provide notice of such subordinate loan to Freddie Mac and the Servicer no later than 30 days prior to the funding of such loan (each notice shall include a representation as to the purpose of the subordinate loan), 

(b) such subordinate loan shall be made only to fund shortfalls in operating expenses or to pay debt service on the related Bonds, 

(c) the enforcement of remedies with respect to such subordinate loan(s) shall be done solely with Freddie Mac’s prior consent, and

(d) such subordinate loan: (i) is not secured by the applicable Mortgaged Property or an interest in the applicable Owner, (ii) is payable solely from 75% of surplus cash with respect to the related Mortgaged Property (as determined in accordance with Freddie Mac’s program standards), (iii) has a maturity date which extends beyond the maturity date on the related Bonds, and (iv) otherwise conforms to Freddie Mac’s then applicable program, policies and underwriting criteria for soft subordinate debt.

Section 3.25Credit Advances; Real Estate Taxes.  In the event any real estate taxes are assessed on a Mortgaged Property and are not timely paid when due by either the Owner or the Sponsor (irrespective of whether the Owner or the Sponsor is contesting such assessment), Freddie Mac shall have the right (but not the obligation) to pay such taxes and such expenditure by Freddie Mac shall be treated as a Credit Advance hereunder to be reimbursed from the sources and in the priority established in accordance with the provisions of this Agreement and Section 4.03 of the Series Certificate Agreement.  

Section 3.26Substitution Upon Sale of Pre-Selected Mortgaged Property.  On or after the date which is thirty-six (36) months after the Closing Date, the Sponsor may elect, solely in connection with a sale of a Pre-Selected Mortgaged Property to a party that is not a Sponsor Affiliate and which party does not elect to assume the indebtedness of the related Bonds, to effect a substitution of the related Pre-Selected Bond in accordance with Section 3.19 and direct Freddie Mac to declare a Release Event for such purpose; provided, however, the Sponsor shall only have the right to effect a substitution of up to four Pre-Selected Bond pursuant to this Section 3.26.  In connection with any election under this Section 3.26, the Sponsor shall also satisfy the following conditions:

(i)the Sponsor shall cause to be funded to Freddie Mac any applicable Prepayment/Substitution Premium required under Sections 3.8(a) and 3.19 hereof;

(ii)the Sponsor shall provide reasonably satisfactory evidence to Freddie Mac that the applicable Pre-Selected Mortgaged Property is under contract for sale, the proposed purchaser of such Pre-Selected Mortgaged Property is not a Sponsor Affiliate and the proposed purchase price is the market price for such Pre-Selected Mortgaged Property;

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(iii)the Sponsor shall provide satisfactory evidence to Freddie Mac that the proposed purchaser is electing to payoff the related Bonds in connection with the sale; and

(iv)the Sponsor shall cause to be provided to Freddie Mac all fees required pursuant to Section 3.19 hereof.

Section 3.27[Reserved].  

Section 3.28Common Owner Mortgaged Properties.  The parties acknowledge and agree that: 

(a)(i) The Concord at Williamcrest Apartments Mortgaged Property and the Concord at Little York Apartments Mortgaged Property have the same Owner, and (ii) notwithstanding anything to the contrary herein or in the Series Certificate Agreement, upon the occurrence of a Release Event with respect to either the Concord at Williamcrest Bonds or the Concord at Little York Bonds, both series of Bonds will be subject to release from the Series Pool; and 

(b)(i) The Berrendo Square Apartments Mortgaged Property and the Laurel Crossings Apartments Mortgaged Property have the same Owner, and (ii) notwithstanding anything to the contrary herein or in the Series Certificate Agreement, upon the occurrence of a Release Event with respect to either the Berrendo Bonds or the Laurel Bonds, both series of Bonds will be subject to release from the Series Pool.

Article IV

AGREEMENT TO EXCHANGE

Section 4.1Exchange.  Freddie Mac agrees to exchange the Certificates for the Bonds in accordance with and subject to the terms and provisions of this Agreement.  In consideration for the transfer of ownership and possession of the Bonds from the Sponsor to Freddie Mac, Freddie Mac shall simultaneously deliver to the Sponsor the Class A Certificates issued pursuant to the Series Certificate Agreement and deliver the Class B Certificates to the Sponsor or upon its order.  With respect to the Bonds, the Sponsor is transferring and assigning to Freddie Mac all of its right, title and interest in and to such Bonds together with all interest due thereon from and after August 1, 2018 (such transfer and assignment being intended as an absolute assignment to Freddie Mac of all of the Sponsor’s ownership, right, title and interest in such Bonds from such date forward, and not as a collateral assignment or pledge of such Bonds).  

Section 4.2Mandatory Delivery; Ownership; Registration of Transfer.  No later than the Closing Date (the “Delivery Deadline”), the Sponsor shall complete the delivery of the Bonds to Freddie Mac in accordance with this Agreement and the Bond Custody Agreement, and beneficial ownership of the Bonds shall pass from the Sponsor to Freddie Mac on the Closing Date as provided in Section 4.1.  The Sponsor shall execute and deliver any instrument necessary or appropriate to effect or evidence the transfer and delivery of all the Sponsor’s interest in and to the Bonds to Freddie Mac, and shall fully and promptly cooperate with Freddie Mac, and take any necessary action, to cause the ownership of the Bonds to be registered in the name of Freddie Mac.

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Section 4.3Failure to Deliver.  If the Sponsor fails to deliver the Bonds to Freddie Mac or fails to comply fully with any precondition to Freddie Mac’s obligation to exchange Certificates for the Bonds on or before the Closing Date, Freddie Mac shall have no obligation to exchange Certificates for the Bonds, and the Sponsor shall promptly reimburse Freddie Mac for all of its out-of-pocket expenses in connection with the proposed transaction, including, but not limited to, Freddie Mac’s legal and financial modeling costs.

Article V

[RESERVED]

Article VI

UNIFORM COMMERCIAL CODE SECURITY AGREEMENT

This Agreement is also a security agreement under the Uniform Commercial Code with respect to the Pledged Security Collateral as provided in Article VIII and all funds and accounts and investments thereof now or hereafter held by the Administrator under the Series Certificate Agreement (to the extent of any retained interested by the Sponsor therein) and all funds and accounts and investments thereof now or hereafter held for the benefit of Freddie Mac under the Custody Account, and all cash and non-cash proceeds thereof (collectively, “UCC Collateral”), and the Sponsor hereby grants to Freddie Mac a security interest in the UCC Collateral as security for all Obligations due under this Agreement and under any of the Sponsor Documents.  The Sponsor shall execute and deliver to Freddie Mac, upon Freddie Mac’s request, financing statements, continuation statements and other account agreements and amendments, in such form as Freddie Mac may require to perfect or continue the perfection of this security interest.  The Sponsor shall pay or cause to be paid all filing costs and all costs and expenses of any record searches for financing statements that Freddie Mac may reasonably require.  Except as otherwise permitted herein, without the prior written consent of Freddie Mac, the Sponsor shall not create or permit to exist any other lien or security interest in any of the UCC Collateral.  The Sponsor covenants and agrees that it will defend Freddie Mac’s rights and security interests created by this Article against the claims and demands of all Persons.  If an Event of Default has occurred and is continuing, subject to Article VII hereof, Freddie Mac shall have the remedies of a secured party under the Uniform Commercial Code, in addition to all remedies provided by this Agreement or existing under applicable law.  In exercising any remedies, Freddie Mac may exercise its remedies against the UCC Collateral separately or together, and in any order, without in any way affecting the availability of the other remedies available to Freddie Mac.

Article VII

EVENTS OF DEFAULT; REMEDIES

Section 7.1Events of Default.  The occurrence of any one or more of the following events shall constitute an Event of Default hereunder:

(a)Freddie Mac, as provider of credit enhancement, does not receive any amount payable under this Agreement when due, including, without limitation, any fees, costs or expenses (provided that if the Administrator or Pledge Custodian has such amounts in its possession pursuant to the Series Certificate Agreement or this Agreement 

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and is directed thereunder or hereunder to pay such amounts to Freddie Mac, such occurrence will not be an Event of Default);

(b)the Sponsor shall fail to perform its obligations under Section 3.15;

(c)the Sponsor shall fail to observe or perform in all material respects any other term, covenant, condition or agreement set forth in this Agreement, and such failure shall continue, and remain uncured, for a period of thirty (30) days following notice to the Sponsor of such failure, or actual knowledge by the Sponsor of such failure; provided, however, in the event such failure shall relate to a non-monetary term, covenant, condition or agreement that can be corrected but not within thirty (30) days, such failure shall not constitute an Event of Default hereunder if corrective action is instituted by the Sponsor within thirty (30) days and diligently pursued until such failure is cured, provided such failure must be cured not later than ninety (90) days after the initial date of such failure;

(d)the Sponsor (or any Affiliate thereof who is a party to such Sponsor Document) shall fail to observe or perform in all material respects any other term, covenant, condition or agreement set forth in any of the other Sponsor Documents, or there shall otherwise occur an event of default caused by the Sponsor (or any Affiliate thereof who is a party to such Sponsor Document) under any of the other Sponsor Documents (taking into account any applicable cure period);

(e)[Reserved];

(f)failure to pay principal of, and interest on, any Bond Purchase Loan when due pursuant to Section 7.03(b) hereof;

(g)[Reserved];

(h)[Reserved];

(i)the Guarantor fails to perform its obligations when required under the Guaranty;

(j)Article VIII of this Agreement, or the validity or enforceability thereof, shall be contested by the Sponsor or any Class B Owner, or the Sponsor, or any Class B Owner shall deny that it has any further obligation under Article VIII of this Agreement or any instrument delivered thereunder, or that its beneficial interest in the Class B Certificates is subject to or subordinate to the terms of this Agreement, as applicable, prior to the termination of this Agreement; 

(k)any representation made by the Sponsor in Sections 2.1(uu), 2.2(a)(iii), 2.2(a)(iv), 2.2(a)(v), 2.2(a)(vi) or 2.2(a)(vii) or in Section 8.10 of this Agreement shall prove to have been incorrect in any material respect when made (the breach of other representations made by the Sponsor herein shall not constitute an “Event of Default” but shall be dealt with pursuant to Section 2.4 hereof); or

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(l)a subordinate loan is made by the Guarantor or an affiliate of the Guarantor not in accordance with Section 3.24 hereof.

Section 7.2Remedies; Waivers.

(a)Remedies.  Upon the occurrence of an Event of Default, (i)  Freddie Mac may declare all of the Obligations hereunder to be immediately due and payable, in which case all such Obligations shall become due and payable, without presentment, demand, protest or notice of any kind, including notice of default, notice of intent to accelerate or notice of acceleration;(ii) Freddie Mac may direct the Administrator to deliver all amounts payable on the Class B Certificates to the Pledge Custodian for deposit into the Custody Account (which amounts shall be Pledged Security Collateral hereunder); (iii)  at the written direction of a Freddie Mac Authorized Officer, the Pledge Custodian shall deliver all Pledged Security Collateral to Freddie Mac; (iv) Freddie Mac may, or the Pledge Custodian at the written direction of a Freddie Mac Authorized Officer shall, without further notice, exercise all rights, privileges or options pertaining to the UCC Collateral as if Freddie Mac were the absolute owner thereof, upon such terms and conditions as Freddie Mac may determine, all without liability except to account for property actually received by Freddie Mac or the Pledge Custodian (but neither Freddie Mac nor the Pledge Custodian shall have any duty to exercise any of those rights, privileges or options and shall not be responsible for any failure to do so or delay in so doing); and (v) Freddie Mac may, or the Pledge Custodian at the written direction of a Freddie Mac Authorized Officer shall, exercise in respect of the UCC Collateral, in addition to other rights and remedies provided for in this Agreement or otherwise available to it, all of the rights and remedies of a secured party under the Uniform Commercial Code and also may, without notice except as specified below, sell the UCC Collateral at private sale, at any of the offices of Freddie Mac or the Pledge Custodian or elsewhere, for cash, on credit or for future delivery, and upon such other terms as may be commercially reasonable.  The Sponsor agrees that, to the extent notice of sale shall be required by law, at least ten (10) days’ prior notice to the Sponsor of the time after which any private sale is to be made shall constitute reasonable notification.  Neither Freddie Mac nor the Pledge Custodian shall be obligated to make any sale of UCC Collateral regardless of notice of sale having been given.  Freddie Mac may, or the Pledge Custodian at the written direction of a Freddie Mac Authorized Officer shall, adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.

Freddie Mac shall also have the right to provide notice to the Administrator of a Credit Provider Termination Event, in which event the funds advanced by Freddie Mac to purchase Class A Certificates shall be a Credit Advance and immediately due and payable hereunder.  In addition to the foregoing, Freddie Mac shall have the right to take such action at law or in equity, without notice or demand, as it deems advisable to protect and enforce the rights of Freddie Mac against the Sponsor in and to the UCC Collateral, including, but not limited to, (i) the exercise of any rights and remedies available to Freddie Mac under any of the Sponsor Documents and (ii) the right to cause a mandatory tender of all Certificates and to require that the Sponsor elect to fund or cause the funding of the purchase of such Certificates.

Notwithstanding anything contained in this Section 7.2 to the contrary, following an Event of Default and prior to any liquidation of the UCC Collateral, the Class B Owners shall continue to be the owner(s) of all Class B Certificates, and the Sponsor shall continue to be the 

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beneficial owner of all Purchased Bonds and other Pledged Security Collateral, subject to any and all liens in favor of Freddie Mac created by this Agreement.

(b)Application of Proceeds.  The Pledge Custodian shall apply the cash proceeds actually received from any sale or other disposition of the Pledged Security Collateral as follows: (a) first, to reimburse the Pledge Custodian for the reasonable expenses of preparing for sale, selling and the like and to reasonable attorneys’ fees and expenses and legal expenses incurred by the Pledge Custodian in connection therewith, (b) second, to Freddie Mac to be applied to the repayment of all amounts then due and unpaid on the Obligations and (c) then, to pay the balance, if any, to (i) the Sponsor, or (ii) as otherwise required by law.  The Sponsor shall not be liable for any deficiency, subject to Section 9.11(b) of this Agreement, which sets forth circumstances under which personal liability applies to the Sponsor, if the proceeds of any final sale or other disposition of the Pledged Security Collateral and any other security provided by the Sponsor for its Obligations hereunder is insufficient to pay the Obligations.

(c)Waivers.  Freddie Mac shall have the right, to be exercised in its discretion, to waive any Event of Default under this Agreement.  Unless such waiver expressly provides to the contrary, any waiver so granted shall extend only to the specific event or occurrence which gave rise to the Event of Default so waived and not to any other similar event or occurrence which occurs subsequent to the date of such waiver.

Section 7.3Rights with Respect to Defaults under Bond Mortgages; Bond Purchase Loan.

(a)Exercise of Right of Sponsor to Fund or Cause Funding in Connection with Release Event.  Upon the occurrence of a Release Event under the Series Certificate Agreement and the exercise by Freddie Mac of its right to cause a purchase of the related series of Bonds, the Sponsor shall have the right (or where the Sponsor directs Freddie Mac to cause a Release Event pursuant to Sections 3.21, 3.23 or 3.26, the obligation) economically to fund or cause the funding of the purchase of such Bonds as provided in this Section 7.3(a).  If the Sponsor elects to exercise any such right by giving notice to Freddie Mac, the Sponsor shall provide or cause to be provided sufficient immediately available funds to Freddie Mac to fund the Total Release Price of the affected Bonds not later than 11:00 a.m. Washington, D.C. time, on the Business Day prior to the Release Event Date designated by Freddie Mac.  If the Sponsor makes such election or directs Freddie Mac to declare a Release Event pursuant to the terms hereof and fails to provide or cause to be provided such funds to Freddie Mac when required, such Release Event shall be cancelled.  All moneys provided or caused to have been provided by the Sponsor to Freddie Mac for the purchase of Bonds, shall be applied as provided in the Series Certificate Agreement.

(b)Exercise of Purchase Right by Freddie Mac.  Upon the occurrence of a Release Event with respect to the Bonds, Freddie Mac shall have the right to fund the purchase of the related series of Bonds if the Sponsor declines or fails to exercise properly its right to fund or cause funding with respect to the same.  Prior to any exercise of such right, Freddie Mac shall provide written notice to the Sponsor (the “Freddie Mac Purchase Notice”) not less than fifteen (15) days prior to the proposed Release Event Date (or such lesser time period necessary for the Release Event under Section 13.04 of the Series Certificate Agreement) identifying each series of Bonds giving rise to a Release Event, the circumstances giving rise to such Release Event and 

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the proposed purchase date and stating that the Sponsor may elect to fund or cause the funding of such purchase of the affected series of Bonds.

In the event the Sponsor elects to fund or cause the funding of the purchase of the affected series of Bonds, the provisions of subsection (a) above shall apply.

In the event the Sponsor does not elect to fund or cause the funding of the purchase of the affected series of Bonds, and Freddie Mac does not decide to terminate the Release Event, the affected series of Bonds are required to be purchased with funds drawn pursuant to the Credit Enhancement by Freddie Mac under the Series Certificate Agreement, and such Bonds shall be delivered to the Pledge Custodian and held in the name of the Pledge Custodian as applicable for the benefit of the Sponsor subject to the lien in favor of Freddie Mac.  All such moneys for the purchase of such Bonds shall be applied as provided in Series Certificate Agreement.

Any Credit Advance by Freddie Mac under this Section 7.3(b) to fund the purchase of an affected series of Bonds, shall be deemed to be a loan from Freddie Mac to the Sponsor (a “Bond Purchase Loan”).  The maturity date of any Bond Purchase Loan shall be the earliest of (1) two years from the date of purchase, or (2) the sale or transfer of all of the affected series of Bonds, or the foreclosure, deed in lieu of foreclosure or comparable conversion of the related Bond Mortgage, on which maturity date the outstanding principal of such Bond Purchase Loan shall be due and payable in full, or (3) the date of termination of the Series Pool in whole in accordance with Article XIII of the Series Certificate Agreement.  (Any Bond Purchase Loan may be prepaid by the Sponsor at any time.)  Interest on any Bond Purchase Loan shall accrue at a rate of interest equal to the prime rate of interest of Citibank, N.A., until such time as another “Money Center” bank is designated by Freddie Mac in its sole discretion by notice to the Sponsor, plus two percent (2%) per annum, which shall be payable on the fifteenth day of each calendar month.  The principal of any Bond Purchase Loan shall be payable from amounts applied as provided in Section 4.03(b) of the Series Certificate Agreement except, prior to the payment in full of all Class A Certificates under the Series Certificate Agreement and prior to the termination thereof, the principal of any outstanding Bond Purchase Loan shall not be payable (nor be deemed due for payment) from amounts applied pursuant to the aforementioned Section 4.03(b) if such amounts are derived from a Credit Advance by Freddie Mac in connection with a subsequent Release Event.  The principal of any outstanding Bond Purchase Loan shall also be payable from any payments of principal in respect of a Purchased Bond pursuant to Article VIII hereof.  At any time prior to the Sponsor's funding of the purchase of such Bonds or causing to fund the same, (i)  Freddie Mac shall retain all rights and remedies with respect to any such Mortgaged Property and the related Owner Documents and (ii) the Sponsor hereby acknowledges and agrees that it has relinquished and has no rights to exercise remedies with respect to the Mortgaged Property or the related Owner Documents except as specifically provided under any Sponsor Documents and that with respect thereto the Sponsor shall not exercise any such rights without the prior written consent of Freddie Mac.

(c)Material Adverse Credit Condition.  Freddie Mac hereby acknowledges that a Release Event may not be declared solely because the DCR or LTV of a Mortgaged Property (as defined in Section 3.19 hereof) related to a Bond worsens following the Closing Date, and that any such event shall not in and of itself be treated as a “material adverse credit condition” for such purpose.  The foregoing statement does not in any way alter or change the DCR and LTV requirements for Substitute Bonds specified in Section 3.19 hereof.

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Section 7.4No Remedy Exclusive.  Unless otherwise expressly provided, no remedy conferred upon or reserved in this Agreement is intended to be exclusive of any other available remedy, but each remedy shall be cumulative and shall be in addition to other remedies given under the Sponsor Documents or existing at law or in equity.  No delay or omission to exercise any right or power accruing under any Sponsor Document upon the happening of any event set forth in Section 7.1 shall impair any such right or power or shall be construed to be a waiver of such event, but any such right and power may be exercised from time to time and as often as may be deemed expedient.  In order to entitle Freddie Mac to exercise any remedy reserved to Freddie Mac in this Article, it shall not be necessary to give any notice, other than such notice as may be required under the applicable provisions of any of the other Sponsor Documents.  The rights and remedies of Freddie Mac specified in this Agreement are for the sole and exclusive benefit, use and protection of Freddie Mac, and Freddie Mac is entitled, but shall have no duty or obligation to the Sponsor, the Guarantor, any Sponsor Affiliate, the Pledge Custodian, the Administrator or otherwise, (a) to exercise or to refrain from any right or remedy reserved to Freddie Mac hereunder, or (b) to cause the Pledge Custodian, the Administrator or any other party to exercise or to refrain from exercising any right or remedy available to it under any of the Sponsor Documents.

Article VIII

PLEDGE, SECURITY AND CUSTODY OF PLEDGED SECURITY COLLATERAL

Section 8.1Pledged Security Collateral.  Subject to the provisions of Section 8.18, the Sponsor hereby assigns and pledges to the Pledge Custodian, and grants to the Pledge Custodian, for the benefit of Freddie Mac, a continuing security interest in, and a lien on, all of the Sponsor’s right, title and interest in and to the following property (collectively, the “Pledged Security Collateral”):

(a)all Purchased Bonds;

(b)all amounts deposited into the Custody Account;

(c)all interest and other amounts payable on, and all rights with respect to, any Purchased Bonds, Class B Certificates, and all amounts on deposit in the Custody Account (including, without limitation, all payments of principal and interest thereon); and

(d)all proceeds of any of the foregoing.

Section 8.2Delivery of Pledged Security Collateral.  At such time as a Bond becomes a Purchased Bond in accordance with the Series Certificate Agreement, and this Agreement, the Sponsor shall be the beneficial owner of each of the Purchased Bonds, as applicable, which, regardless of the identity of the beneficial owner thereof, shall be held by the Pledge Custodian subject to the security interest created by the terms of this Agreement.  All Pledged Security Collateral shall be deposited in the Custody Account (as defined in Section 8.11 below).  The Pledge Custodian shall cause the Purchased Bonds to be registered in the name of the Pledge Custodian or, if transfers are recorded in book-entry form only, cause the appropriate records of the applicable financial intermediary to reflect that the Pledge Custodian holds a security interest in the Purchased Bonds for the benefit of Freddie Mac.

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Section 8.3[Reserved].   

Section 8.4Amounts Received on Purchased Bonds.  The Pledge Custodian shall pay to Freddie Mac within one (1) Business Day all amounts received by the Pledge Custodian with respect to any Purchased Bonds, for credit to the obligations of the Sponsor hereunder, until such Purchased Bonds are released to the Sponsor in accordance with the terms of Section 8.5 of this Agreement.

Section 8.5Release of Purchased Bonds.  If the Pledge Custodian has received written notice from Freddie Mac that Freddie Mac (provided no written notice shall be required when Freddie Mac is also acting as the Pledge Custodian) has been fully reimbursed by the Sponsor for all Obligations relating to a Purchased Bond (and Freddie Mac agrees to give such notice promptly following full reimbursement), that no Credit Advances remain unreimbursed, that all fees and other amounts currently owing to Freddie Mac have been paid and that no Event of Default exists hereunder, the Pledge Custodian shall release such Purchased Bond together with the proceeds thereof remaining in the possession of the Pledge Custodian, if any, to the Sponsor.  The release of such Purchased Bond shall be free and clear of the security interest created by this Agreement.

Section 8.6[Reserved].  

Section 8.7Loss to Pledged Security Collateral.  The Pledge Custodian shall not be liable for any loss with respect to any Pledged Security Collateral in its possession (except for any loss resulting from the Pledge Custodian’s willful misconduct or negligence), nor shall such loss diminish the Obligations.

Section 8.8[Reserved].  

Section 8.9Ownership Restrictions.  Notwithstanding any provisions of this Agreement, ownership by and release to the Sponsor of any Pledged Security Collateral as described hereunder shall be in all respects subject to the provisions of any documents restricting or governing transfers and ownership of such Pledged Security Collateral.

Section 8.10Representations and Warranties of the Sponsor to the Pledge Custodian.  The Sponsor represents and warrants to the Pledge Custodian on the Closing Date and on each date that Purchased Bonds are delivered to the Pledge Custodian hereunder with respect to such Purchased Bonds that:

(a)it is the legal and beneficial owner of (and has full right and authority to pledge and assign) the applicable Pledged Security Collateral, free and clear of all liens, security interests, options or other charges or encumbrances (collectively, “Liens”) except Liens granted pursuant to this Agreement; and

(b)upon delivery of the Pledged Security Collateral to the Pledge Custodian (or notice to the financial intermediary, if applicable), the Pledge Custodian shall have a valid, enforceable and first priority security interest in all of the Pledged Security Collateral securing the Obligations.

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Section 8.11Custody Account.  On or prior to the Closing Date, the Pledge Custodian shall establish on its books and in its records the Custody Account.  The Pledge Custodian shall maintain the Custody Account until the termination of this Agreement.  At no time shall the Custody Account be maintained on behalf of, or be payable to, any person other than Freddie Mac.  The Sponsor and any Class B Owner shall not have any right of withdrawal from the Custody Account.  No property other than Pledged Security Collateral shall be deposited by the Pledge Custodian in the Custody Account.  Segregation of the Pledged Security Collateral in the Custody Account from other property maintained with the Pledge Custodian shall be accomplished by appropriate identification on the Pledge Custodian’s books and records.  The Pledge Custodian shall, at all times prior to the termination of this Agreement, maintain a record of all Purchased Bonds and other property in the Custody Account separately identifying such Purchased Bonds or other property received with respect thereto as being subject to the security interest granted to the Pledge Custodian on behalf of Freddie Mac in this Agreement.  So long as the internal procedures set forth in this Section are met by the Pledge Custodian, the Pledge Custodian may hold the Pledged Security Collateral in its vaults or in a commingled account (whether book-entry or otherwise) of the Pledge Custodian, as agent for its customers, with any bank, central depository or clearing organization as the Pledge Custodian’s subcustodian, in nominee name or otherwise.

Section 8.12Appointment and Powers of the Pledge Custodian.  

(a)The Sponsor acknowledges the appointment of Freddie Mac in its capacity as the Pledge Custodian as collateral agent for Freddie Mac in its corporate capacity under this Agreement, and authorizes the Pledge Custodian to take such actions on behalf of Freddie Mac, and to exercise such rights, remedies, powers and privileges under this Agreement as are specifically authorized to be exercised by the Pledge Custodian by the terms of this Agreement.  The Pledge Custodian may execute any of its duties as collateral agent under this Agreement by or through its agents (but only with the prior written consent of Freddie Mac) or employees and shall be entitled to retain experts (including counsel) and to act in reliance upon the advice of such experts concerning all matters pertaining to the agencies created by this Agreement and its duties under this Agreement, and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel selected by it.  The Pledge Custodian agrees to perform only those duties specifically set forth in this Agreement, and no implied duties or obligations shall be read into this Agreement.  So long as Freddie Mac is acting as Pledge Custodian hereunder, it shall have no duty to provide notice to, or seek the consent or direction of, Freddie Mac in its corporate capacity.

(b)The Pledge Custodian shall have no duty to exercise any discretionary right, remedy, power or privilege granted to it by this Agreement, or to take any affirmative action under this Agreement, unless directed to do so by Freddie Mac in writing, and shall not, without the prior written approval of Freddie Mac, consent to any departure by the Sponsor from the terms of this Agreement, waive any default on the part of the Sponsor under this Agreement or amend, modify, supplement or terminate, or agree to any surrender of, this Agreement or the Pledged Security Collateral; provided, that the Pledge Custodian shall not be required to take any action that exposes the Pledge Custodian to personal liability, or which is contrary to this Agreement or any other agreement or instrument relating to the Pledged Security Collateral or applicable law.

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(c)Neither the Pledge Custodian nor any of its directors, officers, employees or agents, shall be liable for any action taken or omitted to be taken by it or them under this Agreement, or in connection with this Agreement, except the Pledge Custodian shall be responsible for its own negligence or willful misconduct; nor shall the Pledge Custodian be responsible for the validity, effectiveness, value, sufficiency or enforceability against the Sponsor of this Agreement or any other document furnished pursuant to this Agreement or in connection with this Agreement, or of the Pledged Security Collateral (or any part thereof), or for the perfection or priority of any security interest purported to be granted under this Agreement.

(d)The Pledge Custodian shall be entitled to rely on any communication, instrument, paper or other document believed by it in good faith to be genuine and correct and to have been signed or sent by the proper person or persons.  The Pledge Custodian shall be entitled to assume that no Event of Default shall have occurred and be continuing, unless the Pledge Custodian has received written notice from Freddie Mac that such an Event of Default has occurred and is continuing and specifying the nature of the Event of Default.  The Pledge Custodian may accept deposits from, lend money to, and generally engage in any kind of business with, the Sponsor and its Affiliates as if it were not the agent of Freddie Mac.

(e)None of the provisions contained in this Article VIII shall require the Pledge Custodian to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers under this Article VIII except for any liability of the Pledge Custodian arising from its own negligence or willful misconduct.

(f)Notwithstanding any other provisions in this Agreement to the contrary, in no event shall the Pledge Custodian be liable for special, consequential or punitive damages.

Section 8.13Successor Pledge Custodian.

(a)If Freddie Mac no longer acts as Pledge Custodian, if required by the successor pledge custodian or Freddie Mac, the Sponsor and the successor pledge custodian shall execute a new pledge, security and custody agreement that contains substantially the same terms as Article VIII of this Agreement and which is in form and substance satisfactory to Freddie Mac.  The Pledge Custodian acting under this Agreement may at any time resign by an instrument in writing addressed and delivered to the Sponsor and, if applicable, Freddie Mac (provided, however, that, if the Pledge Custodian (if other than Freddie Mac) is Administrator under the Series Certificate Agreement, the Pledge Custodian must have resigned as Administrator under the Series Certificate Agreement), and may be removed at any time with or without cause by an instrument in writing duly executed by or on behalf of Freddie Mac.

(b)Freddie Mac shall have the right to appoint a successor Pledge Custodian upon any such resignation or removal by an instrument of substitution complying with the requirements of applicable law, or, in the absence of any such requirements, without formality other than appointment and designation in writing (which appointment, provided no Event of Default exists hereunder, shall be subject to the prior consent of the Sponsor, which consent shall not be unreasonably withheld).  Upon the making and acceptance of such appointment, the execution and delivery by such successor Pledge Custodian of a ratifying instrument pursuant to 

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which such successor Pledge Custodian agrees to assume the duties and obligations imposed on the Pledge Custodian by the terms of this Agreement, and the delivery to such successor Pledge Custodian of the Pledged  Security Collateral and documents and instruments then held by the retiring Pledge Custodian, such successor Pledge Custodian shall thereupon succeed to and become vested with all the estate, rights, powers, remedies, privileges, immunities, indemnities, duties and obligations by this Agreement granted to or conferred or imposed upon the Pledge Custodian named in this Agreement, and any such appointment and designation shall not exhaust the right to appoint and designate further successor Pledge Custodians under this Agreement.  No Pledge Custodian shall be discharged from its duties or obligations under this Agreement until the Pledged Security Collateral and documents and instruments then held by such Pledge Custodian shall have been transferred or delivered to the successor Pledge Custodian, and until such retiring Pledge Custodian shall have executed and delivered to the successor Pledge Custodian appropriate instruments assigning the retiring Pledge Custodian’s security or other interest in the Pledged Security Collateral to the successor Pledge Custodian.  The retiring Pledge Custodian shall not be required to make any representation or warranty in connection with any such transfer or assignment.

(c)If no successor Pledge Custodian shall be appointed, as provided above, or, if appointed, shall not have accepted its appointment within thirty (30) days after the resignation or removal of the retiring Pledge Custodian, then the retiring Pledge Custodian may appoint a successor Pledge Custodian.  Each such successor Pledge Custodian shall provide the Sponsor and Freddie Mac with its address, to be used for purposes of Section 9.6, in a notice complying with the terms of Section 9.6.  Notwithstanding the resignation or removal of any retiring Pledge Custodian under this Agreement, the provisions of this Agreement shall continue to inure to the benefit of such Pledge Custodian in respect of any action taken or omitted to be taken by such Pledge Custodian in its capacity as such while it was Pledge Custodian under this Agreement.

Section 8.14Qualifications of Pledge Custodian.  Any Pledge Custodian at any time acting under this Agreement must at all times be either Freddie Mac or a bank or trust company organized under the laws of the United States of America or any state of the United States, having a combined capital stock, surplus and undivided profits aggregating at least $50,000,000 (or be the wholly-owned subsidiary of a corporation or other entity meeting such requirement) or have at least $500,000,000 in assets under trust management.

Section 8.15Application of Proceeds.  The Pledge Custodian shall apply the cash proceeds actually received from any sale or other disposition of the Pledged Security Collateral following an Event of Default as provided in Section 7.2(b).

Section 8.16No Additional Waiver Implied by One Waiver.  If any provision of this Article VIII is breached by the Sponsor and thereafter waived by the Pledge Custodian, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach under this Article VIII; provided that no waiver of any breach or default hereunder may be granted by the Pledge Custodian without the prior written consent of Freddie Mac.  Any forbearance by the Pledge Custodian to demand payment for any amounts payable under this Article VIII shall be limited to the particular payment for which the Pledge Custodian forbears demand for payment and will not be deemed a forbearance to demand any other amount payable under this Article VIII.

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Section 8.17Cooperation.  At any time, and from time to time after the date of this Agreement, the Sponsor shall, at the request of the Pledge Custodian or Freddie Mac (if not serving as Pledge Custodian), execute and deliver any instruments or documents, including U.C.C. financing and continuation statements in favor of the Pledge Custodian, reflecting the Pledge Custodian’s security interest in the Pledged Security Collateral, and shall take all such further actions as such party may reasonably request in order to consummate and make effective the transactions contemplated by this Agreement.

Section 8.18Termination.  The assignments, pledges and security interests created or granted by this Article VIII shall terminate contemporaneously with the termination of this Agreement, at which time the Pledge Custodian shall reassign, without recourse to, or any warranty whatsoever by the Pledge Custodian, and execute and deliver to the Sponsor or Class B Owner(s), as applicable, all Pledged Security Collateral and documents then in the custody or possession of the Pledge Custodian, and, if requested by the Sponsor or Class B Owner(s), shall execute and deliver to the Sponsor, Class B Owner(s) or their order, as applicable, for recording or filing in each office in which any assignment or financing statement relative to the Pledged Security Collateral or the agreements relating thereto, or any part thereof, shall have been filed or recorded, a termination statement or release under applicable law (including, if relevant, the U.C.C.) releasing the Pledge Custodian’s interest therein, and such other documents and instruments as the Sponsor or Class B Owner(s) may reasonably request, all without recourse to or any warranty whatsoever by the Pledge Custodian, and at the cost and expense of the Sponsor or Class B Owner(s).  Freddie Mac shall notify the Pledge Custodian in writing of any such termination, and the Pledge Custodian shall be entitled to rely upon such notice.

Section 8.19Representations and Warranties of the Pledge Custodian.  The Pledge Custodian represents and warrants to the Sponsor that:

(i)it has the power and authority to execute and deliver, and perform its obligations under, this Agreement;

(ii)all corporate action required to authorize the acceptance of its appointment as Pledge Custodian hereunder and the execution, delivery and performance of this Agreement and the effectuation of the transactions provided for in this Agreement has been duly taken; and

(iii)this Agreement has been duly and validly executed by the Pledge Custodian and constitutes the valid and binding obligation of the Pledge Custodian, enforceable against the Pledge Custodian in accordance with its terms, subject only to bankruptcy and other similar laws affecting creditors’ rights generally and general principles of equity.

Article IX

MISCELLANEOUS

Section 9.1Counterparts.  This Agreement may be executed in counterparts by the parties hereto, and each such counterpart shall be considered an original, and all such counterparts shall constitute one and the same instrument.

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Section 9.2Amendments, Changes and Modifications.  This Agreement may be amended, changed, modified, altered or terminated only by a written instrument or written instruments signed by the parties to this Agreement.  No course of dealing among the Sponsor and Freddie Mac, nor any delay in exercising any rights hereunder, shall operate as a waiver of any rights of Freddie Mac hereunder.  Unless otherwise specified in such waiver or consent, a waiver or consent given hereunder shall be effective only in the specific instance, and for the specific purpose for which given.

Section 9.3Payment Procedure.  All amounts due to Freddie Mac under Article III of this Agreement shall be paid to Freddie Mac.  All such payments shall be paid in lawful currency of the United States of America and in immediately available funds in accordance with instructions given to the Sponsor by Freddie Mac to an account designated in writing by Freddie Mac before 2:00 p.m. (Washington, D.C. time) on the date when due, unless the Sponsor is otherwise instructed in writing by Freddie Mac.

Section 9.4Payments on Business Days.  In any case where the date of payment to Freddie Mac or the expiration of any time period hereunder occurs on a day which is not a Business Day, then such payment or expiration of such time period need not occur on such date but may be made on the next succeeding Business Day with the same force and effect as if made on the day of maturity or expiration of such period, except that interest shall continue to accrue for the period after such date to the next Business Day.

Section 9.5Governing Law; Severability.  This Agreement shall be construed, and the rights and obligations of Freddie Mac and the Sponsor hereunder determined, in accordance with federal statutory or common law (“federal law”).  Insofar as there may be no applicable rule or precedent under federal law and insofar as to do so would not frustrate the purposes of any provision of this Agreement and the Freddie Mac Act, the local law of the State of New York shall be deemed reflective of federal law.  The parties agree that any legal actions among Freddie Mac and the Sponsor regarding each party hereunder shall be originated in the United States District Court in and for the Eastern District of Virginia, and the parties hereby consent to the jurisdiction and venue of said Court in connection with any action or proceeding initiated concerning this Agreement.

The invalidity or enforceability of any provision of this Agreement shall not affect the validity of any other provision, and all other provisions shall remain in full force and effect.

Section 9.6Notices.  All notices, directions, certificates or other communications hereunder to Freddie Mac or the Sponsor shall be deemed to be given (unless another form of notice shall be specifically set forth in this Agreement) on the Business Day following the date on which the same shall have been delivered to a national overnight delivery service (receipt of which to be evidenced by a signed receipt for overnight delivery service) with arrangements made for payment of all charges, for next Business Day delivery, addressed as set forth below.  All notices, directions, certificates or other communications to the Pledge Custodian or the Administrator shall be given and addressed in accordance with this Agreement and the Series Certificate Agreement.

56

		
		
	
Freddie Mac:
	
Freddie Mac

Director of Multifamily Loan Servicing, Mail Stop B2E

8100 Jones Branch Drive

McLean, VA 22102

Facsimile:  703-714-3273

Telephone: 703-903-2000

E-mail:  

carl_mclaughlin@freddiemac.com, with a copy to

  mfla@freddiemac.com

with a copy to:

 

Freddie Mac 

Director, Structured Transactions, Multifamily Asset Management, Mail Stop B4F 8100 Jones Branch Drive

McLean, VA 22102

Facsimile:  703-714-3003

Telephone: 703-714-3194

E-mail:  MF_Structured_Transactions@freddiemac.com.

 

with a copy to

	
 
	

	
Freddie Mac 

Attention: Director, Multifamily Production, Mail Stop B4U

8100 Jones Branch Drive

McLean, VA 22102

Facsimile:  703-714-3003

Telephone: 703-903-2000

E-mail:  curtis_melvin@freddiemac.com

 

		
	
Sponsor:
	
ATAX TEBS IV, LLC

1004 Farnam Street, Suite 400

Omaha, NE 68102 

Attention: Andy Grier

Telephone:  (402) 930-3076

E-mail: agrier@burlingtoncapital.com

With a copy to:

Craig Allen

1004 Farnam Street, Suite 400

Omaha, Nebraska 68102 

Phone: 402.930.3018

E-mail: callen@burlingtoncapital.com

 

with a copy to:

Kutak Rock LLP

1650 Farnam Street 

Omaha, Nebraska 68102 

Attention:  Conal Hession

Telephone: (402) 346-1148

E-mail: conal.hession@kutakrock.com

57

Section 9.7Further Assurances and Corrective Instruments.  To the extent permitted by law, the parties to this Agreement agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements to this Agreement and such further instruments as Freddie Mac may request and as may be reasonably required in the opinion of Freddie Mac or its counsel to effectuate the intention of or to facilitate the performance of this Agreement or any other Sponsor Document.

Section 9.8Term of this Agreement.  The term of this Agreement (the “Term”) shall continue in full force and effect, and Sponsor shall not be released from liability under this Agreement until the later of (a) the Terminating Mandatory Tender Date, (b) the date on which Freddie Mac has no further liability (accrued or contingent) under the Series Certificate Agreement and (c) the date on which Freddie Mac has been paid all amounts due it under this Agreement, under the other Sponsor Documents and otherwise with respect to the Obligations.  Notwithstanding such termination, the provisions of Sections 2.1, 2.2, 2.4 and Section 3.12 hereof shall survive the expiration or termination of this Agreement.

Section 9.9Assignments; Transfers; Third-Parties Rights.  The Sponsor shall not assign this Agreement, or delegate any of its obligations hereunder, without the prior written consent of Freddie Mac.  This Agreement may not be transferred in any respect without the prior written consent of Freddie Mac.  Nothing in this Agreement shall confer any right upon the owner or holder of any Certificate or upon any other Person other than the parties hereto and their successors and permitted assigns.

Section 9.10Headings.  Article and section headings used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

Section 9.11Limitation on Personal Liability.

(a)Except as otherwise provided in Section 9.11(b), neither the Sponsor nor its officers, directors, partners, members, managers or employees, shall have personal liability under this Agreement or any other Sponsor Document for the payment of the payment Obligations or for the performance of any other Obligations of the Sponsor under the Sponsor Documents, and Freddie Mac’s only recourse for the satisfaction or performance of the Obligations shall be Freddie Mac’s exercise of its rights and remedies with respect to the UCC Collateral and any other collateral held by Freddie Mac as security for the Obligations.  The foregoing notwithstanding, the Sponsor acknowledges that this Section 9.11(a) shall not be construed as limiting the coverage of, or any of Freddie Mac’s rights under, the Guaranty.

(b)The Sponsor shall be personally liable to Freddie Mac for its damages, losses or expenses, as applicable upon the occurrence of any of the following: (1) fraud or written material misrepresentation by the Sponsor, or any Sponsor Affiliate, or any officer, director, partner, member, manager or employee of the Sponsor, or any Sponsor Affiliate, in connection with the application for or creation of the Obligations or any request for any action or consent by Freddie Mac, (2) any costs and expenses incurred by Freddie Mac in connection with the collection of any amount for which the Sponsor is personally liable under this Section, including fees and out of pocket expenses of attorneys and expert witnesses and the costs of conducting any independent audit of the Sponsor’s and any Sponsor Affiliate’s books and records to determine 

58

the amount for which the Sponsor has personal liability; and (3) any Breach that is uncured by the Sponsor in the event the Sponsor does not fulfill its obligations under Section 2.4(c).  In addition, the Sponsor shall be personally liable to Freddie Mac for indemnification obligations under Section 3.12. 

(c)To the extent that the Sponsor has personal liability under this Section 9.11, Freddie Mac may exercise its rights against the Sponsor personally without regard to whether Freddie Mac has exercised any rights against the UCC Collateral or any other security or pursued any rights against any guarantor or pursued any other rights available to Freddie Mac under this Agreement, any other Sponsor Document or applicable law.

Section 9.12Consent of Freddie Mac.  Whenever Freddie Mac shall have any right or option to exercise any  discretion, to determine any matter, to accept any presentation or to approve any matter, such exercise, determination, acceptance or approval shall, unless otherwise specifically provided, be in Freddie Mac’s sole and absolute discretion.

Section 9.13Disclaimer; Acknowledgments.  Approval by Freddie Mac of the Sponsor, any Sponsor Affiliate, the Sponsor Documents, any Owner Documents, any Mortgaged Property, the Bonds, or otherwise shall not constitute a warranty or representation by Freddie Mac as to any matter.  Nothing set forth in this Agreement, in any of the other Sponsor Documents or in the subsequent conduct of the parties shall be deemed to constitute Freddie Mac as the partner or joint venturer of the Sponsor, any Sponsor Affiliate, or any Person for any purpose whatsoever.

Section 9.14Entire Agreement.  This Agreement and the Sponsor Documents constitute the entire contract between the parties relative to the subject matter hereof.  Any previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement and the Sponsor Documents.  Nothing in this Agreement or the Sponsor Documents, expressed or implied, is intended to confer upon any party, other than the parties hereto and thereto, any rights, remedies, obligations or liabilities under or by reason of this Agreement or the Sponsor Documents; provided, however, that as to Persons other than Freddie Mac and the Sponsor that are parties to any of the Sponsor Documents, such Persons shall not have any rights, remedies, obligations or liabilities under this Agreement or any of the Sponsor Documents except under such Sponsor Documents to which such Persons are directly parties.

Section 9.15Survival of Representation and Warranties.  All statements contained in any Sponsor Document, or in any certificate, financial statement or other instrument delivered by or on behalf of the Sponsor pursuant to or in connection with this Agreement (including but not limited to any such statement made in or in connection with any amendment hereto or thereto) shall constitute representations and warranties made under this Agreement.  All representations and warranties made under this Agreement (a) shall be made and shall be true at and as of the Closing Date and (b) shall survive the execution and delivery of this Agreement, regardless of any investigation made by Freddie Mac or on its behalf.

Section 9.16Waiver of Claims.  IN ORDER TO INDUCE FREDDIE MAC TO EXECUTE AND DELIVER THE SERIES CERTIFICATE AGREEMENT, THE SPONSOR HEREBY REPRESENTS AND WARRANTS THAT IT HAS NO CLAIMS, SET-OFFS OR DEFENSES AS OF THE CLOSING DATE IN CONNECTION WITH THE TRANSACTIONS 

59

CONTEMPLATED BY THIS AGREEMENT OR IN CONNECTION WITH ANY OF THE OTHER SPONSOR DOCUMENTS.  TO THE EXTENT ANY SUCH CLAIMS, SET-OFFS OR DEFENSES MAY EXIST, WHETHER KNOWN OR UNKNOWN, THEY ARE EACH HEREBY WAIVED AND RELINQUISHED IN THEIR ENTIRETY.

Section 9.17Waivers of Jury Trial.  THE SPONSOR AND FREDDIE MAC EACH (A) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS AGREEMENT OR THE RELATIONSHIP BETWEEN THE SPONSOR AND FREDDIE MAC AS CREDIT FACILITY PROVIDER, PLEDGE CUSTODIAN AND ADMINISTRATOR THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

[Signatures follow]

 

60

IN WITNESS WHEREOF, the Sponsor and Freddie Mac have executed this Reimbursement Agreement as of the day and year first above written.

FEDERAL HOME LOAN MORTGAGE

CORPORATION

 

	
By:
	
 
	
/s/ Curtis Melvin

	
 
	
 
	
Curtis Melvin

	
 
	
 
	
Multifamily, Production Director

 

 

 

 

 

 

 

 

 

 

 

 

[Signature page to ATAX TEBS IV Reimbursement Agreement]

 

ATAX TEBS IV, LLC, a Delaware limited liability company, as Sponsor

	
 
	
By:
	
AMERICA FIRST MULTIFAMILY INVESTORS, L.P., a Delaware limited partnership (f/k/a America First Tax Exempt Investors, L.P.), its sole member 

	
 
	
By:
	
AMERICA FIRST CAPITAL ASSOCIATES LIMITED PARTNERSHIP TWO, a Delaware limited partnership, its general partner 

	
 
	
By:
	
BURLINGTON CAPITAL LLC, a Delaware limited liability company, its general partner

	
 
	
By:
	
/s/ Craig S. Allen

	
 
	

	
Name:  Craig S. Allen

	
 
	

	
Title:    Chief Financial Officer

 

 

 

 

 

 

 

[Counterpart Signature page to ATAX TEBS IV Reimbursement Agreement]

 

 

 

SCHEDULE A

MORTGAGED PROPERTIES AND YIELD MAINTENANCE PERIOD 

 

	
 
	
Mortgaged Property, Location
	
Yield Maintenance End Date

	
1.
	
15 West Apartments, Vancouver, Washington
	
01/01/2032

	
2.
	
Berrendo Square Apartments, San Antonio, Texas
	
11/01/2029

	
3.
	
Bruton Apartments, Dallas, Texas
	
02/01/2032

	
4.
	
Columbia Gardens, Columbia, South Carolina
	
12/01/2027

	
5.
	
Companion at Thornhill, Lexington, South Carolina
	
02/01/2027

	
6.
	
Concord at Gulfgate Apartments, Houston, Texas
	
06/01/2030

	
7.
	
Concord at Little York Apartments, Houston, Texas
	
06/01/2030

	
8.
	
Concord at Williamcrest Apartments, Houston, Texas
	
06/01/2030

	
9.
	
Courtyard Apartments, Fullerton, California
	
12/01/2030

	
10.
	
Decatur-Angle Apartments, Fort Worth, Texas
	
02/01/2031

	
11.
	
Harmony Court Bakersfield, Bakersfield, California
	
12/01/2030

	
12.
	
Harmony Terrace Apartments, Simi Valley, California
	
01/01/2031

	
13.
	
Las Palmas II Apartments, Coachella, California
	
11/01/2030

	
14.
	
Laurel Crossings Apartments, San Antonio, Texas
	
11/01/2029

	
15.
	
Oaks at Georgetown Apartments, Georgetown, Texas
	
12/01/2030

	
16.
	
Palo Alto Apartments, San Antonio, Texas
	
07/01/2033

	
17.
	
San Vicente Townhomes, Soledad, California
	
11/01/2030

A-1

	
18.
	
Seasons Lakewood Apartments, Lakewood, California
	
01/01/2031

	
19.
	
Seasons San Juan Capistrano Apartments, San Juan Capistrano, California
	
01/01/2031

	
20.
	
Simi Valley Apartments, Simi Valley, California
	
07/01/2029

	
21.
	
Summerhill Family Apartments, Bakersfield, California
	
12/01/2030

	
22.
	
Sycamore Walk, Bakersfield, California
	
01/01/2030

	
23.
	
Village at Madera Apartments, Madera California
	
12/01/2030

	
24.
	
Village at Rivers Edge, Columbia, South Carolina
	
06/01/2032

	
25.
	
Willow Run Apartments, Columbia, South Carolina
	
12/01/2027

 

 

2

 

SCHEDULE A-1

BONDS

 

	
1.
	
15 West Apartments

Washington State Housing Finance Commission
Multifamily Housing Revenue Bonds (15 West Apartments Project), Series 2014A

	
2.
	
Berrendo Square Apartments

Public Finance Authority
Multifamily Housing Revenue Bonds
(Berrendo Square Apartments Project) Series 2015A

	
3.
	
Bruton Apartments

City of Dallas Housing Finance Corporation, Multifamily Housing Revenue Bonds (Bruton Apartments) Series 2014

	
4.
	
Columbia Gardens

South Carolina State Housing Finance and Development Authority
Multifamily Housing Revenue Bonds
(Columbia Gardens) Series 2015

	
5.
	
Companion at Thornhill

Public Finance Authority
Multifamily Housing Revenue Bonds (Companion at Thornhill Apartments Project) Series 2016

	
6.
	
Concord at Gulfgate Apartments

Public Finance Authority
Multifamily Housing Revenue Bonds
(Concord at Gulfgate Apartments Project) Series 2015A

	
7.
	
Concord at Little York Apartments

Public Finance Authority
Multifamily Housing Revenue Bonds
(Concord at Little York Apartments Project) Series 2015A

	
8.
	
Concord at Williamcrest Apartments

Public Finance Authority
Multifamily Housing Revenue Bonds
(Concord at Williamcrest Apartments Project) Series 2015A

	
9.
	
Courtyard Apartments

Golden State Finance Authority
Multifamily Housing Revenue Bonds
(Courtyard Apartments Project) 2016 Series G-1

A-1-1

	
10.
	
Decatur-Angle Apartments

Texas Department of Housing and Community Affairs
Multifamily Housing Revenue Bonds (Decatur-Angle Apartments),
Series 2014

	
11.
	
Harmony Court Bakersfield

Golden State Finance Authority
Multifamily Housing Revenue Bonds
(Harmony Court Bakersfield Apartments Project) 2016 Series E-1

	
12.
	
Harmony Terrace Apartments

Golden State Finance Authority
Senior Housing Revenue Bonds
(Harmony Terrace Apartments Project) 2016 Series I-1

	
13.
	
Las Palmas II Apartments

Golden State Finance Authority
Multifamily Housing Revenue Bonds
(Las Palmas II Apartments Project) 2016 Series A-1

	
14.
	
Laurel Crossings Apartments

Public Finance Authority
Multifamily Housing Revenue Bonds
(Laurel Crossings Apartments Project) Series 2015A

	
15.
	
Oaks at Georgetown Apartments

Capital Area Housing Finance Corporation
Multifamily Housing Revenue Bonds
(Oaks at Georgetown Apartments Project),
2016 Series A-1

	
16.
	
Palo Alto Apartments

San Antonio Housing Trust Finance Corporation
Multifamily Housing Revenue Bonds
(Palo Alto Apartments) Series 2015

	
17.
	
San Vicente Townhomes

Golden State Finance Authority
Multifamily Housing Revenue Bonds
(San Vicente Townhomes Project) 2016 Series C-1

	
18.
	
Seasons Lakewood Apartments

Golden State Finance Authority
Senior Housing Revenue Bonds
(Seasons Lakewood Apartments Project) 2016 Series H-1

	
19.
	
Seasons San Juan Capistrano Apartments

Golden State Finance Authority
Senior Housing Revenue Bonds
(Seasons San Juan Capistrano Apartments Project) 2016 Series F-1

A-1-2

	
20.
	
Simi Valley Apartments
Golden State Finance Authority
Senior Housing Revenue Bonds
(Seasons at Simi Valley Apartments Project) 2015 Series A-1

	
21.
	
Summerhill Family Apartments

Golden State Finance Authority
Multifamily Housing Revenue Bonds
(Summerhill Family Apartments Project) 2016 Series D-1

	
22.
	
Sycamore Walk
Golden State Finance Authority
Multifamily Housing Revenue Bonds (Sycamore Walk Project)
2015 Series B-1

	
23.
	
Village at Madera Apartments

Golden State Finance Authority Multifamily Housing Revenue Bonds (Village at Madera Apartments Project) 2016 Series B-1

	
24. []
	
Village at River’s Edge

South Carolina State Housing Finance and Development Authority Multifamily Rental Housing Revenue Bonds
(Village at River’s Edge) Series 2015

	
25. []
	
Willow Run Apartments

South Carolina State Housing Finance and Development Authority

Multifamily Housing Revenue Bonds (Willow Run Apartments)

Series 2015

 

 

 

 

A-1-3

 

SCHEDULE A-2

PRE-SELECTED BONDS

	
1.
	
Public Finance Authority
Multifamily Housing Revenue Bonds
(Berrendo Square Apartments Project) Series 2015A

	
2.
	
Public Finance Authority
Multifamily Housing Revenue Bonds
(Concord at Gulfgate Apartments Project) Series 2015A

	
3.
	
Public Finance Authority
Multifamily Housing Revenue Bonds
(Concord at Little York Apartments Project) Series 2015A

	
4.
	
Public Finance Authority
Multifamily Housing Revenue Bonds
(Concord at Williamcrest Apartments Project) Series 2015A

	
5.
	
Golden State Finance Authority
Multifamily Housing Revenue Bonds
(Courtyard Apartments Project) 2016 Series G-1

	
6.
	
Public Finance Authority
Multifamily Housing Revenue Bonds
(Laurel Crossings Apartments Project) Series 2015A

	
7.
	
Golden State Finance Authority
Senior Housing Revenue Bonds
(Seasons Lakewood Apartments Project) 2016 Series H-1

	
8.
	
Golden State Finance Authority
Senior Housing Revenue Bonds
(Seasons San Juan Capistrano Apartments Project) 2016 Series F-1

 

 

 

 

A-2-1

 

SCHEDULE B

QUALIFICATIONS TO REPRESENTATIONS AND WARRANTIES

 

				
	
 
	
Mortgaged Property
	
Representation and Warranty
	
Issue

	
1
	
Landings at Marine Creek (aka Decatur Angle)
	
2.1(r) Title; First Lien 
	
The Mortgaged Property is not owned by Owner in fee simple; Owner’s interest is a ground leasehold interest.

	
2
	
15 West
	
2.1(pp) Exemption from Real Property Taxes

 
	
The Improvements located on the Mortgaged Property are currently exempt from real property taxes; however the exemption expires January 1, 2029.

	
3
	
Sterlingshire (aka Bruton)
	
2.1(r) Title; First Lien
	
The Mortgaged Property is not owned by Owner in fee simple (other than the improvements); Owner’s interest in the land is a ground leasehold interest.

	
4
	
Concord at Little York
	
2.1 (jj) Single Asset Requirements

 

 

 

 

 

 

2.1(pp) Exemption from Real Property Taxes
	
The Bond Mortgage Documents permit Owner to own Williamcrest Apartments and personal property related to its operation and maintenance and to engage in business activities related to Williamcrest Apartments.

 

The Mortgaged Property is exempt from real property taxes under current law and subject to annual audits of continued eligibility.

	
5
	
Concord at Gulfgate
	
2.1(pp) Exemption from Real Property Taxes
	
The Mortgaged Property is exempt from real property taxes under current law and subject to annual audits of continued eligibility.

B-1

 

				
	
6
	
Concord at Williamcrest
	
2.1 (jj) Single Asset Requirements

 

 

2.1(pp) Exemption from Real Property Taxes
	
The Bond Mortgage Documents permit Owner to own Little York Apartments and personal property related to its operation and maintenance and to engage in business activities related to Little York Apartments.

The Mortgaged Property is exempt from real property taxes under current law and subject to annual audits of continued eligibility.

	
7
	
Village at River’s Edge

 
	
Section 2.1(pp) Exemption from Real Property Taxes
	
The Mortgaged Property is not exempt from real property taxes.

	
8
	
Sycamore Walk
	
2.1(pp) Exemption from Real Property Taxes
	
The tax abatement with respect to the Mortgaged Property is a PARTIAL abatement for fiscal year 2017-2018 under current law, and subject to claims for exemption being filed annually with the county assessor based upon a continued qualifying ownership structure and use.  

	
9
	
Simi Valley
	
2.1(pp) Exemption from Real Property Taxes

 
	
The Mortgaged Property is exempt from real property taxes under current law and subject to claims for exemption being filed annually with the county assessor based upon a continued qualifying ownership structure and use.

	
10
	
Las Palmas
	
2.1(pp) Exemption from Real Property Taxes
	
The tax abatement with respect to the Mortgaged Property is a PARTIAL abatement for fiscal year 2017-2018 under current law, and subject to claims for exemption being filed annually with the county assessor based upon a continued qualifying ownership structure and use.

	
11
	
Laurel Crossing
	
2.1 (jj) Single Asset Requirements

 

 

 

2.1 (pp) Exemption from Real Property Taxes
	
The Bond Mortgage Documents permit Owner to own Berrendo Square Apartments (the “Berrendo Project”) and personal property related to the Berrendo Project and to operate and manage the Berrendo Project.

The Mortgaged Property is exempt from real property taxes under current law and subject to annual audits of continued eligibility.

B-2

 

				
	
12
	
Berrendo
	
2.1 (jj) Single Asset Requirements

 

 

 

2.1 (pp) Exemption from Real Property Taxes
	
The Bond Mortgage Documents permit Owner to own Laurel Crossing Apartments (the “Laurel Project”) and personal property related to the Laurel Project and to operate and manage the Laurel Project.

The Mortgaged Property is exempt from real property taxes under current law and subject to annual audits of continued eligibility.

	
13
	
Thornhill
	
N/A
	
N/A

	
14
	
Columbia Gardens
	
2.1(pp) Exemption from Real Property Taxes
	
The Mortgaged Property is not exempt from real property taxes.

	
15
	
Willow Run
	
2.1(pp) Exemption from Real Property Taxes
	
The Mortgaged Property is not exempt from real property taxes.

	
16
	
Courtyard
	
2.1(pp) Exemption from Real Property Taxes
	
The tax abatement with respect to the Mortgaged Property is a PARTIAL abatement for fiscal year 2017-2018 under current law, and subject to claims for exemption being filed annually with the county assessor based upon a continued qualifying ownership structure and use.

	
17
	
Seasons San Juan Capistrano
	
2.1(pp) Exemption from Real Property Taxes
	
The tax abatement with respect to the Mortgaged Property is a PARTIAL abatement for fiscal year 2017-2018 under current law, and subject to claims for exemption being filed annually with the county assessor based upon a continued qualifying ownership structure and use.

	
18
	
Seasons Lakewood
	
2.1(r) Title

 

 

 

 

2.1(pp) Exemption from Real Property Taxes
	
The Mortgaged Property is not owned by Owner in fee simple; Owner’s interest is a ground lease interest.

 

There is currently NO TAX ABATEMENT with respect to the Mortgaged Property for fiscal year 2017-2018; however, the subject property previously qualified for a one hundred percent (100%) abatement.  It is possible that no claim for exemption was made for fiscal year 2017-2018.

B-3

 

				
	
19
	
San Vicente
	
Section 2.1(pp) Exemption from Real Property Taxes
	
The Mortgaged Property is exempt from real property taxes under current law and subject to claims for exemption being filed annually with the county assessor based upon a continued qualifying ownership structure and use.

	
20
	
Harmony Court
	
Section 2.1(pp) Exemption from Real Property Taxes
	
The Mortgaged Property is exempt from real property taxes under current law and subject to claims for exemption being filed annually with the county assessor based upon a continued qualifying ownership structure and use.

	
21
	
Summerhill
	
2.1(pp) Exemption from Real Property Taxes

 
	
The Mortgaged Property is exempt from real property taxes under current law and subject to claims for exemption being filed annually with the county assessor based upon a continued qualifying ownership structure and use

	
22
	
Oaks at Georgetown
	
2.1(pp) Exemption from Real Property Taxes
	
The Mortgaged Property is only 50% exempt from real property taxes and subject to annual audits of continued eligibility.

	
23
	
Harmony Terrace
	
2.1(pp) Exemption from Real Property Taxes
	
The Mortgaged Property is exempt from real property taxes under current law and subject to claims for exemption being filed annually with the county assessor based upon a continued qualifying ownership structure and use.

	
24
	
Village at Madera
	
2.1(pp) Exemption from Real Property Taxes

 
	
The Mortgaged Property is exempt from real property taxes under current law and subject to claims for exemption being filed annually with the county assessor based upon a continued qualifying ownership structure and use.

	
25
	
Palo Alto
	
Section 2.1(r) Title; First Lien
	
The Mortgaged Property is not owned by Owner in fee simple (other than the improvements).  Owner’s interest in the land is a ground leasehold interest. 

 

[End of Schedule B]

 

 

B-4

 

EXHIBIT I

MORTGAGED PROPERTIES WITH STATE AGENCY LETTERS

 

1.Courtyard Apartments

Golden State Finance Authority

Multifamily Housing Revenue Bonds

(Courtyard Apartments Project) 2016 Series G-1

 

2.Harmony Court Bakersfield

Golden State Finance Authority

Multifamily Housing Revenue Bonds

(Harmony Court Bakersfield Apartments Project) 2016 Series E-1

 

3.Harmony Terrace Apartments

Golden State Finance Authority

Senior Housing Revenue Bonds

(Harmony Terrace Apartments Project) 2016 Series I-1

 

4.Las Palmas II Apartments

Golden State Finance Authority

Multifamily Housing Revenue Bonds

(Las Palmas II Apartments Project) 2016 Series A-1

 

5.San Vicente Townhomes

Golden State Finance Authority

Multifamily Housing Revenue Bonds

(San Vicente Townhomes Project) 2016 Series C-1

 

6.Seasons Lakewood Apartments

Golden State Finance Authority

Senior Housing Revenue Bonds

(Seasons Lakewood Apartments Project) 2016 Series H-1

 

7.Seasons San Juan Capistrano Apartments

Golden State Finance Authority

Senior Housing Revenue Bonds

(Seasons San Juan Capistrano Apartments Project) 2016 Series F-1

 

8.Simi Valley Apartments

Golden State Finance Authority

Senior Housing Revenue Bonds

(Seasons at Simi Valley Apartments Project) 2015 Series A-1

 

 

 

9.Summerhill Family Apartments

Golden State Finance Authority

Multifamily Housing Revenue Bonds

(Summerhill Family Apartments Project) 2016 Series D-1

 

10.Sycamore Walk

Golden State Finance Authority

Multifamily Housing Revenue Bonds (Sycamore Walk Project)

2015 Series B-1

 

11.Village at Madera Apartments

Golden State Finance Authority 

Multifamily Housing Revenue Bonds (Village at Madera Apartments Project) 

2016 Series B-1

 

 

 

EXHIBIT II

MORTGAGED PROPERTIES AND FIRST OPTIONAL REDEMPTION DATES 

	
Bond Issue and Series

 
	
First Optional Redemption Date at Par

	
Washington State Housing Finance Commission
Multifamily Housing Revenue Bonds 
(15 West Apartments Project), Series 2014A
	
01/01/2032

	
Public Finance Authority
Multifamily Housing Revenue Bonds
(Berrendo Square Apartments Project) Series 2015A
	
11/01/2029

	
City of Dallas Housing Finance Corporation, Multifamily Housing Revenue Bonds 
(Bruton Apartments) Series 2014
	
02/01/2032

	
South Carolina State Housing Finance and Development Authority
Multifamily Housing Revenue Bonds
(Columbia Gardens) Series 2015
	
12/01/2027

	
Public Finance Authority
Multifamily Housing Revenue Bonds 
(Companion at Thornhill Apartments Project) Series 2016
	
02/01/2027

	
Public Finance Authority
Multifamily Housing Revenue Bonds
(Concord at Gulfgate Apartments Project) Series 2015A
	
06/01/2030

	
Public Finance Authority
Multifamily Housing Revenue Bonds
(Concord at Little York Apartments Project) Series 2015A
	
06/01/2030

	
Public Finance Authority
Multifamily Housing Revenue Bonds
(Concord at Williamcrest Apartments Project) Series 2015A
	
06/01/2030

	
Golden State Finance Authority
Multifamily Housing Revenue Bonds
(Courtyard Apartments Project) 2016 Series G-1
	
12/01/2030

	
Texas Department of Housing and Community Affairs
Multifamily Housing Revenue Bonds 
(Decatur-Angle Apartments) Series 2014
	
02/01/2031

	
Golden State Finance Authority
Multifamily Housing Revenue Bonds
(Harmony Court Bakersfield Apartments Project) 2016 Series E-1
	
12/01/2030

 

 

	
Bond Issue and Series

 
	
First Optional Redemption Date at Par

	
Golden State Finance Authority
Senior Housing Revenue Bonds
(Harmony Terrace Apartments Project) 2016 Series I-1
	
01/01/2031

	
Golden State Finance Authority
Multifamily Housing Revenue Bonds
(Las Palmas II Apartments Project) 2016 Series A-1
	
11/01/2030

	
Public Finance Authority
Multifamily Housing Revenue Bonds
(Laurel Crossings Apartments Project) Series 2015A
	
11/01/2029

	
Capital Area Housing Finance Corporation
Multifamily Housing Revenue Bonds
(Oaks at Georgetown Apartments Project),
2016 Series A-1
	
12/01/2030

	
San Antonio Housing Trust Finance Corporation
Multifamily Housing Revenue Bonds
(Palo Alto Apartments) Series 2015
	
07/01/2033

	
Golden State Finance Authority
Multifamily Housing Revenue Bonds
(San Vicente Townhomes Project) 2016 Series C-1
	
11/01/2030

	
Golden State Finance Authority
Senior Housing Revenue Bonds
(Seasons Lakewood Apartments Project) 2016 Series H-1
	
01/01/2031

	
Golden State Finance Authority
Senior Housing Revenue Bonds
(Seasons San Juan Capistrano Apartments Project) 2016 Series F-1
	
01/01/2031

	
Golden State Finance Authority
Senior Housing Revenue Bonds
(Seasons at Simi Valley Apartments Project) 2015 Series A-1
	
07/01/2029

	
Golden State Finance Authority
Multifamily Housing Revenue Bonds

(Summerhill Family Apartments Project) 2016 Series D-1
	
12/01/2030

	
Golden State Finance Authority
Multifamily Housing Revenue Bonds (Sycamore Walk Project) 2015 Series B-1
	
01/01/2030

	
Golden State Finance Authority 
Multifamily Housing Revenue Bonds 
(Village at Madera Apartments Project) 2016 Series B-1
	
12/01/2030

 

 

	
Bond Issue and Series

 
	
First Optional Redemption Date at Par

	
South Carolina State Housing Finance and Development Authority 
Multifamily Rental Housing Revenue Bonds 
(Village at River’s Edge) Series 2015
	
06/01/2032

	
South Carolina State Housing Finance and Development Authority

Multifamily Housing Revenue Bonds 
(Willow Run Apartments)

Series 2015
	
12/01/2027atax-ex104_31.htm

 

Exhibit 10.4

SERIES CERTIFICATE AGREEMENT

by and between

FEDERAL HOME LOAN MORTGAGE CORPORATION,
in its corporate capacity

and

FEDERAL HOME LOAN MORTGAGE CORPORATION,
in its capacity as Administrator

Dated as of August 1, 2018

incorporating by reference

STANDARD TERMS OF THE SERIES CERTIFICATE AGREEMENT

Dated as of August 1, 2018

FREDDIE MAC
MULTIFAMILY M CERTIFICATES
Series M-045

$221,540,000 Class A Certificates
$39,096,296 Class B Certificates

relating to

the Bonds described herein

SPONSOR:  ATAX TEBS IV, LLC

 

 

 

SERIES CERTIFICATE AGREEMENT

This SERIES CERTIFICATE AGREEMENT (this “Series Certificate Agreement”) is dated as of August 1, 2018 by and between FEDERAL HOME LOAN MORTGAGE CORPORATION, in its corporate capacity (“Freddie Mac”) and FEDERAL HOME LOAN MORTGAGE CORPORATION, in its capacity as Administrator (the “Administrator”) on behalf of the Holders of the Series of Class A Certificates (the “Class A Certificates”) and the Class B Certificates (the “Class B Certificates”) (collectively, the “Certificates”) described on the cover page.  This Series Certificate Agreement incorporates by reference the Standard Terms of the Series Certificate Agreement dated as of August 1, 2018 (the “Standard Terms”), attached as Appendix A, which Standard Terms will govern the Certificates and the Series Pool except as provided in this Series Certificate Agreement.  All capitalized terms used and not defined herein shall have the meaning set forth in the Standard Terms.

RECITALS:

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

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

AGREEMENT:

Section 1.Freddie Mac hereby creates the Series Pool relating to the Certificates and transfers the Bonds to such Series Pool for the benefit of the Holders of the Certificates, together with all of its interest in (a) all Bond Payments made from and after the Date of Original Issue and all certificates and instruments, if any, representing the Bonds, (b) the Distribution Account and (c) all proceeds of the Bonds and the Distribution Account of every kind and nature.

Section 2.The Series Pool and the related Certificates will bear the Series designation set forth on the cover page of this Series Certificate Agreement.

Section 3.The Class A Certificates will be issued with an Initial Certificate Balance of $221,540,000 and the Class B Certificates will be issued with an Initial Certificate Balance of $39,096,296 in substantially the forms set forth in Exhibit B and Exhibit C to the Standard Terms.  Upon initial issuance, the Class A Certificates shall be registered in the name of CEDE & Co., as nominee for DTC.  Upon initial issuance, the Class B Certificates shall be registered in the name of the Sponsor and will be held in definitive form.

Section 4.The Sponsor will be ATAX TEBS IV, LLC (no successor Sponsor may be appointed under Section 3.07 of the Standard Terms).

Section 5.The Class A Certificates shall be Term Extended Rate Class A Certificates.  Term Extended Rate applicable to the Class A Certificates shall be: (i) 3.08% for each Accrual Period commencing on the Date of Original Issue to, but not including, the Accrual 

 

Period commencing August 1, 2023, and (ii) 3.65% for the Accrual Period commencing on August 1, 2023 through the Series Expiration Date.

Section 6.The Bonds were neither deposited with nor acquired with market discount in excess of a de minimis amount within the meaning of Section 1278(a)(2)(C) of the Code determined as of the Date of Original Issue.

Section 7.The Monthly Closing Election will be made on behalf of the Series Pool, effective as of the “start-up date” (as defined in Revenue Procedure 2003-84).  The Sponsor and all Holders of Certificates (by their purchase thereof) consent to the Monthly Closing Election.  The Series Pool, the Sponsor and each Holder of Certificates (by their purchase thereof) agree to comply with the tax reporting requirements of Sections 8.02, 8.03 and 8.04 of Revenue Procedure 2003-84 (or any successor Revenue Procedure or other applicable Internal Revenue Service guidance).

Section 8.Partnership Factors shall not apply to the Series Pool.

Section 9.The provisions of the Standard Terms relating to the Reset Rate, Reset Rate Methods, Reset Dates, the LIBOR Index Rate, the Liquidity Facility, the Liquidity Provider Termination Event, Liquidity Failure, the Remarketing Agent, the Tender Option, the Reset Rate Class A Certificates, the Initial Purchaser, the remarketing of Class A Certificates, Pledged Class A Certificates and the Mandatory Tender of Class Certificates shall not be applicable to the Series Pool (other than with respect to Mandatory Tenders resulting from a Credit Provider Termination Event or a Clean-Up Event which shall be applicable to the Series Pool).  

Section 10.The CUSIP Numbers for the Certificates are the following:

 

	
 
	
CUSIP Number

	
Class A Certificates
	
31350ACC0

	
Class B Certificates
	
31350ACD8

 

Section 11.The Notional Accelerated Principal Amortization Schedule and the Class A Certificate Notional Accelerated Principal Paydown Amount will not be applicable to the Series Pool.

Section 12.The provisions of the Standard Terms relating to the making of Administrator Advances and the payment of Daily Administrator Advance Charges will not be applicable to the Series Pool.

Section 13.The provisions of the Standard Terms relating to a Special Adjustment Event and the Mandatory Tender in connection with a Special Adjustment Event will not be applicable to the Series Pool.

Section 14.Receipt by the Administrator of a rating letter from S&P confirming the rating of the Class A Certificates as “AA+” will be an additional condition under Section 2.09 of the Standard Terms to the issuance of the Certificates.

2

Section 15.The provisions of the Standard Terms relating to the Bond Payment Subaccount – Holdback within the Distribution Account will not be applicable to the Series Pool.

Section 16.The Administrator shall deposit into the Odd Lot Subaccount within the Distribution Account the sum of $4,999.99 received from the Sponsor on the Date of Original Issue for application in accordance with Section 4.03(f) of the Standard Terms.

Section 17.The following definitions shall apply with respect to the Certificates:

“Accrual Commencement Date” - shall mean August 8, 2018.

“Accrued Interest on the Bonds” means the amount of $0.00, representing the portion of the interest on the Bonds that is to accrue prior to the Accrual Commencement Date.

"Berrendo Bonds" means Public Finance Authority Multifamily Housing Revenue Bonds (Berrendo Square Apartments Project) Series 2015A.

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

"Concord at Little York Bonds" means the Public Finance Authority Multifamily Housing Revenue Bonds (Concord at Little York Apartments Project) Series 2015A.

"Concord at Williamcrest Bonds" means the Public Finance Authority Multifamily Housing Revenue Bonds (Concord at Williamcrest Apartments Project) Series 2015A.

“Date of Original Issue” - shall mean August 8, 2018.

“First Payment Date” - shall mean September 15, 2018.

"Laurel Bonds" means the Public Finance Authority Multifamily Housing Revenue Bonds (Laurel Crossings Apartments Project) Series 2015A.

“Rating Agency” - shall mean S&P.

"Pre-Selected Deposited Bonds" means the following Bonds: (1) Public Finance Authority Multifamily Housing Revenue Bonds (Berrendo Square Apartments Project) Series 2015A, (2) Public Finance Authority Multifamily Housing Revenue Bonds (Concord at Gulfgate Apartments Project) Series 2015A, (3) Public Finance Authority Multifamily Housing Revenue Bonds (Concord at Little York Apartments Project) Series 2015A, (4) Public Finance Authority Multifamily Housing Revenue Bonds (Concord at Williamcrest Apartments Project) Series 2015A, (5) Golden State Finance Authority Multifamily Housing Revenue Bonds (Courtyard Apartments Project) 2016 Series G-1, (6) Public Finance Authority Multifamily Housing Revenue Bonds (Laurel Crossings Apartments Project) Series 2015A, (7) Golden State Finance Authority Senior Housing Revenue Bonds (Seasons Lakewood Apartments Project) 2016 Series H-1, and (8) 

3

Golden State Finance Authority Senior Housing Revenue Bonds (Seasons San Juan Capistrano Apartments Project) 2016 Series F-1

“Servicer” - shall mean NorthMarq Capital, LLC, or any subsequent Servicer appointed by Freddie Mac.

Section 18.References to “Administrator Fee” and “Administrator Fee Rate” will be inapplicable as long as Freddie Mac serves in such capacity.  If an Administrator other than Freddie Mac is appointed, the Administrator Fee will be payable based on an Administrator Fee Rate established by notice from Freddie Mac to such Administrator and the Sponsor; provided such Administrator Fee will be paid only from an allocated portion of the Freddie Mac Fee as set forth in such notice, and the amount of the Freddie Mac Fee will be reduced by such allocated portion.

Section 19.Notices under this Series Certificate Agreement to be provided to the Sponsor and the Rating Agency will be provided in the manner set forth in Section 14.02 of the Standard Terms as follows:

	
 
	
Sponsor:
	
ATAX TEBS IV, LLC

1004 Farnam Street, Suite 400

Omaha, Nebraska 68102

Attention: Andy Grier 

Phone: 402.930.3076

E-mail: agrier@burlingtonapital.com

	
 
	
with a copy to:
	
Craig Allen

1004 Farnam Street, Suite 400

Omaha, Nebraska 68102

Phone: 402.930.3081

E-mail: callen@burlingtoncapital.com

	
 
	
with a copy to:
	
Kutak Rock LLP

1650 Farnam Street

Omaha, Nebraska 68102

Attention:  Conal Hession

Telephone: (402) 346-1148

E-mail: conal.hession@kutakrock.com

	
 
	
Rating Agency:
	
Standard & Poor’s Ratings Service

55 Water Street, 38th Floor

New York, New York 10041

Attention:  Muni Structured Group

Facsimile:  (212) 438-2152

E-mail: Pubfin_structured@spglobal.com

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

4

Section 20.For purposes of Section 4.03(a)(i) of the Standard Terms, there is no Accrued Interest on the Bonds to be paid on the First Payment Date to the Sponsor.

Section 21.The provisions of the Standard Terms relating to Fed System shall not be applicable so long as the DTC System is in effect for the Series Pool.

Section 22.The provisions of the Standard Terms relating to the Optional Disposition Right shall not be applicable to the Series Pool.

Section 23.Notwithstanding any provisions of the Standard Terms to the contrary, including those regarding the establishment and deposit of funds into the Distribution Account and the requirement to segregate Assets of the Series Pool, for so long as Freddie Mac is the Administrator, Freddie Mac shall not be required to establish separate Distribution Accounts and related subaccounts for each Series Pool, and may comingle payments received on the Assets with its other assets provided it at all times maintains accurate books and records with respect to all amounts of principal, interest and prepayment premium, if any, received on the Assets and amounts paid out on the Certificates and otherwise complies with the terms of the Standard Terms.

 

 

[Signatures follow]

 

5

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

 

	
FEDERAL HOME LOAN MORTGAGE CORPORATION, in its corporate capacity

	
 
	
 

	
 
	
 

	
By:
	
/s/ Curtis Melvin

	
 
	
Curtis Melvin

	
 
	
Multifamily, Production Director

	
 
	
 

	
 
	
 

	
FEDERAL HOME LOAN MORTGAGE CORPORATION, as Administrator

	
 
	
 

	
 
	
 

	
By:
	
/s/ Curtis Melvin

	
 
	
Curtis Melvin

	
 
	
Multifamily, Production Director

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Series Certificate Agreement - Series M-045 – ATAX TEBS IV]

S-1

SPONSOR ACCEPTANCE

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

 

	
ATAX TEBS IV, LLC, a Delaware limited liability company, as Sponsor

	
 
	
 

	
By:
	
AMERICA FIRST MULTIFAMILY INVESTORS, L.P., a Delaware limited partnership (f/k/a America First Tax Exempt Investors, L.P.), its sole member

	
 
	
 

	
 
	
By:
	
AMERICA FIRST CAPITAL ASSOCIATES LIMITED PARTNERSHIP TWO, a Delaware limited partnership, its general partner

	
 
	
 
	
 

	
 
	
 
	
By:
	
BURLINGTON CAPITAL LLC, a Delaware limited liability company, its general partner

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
By:
	
/s/ Craig S. Allen

	
 
	
 
	
 
	
 
	
Craig S. Allen

Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

[Acceptance Page to Series Certificate Agreement - Series M-045 – ATAX TEBS IV]

S-2

 

SCHEDULE 1
DESCRIPTION OF THE BONDS
(SERIES M-045)

 

	
Bond Issue and Series
	
Original Issue Date
	
Project Name and Location
	
CUSIP #
	
Outstanding Amount Deposited
	
Interest Rate
	
Stated Maturity Date
	
Bond Trustee
	
Bond Counsel
	
Deposit Price
	
Bond Interest Payment Dates
	
Subject to Stabilization
	
Mandatory Purchase Date (1)

	
Custodial receipt related to
Washington State Housing Finance Commission
Multifamily Housing Revenue Bonds
(15 West Apartments Project)
Series 2014A
	
07/02/2014
	
15 West Apartments
Vancouver, Washington
	
93978PPE1
	
$9,757,976
	
6.25% per annum
	
07/01/2054
	
U.S. Bank National Association
	
Pacifica Law Group
	
100%
	
First day of each month
	
No
	
07/01/2034

	
Custodial receipt related to
Public Finance Authority
Multifamily Housing Revenue Bond
(Berrendo Square Apartments Project)
Series 2015A
	
11/16/2015
	
Berrendo Square Apartments
San Antonio, Texas
	
74441XFH7
	
$6,863,553
	
6.00% per annum
	
12/01/2052
	
U.S. Bank National Association
	
Norton Rose Fulbright US LLP
	
100%
	
First day of each month
	
No
	
07/01/2034

	
Custodial Receipts Relating to
City of Dallas Housing Finance Corporation
Multifamily Housing Revenue Bonds (Bruton Apartments)
Series 2014
	
08/07/2014
	
Bruton Apartments 

Dallas, TX
	
235298BL9
	
$17,973,715
	
6.00% per annum
	
08/01/2054
	
Wilmington  Trust, National Association
	
Bracewell LLP
	
100%
	
First day of each month
	
No
	
07/01/2034

	
Custodial receipt related to
South Carolina State Housing Finance and Development Authority
Multifamily Housing Revenue Bond
(Columbia Gardens)
Series 2015
	
12/17/2015
	
Columbia Gardens
Columbia, South Carolina
	
83712EGV0
	
$13,106,000
	
5.50% per annum
	
12/01/2050
	
U.S. Bank National Association
	
Howell Linkous & Nettles, LLC
	
100%
	
First Business Day of each month
	
No
	
07/01/2034

	
Custodial Receipts Relating to
Public Finance Authority
Multifamily Housing Revenue Bonds (Companion at Thornhill Apartments Project)
Series 2016
	
01/04/2016
	
Companion at Thornhill Apartments

Lexington, SC
	
74441XFG9
	
$11,332,246
	
5.80% per annum
	
01/01/2052
	
U.S. Bank, National Association
	
Parker Poe Adams & Bernstein LLP
	
100%
	
First day of each month
	
No
	
07/01/2034

	
	 

	
(1)
	
Where applicable, purchase price is at par with no premium.  The custodian for the related custodial receipts has been irrevocably instructed to provide notice on a timely basis to the related Bond Trustee to establish the specified Mandatory Purchase Date for the related Bonds.

Schedule 1-1

 

	
Bond Issue and Series
	
Original Issue Date
	
Project Name and Location
	
CUSIP #
	
Outstanding Amount Deposited
	
Interest Rate
	
Stated Maturity Date
	
Bond Trustee
	
Bond Counsel
	
Deposit Price
	
Bond Interest Payment Dates
	
Subject to Stabilization
	
Mandatory Purchase Date (1)

	
Custodial receipt related to
Public Finance Authority
Multifamily Housing Revenue Bonds
(Concord at Gulfgate Apartments Project) Series 2015A
	
01/29/2015
	
Concord at Gulfgate Apartments
Houston, Texas
	
74441XFD6
	
$19,185,000
	
6.00% per annum
	
02/01/2032
	
U.S. Bank National Association
	
Bracewell & Giuliani LLP
	
100%
	
First day of each month
	
No
	
N/A

	
Custodial receipt related to
Public Finance Authority
Multifamily Housing Revenue Bonds
(Concord at Little York Apartments Project)
Series 2015A
	
01/29/2015
	
Concord at Little York Apartments
Houston, Texas
	
74441XFE4
	
$13,440,000
	
6.00% per annum
	
02/01/2032
	
U.S. Bank National Association
	
Bracewell & Giuliani LLP
	
100%
	
First day of each month
	
No
	
N/A

	
Custodial receipt related to
Public Finance Authority
Multifamily Housing Revenue Bonds
(Concord at Williamcrest Apartments Project)
Series 2015A
	
01/29/2015
	
Concord at Williamcrest Apartments
Houston, Texas
	
74441XFF1
	
$20,820,000
	
6.00% per annum
	
02/01/2032
	
U.S. Bank National Association
	
Bracewell & Giuliani LLP
	
100%
	
First day of each month
	
No
	
N/A

	
Custodial receipt related to
Golden State Finance Authority
Multifamily Housing Revenue Bonds
(Courtyard Apartments Project)
2016 Series G-1
	
12/05/2016
	
Courtyard Apartments
Fullerton, California
	
38122CAV8
	
$10,230,000
	
5.00% per annum
	
12/01/2033
	
Wilmington Trust, National Association
	
Kutak Rock LLP
	
100%
	
First day of each month
	
No
	
N/A

	
Custodial receipt related to
Texas Department of Housing and Community Affairs
Multifamily Housing Revenue Bonds (Decatur-Angle Apartments)
Series 2014
	
02/26/2014
	
Decatur-Angle Apartments
Fort Worth, Texas
	
88275ADL1
	
$22,686,225
	
5.75% per annum
	
01/01/2054
	
Wilmington Trust, National Association
	
Bracewell & Giuliani LLP and Bates & Coleman, P.C.
	
100%
	
First day of each month
	
No
	
07/01/2034

	
Custodial receipt related to
Golden State Finance Authority
Multifamily Housing Revenue Bonds
(Harmony Court Bakersfield Apartments Project)
2016 Series E-1
	
11/21/2016
	
Harmony Court Bakersfield
Bakersfield, California
	
38119VAL3
	
$3,730,000
	
5.00% per annum
	
12/01/2033
	
Wilmington Trust, National Association
	
Kutak Rock LLP
	
100%
	
First day of each month
	
No
	
N/A

	
Custodial receipt related to
Golden State Finance Authority
Senior Housing Revenue Bonds
(Harmony Terrace Apartments Project)
2016 Series I-1
	
12/19/2016
	
Harmony Terrace Apartments
Simi Valley, California
	
38119VAP4
	
$6,900,000
	
5.00% per annum
	
01/01/2034
	
Wilmington Trust, National Association
	
Kutak Rock LLP
	
100%
	
First day of each month
	
No
	
N/A

Schedule 1-2

 

	
Bond Issue and Series
	
Original Issue Date
	
Project Name and Location
	
CUSIP #
	
Outstanding Amount Deposited
	
Interest Rate
	
Stated Maturity Date
	
Bond Trustee
	
Bond Counsel
	
Deposit Price
	
Bond Interest Payment Dates
	
Subject to Stabilization
	
Mandatory Purchase Date (1)

	
Custodial receipt related to
Golden State Finance Authority
Multifamily Housing Revenue Bonds
(Las Palmas II Apartments Project)
2016 Series A-1
	
09/26/2016
	
Las Palmas II Apartments
Coachella, California
	
38122CAS5
	
$1,695,000
	
5.00% per annum
	
11/01/2033
	
Wilmington Trust, National Association
	
Kutak Rock LLP
	
100%
	
First day of each month
	
No
	
N/A

	
Custodial receipt related to
Public Finance Authority
Multifamily Housing Revenue Bond
(Laurel Crossings Apartments Project)
Series 2015A
	
11/16/2015
	
Laurel Crossings Apartments
San Antonio, Texas
	
74441XFJ3
	
$7,496,913
	
6.00% per annum
	
12/01/2052
	
U.S. Bank National Association
	
Norton Rose Fulbright US LLP
	
100%
	
First day of each month
	
No
	
07/01/2034

	
Custodial receipt related to
Capital Area Housing Finance Corporation
Multifamily Housing Revenue Bonds
(Oaks at Georgetown Apartments Project)
2016 Series A-1
	
12/19/2016
	
Oaks at Georgetown Apartments
Georgetown, Texas
	
139726CJ0
	
$12,330,000
	
5.00% per annum
	
01/01/2034
	
BOKF, NA
	
Chapman and Cutler LLP
	
100%
	
First day of each month
	
No
	
N/A

	
Custodial receipt related to
San Antonio Housing Trust Finance Corporation
Multifamily Housing Revenue Bonds
(Palo Alto Apartments)
Series 2015
	
07/13/2015
	
Palo Alto Apartments
San Antonio, Texas
	
79626PAG7
	
$19,529,643
	
5.80% per annum
	
07/01/2058
	
Amegy Bank National Association
	
Norton Rose Fulbright US LLP
	
100%
	
First day of each month
	
No
	
07/01/2034

	
Custodial receipt related to
Golden State Finance Authority
Multifamily Housing Revenue Bonds
(San Vicente Townhomes Project)
2016 Series C-1
	
09/26/2016
	
San Vicente Townhomes
Soledad, California
	
38122CAR7
	
$3,495,000
	
5.00% per annum
	
11/01/2033
	
Wilmington Trust, National Association
	
Kutak Rock LLP
	
100%
	
First day of each month
	
No
	
N/A

	
Custodial receipt related to
Golden State Finance Authority
Senior Housing Revenue Bonds
(Seasons Lakewood Apartments Project)
2016 Series H-1
	
12/15/2016
	
Seasons Lakewood Apartments
Lakewood, California
	
38119VAM1
	
$7,350,000
	
5.00% per annum
	
01/01/2034
	
Wilmington Trust, National Association
	
Kutak Rock LLP
	
100%
	
First day of each month
	
No
	
N/A

	
Custodial receipt related to
Golden State Finance Authority
Senior Housing Revenue Bonds
(Seasons San Juan Capistrano Apartments Project)
2016 Series F-1
	
12/15/2016
	
Seasons San Juan Capistrano Apartments Project
San Juan Capistrano, California
	
38119VAN9
	
$12,375,000
	
5.00% per annum
	
01/01/2034
	
Wilmington Trust, National Association
	
Kutak Rock LLP
	
100%
	
First day of each month
	
No
	
N/A

Schedule 1-3

 

	
Bond Issue and Series
	
Original Issue Date
	
Project Name and Location
	
CUSIP #
	
Outstanding Amount Deposited
	
Interest Rate
	
Stated Maturity Date
	
Bond Trustee
	
Bond Counsel
	
Deposit Price
	
Bond Interest Payment Dates
	
Subject to Stabilization
	
Mandatory Purchase Date (1)

	
Custodial Receipts Relating to
Golden State Finance Authority Senior Housing Revenue Bonds
(Seasons at Simi Valley Apartments Project)
2015 Series A-1
	
08/27/2015
	
Simi Valley Apartments

Simi Valley, CA
	
38119VAK5
	
$4,339,349
	
5.75% per annum
	
09/01/2032
	
Wilmington Trust, National Association
	
Kutak Rock LLP
	
100%
	
First day of each month
	
No
	
N/A

	
Custodial Receipts Relating to
Golden State Finance Authority
Multifamily Housing Revenue Bonds
(Summerhill Family Apartments Project)
2016 Series D-1
	
11/21/2016
	
Summerhill Family Apartments

Bakersfield, CA
	
38122CAU0
	
$6,423,000
	
5.00% per annum
	
12/01/2033
	
Wilmington Trust, National Association 
	
Kutak Rock LLP
	
100%
	
First day of each month
	
No
	
N/A

	
Custodial Receipts Relating to
Golden State Finance Authority
Multifamily Housing Revenue Bonds (Sycamore Walk Project)
2015 Series B-1
	
12/18/2015
	
Sycamore Walk Apartments

Bakersfield, CA
	
38122CAQ9
	
$3,610,556
	
5.25% per annum
	
01/01/2033
	
Wilmington Trust, National Association
	
Kutak Rock LLP
	
100%
	
First day of each month
	
No
	
N/A

	
Custodial Receipts Relating to
Golden State Finance Authority Multifamily Housing Revenue Bonds (Village at Madera Apartments Project)
2016 Series B-1
	
11/21/2016
	
Village at Madera Apartments 

Madera, CA
	
38122CAT3
	
$3,085,000
	
5.00% per annum
	
12/01/2033
	
Wilmington Trust, National Association
	
Kutak Rock LLP
	
100%
	
First day of each month
	
No
	
N/A

	
Custodial Receipts Relating to
South Carolina State Housing Finance and Development Authority 
Multifamily Rental Housing Revenue Bonds
(Village at River’s Edge)
Series 2015
	
05/20/2015
	
Village at River’s Edge 

Columbia, SC
	
83712EGX6
	
$9,959,119
	
6.00% per annum
	
06/01/2033
	
U.S. Bank, National Association
	
Parker Poe Adams & Bernstein LLP
	
100%
	
First day of each month
	
No
	
N/A

	
Custodial Receipts Relating to
South Carolina State Housing Finance and Development Authority
Multifamily Housing Revenue Bonds (Willow Run Apartments)
Series 2015
	
12/17/2015
	
Willow Run Apartments

Columbia, SC
	
83712EGW8
	
$12,923,000
	
5.50% per annum
	
12/01/2050
	
U.S. Bank, National Association
	
Howell Linkous & Nettles, LLC 
	
100%
	
First Business Day of each month
	
No
	
07/01/2034

 

 

 

 

Schedule 1-4

 

APPENDIX A

STANDARD TERMS

DMEAST #34589798 v4

 

FREDDIE MAC

MULTIFAMILY M CERTIFICATES

STANDARD TERMS OF THE

SERIES CERTIFICATE AGREEMENT

DATED AS OF AUGUST 1, 2018

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

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

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

 

 

ii

 

TABLE OF CONTENTS

 

	
Article I
	
 
	
Page

	
 
	
DEFINITIONS, CERTAIN CALCULATIONS AND RULES OF CONSTRUCTION
	
 

	
 
	
Section 1.01
	
Definitions
	
1

	
 
	
Section 1.02
	
Certain Interest Calculations
	
1

	
 
	
Section 1.03
	
Other Definitional Provisions
	
1

	
 
	
Section 1.04
	
Rules of Construction
	
1

	
Article II
	
 
	
 

	
 
	
THE CERTIFICATES AND THE SERIES POOL
	
 

	
 
	
Section 2.01
	
Classes of Certificates
	
2

	
 
	
Section 2.02
	
Book-Entry Only for Class A Certificates; the Fed System; the DTC System
	
2

	
 
	
Section 2.03
	
Denominations
	
5

	
 
	
Section 2.04
	
Execution and Authentication; Persons Deemed Owners
	
5

	
 
	
Section 2.05
	
Registration of Transfer and Exchange
	
5

	
 
	
Section 2.06
	
Transfer Restrictions Related to Class B Certificates
	
6

	
 
	
Section 2.07
	
Mutilated, Destroyed, Lost or Stolen Certificates
	
6

	
 
	
Section 2.08
	
No Additional Liabilities or Indebtedness
	
6

	
 
	
Section 2.09
	
Initial Authentication and Delivery of Certificates
	
7

	
 
	
Section 2.10
	
Identification of the Assets to a Series Pool
	
7

	
 
	
Section 2.11
	
Delivery and Possession of Bonds
	
8

	
 
	
Section 2.12
	
Purposes and Powers
	
8

	
 
	
Section 2.13
	
Recharacterization
	
8

	
 
	
Section 2.14
	
Decrease of Aggregate Outstanding Class B Certificate Balance
	
8

	
Article III
	
 
	
 

	
 
	
SPONSOR COVENANTS; RELEASE EVENT
	
 

	
 
	
Section 3.01
	
Negative Covenants
	
9

	
 
	
Section 3.02
	
Other Obligations
	
9

	
 
	
Section 3.03
	
Maintenance of Office or Agency
	
9

	
 
	
Section 3.04
	
Payment of Certain Fees and Expenses
	
9

	
 
	
Section 3.05
	
Liabilities and Recourse Against Freddie Mac and the Sponsor for Liabilities of the Series Pool
	
10

	
 
	
Section 3.06
	
The Sponsor’s Interest and Net Worth
	
11

	
 
	
Section 3.07
	
Successor Sponsor
	
12

	
 
	
Section 3.08
	
Release Event
	
12

	
 
	
Section 3.09
	
Sponsor’s Indemnification of the Administrator
	
13

	
 
	
Section 3.10
	
Substitution of Bonds After Date of Original Issue.
	
13

i

 

	
Article IV
	
 
	
 

	
 
	
ACCOUNTS AND DISBURSEMENTS; CREDIT ENHANCEMENT
	
 

	
 
	
Section 4.01
	
Collection of Money
	
14

	
 
	
Section 4.02
	
Distribution Account; Establishment
	
14

	
 
	
Section 4.03
	
Distributions and Payments from Bond Payment Subaccounts
	
15

	
 
	
Section 4.04
	
Administrator May Appoint Paying Agents
	
18

	
 
	
Section 4.05
	
General Provisions Regarding Accounts
	
18

	
 
	
Section 4.06
	
Pledged Class A Certificates
	
18

	
 
	
Section 4.07
	
Reports to Holders
	
19

	
 
	
Section 4.08
	
Reductions of the Aggregate Outstanding Amounts
	
19

	
 
	
Section 4.09
	
Administrator Advances and Daily Administrator Advance Charges
	
19

	
 
	
Section 4.10
	
[Reserved]
	
20

	
 
	
Section 4.11
	
Credit Enhancement
	
20

	
Article V
	
 
	
 

	
 
	
RESET RATES; TERM EXTENDED RATE; LIBOR INDEX RATE
	
 

	
 
	
Section 5.01
	
Determination of Reset Rates, Reset Rate Methods and Reset Dates
	
23

	
 
	
Section 5.02
	
Weekly Reset Rate; Monthly Reset Rate
	
23

	
 
	
Section 5.03
	
Term Reset Rate; Term Reset Date
	
25

	
 
	
Section 5.04
	
Notice of Reset Rate
	
27

	
 
	
Section 5.05
	
No Changes in Reset Rate Method During the Two Business Days Preceding Mandatory Tender Date
	
27

	
 
	
Section 5.06
	
Maximum Reset Rate
	
27

	
 
	
Section 5.07
	
Term Extended Rate
	
27

	
 
	
Section 5.08
	
LIBOR Index Rate
	
28

	
Article VI
	
 
	
 

	
 
	
THE LIQUIDITY FACILITY; THE TENDER OPTION; MANDATORY TENDER
	
 

	
 
	
Section 6.01
	
Tender Option; Rights of Holders; Liquidity Facility
	
28

	
 
	
Section 6.02
	
Funds Held by Administrator
	
30

	
 
	
Section 6.03
	
Exercise of Tender Option
	
30

	
 
	
Section 6.04
	
Mandatory Tender Events
	
32

	
 
	
Section 6.05
	
Notice of Mandatory Tender
	
32

	
 
	
Section 6.06
	
Funding Procedures; Payment of Purchase Price
	
33

	
 
	
Section 6.07
	
Right of Holder to Elect to Retain Reset Rate Class A Certificates Upon the Occurrence of Certain Mandatory Tender Events
	
38

	
 
	
Section 6.08
	
Sole Sources of Payment of Purchase Price
	
39

	
Article VII
	
 
	
 

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

	
 
	
Section 7.01
	
Tender Option Termination Events
	
39

	
 
	
Section 7.02
	
Special Adjustment Event
	
40

	
 
	
Section 7.03
	
Liquidity Provider Termination Event; Credit Provider Termination Event
	
41

	
 
	
Section 7.04
	
Sponsor Act of Bankruptcy
	
42

	
 
	
Section 7.05
	
Optional Disposition Date
	
42

	
 
	
Section 7.06
	
Clean-Up Event
	
44

ii

 

	
Article VIII
	
 
	
 

	
 
	
THE REMARKETING AGENT
	
 

	
 
	
Section 8.01
	
Duties of the Remarketing Agent
	
44

	
 
	
Section 8.02
	
Resignation or Removal of the Remarketing Agent
	
44

	
 
	
Section 8.03
	
Successor Remarketing Agent
	
44

	
 
	
Section 8.04
	
Merger or Consolidation of the Remarketing Agent
	
45

	
 
	
Section 8.05
	
Notices by Remarketing Agent
	
45

	
Article IX
	
 
	
 

	
 
	
EVENTS OF DEFAULT AND RIGHTS AND REMEDIES OF HOLDERS
	
 

	
 
	
Section 9.01
	
Event of Default
	
45

	
 
	
Section 9.02
	
Remedies
	
45

	
 
	
Section 9.03
	
Waiver of Past Defaults
	
46

	
Article X
	
 
	
 

	
 
	
THE ADMINISTRATOR; HOLDERS’ LISTS AND REPORTS; BONDHOLDER REPRESENTATIVE
	
 

	
 
	
Section 10.01
	
Certain Duties and Responsibilities
	
46

	
 
	
Section 10.02
	
Notice of Non-Monetary Default
	
47

	
 
	
Section 10.03
	
Certain Rights of the Administrator
	
48

	
 
	
Section 10.04
	
Parties that May Hold Certificates
	
48

	
 
	
Section 10.05
	
Information Regarding Holders
	
48

	
 
	
Section 10.06
	
Corporate Administrator Required; Eligibility
	
48

	
 
	
Section 10.07
	
Resignation
	
49

	
 
	
Section 10.08
	
Preservation of Information; Communications to Holder
	
51

	
 
	
Section 10.09
	
Bondholder Representative
	
51

	
Article XI
	
 
	
 

	
 
	
PROFITS AND LOSSES
	
 

	
 
	
Section 11.01
	
Tax Treatment and Information
	
52

	
 
	
Section 11.02
	
Capital Accounts
	
52

	
 
	
Section 11.03
	
Allocations of Profits, Market Discount Gains and Capital Gains
	
53

	
 
	
Section 11.04
	
Allocations of Losses and Capital Losses
	
53

	
 
	
Section 11.05
	
Special Allocations
	
54

	
 
	
Section 11.06
	
Tax Allocations; Code Section 704(c)
	
56

	
 
	
Section 11.07
	
Allocation Among Holders
	
56

	
 
	
Section 11.08
	
Tax Matters; Tax Election
	
56

	
 
	
Section 11.09
	
Accounting Method
	
57

	
 
	
Section 11.10
	
Tax Matters Partner
	
57

	
 
	
Section 11.11
	
Compliance with Code Requirements
	
57

	
Article XII
	
 
	
 

	
 
	
AMENDMENTS
	
 

	
 
	
Section 12.01
	
Amendments
	
58

	
 
	
Section 12.02
	
Execution of Amendments
	
59

	
 
	
Section 12.03
	
Effect of Amendment
	
59

	
 
	
Section 12.04
	
Reference in Certificates to Amendments
	
59

	
Article XIII
	
 
	
 

	
 
	
TERMINATION
	
 

	
 
	
Section 13.01
	
Termination
	
60

	
 
	
Section 13.02
	
Final Distribution on the Series Expiration Date
	
61

	
 
	
Section 13.03
	
Terminating Mandatory Tender Date
	
62

	
 
	
Section 13.04
	
Exchange Date
	
63

iii

 

	
Article XIV
	
 
	
 

	
 
	
MISCELLANEOUS
	
 

	
 
	
Section 14.01
	
Acts of Holders
	
67

	
 
	
Section 14.02
	
Notices
	
67

	
 
	
Section 14.03
	
Notices to Holders; Waiver
	
67

	
 
	
Section 14.04
	
Successors and Assigns
	
67

	
 
	
Section 14.05
	
Severability
	
68

	
 
	
Section 14.06
	
Benefits of Series Certificate Agreement
	
68

	
 
	
Section 14.07
	
Governing Law
	
68

	
 
	
Section 14.08
	
Counterparts
	
68

	
 
	
Section 14.09
	
Non-Petition Covenants
	
68

 

	
Exhibit A
	
--
	
Definitions
	
A-1

	
Exhibit B
	
--
	
Form of Class A Certificates (DTC Only)
	
B-1

	
Exhibit C
	
--
	
Form of Class B Certificates
	
C-1

	
Exhibit D
	
--
	
Form of Class B Investor Letter
	
D-1

 

 

 

iv

 

Article I
DEFINITIONS, CERTAIN CALCULATIONS AND RULES OF CONSTRUCTION

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

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

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

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

(a)Words in the singular will include the plural and vice versa.

(b)The captions and headings of these Standard Terms are solely for convenience of reference and neither constitute a part of the Series Certificate Agreement nor affect its meaning.

(c)All references to a particular time of day will be to Washington, D.C. time.

(d)References to Sections, Articles, Schedules and Exhibits will be to Sections, Articles, Schedules and Exhibits of or to the Series Certificate Agreement unless a different document is specified.

(e)Whenever an action is to be taken by Freddie Mac under the Series Certificate Agreement, unless such action is designated to be taken by Freddie Mac as Administrator, such action is to be taken by Freddie Mac in its corporate capacity.  If an action is to be taken by the Sponsor, it will be taken by the Person designated by Freddie Mac as Sponsor in the Series Certificate Agreement or, if undesignated, by Freddie Mac.

 

 

 

Article II
THE CERTIFICATES AND THE SERIES POOL

Section 2.01Classes of Certificates.  (a)  The Class A Certificates.  All Class A Certificates will be identical in all respects except for their designated number and denominations and will be issued in book-entry only form.  All Class A Certificates issued under the Series Certificate Agreement will be equally and proportionately entitled to the benefits of the Series Certificate Agreement without preference, priority or distinction, except as indicated in these Standard Terms and the Series Certificate Agreement with respect to Pledged Class A Certificates.  Class A Certificates maintained on the DTC System will be in substantially the form indicated in Exhibit B.  Class A Certificates maintained on the Fed System will be evidenced only by an entry on the books and records of a Federal Reserve Bank.

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

Section 2.02Book-Entry Only for Class A Certificates; the Fed System; the DTC System.  

(a)  Book-Entry Only.  The Administrator shall issue, maintain and transfer the Class A Certificates on either (i) the Fed System or (ii) the DTC System, as elected from time to time by Freddie Mac.

(b)The Fed System.  

(i)To the extent the Class A Certificates are maintained on the Fed System, this Section 2.02(b) will override any other conflicting provisions of these Standard Terms (including any provisions with respect to payments being made through DTC), except in the case of provisions governing Pledged Class A Certificates.  Class A Certificates maintained on the Fed System shall be evidenced only by an entry on the books and records of a Federal Reserve Bank.  Neither Holders nor beneficial owners of such Class A Certificates shall receive certificates.  Class A Certificates maintained on the Fed System shall at all times remain on deposit with a Federal Reserve Bank in accordance with the provisions of the Fed System Book-Entry Rules.  The issuance and recordation of, and transfers of interests (including security interests) in, such Class A Certificates maintained on the Fed System shall be governed by the Fed System Book-Entry Rules and such procedures as shall be agreed upon from time to time by the Administrator and the Federal Reserve Banks. A Federal Reserve Bank shall act only upon the instructions of the Holder in recording transfers of securities maintained on the Fed System.  

(ii)Payments on the Class A Certificates maintained on the Fed System shall be made by crediting the Class A Holders' accounts at the Federal Reserve Bank on the applicable Payment Date.

 

2

 

(iii)Transfers of Class A Certificates maintained on the Fed System shall also be subject to any applicable Federal Reserve Bank minimum wire transfer requirements.  The Federal Reserve Banks shall maintain a book-entry recordkeeping system for all transactions in such Class A Certificates.  

(iv)Except as otherwise provided herein, so long as the Class A Certificates are maintained on the Fed System, the Administrator may treat the Holder as the sole and absolute owner of the Class A Certificates for all purposes whatsoever, including, without limitation, the payment of distributions to Holders of Class A Certificates, giving or receiving notices of redemption, tender and other matters with respect to the Class A Certificates and the selection of Class A Certificates for redemption or tender.

(v)Freddie Mac may elect (with the consent of the Sponsor) to terminate the Fed System with respect to the Class A Certificates, and in such event will either appoint DTC as the securities depository (or appoint another securities depository satisfying the terms of Section 2.02(c)) or terminate the book-entry system for the Class A Certificates.  When the Administrator receives notice from Freddie Mac that the Fed System has been terminated, the Administrator will, at least 10 days before such appointment or termination is effective, give notice of such event to the Registered Holders and will inform them either (i) of the name and address of the securities depository pursuant to which the Class A Certificates will be maintained or (ii) the time and place where certificated Class A Certificates may now be obtained by Holders of the Class A Certificate if the book-entry system has been terminated.

(c)The DTC System.  

(i)To the extent the Class A Certificates are maintained on the DTC System, this Section 2.02(c) will override any other conflicting provisions of these Standard Terms, except in the case of provisions governing Pledged Class A Certificates.  Class A Certificates maintained on the DTC System will be registered in the name of Cede & Co., as nominee for DTC, provided that Cede & Co. may register the transfer of such Certificates to another nominee for DTC.  There will be one Global Class A Certificate, except as otherwise requested by DTC.  The procedures for making payments on such Class A Certificates and for giving any notice or other communication that is permitted or required to be given to Holders of such Class A Certificates under these Standard Terms, will comply in all respects with DTC’s rules and operational arrangements, and, notwithstanding any other provisions in these Standard Terms, the Administrator and Freddie Mac agree to comply with all rules and operational arrangements of DTC, as such rules and operational arrangements change from time to time.  The exercise by Holders and Registered Holders of such Class A Certificates of the Tender Option, mandatory tender rights, rights to retain such Class A Certificates subject to mandatory tender, rights to convert Class B Certificates to such Class A Certificates, the Optional Disposition Right and all other rights granted to such Holders or Registered Holders under the Series Certificate Agreement will be made in accordance with DTC’s rules and operational arrangements, as such rules and operational arrangements change from time to time.

(ii)If, pursuant to DTC’s rules and operating procedures, DTC gives notice to the Administrator, that DTC will discontinue providing its services as securities depository for the Class A Certificates or if Freddie Mac elects to terminate the services 

 

3

 

of DTC as securities depository with respect to the Class A Certificates, Freddie Mac will, in its sole discretion, either appoint a successor securities depository or terminate the book-entry system for the Class A Certificates.

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

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

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

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

(vii)Except as otherwise provided herein, so long as the Class A Certificates are registered in the name of DTC or its nominee, the Administrator may treat DTC or its nominee as, and deem DTC or its nominee to be, the sole and absolute owner of the Class 

 

4

 

A Certificates for all purposes whatsoever, including, without limitation, the payment of distributions to Holders of Class A Certificates, giving or receiving notices of redemption, tender and other matters with respect to the Class A Certificates and the selection of Class A Certificates for redemption or tender.

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

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

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

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

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

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

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

 

5

 

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

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

Section 2.06Transfer Restrictions Related to Class B Certificates.  Without the prior written consent of Freddie Mac, no Class B Certificate may, in whole or in part, be sold, assigned, pledged, hypothecated or otherwise transferred (including any transfer of a beneficial interest) nor may any liens, security interests, options or other charges or encumbrances be granted with respect to the Class B Certificates.  Any transfer of the Class B Certificates will require the delivery to the Administrator of an Investor Letter by the Person acquiring an interest substantially in the form attached as Exhibit D.

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

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

Section 2.08No Additional Liabilities or Indebtedness.  Unless a Series Certificate Agreement provides otherwise, none of the Administrator, the parties to the Series Certificate Agreement or the Holders of Certificates will cause the Series Pool to incur, assume 

 

6

 

or guarantee any liability or indebtedness.  The Administrator will have no power or authority to assign, transfer or pledge any of the Assets of any Series Pool to any Person or otherwise dispose of any Assets of any Series Pool, except as otherwise permitted or required by the Series Certificate Agreement.

Section 2.09Initial Authentication and Delivery of Certificates.  The initial Certificates will be executed, authenticated and delivered by the Administrator only after Freddie Mac executes the Series Certificate Agreement and thereby directs the execution, authentication and delivery of the Certificates.  The Series Certificate Agreement will identify the Persons in whose names the Class A Certificates are to be registered, the Current Certificate Balances to be registered to each such Person, and also state that the Class B Certificates are to be registered in the name of the Sponsor, but only after each of the following is delivered or has occurred:

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

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

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

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

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

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

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

(b)Freddie Mac will segregate the Assets of each Series Pool from all of its general assets and from any other bonds in its possession, and will hold the Assets of each Series Pool at 

 

7

 

all times during the existence of the Series Pool for the benefit of the related Holders.  The Holders of the Class A Certificates and Class B Certificates will have the respective rights with respect to the Assets specified for each Class as set forth in the Series Certificate Agreement.

Section 2.11Delivery and Possession of Bonds.  The Bonds identified to a Series Pool will not be subject to any Lien in favor of the Administrator (provided, Freddie Mac in its corporate capacity will be the beneficiary of the pledge of  any Pledged Class A Certificates).

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

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

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

 

8

 

conversion will be effected by delivering to the Administrator (A) at least 15 Business Days prior to the date on which such conversion is to occur (i) a written request to increase the Current Certificate Balance of such Class A Certificates, and (ii) the written consent of Freddie Mac, and (B) on the date of the conversion, an equivalent Current Certificate Balance of Class B Certificates.  The Administrator will promptly notify Freddie Mac and DTC of the resulting reduction in the Aggregate Outstanding Class B Certificate Balance and the corresponding increase in the Aggregate Outstanding Class A Certificate Balance, and the Liquidity Commitment will be increased accordingly.

Article III
SPONSOR COVENANTS; RELEASE EVENT

Section 3.01Negative Covenants.  The Sponsor will not:

(i)sell, transfer, exchange or otherwise dispose of, or Grant a Lien on, any Series Pool Assets; or

(ii)claim any credit or deduction with respect to the principal or interest payable on the Certificates or pursuant to the Credit Enhancement or the Liquidity Facility (other than amounts properly withheld from such payments under the Code or other applicable tax law) on its federal, state or local income tax filings.

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

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

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

(a)except as otherwise expressly provided in the Series Certificate Agreement, to pay, or cause to be paid, to the Administrator (if different than Freddie Mac) the Administrator Fee; to pay, or cause to be paid, to the Remarketing Agent, if any, the Remarketing Agent Fee (each to the extent not paid from funds received by the Series Pool); and to pay, or cause to be paid, to the Initial Purchaser, any amounts owed to the Initial Purchaser pursuant to the Remarketing Agreement (if applicable) in connection with issuing and selling the Class A Certificates and preparing all related offering documents;

(b)except as otherwise expressly provided in the Series Certificate Agreement or the last paragraph of Section 3.5 of the Reimbursement Agreement, to reimburse or cause reimbursement of the Administrator for all reasonable out-of-pocket expenses, disbursements and advances incurred or made by it in accordance with the 

 

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Series Certificate Agreement (including the reasonable compensation, expenses and disbursements of its respective agents and counsel), except any such expense, disbursement or advance as may be attributable to its gross negligence, bad faith, fraud or willful misconduct; and

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

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

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

(b)Subject to any credit enhancement with respect to any Bonds, the Issuer of each Bond is the sole obligor with respect to the payment of the principal or redemption price of such Bond, and interest on the Bond.  The payments on the Bonds, amounts in the Distribution Account, the Credit Enhancement and the Liquidity Facility, if applicable, constitute the sole security for the Certificates.  Each of the Sponsor and Freddie Mac has no obligation whatsoever with respect to any Bond or any payments due on the Bonds or with respect to the security for, or the sufficiency of, any such payments or any obligations of the Issuer, any related credit enhancer or any other Person arising in connection with the Bonds, other than the obligations of Freddie Mac under the Credit Enhancement and the Liquidity Facility, if applicable.  In the event of a default in the payment of the principal of or interest on, or any other amount payable with respect to, any of the Bonds, or in the event of a default under any credit enhancement with respect to such Bond, neither the Sponsor nor Freddie Mac will have any duty to proceed against the Issuer or any related credit enhancer and no obligation to assert any rights and privileges of the Holders with respect to such Bonds or such credit enhancement.  Neither the Sponsor nor Freddie Mac will be under any obligation whatsoever to appear in, prosecute or defend any action, suit or other proceeding in respect of such Bonds or such credit enhancement; provided the Administrator may in its sole discretion and upon being provided with indemnification satisfactory to it agree to proceed against any such party at the written direction of the Registered Holders of at least 51% of the Current Certificate Balance of the Class A Certificates.

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

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

 

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

(i)Under no condition or circumstance will any recourse or personal liability whatever attach to or be incurred by, and under no condition or circumstance will any deficiency or other judgment be had against, the officers, directors, agents, employees or stockholders of the Sponsor or Freddie Mac, by reason of any obligation, covenant, agreement, representation, warranty or indemnity of the Sponsor or Freddie Mac under the Series Certificate Agreement, any Certificates or any document, instrument or certificate delivered hereunder or thereunder; and

(ii)They expressly waive recourse against, or personal liability of, any officer, director, agent, employee or stockholder of the Sponsor or Freddie Mac for breaches by Sponsor or Freddie Mac of any such obligation, covenant, agreement, representation, warranty or indemnity either at common law or at equity, or by statute or constitution; and

(iii)The permissive right of the Sponsor or Freddie Mac to take actions set forth in the Series Certificate Agreement will not be construed as a duty, and neither the Sponsor nor Freddie Mac will be answerable for other than its own fraud, bad faith, gross negligence or willful misconduct.  Each of the Sponsor and Freddie Mac will not be liable for any action that it takes or omits to take in good faith (including, but not limited to any action it takes or omits to take as Tax Matters Partner pursuant to Section 11.10) and, in the absence of fraud, bad faith, gross negligence or willful misconduct, that it believes to be authorized or within its rights or powers.

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

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

 

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Section 3.07Successor Sponsor.  If a party other than Freddie Mac is the Sponsor and the Sponsor wishes to assign its rights and obligations under the Series Certificate Agreement to another Person and Freddie Mac provides its prior written consent, the Sponsor will provide notice to the Administrator, the Remarketing Agent, and each applicable Rating Agency, together with the written consent of Freddie Mac, at least 10 Business Days prior to the proposed effective date of such assignment.  Such notice (a “Successor Sponsor Notice”) will set forth (A) a brief statement that the Sponsor is assigning its rights and obligations hereunder to the successor Sponsor named therein, (B) the proposed effective date of such assignment and (C) the Mandatory Tender Date on which the Class A Certificates will be subject to Mandatory Tender pursuant to Section 6.04 (subject to the right of retention), which day shall be the Business Day before the effective date of the assignment.  When the Administrator has received the Successor Sponsor Notice, unless Freddie Mac consents, the assignment of the Sponsor to its successor will be irrevocable and will take place on the proposed date set forth in the Successor Sponsor Notice.  

Section 3.08Release Event.  In accordance with the Reimbursement Agreement, when a Release Event occurs, the affected series of Bonds (or a portion thereof) will be subject to mandatory purchase from the Series Pool at the Release Purchase Price.  Payment of such Release Purchase Price will be made by Freddie Mac pursuant to the Credit Enhancement or by the Sponsor.  Any Bond purchased on the related Release Event Date will be deemed purchased by the Sponsor at the Release Purchase Price from funds provided pursuant to the Credit Enhancement or, if applicable, by the Sponsor.  In addition, Hypothetical Gain Share, if any, as calculated by Freddie Mac, will be payable on the Release Event Date from amounts provided by the Sponsor to the Administrator on such Release Event Date (and such Hypothetical Gain Share will be paid to the Class A Certificateholders in addition to the Release Purchase Price).  When purchased with monies provided pursuant to the Credit Enhancement, the Administrator will cause the transfer of the related Bonds to the Pledge Custodian to be held pursuant to the Reimbursement Agreement.  When purchased with funds provided by the Sponsor, the Administrator will cause the transfer and release of the related Bonds to the Sponsor or as directed by the Sponsor.  Notwithstanding anything to the contrary herein, (i) upon the occurrence of a Release Event with respect to either of the Concord at Williamcrest Bonds or the Concord at Little York Bonds, both such series of Bonds shall be affected series of Bonds which shall be subject to mandatory purchase from the Series Pool at the respective Release Purchase Price in accordance with the terms hereof, and (ii) upon the occurrence of a Release Event with respect to either of the Berrendo Bonds or the Laurel Bonds, both such series of Bonds shall be affected series of Bonds which shall be subject to mandatory purchase from the Series Pool at the respective Release Purchase Price in accordance with the foregoing.

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

 

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In addition to the foregoing notice, with respect to a Release Event occurring as a result of the Sponsor’s delivery of notice to the Administrator that it has elected to purchase all of the Bonds in the Series Pool on the Optional Series Termination Date, the Administrator, following receipt of such notice from the Sponsor, shall provide written notice to the Registered Holders of such Release Event not less than twenty (20) days prior to the Optional Series Termination Date, which notice will set forth (A) a brief statement that the Sponsor has elected to cause a Release Event of all of the Bonds on the Optional Series Termination Date, (B) that the Release Event is conditioned upon the Sponsor depositing at least five (5) Business Days prior to the Optional Series Termination Date funds sufficient to pay in full the Release Purchase Price and Hypothetical Gain Share, if any, due on the Optional Series Termination Date, and any additional amounts owed by the Sponsor to Freddie Mac (or making escrow arrangements acceptable to Freddie Mac with respect to the same) and (C) that if such conditions are not satisfied, such Release Event shall not occur.

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

Section 3.10Substitution of Bonds After Date of Original Issue.

(a)On any Payment Date after the Date of Original Issue (a “Substitution Date”), with the Required Class B Certificate Consent and the consent of Freddie Mac and subject to the prior delivery to the Administrator of a confirmation of the existing rating on the Class A Certificates from each applicable Rating Agency, the Sponsor may deliver to the Administrator a new series of Bonds in substitution for an existing series of Bonds with respect to which an event of default exists under the related Bond Documents (or in the case of the Pre-Selected Deposited Bonds, also in the event of a sale of no more than four related Projects to a party not related to the Sponsor).  Any series of Bonds delivered in substitution for an existing series of Bonds must have terms consistent with the series of Bonds being released, including principal amount (which must be equal to or less than the principal amount of Bonds being released), tax status, interest rate, interest payment date and interest modes.  If such principal amount is less, the Sponsor must, prior to the substitution, provide funds to the Administrator in an amount sufficient to effect a Release Event with respect to the principal portion of the Bonds being released that is in excess of the principal amount of Bonds being substituted.  In addition, on any Substitution Date, the Sponsor must pay Hypothetical Gain Share, if any, as calculated by Freddie Mac, with respect to the total principal amount of Bonds being released.  Such 

 

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Hypothetical Gain Share will be paid to the Class A Certificateholders in addition to any applicable Release Purchase Price.

(b)The Sponsor shall, at least 10 days prior to each Substitution Date, submit a notice (a “Substitution Notice”) to the Administrator and the Remarketing Agent, if any, which notice shall be accompanied by copies of the consents and rating confirmation (if applicable) referenced in Section 3.10(a) above and shall set forth the following:

(i)the series of Bonds to be released upon substitution;

(ii)with respect to the series of Bonds to be substituted, the items of information set forth on Schedule 1 of the Series Certificate Agreement;

(iii)the Substitution Date;

(iv)if applicable, the amount being paid by the Sponsor to effect a related Release Event and the Hypothetical Gain Share; and

(v)instructions to the Administrator to effect the substitution on the Substitution Date.

(c)Within five Business Days of its receipt thereof (and only if the Administrator has received the amount necessary to effect any related Release Event and the Hypothetical Gain Share, if applicable), the Administrator will forward a copy of the Substitution Notice to the Registered Holders and each applicable Rating Agency.

(d)On the Substitution Date, the Administrator shall effect the substitution if the aforementioned requirements have been satisfied.  In addition, notwithstanding the foregoing, if the Series Certificate Agreement contains a representation that the Bonds were neither deposited with nor acquired with market discount in excess of a de minimis amount within the meaning of Section 1278(a)(2)(C) of the Code determined as of the Date of Original Issue, the same requirement shall apply to the substitution.

Article IV
ACCOUNTS AND DISBURSEMENTS; CREDIT ENHANCEMENT

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

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

 

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Subaccount – Interest; (ii) the Bond Payment Subaccount – Principal; (iii) the Bond Payment Subaccount – Holdback; and (iv) the Odd-Lot Subaccount.

(b)The Administrator will deposit into the Bond Payment Subaccount--Interest or Bond Payment Subaccount – Principal, as applicable, promptly upon receipt, Bond Payments in respect of each Bond Interest Payment Date or Bond Redemption Date, as applicable, Bond Payments in connection with any Release Event and any Bankruptcy Coverage Payments.  The Administrator will also deposit into the Bond Payment Account – Interest any Administrator Advances it makes pursuant to Section 4.09.  Prior to any Bond Interest Payment Date or Bond Redemption Date, as applicable, the Administrator will notify Freddie Mac of the amounts of each Bond Payment anticipated on such date.  In connection with any Payment Date, the Administrator will notify Freddie Mac as soon as practicable by Electronic Notice of any amounts not received by the Administrator for such Payment Date corresponding to scheduled interest on and principal of the Bonds.  If the Administrator receives any Bond Redemption Premium, it will promptly deposit it into the Bond Payment Subaccount – Principal.  The Administrator will deposit into the Odd-Lot Subaccount the amounts required by Section 4.03(f).

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

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

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

(f)Amounts on deposit in the Distribution Account may be invested by the Administrator at the direction of Freddie Mac, and any investment earnings will be retained by Freddie Mac.  Any such investment earnings will not constitute part of the Series Pool Assets and will at all times be accounted for separately and held segregated from and outside of the Distribution Account.  If any loss from such investment occurs, Freddie Mac will be obligated to reimburse the Administrator for any such loss at the time it occurs.  The Administrator will use any such reimbursement amount to replenish the Distribution Account.

Section 4.03Distributions and Payments from Bond Payment Subaccounts.  (a)  No later than 4:30 p.m. on each Payment Date, the Administrator will withdraw from the Bond Payment Subaccount – Interest and the Bond Payment Subaccount – Holdback the Available Funds deposited into each such subaccount and will distribute or retain, as applicable, the following amounts in the following priority, in each case to the extent of remaining Available Funds:

(i)first, pro rata to

(A)the Registered Holders of Class A Certificates (other than Pledged Class A Certificates), the aggregate of the amounts of interest accrued, for each day in the Accrual Period related to that Payment Date at the Reset Rate, the Term 

 

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Extended Rate or the LIBOR Index Rate, as applicable, in effect for each such day, on the Current Certificate Balance of such Certificates; and

(B)the Pledge Custodian with respect to Pledged Class A Certificates, the aggregate of the amounts of interest accrued, for each day in the Accrual Period related to such Payment Date at the Reset Rate, the Term Extended Rate or the LIBOR Index Rate, as applicable, in effect for each such day, on the Current Certificate Balance of such Pledged Class A Certificates;

provided that on the First Payment Date, before making the foregoing distributions, the Administrator will transfer to the Person designated by the Sponsor the amount, if any, set forth in the Series Certificate Agreement as Accrued Interest on the Bonds;

(ii)second, to the Administrator, the amount of the Administrator Fee (if the Administrator is not Freddie Mac and solely to the extent not otherwise paid by the Sponsor pursuant to the Reimbursement Agreement), the aggregate accrued Daily Administrator Advance Charges unpaid on such date (if Section 4.09 is made applicable under the Series Certificate Agreement) and all other reasonable amounts payable to the Administrator upon the issuance of a new Certificate pursuant to Section 2.05 or Section 2.07 or as reimbursement for its out-of-pocket expenses;

(iii)third, to the Administrator (if Section 4.09 is made applicable under the Series Certificate Agreement), the amount of any outstanding Administrator Advances previously made to Holders of Class A Certificates as of such Payment Date;

(iv)fourth, to Freddie Mac, the amount of the Freddie Mac Fee due and payable on such date;

(v)fifth, if provided for in the Series Certificate Agreement, pro rata, to the Holders of Class A Certificates, their Class A Certificate Notional Accelerated Principal Paydown Amounts, if any;

(vi)sixth, to the Remarketing Agent, if any, the amount of the Remarketing Agent Fee due and payable on such date; 

(vii)seventh, to the Pledge Custodian, the amount, if any, required to be deposited in the Cap Fee Escrow (as defined in the Reimbursement Agreement) on such date;

(viii)eighth, to the Servicer, the amount of the Servicing Fee due and payable on such date;

(ix)ninth, to the Bond Payment Subaccount—Holdback, the amount necessary to fully fund the Holdback Requirement, if applicable, as of such Payment Date; and

(x)tenth, to Freddie Mac the amount of any Advance (as defined in the Reimbursement Agreement) previously made by Freddie Mac as of such Payment Date and all other amounts then payable pursuant to the Reimbursement Agreement; and

 

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(xi)eleventh, to the Holders of Class B Certificates, the remainder.

(b)No later than 4:30 p.m. on each Redemption Date, the Administrator will withdraw from the Bond Payment Subaccount -- Principal the Available Funds deposited into that subaccount and will distribute the following amounts in the following priority, in each case to the extent of remaining Available Funds:

(i)first, pro rata to (A) the Pledge Custodian, to pay the Outstanding Certificate Balance of Pledged Class A Certificates and (B) the Registered Holders of the Class A Certificates, the amount determined to be paid in accordance with the following formula:

Amount to be paid = X + Y + Z

where X = (85%) (A)

and Y = A minus (X + B minus C + D) [BUT Y WILL NEVER BE LESS THAN ZERO]

and Z = the Class A Holder’s allocable share of the respective portion of the Redemption Premium Payment, if any, payable to Holders determined in accordance with the definition of Gain Share, or in connection with a payment arising from a Release Event, the Class A Holder’s allocable share of the Hypothetical Gain Share

 

and where:

 

	
 
	
A =
	
the total principal amount of the Bond Payments (exclusive of any Redemption Premium Payment or Hypothetical Gain Share payable in connection with a Release Event)

	
 
	
B =
	
the Current Class B Certificate Balance

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

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

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

(iii)third, (subject to the provisions of Section 4.03(c) and the agreement of the Sponsor to maintain a Minimum Sponsor Interest), to the Holders of Class B Certificates, the remainder.

(c)All distributions made to Holders described above on each Payment Date will be made to the Registered Holders of the Certificates of record on the related Regular Record Date, based on the Current Certificate Balances of their respective Certificates; provided, however, that 

 

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the final payment on each Certificate will be made only in accordance with payments to be made on a termination of the Series Pool pursuant to Article XIII.  Subject to Section 2.02(b), each distribution with respect to Class A Certificates or Pledged Class A Certificates will be paid to DTC for distribution to DTC Participants, Indirect Participants and Holders in accordance with the Letter of Representations and the rules and regulations of DTC.  Each distribution with respect to Class B Certificates will be paid to the Holders of the Class B Certificates.  

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

(e)Any provision of this Article IV notwithstanding, redemptions of Class A Certificates shall only be made in Permitted Increments.  In the event of a partial redemption of Class A Certificates, the particular Class A Certificates to be redeemed shall be Selected by Lot.

(f)Any amounts not permitted to be distributed on any Redemption Date pursuant to Section 4.03(b)(i) as a result of subsection (e) above, shall be retained and held by the Administrator in the Odd-Lot Subaccount.

On the Date of Original Issue, the Sponsor shall cause to be deposited into the Odd-Lot Subaccount the initial amount specified in the Series Certificate Agreement.  On the first Redemption Date, the Administrator shall withdraw from the Odd-Lot Subaccount any funds needed to round the amount to be distributed pursuant to Section 4.03(b)(i) to a Permitted Increment and pay the rounded amount on the Class A Certificates.  On the next Redemption Date, the Administrator will apply Available Funds under Section 4.03(b) first to repay any amount withdrawn from the Odd-Lot Subaccount on the previous Redemption Date.  The Administrator shall then round the remainder of the amount to be distributed pursuant to Section 4.03(b)(i) to a Permitted Increment by making another withdrawal from the Odd-Lot Subaccount, and shall pay this amount on the Class A Certificates.  This process shall continue on each following Redemption Date until the Class A Certificates have been retired.

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

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

Section 4.06Pledged Class A Certificates.  (a)  The Administrator will not obtain separate CUSIP identification numbers for Pledged Class A Certificates unless required by DTC or the Fed System.  The Administrator will take any reasonable action requested by Freddie Mac in order to perfect or otherwise safeguard its security interest in the Pledged Class 

 

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A Certificates, including arranging for such pledge to be noted in the records of DTC Participants (if held in the DTC System) or in accordance with Fed System Book-Entry Rules (if held in the Fed System).

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

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

Section 4.07Reports to Holders.  (a)  Each month, not later than the second Business Day prior to the Payment Date for that month, Freddie Mac will post on its Internet web-site the following information regarding the Class A Certificates:

(i)the related Payment Date for such monthly report; 

(ii)the Class Factor for the Class A Certificates; and

(iii)the weighted average of the Reset Rate, Term Extended Rate or LIBOR Index Rate (and the Maximum LIBOR Index Rate to the extent it is less than the LIBOR Index Rate as reported by the Indexing Agent), as applicable, for the preceding monthly period.

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

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

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

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

(a)Administrator to Make Administrator Advances.  The Administrator may, but need not, make Administrator Advances to Holders of Class A Certificates on a Payment Date in an amount up to the Required Class A Certificate Interest Distribution Amount for the prior Accrual Period.  The decision by the Administrator to make an Administrator Advance in any amount will be made in the sole discretion of the Administrator, and no decision to make an Administrator Advance on any Payment Date will impose any obligation to make an Administrator Advance of any further amount.  On 

 

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each occasion when the Administrator determines to make an Administrator Advance, the Administrator will notify the Remarketing Agent, if any, and Freddie Mac of such determination prior to 12:00 noon, on the Business Day prior to such Payment Date.

(b)Repayment of Administrator Advances.  Unreimbursed Administrator Advances will be repaid from amounts deposited in the Bond Payment Subaccount-Interest as provided in Section 4.03(a) or from proceeds of Bonds sold as provided in Article XIII.

(c)Administrator Advance Charge.  The Administrator will be entitled to receive a fee equal to the aggregate accrued Daily Administrator Advance Charges.

(d)Payment of Daily Administrator Advance Charge.  Aggregate Daily Administrator Advance Charges will be paid, to the extent available, from Available Funds, on each Payment Date derived from interest payments on Bonds or in the Bond Payment Subaccount–Holdback before payments to Class A Holders on each Payment Date and as elsewhere herein upon the withdrawal, sale or redemption of Bonds. 

(e)Authorization to Deduct Administrator Advances, Administrator Advance Charges, Service Charges, Liquidity Charges and Administrator Fees.  Each Holder of Certificates, by its purchase thereof, authorizes the Administrator to deduct from payments on the Bonds any unreimbursed Administrator Advances, unpaid Daily Administrator Advance Charges, and accrued fees and reimbursements due to Freddie Mac, the Administrator, the Remarketing Agent, if any, or the Servicer.

(f)If the Administrator determines not to make Administrator Advances for any reason, interest distributions on the Class A Certificates will be made on each Payment Date in the manner described in Section 4.03(a) by the payment of the Available Funds in the Bond Payment Subaccount-Interest and the Bond Payment Subaccount-Holdback.  After the payment of Administrator Fees and aggregate Daily Administrator Advance Charges, all amounts remaining in the Bond Payment Subaccount-Interest and the Bond Payment Subaccount – Holdback will be paid immediately to Holders of Class A Certificates on each Payment Date.  Interest on the Class A Certificates will continue to accrue at the Reset Rate, Term Extended Rate or LIBOR Index Rate, as applicable, in effect for each Accrual Period without an increase in the accrual rate for any delay in payment.

Section 4.10[Reserved].  

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

(a)Freddie Mac hereby guarantees to each Registered Holder of a Class A Certificate the timely payment on each Payment Date of such Holder’s pro rata portion of

(i)interest on the Bonds equal to the Required Class A Certificate Interest Distribution Amount; and

 

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(ii)that portion of the scheduled principal then due and payable on any Bond on the most recent Bond Redemption Date that was not received by the Administrator on such Bond Redemption Date (excluding any Bond Redemption Premium).

(b)Freddie Mac hereby guarantees to each Registered Holder of a Class A Certificate or a Class B Certificate the timely payment on each Release Event Date of the applicable Release Purchase Price (but not any Hypothetical Gain Share payable on such date).

(c)Freddie Mac hereby guarantees to the Registered Holder of the Class B Certificates the timely payment on each Payment Date of such Holder’s residual interest set forth in Section 4.03(a) and the payment of the remainder of principal set forth in Section 4.03(b) (but in each such case only to the extent the Administrator has received Available Funds required to be paid to the Registered Holder of the Class B Certificates pursuant to Section 4.03(a) or Section 4.03(b), as applicable).

(d)Freddie Mac hereby guarantees to the Registered Holders of Term Extended Rate Class A Certificates and LIBOR Index Rate Class A Certificates the timely payment of the Purchase Price on a Mandatory Tender Date in connection with a Credit Provider Termination Event or a Clean-Up Event (but not any Hypothetical Gain Share payable on such date) by 2:00 p.m. on such Mandatory Tender Date.

(e)In addition, with respect to any series of Bonds, if all or any portion of a payment of principal of (but not premium related to such Bonds), or interest on, such Bonds or the Release Purchase Price (but not Gain Share or Hypothetical Gain Share) is recovered from any Holder of a Certificate, in whole or in part, as a matter of a final, nonappealable order by a court of competent jurisdiction pursuant to section 544, 547, 549 or 550 of the United States Bankruptcy Code, or under the banking laws of the United States, in any proceeding instituted thereunder by or against the owner of the property that secures the applicable Bonds, or any other Person (other than Freddie Mac) making such payment, Freddie Mac will pay to the Administrator, within three (3) Business Days after receiving a written notice from the affected Registered Holders of the Certificates that were required to pay such recovery, an amount equal to the amount of such recovery.  Nothing contained in this paragraph will preclude Freddie Mac, after making the payment referred to in the prior sentence, from contesting, directly or indirectly, in any such proceeding, any such attempted recovery or stay, or from seeking to lift or modify the automatic stay, and Freddie Mac in its capacity as Administrator, will have the right to contest any attempted recovery or stay, or to seek to lift or modify any automatic stay.  The amounts payable pursuant to this paragraph will be deposited into the applicable Bond Payment Subaccount within the Distribution Account.

(f)Except as provided in the next sentence, Freddie Mac’s obligations under the Credit Enhancement will terminate on the Series Expiration Date.  Under certain circumstances involving an Act of Bankruptcy, Freddie Mac’s obligations under the immediately preceding paragraph will continue beyond the Series Expiration Date, as follows:  Freddie Mac’s obligations under the immediately preceding paragraph will continue beyond the Series Expiration Date with respect to any payment (a “Covered 

 

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Payment”) on any series of Bonds made by an Owner, the Sponsor or any other person (other than Freddie Mac) within three hundred sixty-six (366) days prior to an Act of Bankruptcy with respect to such Bonds, and will terminate on the later to occur of (i) the date on which Freddie Mac has paid to the Administrator an amount equal to all Covered Payments recovered from the Holders pursuant to such proceeding, and (ii) the date on which all claims with respect to any such proceeding have been denied with prejudice by a final, nonappealable order of a court of competent jurisdiction, and (iii) if no Act of Bankruptcy has occurred, the last expiration date of all statutes of limitations applicable to claims against Holders pursuant to an Act of Bankruptcy.  However, all Credit Enhancement obligations of Freddie Mac with respect to any series of Bonds will terminate on the earlier of (A) the receipt by the Administrator of a certificate of each Owner or the Sponsor, as applicable, dated not earlier than 366 days following the applicable Series Expiration Date to the effect that as of the date of the certificate no Act of Bankruptcy has occurred or (B) 380 days following such Series Expiration Date provided that the Administrator has not received notice that an Act of Bankruptcy has occurred.

(g)Freddie Mac will be subrogated to all the rights, interest, remedies, powers and privileges of the Holders with respect to any payments made by Freddie Mac pursuant to its Credit Enhancement set forth in this Section 4.11.  In particular, to the extent Freddie Mac makes a payment pursuant to its Credit Enhancement under this Section 4.11 and has not been fully reimbursed for such payment pursuant to the terms of the Reimbursement Agreement, the Administrator will remit to Freddie Mac any subsequent Bond Payments or other payments received by the Administrator in satisfaction of the obligations with respect to which such Credit Enhancement payment was made.  In the event Freddie Mac makes a payment pursuant to its Credit Enhancement under this Section 4.11 and is fully reimbursed for such Credit Enhancement payment in accordance with the Reimbursement Agreement, then any subsequent Bond Payments or other payments received by the Administrator in satisfaction of the obligations with respect to which such reimbursed Credit Enhancement payment was made, shall be disbursed pursuant to Section 4.03.  Each Holder of Certificates will be deemed to have consented to these subrogation rights.

(h)Any payments by Freddie Mac pursuant to its guaranty set forth in this Section 4.11 will be made by Freddie Mac using its own funds, and not any funds of the Sponsor or otherwise derived from the Bonds.  Freddie Mac agrees to make payments pursuant to its guaranty set forth in this Section 4.11 on the dates provided hereunder and waives demand, notice and any marshaling of assets.  Freddie Mac's guarantee under this Section 4.11 is unconditional, irrespective of value, genuineness, validity, or enforceability of the Certificates.  Freddie Mac's obligation to pay hereunder is not subject to any rights of set-off, counterclaim or any other circumstances or conditions that would constitute a defense to payment hereunder, including the non-payment of the Freddie Mac Fee.  The Holders of the Certificates are beneficiaries of the Credit Enhancement.

 

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Article V
RESET RATES; TERM EXTENDED RATE; LIBOR INDEX RATE

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

(a)Class A Certificates may be issued as Reset Rate Class A Certificates, Term Extended Rate Class A Certificates or LIBOR Index Rate Class A Certificates as designated in the Series Certificate Agreement.  Each Series of Reset Rate Class A Certificates may have a Reset Rate Method that is a Weekly Reset Rate Method, a Monthly Reset Rate Method or a Term Reset Rate Method.  The Series Certificate Agreement will designate the initial Reset Rate Method as of the Date of Original Issue.  The Remarketing Agent will determine the Reset Rate applicable to the Reset Rate Class A Certificates in accordance with this Article V, as applicable.  The Holders of not less than 51% of the Aggregate Outstanding Class B Certificate Balance, with the consent of Freddie Mac, or Freddie Mac, if the interest rate hedge required by the Reimbursement Agreement is not in effect, will have the right to change the initial Reset Rate Method or any subsequent Reset Rate Method to another Reset Rate Method.

(b)(i) Any change in the Reset Rate Method from a Weekly Reset Rate Method or a Monthly Reset Method will be conditioned upon the remarketing of all Available Remarketing Class A Certificates for a price equal to the Current Class A Certificate Balance thereof; and (ii) any change in the Reset Rate Method from a Term Reset Rate Method or any continuation of a Term Reset Rate Method will be conditioned upon the remarketing of all Available Remarketing Class A Certificates for a price equal to the Current Class A Certificate Balance thereof.

(c)If all Available Remarketing Class A Certificates are not remarketed for a purchase price equal to the Current Class A Certificate Balance thereof as provided in Section 5.01(b), beginning on the date that would have been the Reset Rate Method Change Date or the Term Reset Date, as applicable, the Reset Rate Method that will be in effect will be a Weekly Reset Rate Method, and the Weekly Reset Rate will be determined by the Remarketing Agent on or prior to the Reset Rate Method Change Date or the Term Reset Date, as applicable, and will be effective from the day that would have been the Reset Rate Method Change Date or the Term Reset Date through the next succeeding Wednesday.  The Reset Rate Method thereafter will continue to be a Weekly Reset Rate Method unless and until a Reset Rate Method Change Date occurs.

Section 5.02Weekly Reset Rate; Monthly Reset Rate.  

(a)Weekly Reset Rate; Weekly Reset Date.  If the Reset Rate Method is, or is being changed to, a Weekly Reset Rate Method, the Remarketing Agent will determine, by not later than 5:00 p.m. on each Weekly Reset Date, the Weekly Reset Rate for the Class A Certificates, which rate will be the per annum rate, not exceeding the Maximum Reset Rate, determined by the Remarketing Agent as the minimum rate of interest which would, in the judgment of the Remarketing Agent, under then prevailing market conditions (taking into account that such rate will be reset on the next Weekly Reset Date), result in a sale of the Class A Certificates at a market price equal to the Current Certificate Balance thereof, plus accrued interest.  The Weekly 

 

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Reset Rate applicable on the Weekly Reset Date in each week will be in effect from Thursday of such week through Wednesday of the following week, or, if earlier, through the day preceding the next Reset Rate Method Change Date.  However, if on any Weekly Reset Date, the Remarketing Agent fails to establish the Weekly Reset Rate, the then applicable Reset Rate will be the lesser of the previous Reset Rate or the Maximum Reset Rate.

(b)Monthly Reset Rate; Monthly Reset Date.  If the Reset Rate Method is, or is being changed to, a Monthly Reset Rate Method, the Remarketing Agent will determine, by not later than 5:00 p.m. on each Monthly Reset Date, the Monthly Reset Rate for the Class A Certificates, which rate will be the per annum rate, not exceeding the Maximum Reset Rate, determined by the Remarketing Agent as the minimum rate of interest which would, in the judgment of the Remarketing Agent, under then prevailing market conditions (taking into account that such rate will be reset on the next Monthly Reset Date), result in a sale of the Class A Certificates at a market price equal to the Current Certificate Balance thereof, plus accrued interest.  The Monthly Reset Rate will be in effect from the first day of the month through the last day of such month or, if earlier, on the day preceding the next Reset Rate Method Change Date.  However, if on any Monthly Reset Date, the Remarketing Agent fails to establish the Monthly Reset Rate, the then applicable Reset Rate will be the lesser of the previous Reset Rate or the Maximum Reset Rate.  Six Business Days before any Monthly Reset Date, the Remarketing Agent will determine the Preliminary Class A Certificate Rate pursuant to the standard set forth in the first sentence of this Subsection 5.02(b).  Upon such determination, the Remarketing Agent will immediately give telephonic notice of the Preliminary Class A Certificate Rate to each Holder requesting such notice.  The Monthly Reset Rate may be more than, but will be at least equal to such Preliminary Class A Certificate Rate, provided that it may not exceed the Maximum Reset Rate.

(c)Reset Rate Method Change Notice and Related Mandatory Tender.  If the Holders of not less than 51% of the Aggregate Outstanding Class B Certificate Balance, with the written consent of Freddie Mac (which may be conditioned upon a repricing by the Remarketing Agent), or Freddie Mac, if the interest rate hedge required by the Reimbursement Agreement is not in effect, at any time determine to change the Reset Rate Method from a Weekly Reset Rate Method to a Monthly Reset Rate Method, or from a Monthly Reset Rate Method to a Weekly Reset Rate Method, and gives the Administrator notice of such determination along with a copy of such consent if applicable, the Administrator will give, by Electronic Notice, a Reset Rate Method Change Notice to the Remarketing Agent and to the Registered Holders, not later than the second Business Day following the date Freddie Mac consents to or initiates such change.  Each such Reset Rate Method Change Notice must be provided to the Holders of Class A Certificates no later than eight Business Days prior to the Reset Rate Method Change Date and state (A) that a Weekly Reset Rate Method or Monthly Reset Rate Method, whichever is applicable, will be in effect, following the Reset Rate Method Change Date, (B) the date on which such Weekly Reset Rate Method or Monthly Reset Rate Method will become effective, (C) that the Class A Certificates will be subject to Mandatory Tender on the Reset Rate Method Change Date (subject to the Class A Holders’ right to retain their Class A Certificates) and (D) that the change in Reset Rate Method will be subject to the remarketing of all Available Remarketing Class A Certificates for a price equal to the Current Class A Certificate Balance thereof and if not remarketed, the Reset Rate Method will change to the Weekly Reset Rate Method.  Such notice will be attached to the Mandatory Tender Notice that is required to be provided pursuant to Section 6.05.

 

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Section 5.03Term Reset Rate; Term Reset Date.  

(a)Determination of Term Reset Rate.  Subject to the next two sentences of this Section 5.03(a), if the Reset Rate Method is, or is being changed to, a Term Reset Rate Method, the Remarketing Agent will determine by not later than 5:00 p.m. on the Term Reset Date the Term Reset Rate for the Class A Certificates, which rate will be the per annum rate, not exceeding the Maximum Reset Rate, determined by the Remarketing Agent as the minimum rate of interest which would, in the judgment of the Remarketing Agent, under then prevailing market conditions (taking into account that such rate will be reset on the next Term Reset Date), result in a sale of the Class A Certificates at a price equal to the Current Certificate Balance thereof, plus accrued interest.  The Class A Certificates will only bear interest at the Term Reset Rate if on the Term Reset Date all Available Remarketing Class A Certificates are remarketed for a price equal to the Current Class A Certificate Balance thereof.  If all Available Remarketing Class A Certificates are not remarketed for a price equal to the Current Class A Certificate Balance thereof, beginning on the date that would have been the Term Reset Date, the Class A Certificates will bear interest at the Weekly Reset Rate.  The Term Reset Rate determined on each Term Reset Date will be in effect from the related Term Effective Date through the day preceding the earlier of the Series Expiration Date or the next Term Effective Date which period will not be less than 180 days nor exceed one year unless otherwise consented to by Freddie Mac; provided that if, on any Term Reset Date, the Remarketing Agent fails to establish the Term Reset Rate, the applicable Term Reset Rate will be the lesser of the previous Reset Rate or the Maximum Reset Rate.  Following the First Optional Disposition Date, the period during which a Term Reset Rate may be in effect will not be less than 180 days nor exceed five years unless otherwise consented to by Freddie Mac.  Six Business Days before any Term Reset Date, the Remarketing Agent will determine the Preliminary Class A Certificate Rate pursuant to the standard set forth in the first sentence of this Subsection 5.03(a).  Upon such determination, the Remarketing Agent will immediately give telephonic notice of the Preliminary Class A Certificate Rate and the length of the ensuing term to each Holder requesting such notice.  The Term Reset Rate may be more than, but will be at least equal to such Preliminary Class A Certificate Rate, provided that it may not exceed the Maximum Reset Rate.

(b)Term Reset Method Notice and Related Mandatory Tender.  A Term Reset Rate may be set or reset as of the applicable Term Effective Date and may be set or reset at a fixed rate.  If the Holders of not less than 51% of the Aggregate Outstanding Class B Certificate Balance, with the written consent of Freddie Mac, or Freddie Mac if the interest rate hedge acquired by the Reimbursement Agreement is not in effect, determine to change the Reset Rate Method from a Weekly Reset Rate Method or Monthly Reset Rate Method to a Term Reset Rate Method or to reset the Term Reset Rate as of the applicable Term Effective Date (and gives the Administrator notice of such determination along with a copy of such consent if applicable, in all events before any Term Reset Date and on or prior to the ninth Business Day prior to the Term Effective Date) the Administrator will give by Electronic Notice, a Term Reset Method Notice to the Remarketing Agent and to the Registered Holders not later than the Business Day following the date Freddie Mac consents to or initiates such change.  Such notice will be attached to the Mandatory Tender Notice that is required to be provided pursuant to Section 6.05, if applicable.  Each such 

 

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Term Reset Method Notice will set forth: (A) a statement that the ensuing Reset Rate Method will be a Term Reset Rate Method, (B) the Term Effective Date on which the Term Reset Rate Method will take effect, (C) a statement that the Class A Certificates will be subject to Mandatory Tender on the Term Effective Date (subject to the Class A Holders’ right to retain their Class A Certificates), provided that such date will be no earlier than eight Business Days following the date on which such notice is given to the Registered Holders by the Administrator, (D) the Term Reset Date on which the Term Reset Rate for such Term Effective Date will be determined, (E) a statement that the Preliminary Class A Certificate Rate will be determined six Business Days before the Term Reset Date, and (F) a statement that the beginning of the Term Reset Rate Method on the Term Reset Date will be subject to the remarketing of all Available Remarketing Class A Certificates for a price equal to the Current Class A Certificate Balance thereof and if not so remarketed, beginning on the date that would have been the Term Reset Date, the Class A Certificates will bear interest at the Weekly Reset Rate.

(c)Reset Rate Method Change Notice and Related Mandatory Tender.  If the Holders of not less than 51% of the Aggregate Outstanding Class B Certificate Balance, with the written consent of Freddie Mac (which may be conditioned upon a repricing by the Remarketing Agent), or Freddie Mac, if the interest rate hedge required by the Reimbursement Agreement is not in effect, determine to change the Reset Rate Method from a Term Reset Rate Method to a Weekly Reset Rate Method or Monthly Reset Rate Method and give the Administrator notice of such determination along with a copy of such consent if applicable, no later than the ninth Business Day prior to the day that would be the Term Effective Date if the Term Reset Rate Method were to continue, the Administrator will give by Electronic Notice a Reset Rate Method Change Notice to the Remarketing Agent and to the Registered Holders not later than the Business Day following the date Freddie Mac consents or initiates such change.  Such Reset Rate Method Change Notice will set forth (A) a statement that a Weekly Reset Rate Method or Monthly Reset Rate Method, whichever is applicable, will be in effect, (B) the date on which such Weekly Reset Rate Method or Monthly Reset Rate Method will become effective; provided that such date will be a Business Day not earlier than the first day following the end of the term which was in effect and not earlier than eight Business Days following the date on which such notice is given by the Administrator to the Registered Holders, (C) a statement that the Class A Certificates will be subject to Mandatory Tender on the Reset Rate Method Change Date (subject to the Class A Holders’ right to retain their Class A Certificates) and (D) a statement that if all Available Remarketing Class A Certificates are not remarketed for a price equal to the Current Class A Certificate Balance thereof, beginning on the Reset Method Change Date all Class A Certificates will bear interest at the Weekly Reset Rate, notwithstanding, if applicable, the prior election to change the Reset Rate Method to the Monthly Reset Method.  Such notice will be attached to the Mandatory Tender Notice that is required to be provided pursuant to Section 6.05.

(d)Reversion to Weekly Reset Rate Method.  If the Administrator has not received a Term Reset Method Notice pursuant to Section 5.03(b), or a Reset Rate Method Change Notice pursuant to Section 5.03(c), by the ninth Business Day prior to the day that would be the Term Effective Date if the Term Reset Rate Method were to continue or if all Available Remarketing Class A Certificates have not been remarketed 

 

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for a price equal to the Current Class a Certificate Balance thereof, the Reset Rate Method that will be in effect as of the end of such term will be a Weekly Reset Rate Method, and the Weekly Reset Rate will be determined by the Remarketing Agent on the last Business Day on or prior to the end of such term and will be effective from the day following the end of such term through the next succeeding Wednesday, or, if earlier, through the day preceding the next Reset Rate Method Change Date.  Unless any such Reset Rate Method Change Date occurs on or prior to such Wednesday, the Reset Rate Method thereafter will continue to be a Weekly Reset Rate Method unless and until a Reset Rate Method Change Date occurs.  On the eighth Business Day prior to the day that would be the Term Effective Date if the Term Reset Rate Method were to continue, the Administrator will give a notice to Freddie Mac and the Registered Holders of Class A Certificates setting forth (A) a statement that a Weekly Reset Rate Method will be in effect, (B) the date on which such Weekly Reset Rate Method will become effective, and (C) a statement that the Class A Certificates will be subject to Mandatory Tender on the Reset Rate Method Change Date (subject to the Class A Holders’ right to retain their Class A Certificates).  Such notice will be attached to the Mandatory Tender Notice that is required to be provided pursuant to Section 6.05.

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

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

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

Section 5.07Term Extended Rate.  Each Term Extended Rate Class A Certificate shall bear interest at the Term Extended Rate(s) specified in the Series Certificate Agreement.  The Series Certificate Agreement shall designate the Term Extended Rate(s) (including, if applicable, the periods of time such rates shall apply) for any Series of Term Extended Rate Class A Class Certificates as of the Date of Original Issue thereof.  Term Extended Rate Class A Certificates may not be converted to a Reset Rate Method or to a LIBOR Index Rate.  Notwithstanding anything to the contrary herein, none of the provisions of these Standard Terms with respect to the Liquidity Facility or the Tender Option shall apply to the Term Extended Rate Class A Certificates, nor any requirement for Mandatory Tender (other than with respect to Mandatory Tenders resulting from a Credit Provider Termination Event or a 

 

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Clean Up Event).  Except as otherwise provided in the Series Certificate Agreement, Holders of Term Extended Rate Class A Certificates may tender their Term Extended Rate Class A Certificates on any Optional Disposition Date in accordance with Section 7.05.  Term Extended Rate Class A Certificates are subject to early redemption on the Exchange Date in connection with a Tender Option Termination Event.

Section 5.08LIBOR Index Rate.  Each LIBOR Index Rate Class A Certificate shall accrue interest at the LIBOR Index Rate during each Accrual Period.  The Administrator shall determine the Quoted LIBOR Index Rate on each LIBOR Index Computation Date and such Quoted LIBOR Index Rate shall become effective on the LIBOR Index Reset Date next succeeding such LIBOR Index Computation Date and interest at such rate shall accrue each day during such Accrual Period (unless such Quoted LIBOR Index Rate exceeds the Maximum LIBOR Index Rate in which event the LIBOR Index Rate Class A Certificate shall bear interest at the Maximum LIBOR Index Rate during such Accrual Period).  The Indexing Agent shall provide to the Administrator no later than the Maximum LIBOR Index Rate Determination Date for each Accrual Period, the Maximum LIBOR Index Rate for such Accrual Period.  The determination of the LIBOR Index Rate by the Administrator shall be conclusive and binding upon the Holders absent manifest error.  

LIBOR Index Rate Class A Certificates may not be converted to a Reset Rate Method or to a Term Extended Rate.  Notwithstanding anything to the contrary herein, none of the provisions of these Standard Terms with respect to the Liquidity Facility or the Tender Option shall apply to the LIBOR Index Rate Class A Certificates nor any requirement for Mandatory Tender (other than with respect to Mandatory Tenders resulting from a Credit Provider Termination Event or a Clean Up Event).  Except as otherwise provided in the Series Certificate Agreement, Holders of LIBOR Index Rate Class A Certificates may tender their LIBOR Index Rate Class A Certificates on any Optional Disposition Date in accordance with Section 7.05.  LIBOR Index Rate Class A Certificates are subject to early redemption on the Exchange Date in connection with a Tender Option Termination Event.

Article VI
THE LIQUIDITY FACILITY; THE TENDER OPTION; MANDATORY TENDER

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

(b)(i)    Freddie Mac agrees to provide payment of the Purchase Price of Class A Certificates (other than Affected Certificates or Pledged Class A Certificates) on a Purchase Date, Optional Disposition Date or Mandatory Tender Date, as applicable, in accordance with the following provisions, but solely to the extent such events are applicable to the Series Pool.  Subject to its receipt of notice, if applicable, from the Remarketing Agent as provided in Section 6.01(b)(iii) and, if applicable, from the Paying Agent pursuant to Section 6.06(a)(v), Freddie 

 

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

(ii)The initial Liquidity Commitment with respect to Reset Rate Class A Certificates is an amount equal to the sum of (A) the Aggregate Outstanding Class A Certificate Balance as of the Date of Original Issue plus (B) an amount equal to interest for thirty five (35) days on the Aggregate Outstanding Bond Balance at a rate per annum equal to the Weighted Average Bond Rate assuming that the Bond Rate is the maximum possible rate for the related Bond.  The Liquidity Commitment will be increased on any date on which Class B Certificates are converted to Reset Rate Class A Certificates pursuant to Section 2.14 so that as of such date of conversion, the Liquidity Commitment will be the Aggregate Outstanding Class A Certificate Balance plus an amount equal to interest for thirty five (35) days on the Aggregate Outstanding Bond Balance at a rate per annum equal to the Weighted Average Bond Rate assuming that the Bond Rate is the maximum possible rate for the related Bond.  The Liquidity Commitment shall be decreased on any date on which Reset Rate Class A Certificates (A) are canceled or exchanged for Bonds or proceeds from the Disposition of Bonds or (B) become Pledged Class A Certificates pursuant to the Series Certificate Agreement.

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

(iv)The Administrator will receive and hold for the benefit of Freddie Mac all funds provided by Freddie Mac under the Liquidity Facility (or the Credit Facility pursuant to Section 4.11(d)) on account of the Purchase Price of Class A Certificates and will not disburse such funds until the tendered Class A Certificates have been received from the Registered Holders of the Tendered Class A Certificates.  On the Purchase Date, the Administrator will cause Pledged Class A Certificates to be registered in the name of the Pledge Custodian until remarketed or redeemed, subject to the security interest provided for in the Reimbursement Agreement.

 

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

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

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

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

 

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

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

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

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

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

 

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Section 6.04Mandatory Tender Events.  Class A Certificates (other than Affected Certificates and Pledged Class A Certificates) are subject to Mandatory Tender in accordance with the procedures set forth in Sections 6.05, 6.06, 6.07 and 6.08.  Subject to the right of a Holder of Reset Rate Class A Certificates to retain a Reset Rate Class A Certificates pursuant to Section 6.07, the Class A Certificates (other than Affected Certificates and Pledged Class A Certificates) are subject to Mandatory Tender on the earliest to occur of (a) the Business Day specified by Freddie Mac pursuant to Section 7.03(a) below with respect to a Liquidity Provider Termination Event or pursuant to Section 7.03(b) below with respect to a Credit Provider Termination Event, (b) the fifth (5th) Business Day after the Administrator provides notice to the Holders with respect to a Sponsor Act of Bankruptcy pursuant to Section 7.04, (c) on the Business Day prior to the date of assignment described in Section 3.07 in connection with a Successor Sponsor, (d) a Term Effective Date (that is not a Reset Rate Method Change Date), (e) a Reset Rate Method Change Date relating to a change (but not a continuation) in the Reset Rate Method from a Weekly Reset Rate Method or Monthly Reset Rate Method to a Monthly Reset Rate Method or a Term Reset Rate Method, (f) a Reset Rate Method Change Date relating to a change (but not a continuation) in the Reset Rate Method from a Term Reset Rate Method or a Monthly Reset Rate Method to a Weekly Reset Rate Method or Monthly Reset Rate Method, (g) the date on which an amendment to the Standard Terms described in Section 12.01(b) of the Standard Terms becomes effective, (h) the date specified by Freddie Mac as described in Section 7.02(b) below with respect to a Special Adjustment Event and (i) the date specified by Freddie Mac or the Sponsor as described in Section 7.06(b) below with respect to a Clean-Up Event (each, a “Mandatory Tender Date”).  Holders of Affected Certificates and Pledged Class A Certificates have no right to tender such Affected Certificates or Pledged Class A Certificates for purchase by the Administrator at the Purchase Price upon the occurrence of a Mandatory Tender Event.

Section 6.05Notice of Mandatory Tender.  (a)  When any Mandatory Tender Event occurs, the Administrator will give to the Registered Holders a Mandatory Tender Notice, as applicable, with one copy to Freddie Mac, the Sponsor and the Remarketing Agent (i) on the Business Day on which such notice is required to be given pursuant to Section 7.03(a) in connection with the occurrence of a Liquidity Provider Termination Event and pursuant to Section 7.03(b) in connection with the occurrence of a Credit Provider Termination Event, (ii) on the Business Day on which such notice is required to be given pursuant to Section 7.04 in connection with the occurrence of a Sponsor Act of Bankruptcy, (iii) on the Business Day on which notice is required to be given pursuant to Section 3.07 in connection with a Successor Sponsor, (iv) on the Business Day on which such notice is required to be given in connection with a Term Reset Method Notice, a Reset Method Change Notice or a reversion to a Weekly Rate Reset Method, (v) on the Business Day on which notice is required to be given pursuant to the procedures related to a Section 12.01(b) amendment, (vi) on the Business Day on which such notice is required to be given with respect to a Special Adjustment Date pursuant to Section 7.02(b) and (vii) on the Business Day on which notice is required to be given pursuant to Section 7.06(b) in connection with the occurrence of a Clean-Up Event.  Each Mandatory Tender Notice will set forth (A) the Mandatory Tender Date, (B) a brief statement specifying the applicable Mandatory Tender Event, (C) a statement that the Purchase Price payable to the Holders of Class A Certificates (other than Affected Certificates, Pledged Class A Certificates or Reset Rate Class A Certificates with respect to which the Holders thereof have timely delivered a Retention Notice) pursuant to Section 6.06 will be payable on the Mandatory Tender Date, and that interest payable with respect to such Class A Certificates will cease to accrue from and after such 

 

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Mandatory Tender Date, (D) in connection with a Terminating Mandatory Tender Date, a statement that Hypothetical Gain Share, if any, will be paid to the Holders of Class A Certificates based upon a valuation of the Bonds, (E) if applicable, a statement that such Reset Rate Class A Holder will have the right to elect to retain such Certificates by delivering a Retention Notice to the Administrator under the circumstances, at the time and in the manner provided in Section 6.07, (F) if applicable, a statement that even if the Holder of Class A Certificates fails to surrender its Class A Certificate on the Mandatory Tender Date, the Tender Option with respect to such Certificates will terminate on the Mandatory Tender Date, and any Class A Certificates not surrendered on the Mandatory Tender Date will, for all purposes of the Series Certificate Agreement, be deemed to have been surrendered unless the applicable Holder of Reset Rate Class A Certificates has delivered a conforming Retention Notice; and (G) if applicable, a statement that, notwithstanding such Mandatory Tender Notice, each affected Holder of Class A Certificates will continue to have the right to exercise the Tender Option in accordance with the terms and provisions of the Series Certificate Agreement; provided that, if the Series is terminated as a result of such Mandatory Tender Event, such right will terminate at the last applicable time and date on which an Exercise Notice may be given by or on behalf of such Holder of Class A Certificates in accordance with the terms and provisions of the Series Certificate Agreement.

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

Section 6.06Funding Procedures; Payment of Purchase Price.

(a)Funding Procedures.  (i) The Purchase Price of any Class A Certificate will be paid as follows if the applicable conditions have been satisfied:

(A)A Holder of Reset Rate Class A Certificates that has properly exercised its Tender Option will be paid on the Purchase Date designated in the related Exercise Notice.

(B)A Holder of Class A Certificates subject to Mandatory Tender will be paid on the Mandatory Tender Date designated in the related Mandatory Tender Notice.

(C)A Holder of Class A Certificates that has properly exercised its Optional Disposition Right will be paid on the Optional Disposition Date.

 

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The Administrator will obtain funds to make such payments on or before the designated date for distribution as provided in Section 6.06(c) from the Person indicated below in the following order of priority (provided, however, the Administrator shall obtain funds for the payment of the Purchase Price for Term Extended Rate Class A Certificates and LIBOR Index Rate Class A Certificates as set forth in Section 6.06(a)(vi) below):

(1)with respect to Available Remarketing Class A Certificates as described in Section 6.06(a)(ii) only, the Remarketing Agent will deposit with the Administrator, immediately available funds in an amount equal to the net proceeds from the remarketing of such Reset Rate Class A Certificates up to the amount of such Purchase Price, or with respect to Reset Rate Class A Certificates subject to Mandatory Tender as a result of a Special Adjustment Event as described in Section 7.02 only, the Pledge Custodian or the Sponsor, as applicable, will deposit with the Administrator immediately available funds in the amount of such Purchase Price; and

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

(ii)Upon receipt by the Administrator and the Remarketing Agent of (A) an Exercise Notice with respect to Tendered Class A Certificates, (B) notice of a Mandatory Tender Date with respect to a Term Effective Date (that is not a Reset Rate Method Change Date) or  a Reset Rate Method Change Date relating to a change (but not a continuation) in the Reset Rate Method, (C) notice of a Mandatory Tender Date with respect to an amendment to the Standard Terms pursuant to Section 12.01(b), (D) notice of a Mandatory Tender Date with respect to the appointment of a successor Sponsor, and (E) unless otherwise directed by Freddie Mac, notice that any Holder of Reset Rate Class A Certificates has exercised its Optional Disposition Right (all Certificates being subject to any such notice being referred to as “Available Remarketing Class A Certificates”), the Remarketing Agent will use its best efforts to solicit offers for purchases of such Available Remarketing Class A Certificates in accordance with the Remarketing Agreement and the Series Certificate Agreement.  With respect to any Available Remarketing Class A Certificates that the Remarketing Agent has been able to obtain successfully a bid for the purchase thereof, which bid, if accepted, would be binding on the bidder for the consummation of the sale of such Available Remarketing Class A Certificates, the Remarketing Agent shall in accordance with the Remarketing Agreement provide funds, as principal and not as agent, to the Administrator to effect such purchase.

(iii)Not later than 9:00 a.m. on the Purchase Date, a Mandatory Tender Date or an Optional Disposition Date, as applicable, the Administrator will confirm with the Remarketing Agent the Purchase Price of such Available Remarketing Class A Certificates.  Not later than 9:00 a.m. on the Purchase Date, Mandatory Tender Date or Optional Disposition Date, as applicable, the Remarketing Agent will give to Freddie Mac and the Administrator, a Remarketing Agent Notice by Electronic Notice, promptly confirmed by first class mail.  Such Remarketing Agent Notice will contain (A) a statement that such Available Remarketing Class A 

 

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Certificates have been fully remarketed, and that the net remarketing proceeds will be deposited with the Administrator by not later than 9:15 a.m. on such Purchase Date, Mandatory Tender Date or Optional Disposition Date, as applicable, or (B) a statement that only a portion of such Available Remarketing Class A Certificates have been remarketed and the remarketing proceeds that were obtained will be deposited with the Administrator by not later than 9:15 a.m. on the Purchase Date, Mandatory Tender Date or Optional Disposition Date, as applicable, or (C) a statement that such Available Remarketing Class A Certificates have not been remarketed by the Remarketing Agent and that no funds will be deposited with the Administrator on the Purchase Date, Mandatory Tender Date or Optional Disposition Date, as applicable.  If such Available Remarketing Class A Certificates have been remarketed and the Remarketing Agent has received the remarketing proceeds, the Remarketing Agent will, not later than 9:15 a.m. on the Purchase Date, Mandatory Tender Date, or Optional Disposition Date, as applicable, deposit with the Administrator, from the remarketing proceeds, immediately available funds in the amount specified in the Remarketing Agent Notice.

(iv)If Freddie Mac has received a Remarketing Agent Notice from the Remarketing Agent as described in Section 6.06(a)(iii) indicating a failure to remarket any of the Available Remarketing Class A Certificates and requesting payment, Freddie Mac will make a payment in accordance with the conditions set forth in the Liquidity Facility, if applicable, of the Purchase Price of such Available Remarketing Class A Certificates not remarketed (net of any remarketing proceeds that have been received) no later than 2:00 p.m. on the Purchase Date.  Any such Remarketing Agent Notice must be sent to Freddie Mac’s Special Transaction Accounting by facsimile transmission at (703) 714-3273, immediately confirmed by overnight delivery service (or to such other facsimile number or using such other means of electronic communication as otherwise instructed by Freddie Mac).

(v)If the Administrator has appointed a Paying Agent, it will be an additional condition precedent to Freddie Mac’s obligations to pay pursuant to the Liquidity Facility, if applicable, that no later than 10:00 a.m. on the Purchase Date, Mandatory Tender Date or Optional Disposition Date, as applicable, the Paying Agent will have provided proper notice by facsimile means to Freddie Mac to the effect that monies held by the Paying Agent for the purpose of paying the Purchase Price of Tendered Class A Certificates are insufficient and that Freddie Mac is required pursuant to the Liquidity Facility, if applicable, to cover such deficit.

(vi)Notwithstanding the foregoing, or anything to the contrary herein, (x) the Purchase Price of Term Extended Rate Class A Certificates and LIBOR Index Rate Class A Certificates subject to Mandatory Tender in connection with a Credit Provider Termination Event or a Clean-Up Event shall be paid from amounts received upon demand of Freddie Mac under Section 4.11(d), and (y) the Purchase Price of Term Extended Rate Class A Certificates and LIBOR Index Rate Class A Certificates being tendered pursuant to the Optional Disposition Right shall be paid from proceeds of the sale of Bonds selected by Freddie Mac (after consultation with the Sponsor, but if no agreement is reached between Freddie Mac and the Sponsor, then such Bonds as shall be selected by Freddie Mac).   If the Sponsor or the Holders of the Class B Certificates commit to purchase the selected Bonds at a price that is at least the Commitment Price, such Bonds shall be sold to the Sponsor or the Holders of the Class B Certificates.

 

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(b)Purchase Price Excesses.  If, as of any time preceding the payment of the Purchase Price of Class A Certificates the sum of the amounts deposited with the Administrator pursuant to Section 6.06(a) exceeds the aggregate Purchase Price of such Class A Certificates (any such excess, a “Purchase Price Excess”), the Administrator will (i) give to the Remarketing Agent and Freddie Mac notice of the amount of such Purchase Price Excess by Electronic Notice, and (ii) pay by wire transfer of immediately available funds unless otherwise requested (A) first, to Freddie Mac, that portion of the Purchase Price Excess funded by Freddie Mac pursuant to the Liquidity Facility, if applicable, and (B) second, to the Remarketing Agent, the balance of such Purchase Price Excess.  Such payments will be made by the Administrator in accordance with written instructions for such transfer provided by Freddie Mac.  Concurrently with the receipt by Freddie Mac or the Remarketing Agent, as the case may be, of any payment made pursuant to this Section 6.06(b), such Person will execute and deliver to the Administrator a receipt therefor.

(c)(i)    Payment of Purchase Price of Tendered Class A Certificates.  Payment of the Purchase Price of any Tendered Class A Certificates will be made by the Administrator at or before 3:00 p.m. to the Class A Holders, upon receipt by the Administrator of such Class A Certificates pursuant to Section 6.03(b), from amounts provided to the Administrator by 2:00 p.m., by wire transfer of immediately available funds to such account as such Holder’s DTC Participant has specified in writing to the Administrator.  If all or a portion of funds for the payment of the Purchase Price of any Tendered Class A Certificates are provided the Administrator after 2:00 p.m. on any Business Day, the Administrator will pay such Purchase Price or portion thereof to the related DTC Participant by not later than 3:00 p.m. on the next succeeding Business Day.

(ii)Payment of Purchase Price of Certificates Subject to Mandatory Tender or Optional Disposition Right.  Subject to Section 6.07, payment of the Purchase Price of any Class A Certificates subject to Mandatory Tender or the Optional Disposition Right will be made by the Administrator to the Class A Holders, from amounts provided to the Administrator from remarketing proceeds, from in the case of a Mandatory Tender related to a Special Adjustment Event the Pledge Custodian or the Sponsor, from in the case of Term Extended Rate Class A Certificates and LIBOR Index Rate Class A Certificates amounts received from Freddie Mac pursuant to Section 4.11(d) and 6.06(a)(vi), or from the Liquidity Facility, if applicable, as applicable, pursuant to Section 6.06(a) only upon presentation and surrender of the Class A Certificates by the Class A Holder, on the Mandatory Tender Date or Optional Disposition Date, as applicable, at the principal office of the Administrator.  Such payment will be made by the Administrator at or before 3:00 p.m. to the Class A Holder from amounts provided to the Administrator by 2:00 p.m. on any Business Day for such purpose pursuant to Section 6.06(a), by payment to the Class A Holder by wire transfer of immediately available funds to such account as such Holder’s DTC Participant specifies in writing to the Administrator.  If all or a portion of the funds for payment of the Purchase Price of a Class A Certificate that is subject to Mandatory Tender or the Optional Disposition Right are provided to the Administrator after 2:00 p.m. on any Business Day, the Administrator will pay such Purchase Price or portion thereof to the related DTC Participant by not later than 3:00 p.m. on the next succeeding Business Day.

 

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(iii)Failure to Pay Purchase Price.  If payment of the Purchase Price is not made as described in Section 6.06(c)(i) or (ii), as applicable, on any Purchase Date for Class A Certificates for which the Tender Option has been exercised, any Mandatory Tender Date or the Optional Disposition Date for Class A Certificates for which the Optional Disposition Right has been exercised because of (i) a failure by the Liquidity Provider to comply with the terms of the Liquidity Facility, if applicable (a “Liquidity Failure”), provided such failure is not cured on or before the third Business Day after such date, or (ii) a failure by Freddie Mac to comply with the terms of 4.11(d) and provide the Purchase of the Class A Certificates to the Administrator by 2:00 p.m. on the Mandatory Tender Date (a “Credit Failure”), provided such failure is not cured on or before the third Business Day after such date, then each Class A Holder will be required to exchange its Class A Certificates for its pro rata share of the Bonds or sales proceeds thereof in accordance with Section 13.04 on the related Exchange Date.  The Administrator will immediately notify the Sponsor upon the occurrence of a Credit Failure or Liquidity Failure, and the Sponsor will advise the Administrator of the related Exchange Date.  The Administrator will notify the Registered Holders, each applicable Rating Agency and the Remarketing Agent within one Business Day after the occurrence of a Credit Failure or Liquidity Failure.  Any distribution made in connection with such a Credit Failure or Liquidity Failure is in no way intended to, and will not, negate or waive any rights of the Holders of Class A Certificates or the Administrator on their behalf, to take any action against, or to pursue any other remedy available to them under the Series Certificate Agreement, under any other document related to the Series Certificate Agreement, at law, in equity or otherwise against Freddie Mac, with respect to any failure by Freddie Mac to pay the Purchase Price for Class A Certificates when required to do so and such failure is not cured on or before the third Business Day after the related Mandatory Tender Date or Purchase Date.

(d)Disposition of Tendered Class A Certificates and Class A Certificates Subject to Mandatory Tender.  (i)  Concurrently with the payment of the Purchase Price for Class A Certificates on any Purchase Date, Mandatory Tender Date or Optional Disposition Date, the Administrator will (A) to the extent that the Remarketing Agent deposited with the Administrator remarketing proceeds in the amount of such Purchase Price pursuant to Section 6.06(a)(i), deliver to the Remarketing Agent (for redelivery to the purchasers of such Class A Certificates) the Class A Certificates with respect to which the Remarketing Agent deposited with the Administrator the Purchase Price, (B) to the extent Freddie Mac deposited with the Administrator, or in the case of Class A Certificates subject to Mandatory Tender related to a Special Adjustment Event, the Pledge Custodian or the Sponsor deposited with the Administrator, the amount of any Purchase Price with respect to any such Class A Certificates, deliver to the Pledge Custodian, for the benefit of Freddie Mac, such Class A Certificates with respect to which Freddie Mac, the Pledge Custodian or the Sponsor, as applicable, deposited with the Administrator such Purchase Price, and (C) to the extent Freddie Mac deposited with the Administrator the Purchase Price for the Class A Certificates pursuant to Section 4.11(d) and 6.06(a)(vi), such Class A Certificates shall be cancelled as set forth in Section 13.03.  In the case of a delivery described by clause (A) above, the Administrator will deliver such Class A Certificates to the Remarketing Agent registered in such name and to such address as the Remarketing Agent directs in writing.  In the case of a delivery described by clause (B) above, the Administrator will deliver such Class A Certificates to the Pledge Custodian registered in such name, and to such address, as Freddie Mac directs in writing, and the Administrator and the Certificate Registrar will note the pledge of such Class A Certificates to the Pledge Custodian on behalf of Freddie Mac on the books and records of the Administrator and the Certificate 

 

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Registrar, and the Administrator will send confirmation of such delivery to Freddie Mac.  Any Class A Certificates delivered to the Pledge Custodian as described in the preceding sentence will be Pledged Class A Certificates subject to Section 4.06.  Following such registration, Freddie Mac will be entitled to receive payments on the Pledged Class A Certificates in accordance with its interest.

(ii)If any Class A Certificate that is subject to Mandatory Tender is not surrendered by the Holder of such Certificate on a Mandatory Tender Date (except for a Class A Certificate which the respective Holder has elected to retain as provided in Section 6.07), such Class A Certificate will be deemed surrendered for all purposes under the Series Certificate Agreement.  After the Mandatory Tender Date, except to the extent of the portion, if any, of the Current Class A Certificate Balance of such Class A Certificates that is not subject to Mandatory Tender on such Mandatory Tender Date, the Class A Holder will have no further rights with respect to such Class A Certificates except the right to receive payment of the Purchase Price, without interest from or after the Mandatory Tender Date, and its portion of the Hypothetical Gain Share, if any, pursuant to Section 13.03 upon the presentation and surrender of such Class A Certificate at the Delivery Office of the Administrator.

(e)Reductions of the Aggregate Outstanding Amounts.  The Aggregate Outstanding Class A Certificate Balance will be reduced by the aggregate Current Certificate Balance of such Class A Certificates subject to Mandatory Tender that are canceled.

(f)No Investment.  Any amounts received pursuant to the Liquidity Facility, if any, or as remarketing proceeds will be held uninvested.

(g)Substitution of Procedure Times.  Any times specified in Sections 6.03 and 6.06 may be modified pursuant to (i) a Series Certificate Agreement applicable to any Series of Certificates or (ii) written agreement executed by Freddie Mac, the Administrator and the Remarketing Agent, provided notice of any such agreement is provided to the Registered Holders of Certificates.

Section 6.07Right of Holder to Elect to Retain Reset Rate Class A Certificates Upon the Occurrence of Certain Mandatory Tender Events.  (a)  If the Reset Rate Class A Certificates are subject to Mandatory Tender in connection with (a) a Term Effective Date (that is not a Reset Rate Method Change Date), (b) a Reset Rate Method Change Date relating to a change (but not a continuation) in the Reset Rate Method from a Weekly Reset Rate Method or a Monthly Reset Rate Method to a Monthly Reset Rate Method or a Term Reset Rate Method, (c) a Reset Rate Method Change Date relating to a change (but not a continuation) in the Reset Rate Method from a Term Reset Rate Method or a Monthly Reset Rate Method to a Weekly Reset Rate Method or Monthly Reset Rate Method, (d) the date on which the Sponsor assigns its duties to a successor Sponsor pursuant to Section 3.08 or (e) the date on which an amendment to the Standard Terms described in Section 12.01(b) becomes effective, the Reset Rate Class A Certificates owned by each Holder that exercised its right to elect to retain such Reset Rate Class A Certificates in accordance with the requirements of subsection (b) below will not be subject to Mandatory Tender.

(b)In order to elect to retain such Holder must deliver (or cause its DTC Participant to deliver, as required) to the principal office of the Administrator, a Retention Notice by no later 

 

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than 12:00 noon on the third Business Day prior to the Mandatory Tender Date.  The Administrator will give a copy of each Retention Notice received by it to the Remarketing Agent and Freddie Mac, by Electronic Notice, promptly confirmed in writing by mailing a copy thereof, not later than the Business Day following the Business Day on which the Administrator receives such notice.  Upon receipt by the Administrator of a Retention Notice, the related Reset Rate Class A Certificates will no longer be subject to the applicable Mandatory Tender.

Section 6.08Sole Sources of Payment of Purchase Price.  The sole sources of payment of the Purchase Price of any Tendered Class A Certificates, Reset Rate Class A Certificates subject to Mandatory Tender, and Reset Rate Class A Certificates with respect to which the Holders thereof have exercised the Optional Disposition Right will be (a) proceeds from the remarketing of Available Remarketing Class A Certificates, to the extent available, (b) with respect to Class A Certificates subject to Mandatory Tender as a result of a Special Adjustment Event as described in Section 7.02 only, the Pledge Custodian or the Sponsor, and (c) amounts received under the Liquidity Facility, if applicable, as further described in Section 6.06(a)(1) and (2).

Article VII
TENDER OPTION TERMINATION EVENTS AND CERTAIN MANDATORY TENDER EVENTS; OPTIONAL DISPOSITION RIGHt

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

(i)there shall have occurred (A) a failure to pay when due any installment of principal of or premium, if any, or interest with respect to any Bonds (whether by scheduled maturity, regular repayment, acceleration, demand or otherwise), and (B) a failure by Freddie Mac to pay under the Credit Enhancement set forth in Section 4.11, which failure or failures continue for a period of three (3) Business Days;

(ii)upon the entry of any decree or judgment by a court of competent jurisdiction or the taking of any official action by the Internal Revenue Service or the Department of the Treasury, which decree, judgment or action is deemed final under applicable procedural law, and which has the effect of a determination that the interest on any of the Bonds is includable in the gross income of the recipients thereof for federal income tax purposes; or

(iii)if the rating of the long-term senior debt of Freddie Mac is reduced below “investment grade” (being “Baa3” in the case of Moody’s and “BBB-” in the case of Fitch and S&P) by each such Rating Agency rating such debt.

When the Administrator has Knowledge of a Tender Option Termination Event it will promptly give the Remarketing Agent, Registered Holders, the Sponsor and each applicable Rating Agency a Tender Option Termination Notice with respect thereto by Electronic Notice, promptly confirmed by mailing a copy thereof.  The Tender Option Termination Notice will set forth (1) a description of the Tender Option Termination Event that has occurred and a 

 

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description of the Affected Bonds, (2) the date when such Tender Option Termination Event occurred, (3) a schedule, prepared by Freddie Mac, of the Bonds, if any, that will remain after the complete or partial liquidation of the Series Pool and required distributions have been effected on the related Exchange Date, and (4) a schedule, prepared by Freddie Mac, of the amounts of Class A Certificates and Class B Certificates, and of the Liquidity Commitment, that will remain after the complete or partial liquidation of the Series Pool and after all required distributions have been effected on the related Exchange Date.

The Administrator will have no duty or obligation to ascertain whether any Tender Option Termination Event described therein occurred; and provided further, that neither the failure to give notice of any Tender Option Termination Event to the Administrator, the failure of the Administrator to give such notice to any Registered Holder, nor the failure of any Holder to receive such notice, will delay or affect in any manner the termination of the right of Class A Holders to exercise the Tender Option with respect to any Affected Certificate.

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

If a Tender Option Termination Event under (iii) above relating to a downgrade of Freddie Mac’s long-term senior debt occurs, upon three (3) Business Days of receiving notice of the occurrence of the Tender Option Termination Event, Registered Holders representing 100% of the Certificates outstanding may elect to waive the occurrence of the Tender Option Termination Event by sending written notice (which may be Electronic Notice) of their election to waive the occurrence of the Tender Option Termination Event to the Administrator and the Sponsor. If the Administrator receives the notice referred to in the previous sentence, the Tender Option Termination Event shall be deemed to not have occurred and the scheduled Exchange Date relating to such Tender Option Termination Event shall be cancelled.

Section 7.02Special Adjustment Event.  (a)  Freddie Mac will have the right to cause a Mandatory Tender in part of the Class A Certificates (i) upon the Pledge Custodian’s receipt of any principal paid with respect to any “Class B Certificates” of another designated Series with respect to such Certificates; provided that in such event, the aggregate Current Certificate Balance of Class A Certificates subject to Mandatory Tender will equal the amount of such principal received by the Pledge Custodian as of the tenth Business Day of the month (rounded down to the nearest $5,000 increment) which, at the direction of Freddie Mac, is to be remitted to the Administrator on or before the related Mandatory Tender Date or (ii) when any event permitting a Special Adjustment Event described in the provisions of the Reimbursement Agreement occurs, in which case the aggregate Current Certificate Balance of Class A Certificates subject to Mandatory Tender will equal the amount needed to satisfy such provisions of the Reimbursement Agreement.  The Series Certificate Agreement will designate the other series pool from which payments of principal on “Class B Certificates” will generate a Special Adjustment Event.

(b)When any Special Adjustment Event occurs with respect to which Freddie Mac exercises its right to cause a Mandatory Tender, Freddie Mac will give a Special Adjustment Event Notice to the Administrator, each applicable Rating Agency, and the Remarketing Agent by Electronic Notice, promptly confirmed by mailing a copy thereof.  The Special Adjustment Event Notice will set forth (i) a brief statement describing the Special Adjustment Event, (ii) the 

 

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aggregate Current Certificate Balance of Reset Rate Class A Certificates to be Selected by Lot which will be subject to Mandatory Tender, and (iii) the Special Adjustment Date specified by Freddie Mac on which Reset Rate Class A Certificates so Selected by Lot will be subject to Mandatory Tender, which date may not be earlier than five (5) nor later than ten (10) Business Days after that the Administrator provides notice to the Holders as described in the following sentence.  Not later than 5:00 p.m. on the second Business Day following the date on which a Special Adjustment Event Notice is received by the Administrator, the Administrator will give to Registered Holders Selected by Lot a Mandatory Tender Notice.  Any Special Adjustment Event Notice executed by Freddie Mac under the Series Certificate Agreement will become irrevocable when the related Mandatory Tender Notice is given by the Administrator to the Registered Holders Selected by Lot.  Pledged Class A Certificates existing at the time of such Mandatory Tender will not be subject to Mandatory Tender as a result of the Special Adjustment Event.

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

(d)If a Special Adjustment Event occurs due to certain events under the Reimbursement Agreement, the Sponsor will purchase from the applicable Holders of Reset Rate Class A Certificates, the Reset Rate Class A Certificates tendered on the related Mandatory Tender Date, with such purchase to occur no later than 3:00 p.m. on such Mandatory Tender Date.

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

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

Section 7.03Liquidity Provider Termination Event; Credit Provider Termination Event.  

(a)When any Liquidity Provider Termination Event occurs with respect to which Freddie Mac (subject to Section 7.1 of the Reimbursement Agreement) exercises its right to cause a Mandatory Tender, Freddie Mac will give a Liquidity Provider Termination Notice to the Administrator, the Remarketing Agent, the Sponsor and each applicable Rating Agency by Electronic Notice, promptly confirmed by first class mail, which notice will set forth (i) a brief statement describing the Liquidity Provider Termination Event giving rise to such termination, and (ii) the Mandatory Tender Date specified by Freddie Mac on which the Reset Rate Class A Certificates will be subject to Mandatory Tender, which date will be no earlier than five (5), nor later than ten (10), Business Days after the Administrator provides notice to the Holders, as described in the following sentence.  Not later than 5:00 p.m. on the second Business Day 

 

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following the date on which a Liquidity Provider Termination Notice is received by the Administrator, the Administrator will give to the Registered Holders a Mandatory Tender Notice.  Any Liquidity Provider Termination Notice executed by Freddie Mac under the Series Certificate Agreement will become irrevocable when the related Mandatory Tender Notice is given by the Administrator to the Registered Holders.

(b)When any Credit Provider Termination Event occurs with respect to which Freddie Mac (subject to Section 7.1 of the Reimbursement Agreement) exercises its right to cause a Mandatory Tender, Freddie Mac will give a Credit Provider Termination Notice to the Administrator, the Remarketing Agent, the Sponsor and each applicable Rating Agency by Electronic Notice, promptly confirmed by first class mail, which notice will set forth (i) a brief statement describing the Credit Provider Termination Event giving rise to such termination, and (ii) the Mandatory Tender Date specified by Freddie Mac on which the Term Extended Rate Class A Certificates or LIBOR Index Rate Class A Certificates, as applicable, will be subject to Mandatory Tender, which date will be no earlier than five (5), nor later than ten (10), Business Days after the Administrator provides notice to the Holders, as described in the following sentence.  Not later than 5:00 p.m. on the second Business Day following the date on which a Credit Provider Termination Notice is received by the Administrator, the Administrator will give to the Registered Holders a Mandatory Tender Notice.  Any Credit Provider Termination Notice executed by Freddie Mac under the Series Certificate Agreement will become irrevocable when the related Mandatory Tender Notice is given by the Administrator to the Registered Holders.

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

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

Section 7.05Optional Disposition Date.  (a)  The Class A Certificates may be tendered at a price equal to the Optional Disposition Price on any Optional Disposition Date, in accordance with the following provisions.  On any Optional Disposition Date, any Holder of Class A Certificates (other than Affected Certificates or Pledged Class A Certificates), which has held such Class A Certificates for at least one year, may tender any of its Class A Certificates for a price equal to the Optional Disposition Price.  To tender its Class A Certificates, the Holder 

 

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must submit a notice to the Administrator and its DTC Participant (if the DTC System is in effect) at least five (5) Business Days before the related Optional Disposition Date stating that such Holder is the Holder of a specified Current Certificate Balance of Class A Certificates, that it is exercising its right to tender such Class A Certificates in exchange for the Optional Disposition Price and its identity.  Within one Business Day after it receives an optional disposition notice, the Administrator will notify the Remarketing Agent and Freddie Mac of its receipt.  Unless otherwise directed by Freddie Mac, and if applicable to the Series Pool, the Remarketing Agent will attempt to remarket all Class A Certificates tendered pursuant to the Optional Disposition Right, for settlement on the related Optional Disposition Date.

(b)On any Business Day not earlier than 10 Business Days before an Optional Disposition Date, any Holder of Class A Certificates may request a valuation of the Bonds from the Remarketing Agent (or the Servicer to the extent the Class A Certificates are in the Term Extended Rate or LIBOR Index Rate).  The Remarketing Agent or the Servicer, as applicable, will then determine such valuation for such Business Day in the manner specified in the definition of “Hypothetical Gain Share”.  Such valuation will be provided to any such Holder solely for informational purposes and will be non-binding on any Person.

(c)On the Optional Disposition Date, the Class A Certificates tendered pursuant to the Optional Disposition Right will be surrendered by the related Holders to the Administrator.  Such Holders of Class A Certificates will be paid the Optional Disposition Price for such Class A Certificates consisting of the Purchase Price of such Certificates and the related Hypothetical Gain Share.  The Purchase Price will be paid in accordance with Section 6.06 of the Standard Terms, and the Hypothetical Gain Share, as calculated by Freddie Mac, will be paid from (i) first, amounts provided to the Administrator by the Holders of Class B Certificates, at their election, after inquiry by the Administrator, and (ii) second, sales of Bonds selected by Freddie Mac, but only to the extent necessary to pay such Hypothetical Gain Share (subject to applicable Authorized Denomination provisions), and in no event in an aggregate principal amount exceeding the aggregate Current Certificate Balance of the Class A Certificates tendered pursuant to the Optional Disposition Right.  To the extent any Bonds are sold to pay either the Purchase Price of Term Extended Rate Class A Certificates or LIBOR Index Rate Class A Certificates in accordance with Section 6.06(a)(vi) or to pay Hypothetical Gain Share as aforesaid, the aggregate Current Certificate Balance of such Class A Certificates so tendered will be adjusted downward by the Administrator’s cancellation of such Class A Certificates in an amount equal to the aggregate principal amount of Bonds sold, such that the Aggregate Outstanding Certificate Balance does not exceed the Aggregate Outstanding Bond Balance, and, if applicable, only such reduced amount of Class A Certificates will be available for remarketing on the related Optional Disposition Date.

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

 

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

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

Article VIII
THE REMARKETING AGENT

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

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

(b)At the written request of Freddie Mac, the Remarketing Agent may be removed, without cause, upon 10 days’ written notice from the Administrator.  Upon any such removal of the Remarketing Agent, Freddie Mac will promptly appoint in writing a successor Remarketing Agent.

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

Section 8.03Successor Remarketing Agent.  (a)  Any successor Remarketing Agent appointed as provided in Section 8.02 will execute, acknowledge and deliver to the Administrator, and to its predecessor Remarketing Agent, an instrument accepting such appointment under the Series Certificate Agreement and the Remarketing Agreement, and when accepted, such successor Remarketing Agent, without any further act, will become fully vested as Remarketing Agent as if originally named.  The predecessor Remarketing Agent will deliver 

 

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to the successor Remarketing Agent all documents held by it under the Series Certificate Agreement, and the Administrator and the predecessor Remarketing Agent will execute and deliver such instruments, and do such other things, as may reasonably be required to confirm the new appointment.

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

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

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

Article IX
EVENTS OF DEFAULT AND RIGHTS AND REMEDIES OF HOLDERS

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

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

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

Section 9.02Remedies.  (a)  If an Event of Default occurs and continues, then the Holders representing a majority of the then Current Certificate Balance of any affected Class of Certificates may, by written notice to Freddie Mac, remove the Administrator and nominate a successor Administrator under the Series Certificate Agreement, which nominee will be deemed appointed as successor Administrator unless within 10 days after such nomination Freddie Mac objects, in which case Freddie Mac may petition any court of competent jurisdiction for the appointment of a successor Administrator, or any Holder, which has been a bona fide Holder of 

 

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any affected Class for at least six months may, on behalf of such Holder and all others similarly situated, petition any such court for appointment of a successor Administrator.  Such court may thereupon, after such notice, if any, as it may deem proper, appoint a successor Administrator.

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

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

Article X
THE ADMINISTRATOR; HOLDERS’ LISTS AND REPORTS; BONDHOLDER REPRESENTATIVE

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

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

(iii)In the absence of gross negligence or willful misconduct on its part, the Administrator may conclusively rely upon certificates or opinions furnished to the Administrator and conforming to the requirements of the Series Certificate Agreement; provided, that, as to the truth of the statements and the correctness of the opinions expressed therein in the case of any such certificates or opinions which by any provision of the Series Certificate Agreement are 

 

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specifically required to be furnished to the Administrator, the Administrator will be under a duty to examine those opinions or certificates to determine whether or not they conform to the requirements of the Series Certificate Agreement.

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

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

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

(c)No provision of the Series Certificate Agreement will require the Administrator to expend or risk its own funds, or otherwise to incur any financial liability in the performance of any of its duties under the Series Certificate Agreement, or in the exercise of any of its rights or powers, if it has reasonable grounds for believing that repayment of such funds, or adequate indemnity against such risk or liability, is not reasonably assured to it.  However, the Administrator agrees to perform and continue performing fully its duties under any other provision of the Series Certificate Agreement even following any Person’s failure to perform any repayment or indemnity obligation owed to the Administrator by such Person as described in this Section 10.01(c) or in the event the Administrator Fee is not paid in accordance with Section 4.03; but such performance will not be deemed a waiver of the Administrator’s right to repayment or indemnity or the payment of the Administrator Fee.

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

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

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

Section 10.02Notice of Non-Monetary Default.  The Administrator will transmit notice of the occurrence of any Non-Monetary Default known to the Administrator, (a) by Electronic Notice to Freddie Mac, the Sponsor, the Remarketing Agent, if any, and each applicable Rating Agency promptly upon the Administrator’s Knowledge of such Non-Monetary Default and, in any event, within one Business Day after such Non-Monetary Default has 

 

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become known to the Administrator, and (b) by first class mail to all Holders of Certificates, as their names and addresses appear in the Certificate Register, within five Business Days after the Administrator’s Knowledge of such Non-Monetary Default.

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

(a)the Administrator may rely, and will be protected in acting or refraining from acting, (i) upon any document or facsimile transmission believed by it to be genuine and to have been signed or presented by the proper party or parties, or (ii) following consultation, upon any advice of counsel;

(b)the Administrator will be under no obligation to exercise any of the rights or powers vested in it by the Series Certificate Agreement (other than with respect to the Administrator’s obligation to make demands on the Liquidity Facility, if applicable, or the Credit Enhancement at the request or direction of any of the Holders of Class A Certificates pursuant to the Series Certificate Agreement), unless such Holders of Class A Certificates have offered to the Administrator reasonable security or reasonable indemnity against the costs, expenses and liabilities which might be incurred by it in comply with such request or direction;

(c)the Administrator will not be liable for any action that it takes or omits to take in good faith and, in the absence of gross negligence or willful misconduct, that it believes to be authorized or within its rights or powers.

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

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

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

Section 10.06Corporate Administrator Required; Eligibility.  The Administrator, if other than Freddie Mac, must have the following qualifications.  It (i) will be either (1) a bank or trust company organized, in good standing and doing business under the laws of the State of New York or (2) a national banking association organized, in good standing and doing business under the laws of the United States of America with its principal place of business located in the State of New York, in either case, reasonably acceptable to Freddie Mac, (ii) will be authorized under such laws to exercise corporate trust powers, (iii) will have a combined capital and surplus 

 

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of at least $50,000,000, (iv) will be subject to supervision or examination by Federal or State banking authority, (v) will be a member of the Federal Reserve System and (vi) will not be or be affiliated (within the meaning of Rule 405 under the Securities Act) with any of Freddie Mac, the Remarketing Agent, any Class B Holder, or with an Affiliate of any of the foregoing.  If such Administrator publishes reports of conditions at least annually, pursuant to law or the requirements of such supervising or examining authority, then for the purposes of this paragraph, the combined capital and surplus of such Administrator will be deemed to be its combined capital and surplus as set forth in its most recently published report of condition.  If at any time the Administrator ceases to be eligible in accordance with the provisions of this Section 10.06, it will resign immediately in the manner and with the effect specified in Article X.

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

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

(i)No resignation or removal of the Administrator, and no appointment of a successor Administrator pursuant to this Article X, will become effective until the successor Administrator has accepted its appointment under this Section 10.07(b).

(ii)The Administrator, or any Administrator or Administrators appointed as successors, may resign at any time by giving written notice of resignation to Freddie Mac, the Sponsor, the Remarketing Agent and each applicable Rating Agency, and by mailing notice of resignation to Registered Holders of the Certificates at their addresses appearing on the Certificate Register. Upon receiving notice of resignation, Freddie Mac will promptly appoint a successor Administrator or Administrators by delivering a Depositor Order to both the resigning Administrator and the successor administrator.  If no successor administrator has been appointed and has accepted its appointment within 30 days after the giving of such resignation notice, the resigning Administrator may petition any court of competent jurisdiction for the appointment of a successor Administrator, or any Holder of a Certificate may, subject to Section 10.07(b)(vii), petition any such court for the appointment of a successor Administrator.  Such court may, after receiving such notice, if any, as it may deem proper, appoint a successor administrator.

(iii)If at any time:

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

 

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

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

(iv)At any time Freddie Mac may, upon five days’ written notice to the Administrator, and with or without cause, remove the Administrator and appoint a successor Administrator.

(v)If the Administrator is removed or if a vacancy occurs in the office of the Administrator for any cause, Freddie Mac will promptly appoint in writing a successor Administrator.  If no successor administrator is so appointed and accepts its appointment as provided below within 30 days any Holder may petition any court of competent jurisdiction to appoint a successor administrator.  Such court may thereupon, after such notice, if any, as it may deem proper, appoint a successor administrator.

(vi)Freddie Mac will give notice of each removal of the Administrator, and each appointment of, and the acceptance of its duties by, a successor administrator by mailing notice of such event to the Registered Holders, and by Electronic Notice to the Remarketing Agent, the Sponsor and each applicable Rating Agency.

(vii)Every successor Administrator appointed under the Series Certificate Agreement will, within 10 days of its appointment, execute, acknowledge and deliver to Freddie Mac, the Sponsor and its predecessor Administrator an instrument accepting such appointment, and thereupon the resignation or removal of the predecessor Administrator will become effective, and such successor administrator, without any further act, deed, or conveyance, will become vested with all the rights, powers, duties and obligations of its predecessor under the Series Certificate Agreement.  All Assets, relevant legal documents and records held by the predecessor Administrator in such circumstance will be transferred to the successor Administrator.

(viii)No successor Administrator will accept its appointment unless, at the time of such acceptance, such successor administrator is qualified and eligible under Section 10.06 and satisfies the requirements for a “trustee” under Section 26(a)(1) of the Investment Company Act.

 

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

(i)afford such Holder access to the information regarding the names and addresses of all other Holders (to the extent that the Administrator can ascertain the identity of the beneficial owners without expense (or in the case of the Sponsor, the Sponsor's payment of such expenses) and through the use of commercially reasonable methods), or

(ii)inform the requesting Holder(s) of the approximate number of Holders (to the extent that the Administrator can ascertain the identity of the beneficial owners without expense (or in the case of the Sponsor, the Sponsor's payment of such expenses), and as to the approximate cost of mailing to such Holders the form of proxy or other communication, if any, specified in such written request.

If the Administrator does not allow the requesting Holder(s) access to the information described in subsection (i) above, the Administrator will, upon the written request of such Holder(s), mail to each current Holder a copy of the form of proxy or other communication that is specified in such request, with reasonable promptness, upon the Administrator’s receipt of the material to be mailed and payment of the reasonable mailing expenses.  The Holder(s) requesting such mailing will be solely responsible for complying with any state and Federal securities laws and regulations regarding any communication pursuant to this Section, and the Administrator will have no responsibility in that regard.  At the request of Freddie Mac, a requesting Holder may be required to provide an Opinion of Counsel that all securities laws have been complied with in connection with any such mailing.

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

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

 

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Facility, if applicable, in accordance with the terms hereof, the Administrator will solicit from each Holder of the Certificates instead of the Bondholder Representative its proxy for any such vote, consent or direction in favor of and returnable to the Administrator, which will vote, consent or otherwise take direction solely in accordance with such proxies, weighted by the Current Certificate Balance of each Holder providing the same.  The Administrator shall have no liability for any failure to act resulting from the late return of, or failure to return, any such proxy sent by the Administrator to a Holder.

Article XI
PROFITS AND LOSSES

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

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

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

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

 

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

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

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

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

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

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

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

(b)(1)   In connection with the occurrence of a Tender Option Termination Event and immediately prior to the distribution of the Bonds, Affected Bonds or sales proceeds, as 

 

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applicable, to the Holders, both Losses and Capital Losses will be allocated: (i) first, to the Holders of the Affected Class A Certificates and Affected Class B Certificates on a pro rata basis in proportion to the Aggregate Outstanding Certificate Balances until their Capital Account Balances have been reduced to zero; and (ii) thereafter, to the Sponsor.

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

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

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

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

(b)(i)    Notwithstanding anything to the contrary contained in this Article XI, if there is a net decrease in “partnership minimum gain” within the meaning of Section 1.704-2(d)(1) of the Regulations during any Fiscal Year, each Holder who has a share of the partnership minimum gain will be specially allocated items of Series Pool income and gain in an amount equal to such Holder’s share of the net decrease in partnership minimum gain, subject to any modifications deemed appropriate by Freddie Mac to comply with the minimum gain chargeback requirement of Section 1.704-2(f) of the Regulations.  This subsection is intended to comply with the “partnership minimum gain chargeback” requirement of Section 1.704-2(f) of the Regulations and will be interpreted consistently therewith.

(ii)Notwithstanding anything to the contrary contained in this Article XI, except as otherwise provided in Section 1.704-2(i)(4) of the Regulations, if there is a net decrease in “partner nonrecourse debt minimum gain” within the meaning of Section 1.704-2(i)(3) of the Regulations, attributable to “partner nonrecourse debt” within the meaning of Section 1.704-2(b)(4) of the Regulations during any Fiscal Year, each Holder who has a share of 

 

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the partner nonrecourse debt minimum gain attributable to such partner nonrecourse debt, determined in accordance with Section 1.704-2(i)(5) of the Regulations, will be specially allocated items of Series Pool income and gain for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount equal to such Holder’s share of the net decrease in partner nonrecourse debt minimum gain attributable to such partner nonrecourse debt, determined in accordance with Section 1.704-2(i)(4) of the Regulations.  Allocations pursuant to the previous sentence will be made in proportion to the respective amounts required to be allocated to each Holder pursuant thereto.  The items to be so allocated will be determined in accordance with Sections 1.704-2(i)(4) and 1.704-2(j)(2) of the Regulations.  This subsection is intended to comply with the “partner minimum gain chargeback” requirement of Section 1.704-2(i)(4) of the Regulations and will be interpreted consistently therewith.

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

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

(e)If the Partnership Factors apply, notwithstanding any other provision of the Series Certificate Agreement, during each Fiscal Year the Sponsor will be allocated a percentage of Profits, Capital Gains, Market Discount Gain, Losses and Capital Losses, and of each other item of income, gain, loss, deduction or credit not less than the Minimum Sponsor Percentage.

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

 

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

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

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

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

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

Section 11.08Tax Matters; Tax Election.  It is the intention of the parties that the Series Pool will be classified as a partnership for all Federal, state and local tax purposes.  Each Holder and transferee of Certificates acknowledges that it will treat the Series Pool as a partnership for Federal, State and local income tax purposes and that it intends and expects to be treated as a partner for such purposes.  No Person is authorized to elect under Section 301.7701-3(c) of the Regulations or any applicable State or local law to have the Series Pool classified as a corporation for Federal or any applicable State or local income tax purposes.  Freddie Mac will have the discretion to make, or if necessary, to instruct the Administrator to take the necessary steps to make, a Monthly Closing Election on behalf of the Series Pool, in which case the Sponsor and each Holder of Certificates (by their purchase of Certificates) will be deemed to have consented to the Monthly Closing Election.  The Series Pool, the Sponsor and each Holder of Certificates (by their purchase of Certificates) agrees to comply with any special tax reporting requirements applicable to the Monthly Closing Election.  Additionally, Freddie Mac may at its discretion and to the extent permitted by applicable law, file a Section 761 Election to exclude the Series Pool from the application of all of the provisions of Subchapter K of Chapter 1 of the Code.  Each Holder, by virtue of acquiring a Certificate in a Series of Certificates, consents, pursuant to Section 761 of the Code, to the Section 761 Election.  The Sponsor will be liable for any penalties and interest on penalties imposed on the Series Pool relating to the Section 761 Election.  The parties hereto agree that Freddie Mac will not act as or be deemed to be a partner 

 

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for Federal, state or local tax purposes by virtue of its execution and delivery of the Liquidity Facility, if applicable.  Freddie Mac agrees to timely file the necessary or appropriate elections and all tax returns and tax reports consistent with and based upon this Section 11.08 and neither Freddie Mac nor any Holder will take any position on any tax return or report or in any proceeding or audit which is inconsistent with this Section 11.08.

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

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

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

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

 

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Article XII
AMENDMENTS

Section 12.01Amendments.  (a)  Except as provided in Section 12.01(b), without the consent of the Holders of any Class A Certificates, the Standard Terms and the Series Certificate Agreement may be amended if the conditions provided in Section 12.01(c) have been satisfied.  When Freddie Mac gives the Administrator a Depositor Order, the Administrator will enter into any amendment permitted by the Series Certificate Agreement if the Administrator determines the amendment is in acceptable form.

(b)(i)To the extent the Class A Certificates are bearing interest under a Reset Rate Method, the Standard Terms may be amended in order to amend any of the provisions relating to (i) distributions and payments from the Distribution Account and Bond Payment Subaccounts, (ii) the determination of the Reset Rate and changes in the Reset Rate, (iii) the Tender Option or Tender Option Termination Events or (iv) this Section 12.01(b), if the conditions provided in Section 12.01(c) have been satisfied, provided, that (x) such amendments will be subject to the consent of the Holders of Class A Certificates, which consent will be evidenced by executing a Retention Notice, and (y) Holders of Class A Certificates that do not consent to such amendments by executing a Retention Notice will have their Certificates subject to Mandatory Tender.

(ii)To the extent the Class A Certificates are bearing interest at a Term Extended Rate or a LIBOR Index Rate, the Standard Terms may be amended in order to amend any of the provisions relating to (i) distributions and payments from the Distribution Account and Bond Payment Subaccounts, (ii) the determination of the Reset Rate and changes in the Reset Rate, (iii) the Tender Option or Tender Option Termination Events or (iv) this Section 12.01(b), if the conditions provided in Section 12.01(c) have been satisfied and the Holders of the Class A Certificates have provided their prior written consent to such amendment.

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

(c)No amendment to the Standard Terms or the Series Certificate Agreement will be effective without the written consent of the Sponsor and until all of the following conditions have been satisfied:

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

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

(iii)The Administrator will provide notice of any proposed amendment to the Registered Holders at least 20 days prior to the effective date of such amendment.  In the 

 

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case of an amendment that is not a Section 12.01(b) amendment, if the Reset Rate is a Monthly Reset Rate, and the next Purchase Date or Mandatory Tender Date will occur either (i) after the proposed effective date of such amendment, or (ii) before the date which is 10 Business Days after the Registered Holders receive notice of such amendment, then Holders of Reset Rate Class A Certificates will be permitted to treat the Business Day preceding the proposed effective date of such amendment as a Purchase Date for purposes of exercising their Optional Tender.  In the case of a Section 12.01(b)(i) amendment, Holders of Reset Rate Class A Certificates who elect to retain their Reset Rate Class A Certificates, in accordance with Section 6.07 of the Standard Terms, will be deemed to have consented to the related amendment; and

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

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

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

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

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

 

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Article XIII
TERMINATION

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

(i)the Series Expiration Date;

(ii)the Exchange Date on which all Certificates are exchanged for either Bonds or sales proceeds in connection with a Tender Option Termination Event, a Credit Failure or a Liquidity Failure;

(iii)the Mandatory Tender Date arising in connection with a Liquidity Provider Termination Event (if applicable), a Credit Provider Termination Event (if applicable), a Clean-Up Event, or, if applicable, following a Sponsor Act of Bankruptcy or, if Freddie Mac does not provide the Purchase Price on such Mandatory Tender Date but provides the Purchase Price on or before the third Business Day after such Mandatory Tender Date then such date the Purchase Price is provided by Freddie Mac (collectively, a “Terminating Mandatory Tender Date”); or

(iv)the date on which the Optional Disposition Right has been exercised with respect to the last Class A Certificate (unless such Class A Certificate has been remarketed).

Any termination of the Series Certificate Agreement on the Series Expiration Date will be effected as provided in Section 13.02.  Any termination of the Series Certificate Agreement on the Exchange Date following the occurrence of a Tender Option Termination Event will be effected as provided in Sections 7.01 and 13.04.  Any termination of the Series Certificate Agreement on the Exchange Date following the occurrence of a Liquidity Failure will be effected as described in as provided in Sections 6.06(c)(iii), 13.01(b) and 13.04.  Any termination of the Series Certificate Agreement upon the occurrence of a Terminating Mandatory Tender Date will be effected as provided in Sections 13.01(b) and 13.03.  Any termination of the Series Certificate Agreement on the date on which the Optional Disposition Right has been exercised with respect to the last Class A Certificate described above will be effected as provided in Sections 7.05 and 13.01(b).  The Administrator will promptly provide notice to Freddie Mac, the Sponsor, the Remarketing Agent, if any, and each applicable Rating Agency of any Series Termination Event.  For the avoidance of doubt, whenever Bonds are required to be sold as provided in this Article XIII, the Bonds will be sold to any Holder of the Class B Certificates or the Sponsor, in that order, if such Holder of the Class B Certificates or the Sponsor, as applicable, commits to purchase the Bonds at a price that is at least the Commitment Price or the highest bid at such sale, as applicable.

 

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

(c)So long as the Sponsor (or a permitted transferee under Section 2.06 hereof) maintains the Minimum Sponsor Interest and a Series Termination Event has not occurred, the Series Pool will continue in full force and effect.  The Series Pool will not terminate prior to the occurrence of a Series Termination Event.

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

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

(b)Even after the Series Certificate Agreement terminates on the Series Expiration Date, any funds not distributed to any Holder of Certificates on the Redemption Date established for the final distribution on such Certificates because of the failure of such Holder to tender its Certificates will, on such Redemption Date, be set aside and credited to the account of the applicable non-tendering Holder.  If any Certificates as to which notice of the pendency of the final distribution has been given as described in the second preceding paragraph have not been surrendered for cancellation within six months after the time specified in such notice, the Administrator will mail a second notice to the remaining non-tendering Holders to surrender their Certificates for cancellation in order to receive the final distribution with respect to their Certificates.  If within one year after the second notice all Certificates have not been surrendered for cancellation, the Administrator will, directly or through an agent, make a reasonable effort to contact the remaining non-tendering Holders concerning surrender of their Certificates.  The costs and expenses of maintaining the funds and of contacting such Holders will be paid out of the assets remaining in such funds prior to any distribution to such Holders.  If within two years after the second notice any Certificates have not been surrendered for cancellation, the 

 

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Administrator will thereafter hold such amounts for the benefit of such Holders, subject to any applicable escheat statutes.  Any amounts held as described above will not be invested.  No interest will accrue or be payable to any Holder on any amount held as a result of the Holder’s failure to surrender its Certificates for final payment in accordance with this paragraph.

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

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

(b)By the close of business on the related Terminating Mandatory Tender Date, the Administrator will liquidate the Series Pool in accordance with the following provisions.  On the second Business Day immediately preceding the Terminating Mandatory Tender Date, the Administrator will solicit three bids to purchase the Bonds from Persons other than the Specified Parties and which customarily provide such bids, including but not limited to investment dealers and brokers that customarily deal in municipal bonds, determined for the Business Day immediately preceding the Terminating Mandatory Tender Date.

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

(d)The Administrator will pay the Purchase Price of the Class A Certificates in accordance with Section 6.06(c)(ii).  Additionally, the Administrator will calculate and pay Hypothetical Gain Share, if any, to the Holders of Class A Certificates tendered on the Terminating Mandatory Tender Date from (i) first, amounts provided by the Holders of Class B Certificates to the Administrator on such Terminating Mandatory Tender Date at their election after inquiry by the Administrator and (ii) second, from sales proceeds as described in Section 13.03(c).

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

 

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(f)For the avoidance of doubt, Section 13.03 shall not apply if there is a Credit Failure by Freddie Mac with regards to the Mandatory Tender Date.

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

(b)Failure to Pay, Liquidity Failure, Credit Failure or Tender Option Termination Event Relating to Rating Downgrade.  If the Exchange Date arises from a Liquidity Failure, Credit Failure or a Tender Option Termination Event described in Sections 7.01(a)(i) or 7.01(a)(iii) hereof, the following provisions will govern.

(i)On the Business Day immediately preceding such Exchange Date, the Administrator will solicit at least three commitments to purchase the Bonds from Persons, other than Specified Parties, which customarily provide such bids, including but not limited to investment dealers and brokers that customarily deal in municipal bonds.  In the case of either a Liquidity Failure, Credit Failure or a Tender Option Termination Event described in Sections 7.01(a)(i) or 7.01(a)(iii) hereof, if the Bonds can be sold for a price that is at least equal to the sum of the amounts specified in clauses (A) through (C) of the next subparagraph (the “Total Termination Required Exchange Price”), the Series Pool will be liquidated in accordance with the provisions of Section 13.04(b)(ii).  In the case of a Tender Option Termination Event under Section 7.01(a)(i) or a Credit Failure, if the Affected Bonds cannot be sold for a price that is at least equal to the Total Termination Required Exchange Price, the Series Pool will be liquidated in accordance with the provisions of Section 13.04(b)(iii).  In the case of either a Liquidity Failure or a Tender Option Termination Event described in Section 7.01(a)(iii) hereof, if the Bonds cannot be sold for a price that is at least equal to the Total Termination Required Exchange Price, Freddie Mac will elect that the Bonds be subject to mandatory purchase from the Series Pool at the Release Purchase Price and declare a Release Event for such purpose, and the Administrator will distribute the proceeds from such funding of such Release Event in the order provided in Section 13.04(b)(ii).  If there is any failure in the funding of such Release Event which failure continues for a period of three (3) Business Days, the Series Pool will be liquidated in accordance with the provisions of Section 13.04(b)(iii).

(ii)If the Bonds can be sold for a price that is at least equal to the Total Termination Required Exchange Price, the Administrator will sell the Bonds on the Exchange Date to the party that has committed, by the close of the Administrator’s business on the Business Day preceding the Exchange Date, to purchase the Bonds at the Commitment Price; however, if any Specified Party commits to purchase the Bonds at a price that is at least the Commitment Price, the Bonds will be sold to such Specified Party, with priority given, first, to Holders of Class B Certificates, and second to the Sponsor, and third to Freddie Mac.  Immediately upon the disposition of the Bonds in accordance with this subparagraph, the Administrator will distribute the liquidation proceeds from the sale of Bonds: (A) first, to pay any accrued and unpaid expenses of the Series Pool (including, but not limited to any Administrator Fee, Freddie Mac Fee, 

 

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Administrator Advance, Daily Administrator Advance Charges, Servicing Fee and Remarketing Agent Fee); (B) second, to pay the Holders of Class A Certificates an amount equal to their Current Certificate Balances plus the accrued but unpaid Required Class A Certificate Interest Distribution Amount thereon; (C) third, to pay to the Holders of Class B Certificates an amount equal to their Current Certificate Balance; (D) fourth, to pay to Holders of Class A Certificates the amount of each such Holder’s Capital Account Balance (after taking into account all allocations pursuant to Article XI of these Standard Terms and amounts previously distributed pursuant to clause (B)) as determined by Freddie Mac in accordance with Section 11.02 (generally, Gain Share as calculated pursuant to the Series Certificate Agreement); and (E) fifth, to pay to the Holders of Class B Certificates the amount of each such Holder’s remaining Capital Account Balance (after taking into account all allocations pursuant to Article XI of these Standard Terms and previously distributed pursuant to clause (C)) as determined by Freddie Mac in accordance with Section 11.02 (including Gain Share and Market Discount Share).

(iii)In the case of either (a) a Credit Failure or a Tender Option Termination Event described in Section 7.01(a)(i) hereof and the Bonds cannot be sold for a price that is at least equal to the Total Termination Required Exchange Price or (b) in the case of a Liquidity Failure or a Tender Option Termination Event described in Section 7.01(a)(iii) and the Bonds cannot be sold for a price that is at least equal to the Total Termination Required Exchange Price and the funding of a Release Event does not occur as provided in Section 13.04(b)(i) hereof, the Series Pool will be liquidated as follows on the Exchange Date:

(A)To the extent such amounts are not paid by the Holders of the Class B Certificates, at their election after inquiry by the Administrator, the Administrator will sell a principal amount of such Bond equal to the portion of the Outstanding Bond Balance necessary to generate proceeds sufficient to pay any accrued and unpaid expenses of the Series Pool (including, but not limited to any Administrator Fee, Freddie Mac Fee, Administrator Advances, Daily Administrator Advance Charges and Remarketing Agent Fee), determined by multiplying the sum of such expenses by the ratio of the Outstanding Bond Balance to the Aggregate Outstanding Bond Balance; and

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

(iv)Upon the completion of the distributions required pursuant to Sections 13.04(b)(ii) or 13.04(b)(iii), all Class B Certificates and Class A Certificates will be canceled.

 

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(c)Tender Option Termination Event Relating to Taxability.  (i)  If the Exchange Date arises from a Tender Option Termination Event as described in Section 7.01(a)(ii) hereof, the following provisions will govern.  By the close of business on the Exchange Date, the Administrator will use its best efforts to sell the Affected Bonds.  On the Business Day immediately preceding such Exchange Date, the Administrator will solicit at least three commitments to purchase the Affected Bonds from Persons, other than Specified Parties, which customarily provide such bids, including but not limited to investment dealers and brokers that customarily deal in municipal bonds.  In the case of a Tender Option Termination Event under either Section 7.01(a)(ii), if the Affected Bonds can be sold for a price that is at least equal to the sum of the amounts specified in clauses (A) through (C) of the next subparagraph (the “Partial Termination Required Exchange Price”), the Series Pool will be liquidated in part in accordance with Section 13.04(c)(ii).  In the case of a Tender Option Termination Event under Section 7.01(a)(ii), if the Affected Bonds cannot be sold for a price that is at least equal to the Partial Termination Required Exchange Price, Freddie Mac will elect that the Affected Bonds be subject to mandatory purchase from the Series Pool at the Release Purchase Price and declare a Release Event for such purpose, and the Administrator will distribute the proceeds from such funding of such Release Event in the order provided in Section 13.04(c)(ii).  If there is any failure in the funding of such Release Event which failure continues for a period of three (3) Business Days, the Series Pool will be liquidated in part in accordance with the provisions of Section 13.04(c)(iii).

(ii)If the Affected Bonds can be sold for a price that is at least equal to the Partial Termination Required Exchange Price, the Administrator will sell Affected Bonds on the Exchange Date to the party that has committed, by the close of the Administrator’s business on the Business Day preceding the Exchange Date, to purchase the Affected Bonds at the Commitment Price; however, if any Specified Party commits to purchase the Affected Bonds at a price that is at least the Commitment Price, the Affected Bonds will be sold to such Specified Party, with priority given, first, to Holders of Class B Certificates and second to the Sponsor, and third to Freddie Mac.  Immediately upon the disposition of the Affected Bonds in accordance with this subparagraph, the Administrator will distribute the liquidation proceeds from the sale of Affected Bonds: (A) first, to pay any allocable accrued and unpaid expenses of the Series Pool (including, but not limited to any Administrator Fee, Freddie Mac Fee, Administrator Advances, Daily Administrator Advance Charges, Servicing Fee and Remarketing Agent Fee), determined by multiplying the sum of such expenses by the ratio of the principal balance of the Affected Bonds to the Aggregate Outstanding Bond Balance; (B) second, to pay the Holders of Class A Certificates an amount equal to the sum of (1) the product of the principal balance of the Affected Bonds and the ratio of their Current Certificate Balances to the Aggregate Outstanding Certificate Balance and (2) the accrued but unpaid Required Class A Certificate Interest Distribution Amount thereon; (C) third, to pay to the Holders of Class B Certificates an amount equal to the product of the principal balance of the Affected Bonds and the ratio of their Current Certificate Balances to the Aggregate Outstanding Certificate Balance; (D) fourth, to pay to Holders of Class A Certificates Gain Share determined by Freddie Mac in accordance with Section 11.02; and (E) fifth, to pay the balance to the Holders of Class B Certificates.

 

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(iii)In the case of a Tender Option Termination Event under Section 7.01(a)(ii) hereof, if the Affected Bonds cannot be sold for a price that is at least equal to the Partial Termination Required Exchange Price (and in the case of a Tender Option Termination Event under Section 7.01(a)(ii), the funding of a Release Event does not occur as provided in Section 13.04(c)(i) hereof), the Series Pool will be liquidated in part as follows on the Exchange Date:

(A)To the extent such amounts are not paid by the Holders of the Class B Certificates, at their election after inquiry by the Administrator, the Administrator will sell the portion of the outstanding balance of the Affected Bond necessary to generate proceeds sufficient to pay any allocable accrued and unpaid expenses of the Series Pool (including, but not limited to any Administrator Fee, Freddie Mac Fee, Administrator Advances, Daily Administrator Advance Charges, Servicing Fee and Remarketing Agent Fee), determined by multiplying the sum of such expenses by the ratio of the outstanding balance of such Bond to the Aggregate Outstanding Bond Balance; and

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

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

 

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Article XIV
MISCELLANEOUS

Section 14.01Acts of Holders.  (a)  Any request or other action provided by the Series Certificate Agreement to be given or taken by Holders may be evidenced by one or more instruments of substantially similar tenor signed by such Holders or their agents; and, except as otherwise expressly provided in the Series Certificate Agreement, such action will become effective when such instrument or instruments are delivered to the Administrator and Freddie Mac.  (Such an instrument is sometimes referred to in the Series Certificate Agreement as the “action” of the Holders signing such instrument).  Proof of execution of any such instrument, or of the appointment of any such agent, will be sufficient for any purpose of the Series Certificate Agreement and (subject to Section 10.01) conclusive in favor of the Administrator and Freddie Mac, if made in the manner provided in this Section.

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

Section 14.02Notices.  Unless otherwise specified, all communications under the Series Certificate Agreement must be in writing and will be deemed duly given if personally delivered to, mailed by first-class mail, postage prepaid, or sent by Electronic Notice and confirmed by first-class mail, postage prepaid, addressed to: (i) in the case of Freddie Mac, Federal Home Loan Mortgage Corporation, 8100 Jones Branch Drive, Mail Stop B4Q, McLean, Virginia 22102, Attention:  Director of Multifamily Management and Information Control, Telephone No.: (703) 903-2000, Facsimile No.:  (703) 714-3273; Federal Home Loan Mortgage Corporation, 8200 Jones Branch Drive, McLean, Virginia 22102, Attention:  Associate General Counsel – Multifamily Legal Department, Telephone No.: (703) 903-2000, Facsimile: No.:  (703) 903-2885; Federal Home Loan Mortgage Corporation, 8100 Jones Branch Drive, Mail Stop B2E, McLean, Virginia 22102, Attention:  Director of Multifamily Loan Servicing, Telephone No.: (703) 903-2000, Facsimile No.: (703) 714-3273; and (ii) in the case of the Remarketing Agent, as provided in the Remarketing Agreement or, as to each such Person, at such other address designated by such Person in a written notice to each other such Person.

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

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

 

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

Section 14.06Benefits of Series Certificate Agreement.  Nothing in the Series Certificate Agreement or in the Certificates, express or implied, will give to any Person, other than the parties to the Series Certificate Agreement and their successors, the Remarketing Agent and the Holders, any benefit of any legal or equitable right, remedy or claim under the Series Certificate Agreement.

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

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

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

[End of Standard Terms]

 

 

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EXHIBIT A

DEFINITIONS

A-1

 

Exhibit A to Standard Terms

DEFINITIONS

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

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

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

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

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

“Act of Bankruptcy” shall mean an Owner or the Sponsor, as applicable, (i) is dissolved (other than pursuant to a consolidation, amalgamation or merger); (ii) becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (iii) makes a general assignment, arrangement or composition with or for the benefit of its creditors; (iv) institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy, insolvency, reorganization, liquidation or dissolution law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation; (v) has a resolution passed for its winding-up or liquidation (other than pursuant to a consolidation, amalgamation or merger); (vi) seeks or becomes subject to the appointment of a receiver, administrator, conservator, liquidator, custodian, trustee or other similar official for it or for all or substantially all of its assets; (vii) has a secured party or other creditor take possession of all or substantially all of its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all of its assets; (viii) causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the 

 

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events specified in the preceding clauses (i) to (vii) (inclusive); or (ix) takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts. 

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

(a)Credit to such Capital Account any amounts which such Holder is obligated to restore or is deemed to be obligated to restore pursuant to the penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations; and

(b)Debit to such Capital Account the items described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations.

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

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

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

“Administrator Fee” means, if applicable, the annual amount payable to the Administrator (if other than Freddie Mac), determined by multiplying the Administrator Fee Rate by the Aggregate Outstanding Bond Balance.

“Administrator Fee Rate” means, if applicable, the rate set forth in the Series Certificate Agreement or provided by notice from Freddie Mac to the Administrator and the Sponsor.

“Affected Bond” means, (i) in the case of a Tender Option Termination Event relating to a failure to pay or a rating downgrade as described in clauses (a) or (c) of the definition of Tender Option Termination Event, each Bond; and (ii) in the case of a Tender Option Termination Event relating to an event of taxability as described in clause (b) of the definition of Tender Option Termination Event, each Bond giving rise to such event.

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

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

 

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

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

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

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

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

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

“Authorized Denomination” means, (a) with respect to any Class A Certificate (i) while the DTC System is in effect, an initial certificate balance of at least $5,000 with integral multiples of $5,000 in excess thereof and (ii) while the Fed System is in effect, an initial certificate balance of at least $100,000 with integral multiples of $1.00 in excess thereof, and (b) with respect to any Class B Certificate, an initial certificate balance of at least $5,000, subject to, with respect to any Certificate, necessary adjustments due to redemptions after the Date of Original Issue.

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

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

 

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any calculation previously made.  Available Interest Amount is expressed as the variable “AIA” in the following formula:2

AIA = AI+TAI

where

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

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

“Available Remarketing Class A Certificates” means (i) Tendered Class A Certificates, (ii) Class A Certificates subject to Mandatory Tender (A) on a Term Effective Date (that is not a Reset Rate Method Change Date), (B) on a Reset Rate Method Change Date relating to a change (but not a continuation) in the Reset Rate Method from a Weekly Reset Rate Method or a Monthly Reset Rate Method to a Monthly Reset Rate Method or a Term Reset Rate Method, (C) on a Reset Rate Method Change Date relating to a change (but not a continuation) in the Reset Rate Method from a Term Reset Rate Method or a Monthly Reset Rate Method to a Weekly Reset Rate Method or Monthly Reset Rate Method, (D) the date on which an amendment to the Standard Terms described in Section 12.01(b) becomes effective and (E) the date on which a successor Sponsor is appointed pursuant to Section 3.08 of the Standard Terms, and (iii) Class A Certificates with respect to which the Holder thereof has exercised the Optional Disposition Right.  Available Remarketing Class A Certificates do not include Pledged Class A Certificates that are purchased in connection with a Special Adjustment Event, Term Extended Rate Class A Certificates or LIBOR Index Rate Class A Certificates.

	
	 

	
2  Example 1:
	

	
Assumptions:
	
1.    Bonds bear variable interest tied to the SIFMA Municipal Swap Index (“SIFMA”) are reset on the same day as a Weekly Reset Date.

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

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

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

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

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

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

	
      So Available Interest Amount = $130,410.94
	

	
Example 2: 
	

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

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

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

	
Example 3:
	

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

	
Interest accruals are the same as in Example 1.
	

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

 

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

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

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

“Bond Documents” means, with respect to any Bond, the trust indenture, ordinance, resolution and any other agreements or instruments pursuant to which such Bonds or, in the case of Bonds which are custodial receipts, trust receipts or any other similar instrument evidencing an ownership interest in a mortgage loan or municipal securities held in a pass-through arrangement, such underlying mortgage loan or municipal securities, have been issued or secured (including any loan agreement, note, mortgage, deed of trust or any rate cap or interest rate protection agreement delivered to the applicable Bond Trustee) or governing the operation of the Project financed by such Bond or underlying mortgage loan or municipal securities, as applicable as the same may be amended or supplemented from time to time.

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

 

7

 

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

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

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

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

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

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

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

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

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

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

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

 

8

 

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

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

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

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

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

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

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

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

“Commitment Price” means, with respect to any date of determination, the highest cash purchase price for the Bonds subject to sale or distribution on such date obtained by the Administrator by soliciting in good faith at least three bids to purchase such Bonds from Persons (other than the Administrator, the Remarketing Agent, Freddie Mac, any Holder of a Class B Certificate, or any Affiliate of any such Person) that customarily provide such bids, including, but not limited to, investment dealers and brokers that customarily deal in municipal bonds.

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

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

"Credit Failure" means, if the Term Extended Rate or the LIBOR Extended Rate is in effect, the failure of Freddie Mac to comply with its obligations in accordance with the provisions of the Credit Enhancement, and the continuance of such failure for three (3) Business 

 

9

 

Days, to pay the Purchase Price of Class A Certificates subject to Mandatory Tender, in connection with a Credit Provider Termination Event or a Clean-Up Event.

“Credit Provider Termination Event” means, when the Class A Certificates are bearing interest at either the Term Extended Rate or the LIBOR Index Rate, the occurrence of an Event of Default under the Reimbursement Agreement.

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

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

“Current Class A Certificate Balance” means with respect to any Class A Certificate, as of any date of determination, its Initial Certificate Balance minus the sum of all amounts previously distributed to the Holder of such Certificate (or any Predecessor Certificate) with respect to principal payments on the Bonds, payments arising from a Release Event, and Class A Certificate Notional Accelerated Principal Paydown Amounts, if applicable, and adjustments on a Special Adjustment Date.

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

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

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

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

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

 

10

 

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

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

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

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

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

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

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

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

“DTC System” means the book-entry system of DTC.

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

“Event of Default” means:

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

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

 

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

“Excess Accrued Net Interest Amount Rate” means, with respect to the determination of the Maximum Reset Rate where all the Bonds are fixed rate bonds the following:  a per annum rate equal to the product of (i) the quotient obtained by dividing (a) 365 (or 366 in a leap year) by (b) the number of calendar days during which a Reset Rate will be in effect and (ii) the quotient (expressed as a percentage of the Aggregate Outstanding Class A Certificate Balance) obtained by dividing (a) the Excess Accrued Net Interest Amount as of the relevant day of determination by (b) the Aggregate Outstanding Class A Certificate Balance as of such day.  This rate is expressed as the variable “ER” in the following:3

 

	
ER =
	
 
	
 365/6 
	
 
	
 
	
 
	
 EA 
	
 

	
 
	
 
	
D
	
 
	
 
	
 
	
CLA
	
 

 

where

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

	
 
	
EA =
	
Excess Accrued Net Interest Amount

	
 
	
CLA =
	
Aggregate Outstanding Class A Certificate Balance

“Exchange Date” means the date on which the Series Pool is liquidated in whole or in part in accordance with Section 13.04 of the Standard Terms, which date will be designated by 

	
	 

	
3  Example 1:
	

	
    Assumptions =
	
1.   Weekly Reset Rate

	

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

	

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

 

	
  365  X  $50,000     
	

	
   7         $80,000,000
	

	
(52.1428) (0.000625).03258
	

	
Example 2:
	

	
Assumptions:
	
Same assumptions except that there is a Monthly Rate

 

	
  365   X $50,000     
	

	
  30        $80,000,000
	

	
(12.1666) (0.000625).00760
	

 

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Freddie Mac and will occur within five Business Days after the occurrence of a Tender Option Termination Event, Liquidity Failure or Credit Failure.

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

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

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

“Fed Participant” means those entities eligible to maintain book-entry accounts with a Federal Reserve Bank.

“Federal Reserve Bank” means The Federal Reserve Bank of New York and/or such other Federal Reserve Banks as may maintain Class A Certificates on the Fed System, or any successor selected or approved by Freddie Mac.

“Fed System” means the book-entry system of the Federal Reserve Banks.

“Fed-System Book-Entry Rules” means the provisions from time to time in effect, presently contained in Title 24, Part 81, Subpart H of the Code of Federal Regulations, setting forth the terms and conditions under which Freddie Mac may issue securities on the Fed System and authorizing a Federal Reserve Bank to act as Freddie Mac’s agent in connection with such securities.

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

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

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

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

 

13

 

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

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

“Freddie Mac Fee” means the fees due Freddie Mac under the Reimbursement Agreement for providing the Credit Enhancement, the Liquidity Facility, if applicable, and serving as Administrator.

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

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

                               CLA+CLB

where

DG =Disposition Gain

CLA =Aggregate Outstanding Class A Certificate Balance

CLB =Aggregate Outstanding Class B Certificate Balance

Example:

Assumptions:

	
 
	
1.
	
Disposition Gain = (2%)($50,000,000 Bonds)

	
 
	
2.
	
Aggregate Outstanding Class A Certificate Balance  = $80,000,000

	
 
	
3.
	
Aggregate Outstanding Class B Certificate Balance  = $20,000,000

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

                           80,000,000+20,000,000

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

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

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

“Grant” means to pledge or grant a lien upon or a security interest in, or a right of set-off to, the Administrator pursuant to a Series Certificate Agreement.  A Grant of a security interest 

 

14

 

in the Bonds, or any other instrument, will include all rights but none of the obligations of the granting party.

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

“Holder” means (i) with respect to a Class A Certificate maintained on the Fed System, any entity that appears on the records of a Federal Reserve Bank as a holder of such Class A Certificate; (ii) with respect to a Class A Certificate maintained on the DTC System, a Person who is listed as the beneficial owner of such Class A Certificate in the records of a DTC Participant or Indirect DTC Participant; and (iii) with respect to a Class B Certificate, the beneficial owner of such Class B Certificate.

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

“Hypothetical Gain Share” means, for any Class A Certificate, with respect to a Release Event Date, an Optional Disposition Date or a Mandatory Tender Date relating to a Liquidity Provider Termination Event (if applicable), a Credit Provider Termination Date (if applicable), a Sponsor Act of Bankruptcy (if applicable), or a Clean-Up Event, (i) the product of (a) the aggregate of, for each Bond, (1) the highest bid (not including accrued interest) obtained after the Remarketing Agent (or the Servicer to the extent the Class A Certificates are in the Term Extended Rate or LIBOR Index Rate) solicits three bids to purchase such Bond from Persons that customarily provide such bids, other than the Administrator, Freddie Mac, the Remarketing Agent, the Servicer, any Holder of Class B Certificates, or any Affiliate of any such Person, including but not limited to investment dealers and brokers that customarily deal in municipal bonds, determined for the Business Day immediately preceding the Release Event Date, Optional Disposition Date, or Mandatory Tender Date, as applicable, minus (2) the Accreted Price of such Bond and (b) the ratio of the Current Certificate Balance of such Class A Certificate to be tendered to the Aggregate Outstanding Certificate Balance and (c) 0.10, minus (ii) any Hypothetical Gain Share previously paid to any Holder of such Class A Certificate.  However, in no event may the Hypothetical Gain Share be less than zero.  Hypothetical Gain Share is expressed as the variable “HGS” in the following formula:4

	
	 

	
4 Example:
	

	
Assumptions:
	
1.    Market Value of First Bond = (110%)(10,000,000)

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

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

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

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

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

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

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

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

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

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

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

	
Bond 1:   ((110%)($10,000,000)-(100%)($10,000,000))(           $5,000,000           )(.10) = $16,666
	

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

	
Bond 2:   ((100%)($10,000,000)-(100%)($10,000,000))(          $5,000,000           )(.10) = zero
	

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

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

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

	
However, Hypothetical Gain Share may not be less than zero, so the amount for Bond 3 equals zero.
	

	
Aggregating the hypothetical gain share
	

	
Bond 1 + Bond 2 + Bond 3 - HGSPP
	

	
$16,666 + 0 + 0 - $2,000 = $14,666
	

 

 

15

 

HGS =  (MV-AP)(   ACAC   )(.10)  - HGSPP

                            (CLA+CLB)

where

	
 
	
MV =
	
highest bid obtained from qualified bidder

	
 
	
AP =
	
Accreted Price for that Bond

	
 
	
ACAC =
	
Current Certificate Balance of applicable Class A Certificate

	
 
	
CLA =
	
Aggregate Outstanding Class A Certificate Balance

	
 
	
CLB =
	
Aggregate Outstanding Class B Certificate Balance

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

"ICE" means ICE Benchmark Administration Limited.

"Indexing Agent" means the Servicer, or such other entity appointed by Freddie Mac to determine the Maximum LIBOR Index Rate.

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

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

“Initial Purchaser” means, if applicable, the initial purchaser(s) of the Class A Certificates named in the Remarketing Agreement.

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

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

 

16

 

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

“Knowledge” means actual knowledge.

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

"LIBOR Index Bond Calculation Period" means for purposes of any Maximum LIBOR Index Rate Determination Date, the period commencing on the first calendar day of the month immediately preceding the month in which such Maximum LIBOR Index Rate Determination Date occurs and ending on the last calendar day of such month.  

"LIBOR Business Day" means a day on which banks are open for dealing in foreign currency and exchange in London, New York, New York and Washington, D.C.

"LIBOR Credit Spread" means the credit spread set forth in the Series Certificate Agreement applicable to the LIBOR Index Rate Class A Certificates.

 “LIBOR Index Page” means the Bloomberg L.P., page “BBAM”, or such other page as may replace page BBAM on that service, or any other service that ICE nominates as the information vendor to display the 1-Month LIBOR Rate.  In the event ICE ceases to set or publish the 1-Month LIBOR Rate, Freddie Mac will designate an alternative index and such alternative index shall constitute the LIBOR Index Page.

“LIBOR Index Rate” means, with respect to each Accrual Period, the lesser of (i) the Quoted LIBOR Index Rate or (ii) the Maximum LIBOR Index Rate.

“LIBOR Index Rate Class A Certificates” means Class A Certificates designated to bear interest at the LIBOR Index Rate in the Series Certificate Agreement.

"LIBOR Index Computation Date" means the second LIBOR Business Day preceding each LIBOR Index Reset Date.

"LIBOR Index Reset Date" means the first Business Day of each month.

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

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

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

 

17

 

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

“Liquidity Provider” means Freddie Mac.

“Liquidity Provider Termination Event” means, when the Class A Certificates are bearing interest in a Reset Rate Method, the occurrence of an Event of Default under the Reimbursement Agreement.

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

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

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

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

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

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

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

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

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

"Maximum Accrued Interest Rate" means, if applicable, a per annum interest rate determined by the Indexing Agent on each Maximum LIBOR Index Rate Determination Date for each Accrual Period which shall be equal to the percentage derived by dividing (a) the amount of 

 

18

 

interest accrued on the Bonds on deposit in the Series Pool for the corresponding LIBOR Index Bond Calculation Period by (b) the principal amount of the Class A Certificates Outstanding at the time of such calculation.  Notwithstanding the foregoing calculation, in no event shall the Maximum Accrued Interest Rate exceed an interest rate that would result in the payment of an amount in excess of the total amount of interest that accrued on the Bonds for such corresponding LIBOR Index Bond Calculation Period. 

"Maximum LIBOR Index Rate" means, if applicable, a per annum interest rate determined by the Indexing Agent on each Maximum LIBOR Index Rate Determination Date for each Accrual Period equal to the Maximum Accrued Interest Rate for such Accrual Period less the then applicable Administrator Fee and Freddie Mac Fee.

"Maximum LIBOR Index Rate Determination Date" means, with respect to any Accrual Period, latest to occur of (i) the first Wednesday, or (ii) the first Thursday of the calendar month immediately succeeding the end of such Accrual Period.

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

The Maximum Reset Rate, if all the Bonds are fixed rate bonds, is equal to the Excess Accrued Net Interest Amount Rate, if any, plus a rate determined by dividing the product of the lowest Bond Rate times the Aggregate Outstanding Bond Balance by the Aggregate Outstanding Class A Certificate Balance as of such day.  For any Reset Rate Method other than a Weekly Reset Rate method, the calculation will not include the Excess Accrued Net Interest Amount Rate because the Maximum Reset Rate is calculated on a Reset Date and there will be no Excess Accrued Net Interest Amount on a Reset Date for a Monthly Reset Rate Method or a Term Reset Rate Method.  This Maximum Reset Rate is expressed as the variable MRR(FRB) in the following formula:5

	
	 

	
5  Example 1:
	

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

	

	
2.  Lowest Bond Rate:  6.5%

	

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

	

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

	

	
5.  Not a leap year

	

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

	

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

	
STEP ONE:
	

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

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

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

	
STEP TWO:
	

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

	

	
  365  X    EA

	

	
    7           CLA

	

	
(52.1428)(.00082945) = 4.324995%

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

	

	
(LBR)(BB)

	

	
     CLA

	

	
(.065)(100,000,000)

	

	
       80,000,000

	

	
8.125%

	
STEP FOUR:  add STEP TWO and STEP THREE
	

	

	
4.324995%+8.125% = 12.449995%

	
Example 2:
	

	
1.
	
Same assumptions as first six assumptions

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

	
STEP ONE:
	

	

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

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

	

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

	
STEP TWO: 
	

	

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

	

	
 365  X    EA

	

	
  D           CLA

	

	
 365  X    $132,712.33

	

	
  7            $80,000,000

	
(52.1428)(.00165890) = 8.649991%
	

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

	
STEP FOUR:
	
add STEP TWO and STEP THREE

	

	
8.649991% + 8.125% = 16.774991%

 

19

 

 

	
MRR(FRB) =
	
 
	
365/6
	
 
	
 
	
 
	
EA
	
 
	
 
	
PLUS
	
 
	
 
	
(LBRxBB)
	
 

	
 
	
 
	
D
	
 
	
 
	
 
	
CLA
	
 
	
 
	
 
	
 
	
 
	
CLA
	
 

 

This Maximum Reset Rate is determined in four steps.

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

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

 

	
ER =
	
 
	
 365/6 
	
 
	
 
	
 
	
 EA 
	
 

	
 
	
 
	
D
	
 
	
 
	
 
	
CLA
	
 

 

where

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

	
 
	
EA =
	
Excess Accrued Net Interest Amount

	
 
	
CLA =
	
Aggregate Outstanding Class A Certificate Balance

 

20

 

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

(LBRxBB)

    CLA

where

LBR =Lowest Bond Rate

BB = Aggregate Outstanding Bond Balance

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

The Maximum Reset Rate, if any of the Bonds are not fixed rate bonds, is equal to the product of (i) the quotient of the number of days in the year divided by the number of days in which a Reset Rate will be in effect times (ii) the quotient of (a) the Available Interest Amount minus the aggregate amount of interest accrued at the applicable Reset Rate on the Aggregate Outstanding Class A Certificate Balance for each preceding day in the Accrual Period divided by (b) the Aggregate Outstanding Class A Certificate Balance; provided however, that the Class A Certificates will never accrue more interest than the Available Interest Amount, regardless of any calculation previously made.  Unlike the formula for determining the Maximum Reset Rate where all Bonds are fixed rate Bonds, this calculation will apply to all Reset Rate Methods because the determination of the Available Interest Amount includes both accrued interest on the Bonds and Interest on the Bonds that will accrue over the balance of the applicable Reset Period, to the extent that amount is known.  This Maximum Reset Rate is expressed as the variable MRR(NFRB) in the following formula:6

	
	 

	
6  Example 1:
	

	
Assumptions:
	
1.  Weekly Reset for Class A Certificates

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

	
     Amount
	

	
3.  Not a leap year
	

	
4.  Aggregate Outstanding Class A Certificate Balance:
	

	
     $80,000,000
	

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

	
     second week
	

 

	
365  X  ($130,410.94 – (69,041.10)
	

	
  7
	

                          

	
         $80,000,000
	

	
(52.1428)($61,369.84)
	

	
         $80,000,000
	

	
      3.9999% = Maximum Reset Rate
	

	
Example 2:
	

	
Assumptions:
	
1.   Weekly Reset for Class A Certificates

	
2.   Available Interest Amount assumptions
	

	
a.   Bonds bear interest at 90% of 30 day LIBOR; LIBOR is 3.0% for applicable period and
	

	
      for this example, LIBOR is set on the same day as the first Weekly Reset Date in the
	

	
      Accrual Period
	

	
b.   the applicable Weekly Reset Date is the beginning of the third reset period so there are 14
	

	
      days of prior interest accrual on the Class A Certificates
	

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

	
3.   Not a leap year
	

	
4.   Aggregate Outstanding Class A Certificate Balance:
	

	
      $80,000,000
	

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

	
      week
	

	
STEP ONE:
	
establish Reset Rate period factor

	
365 = 52.1428
	

	
  7
	

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

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

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

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

	
(52.1428)($86,301.36)
	

	
         $80,000,000
	

	
     5.62499% = Maximum Reset Rate
	

	
Example 3:
	

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

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

	
STEP ONE:
	
the applicable Reset Period factor is 52.1428

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

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

	
AIA = $51,780.82
	

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

	
(52.1428)($51,780.82)
	

	
       $80,000,000
	

	
                3.337% = Maximum Reset Rate
	

	
Example 4:
	

	
Assumptions:
	
1.   Same as Example 3 except that $20,000,000 of Bonds bear interest at 90% of 30 day LIBOR

	
      and $80,000,000 of Bonds are fixed rate bonds bearing interest at 6.8%
	

	
STEP ONE:
	
the applicable Reset Period factor is 52.1428

	
STEP TWO:
	
determine the Available Interest Amount

	
Interest accruals on Bonds
	

	
$20,000,000 LIBOR-based Bonds = 
	

	
($20,000,000)(2.7%)(7) = $10,356.16
	

	
                365
	

	
($80,000,000)(6.8%)(7) = $104,328.76
	

	
                365
	

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

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

	
(52.1428)($114,684.92)
	

	
         $80,000,000
	

	
       7.47499% = Maximum Reset Rate
	

 

21

 

MRR(NFRB) = 365/6  (AIA-ACI)

                              D

where

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

	
 
	
AIA =
	
Available Interest Amount

 

22

 

	
 
	
ACI =
	
Accrued Certificate Interest

This Maximum Reset Rate is determined in three steps.

STEP ONE:  establish the Reset Rate period factor

365

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

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

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

“Minimum Sponsor Interest” means, (i) if the Series Certificate Agreement provides that the Partnership Factors apply, with respect to any day, an amount equal to the lesser of one percent of the Aggregate Outstanding Certificate Balance and $500,000 (adjusted for any capital contributions (actual or deemed) by any Holder) or (ii) in all other cases, an aggregate interest at all times in the capital of the Series Pool of $5,000.

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

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

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

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

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

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

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

 

23

 

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

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

“Odd-Lot Subaccount” means, if applicable, the segregated subaccount designated as such forming part of the Distribution Account.

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

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

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

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

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

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

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

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

"Optional Series Termination Date" means August 15, 2029, or the 15th day of any August thereafter (or if such date is not a Business Day, the immediately succeeding Business Day).

 

24

 

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

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

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

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

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

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

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

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

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

“Permitted Increment” shall mean with respect to any redemption of Class A Certificates pursuant to Section 4.03 of the Standard Terms, (i) while the DTC System is in effect, $5,000 or any integral multiple of $5,000 in excess thereof, and (ii) while the Fed System is in effect, $0.01 and any integral multiple thereof.

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

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

 

25

 

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

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

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

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

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

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

(a)Any income of the Series Pool that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this definition will be added to such taxable income or loss;

(b)Any expenditures of the Series Pool described in Section 705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B) expenditures pursuant to Section 1.704-1(b)(2)(iv)(i) of the Regulations, and not otherwise taken into account in computing Profits or Losses pursuant to this definition will be subtracted from such taxable income or loss; and

(c)Any amounts paid by the Sponsor pursuant to Sections 3.04 or 3.05 of the Standard Terms will be treated as payments of expenses by the Series Pool.

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

 

26

 

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

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

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

"Quoted LIBOR Index Rate" means a per annum rate of interest equal to the sum of the 1-Month LIBOR Rate plus the LIBOR Credit Spread.

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

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

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

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

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

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

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

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

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

 

27

 

“Reimbursement Agreement” means the Bond Exchange, Reimbursement, Pledge and Security Agreement between the Sponsor and Freddie Mac, as amended or supplemented, which agreement is executed and delivered concurrently with the Series Certificate Agreement.

“Release Event” means, with respect to any series of Bonds, the occurrence of either (i) a Tax Event with respect to such Bonds, (ii) an event of default pursuant to the related Bond Documents, (iii) a material adverse credit condition with respect to the Bonds or under the related Bond Documents or Bond Mortgage Documents or the Reimbursement Agreement (including but not limited to a loss of or failure to establish a real estate tax abatement for a related Project where applicable), (iv) the Sponsor’s delivery of notice to the Administrator that the Sponsor has elected to purchase a portion of the Bonds in connection with a substitution of Bonds as provided in Section 3.10 of the Standard Terms, (v) the termination of the Series in accordance with Article XIII of the Standard Terms, (vi) a breach of a representation or warranty made by the Sponsor with respect to a series of Bonds or related Project is not cured pursuant to the terms of the Reimbursement Agreement, or (vii) the Sponsor's delivery of notice to the Administrator that the Sponsor has elected to purchase all of the Bonds in the Series Pool on the Optional Series Termination Date.

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

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

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

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

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

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

“Remarketing Agreement” means, if applicable, with respect to each Series of Class A Certificates, the related Certificate Purchase and Remarketing Agreement among Freddie Mac, the Sponsor, the Initial Purchaser and the Remarketing Agent (or, as applicable, the related Certificate Placement and Remarketing Agreement among Freddie Mac, the Sponsor, the Placement Agent and the Remarketing Agent), as amended or supplemented.

“Required Class A Certificate Interest Distribution Amount” means, subject to Section 1.02 of the Standard Terms, with respect to any Class A Certificate and for any Payment Date, the aggregate of the amounts of interest accrued for each day in the Accrual Period related to such Payment Date, at the Reset Rate, Term Extended Rate or LIBOR Index Rate, as applicable, 

 

28

 

in effect on each such day, on the Current Certificate Balance of such Certificate for each such day.

“Required Class B Certificate Consent” means the prior consent of the Holders of Class B Certificates representing at least 51% of the Aggregate Outstanding Class B Certificate Balance, which consent will be deemed to have been given without any action being taken by the applicable Holder unless the Holder provides to the Administrator an executed notice of refusal of consent in form reasonably acceptable to the Administrator.

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

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

“Reset Rate Class A Certificates” mean Class A Certificates bearing interest at a Weekly Reset Method, Monthly Reset Rate Method or a Term Reset Rate Method.

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

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

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

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

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

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

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

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

 

29

 

“Selected by Lot” means, if applicable, with respect to Class A Certificates held by DTC, the procedure by which Holders of Certificates are selected to be affected by a given action affecting less than all of the Holders under any CUSIP number are selected, which procedure will be initiated by the Administrator by notifying DTC of a requirement for such a selection.  With respect to such Certificates, DTC will select, in such manner as it determines from a position listing of the aggregate Current Certificate Balances of such Class A Certificates as of the close of business on the date of such notice, the interests in Class A Certificates held by DTC Participants with respect to which such action will be taken.  DTC will give the DTC Participant(s) for the interests so selected written notice of the selection, which will specify the date and nature of such action and the aggregate Current Certificate Balance of Class A Certificates to be selected.  Each such DTC Participant will thereupon select, in such manner as it determines, the Holders with respect to whose interests such action will be taken.  The Administrator will contact each such DTC Participant to request such DTC Participant to disclose to the Administrator the Holders so selected.  With respect to the Class B Certificates and any Class A Certificates not held by DTC, “Selected by Lot” means selected by the Administrator by lot or in such other manner as the Administrator, in its discretion, deems fair.

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

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

“Series Expiration Date” means the date on which the final payment of principal and interest with respect to the Class A Certificates has been distributed by the Administrator pursuant to Article IV of the Standard Terms.

“Series Pool” means a discrete pool formed by Freddie Mac consisting of Assets with respect to which Freddie Mac has elected partnership status.

“Series Termination Event” means the occurrence of any of the following events:

(i)the Series Expiration Date;

(ii)the Exchange Date on which all Certificates are exchanged for Bonds or sales proceeds in connection with a Tender Option Termination Event, Credit Failure or a Liquidity Failure;

(iii)the Mandatory Tender Date relating to a Mandatory Tender Event arising in connection with a Liquidity Provider Termination Event (if applicable), a Credit Provider Termination Event (if applicable), or following a Sponsor Act of Bankruptcy (if applicable), or a Clean-Up Event or, if Freddie Mac does not provide the Purchase Price on such Mandatory Tender Date but provides the Purchase Price on or before the third Business Day after such Mandatory Tender Date then such date the Purchase Price is provided by Freddie Mac; or

(iv)the date on which the Optional Disposition Right has been exercised with respect to the last Class A Certificate (unless such Class A Certificate has been remarketed).

 

30

 

“Servicer” means the party designated as the Servicer in the Series Certificate Agreement; provided, however, that if any of the Servicer's duties or obligations hereunder are required to be performed by a licensed broker dealer, the Servicer shall mean such broker dealer appointed by the Servicer (with the consent of Freddie Mac) to perform such functions.

“Servicing Fee” means the fee payable to the Servicer in accordance with the servicing arrangement between Freddie Mac and the Servicer.

“Special Adjustment Date” means the Mandatory Tender Date arising from a Special Adjustment Event.

“Special Adjustment Event” means, if specified as applicable to a Series Pool in the related Series Certificate Agreement, the occurrence of (i) the receipt of principal paid with respect to any “Class B Certificates” of another Series, as described in Section 7.02 of the Standard Terms, or, if applicable, (ii) any other event specified in the Reimbursement Agreement as giving rise to a Special Adjustment Event.

“Special Adjustment Event Notice” means the notice given to the Administrator by Freddie Mac pursuant to Section 7.02 of the Standard Terms.

“Specified Party” means, collectively, the Administrator, Freddie Mac, the Remarketing Agent, the Sponsor and any Holder of Class B Certificates or any Affiliate of any such Person.

“Sponsor” means the party designated as the Sponsor in the Series Certificate Agreement.

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

“S&P” shall mean S&P Global Ratings, a division of Standard & Poor's Financial Services, LLC, or its successor in interest.  If neither such rating agency nor any successor remains in existence, “S&P” shall be deemed to refer to such other nationally recognized statistical rating agency or other comparable Person designated by Freddie Mac, notice of which designation shall be given to the Administrator, the Sponsor and the Remarketing Agent, and specific ratings of S&P referenced herein shall be deemed to refer to the equivalent ratings of the party so designated.

“Standard Terms” means the Standard Terms of the Series Certificate Agreement, together with all exhibits, as it may be amended or supplemented from time to time.

“State” means any one of the 50 states of the United States of America, or the District of Columbia.

“Substitute Bonds” means any new series of Bonds delivered in substitution for an existing series of Bonds in accordance with Section 3.10 of the Series Certificate Agreement on a Substitution Date.

“Substitution Date” means any date on which a substitution of Bonds is effected in accordance with the Series Certificate Agreement.

 

31

 

“Tax Event” means, with respect to any Bond (i) a determination that interest on such Bond is includable in the gross income of the owners thereof for federal income tax purposes, as a result of the entry of any decree or judgment by a court of competent jurisdiction; or (ii) the taking of any official action by the Internal Revenue Service, in either case, whether or not such decree, judgment or action is appealable or deemed to be final under applicable procedural law, which has the effect of a determination that interest on such Bond is includable in gross income of the owners thereof for federal income tax purposes.

“Tender Advice” means the notice delivered by the Administrator to Freddie Mac pursuant to Section 6.03 or 6.05 of the Standard Terms.

“Tender Option” means the right granted to the Holders of Reset Rate Class A Certificates pursuant to Section 6.01(a) of the Standard Terms to tender or cause to be tendered such Reset Rate Class A Certificates (other than Affected Certificates or Pledged Class A Certificates) for purchase by the Administrator from amounts deposited pursuant to Section 6.06 of the Standard Terms.

“Tender Option Termination Event” means:

(a)there shall have occurred (A) a failure to pay when due any installment of principal of or premium, if any, or interest with respect to any Bonds (whether by scheduled maturity, regular repayment, acceleration, demand or otherwise), and (B) a failure by Freddie Mac to pay under the Credit Enhancement set forth in Section 4.11 of the Standard Terms, which failure or failures continues for a period of three (3) Business Days; 

(b)upon the entry of any decree or judgment by a court of competent jurisdiction or the taking of any official action by the Internal Revenue Service or the Department of the Treasury, which decree, judgment or action is deemed final under applicable procedural law, and which has the effect of a determination that the interest on any of the Bonds is includable in the gross income of the recipients thereof for federal income tax purposes; or

(c)if the rating of the long-term senior debt of Freddie Mac is reduced below “investment grade” (being “Baa3” in the case of Moody’s and “BBB-” in the case of Fitch and S&P) by each Rating Agency rating such debt.

Tender Option Termination Event applies to each of Reset Rate Class A Certificates, Term Extended Rate Class A Certificates and LIBOR Index Rate Class A Certificates.

“Tender Option Termination Notice” means the notice given by the Administrator to the Registered Holders pursuant to Section 7.01 of the Standard Terms in connection with the occurrence of a Tender Option Termination Event.

“Tendered Class A Certificates” means any Certificate as to which an Exercise Notice has been given.

“Term Effective Date” means the date on which a particular Term Reset Rate will be effective.

 

32

 

“Term Extended Rate” means, with respect to Term Extended Rate Class A Certificates, the interest rate to the Current Certificate Balance of the Class A Certificates from the Date of Original Issue to the Series Expiration Date as set forth in the Series Certificate Agreement.

“Term Extended Rate Class A Certificate” means a Class A Certificate bearing interest at a Term Extended Rate.

“Term Reset Date” means the Business Day immediately preceding a Term Effective Date.

“Term Reset Method Notice” means the notice given to the Remarketing Agent and the Administrator, and given by the Administrator to the Registered Holders, pursuant to Section 5.03(b) of the Standard Terms.

“Term Reset Rate” means a Reset Rate determined by the Remarketing Agent for a specified term as provided in Article V of the Standard Terms.

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

“Terminating Mandatory Tender Date” means a Mandatory Tender Date relating to a Mandatory Tender Event arising in connection with a Liquidity Provider Termination Event (if applicable), a Credit Provider Termination Event (if applicable), a Clean-Up Event or, following a Sponsor Act of Bankruptcy (if applicable) or, if Freddie Mac does not provide the Purchase Price on such Mandatory Tender Date but provides the Purchase Price on or before the third Business Day after such Mandatory Tender Date then such date the Purchase Price is provided by Freddie Mac.

“UCC” means the Uniform Commercial Code as in effect in the relevant jurisdiction.

“Vice President” means, with respect to Freddie Mac and the Administrator, any Senior Vice President, Vice President, or Assistant Vice President.

“Weekly Reset Date” means Wednesday of each week, or if Wednesday is not a Business Day, the immediately preceding Business Day, provided that, if the Reset Rate Method is being changed to the Weekly Reset Rate Method, the initial Weekly Reset Date will be the Business Day preceding the Reset Rate Change Date.

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

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

“Weighted Average Bond Rate” means, as of any date of determination, (i) the aggregate of, for each Bond, the product of the Outstanding Bond Balance and the related Bond Rate, divided by (ii) the Aggregate Outstanding Bond Balance, expressed as a percentage. 

 

33

 

“1-Month LIBOR Rate” means ICE’s one (1) month LIBOR Rate for United States Dollar deposits, as displayed on the LIBOR Index Page as of 11:00a.m. (London time) on each date of determination thereof.

 

 

34

 

EXHIBIT B

[FORM OF CLASS A CERTIFICATES (DTC ONLY)]

Freddie Mac
Multifamily M Certificates
Series M-045
Class A Certificate

	
CUSIP No.:                                           
	
Certificate No.:     

Initial Certificate Balance of this 

Class A Certificate (as of the Date of Original Issue): $                   

Registered Owner:  Cede & Co.

Date of Original Issue:                                         

THIS CERTIFICATE IS A GLOBAL CERTIFICATE REPRESENTING THE OWNERSHIP OF THE CLASS OF SECURITIES REFERRED TO ABOVE.  THIS CERTIFICATE MAY ONLY BE TRANSFERRED IN WHOLE TO AN ENTITY THAT IS A “CLEARING CORPORATION” AS DEFINED IN THE UNIFORM COMMERCIAL CODE IN EFFECT IN THE STATE OF NEW YORK OR TO A SIMILARLY QUALIFIED ENTITY SELECTED OR APPROVED BY FREDDIE MAC.

This Class A Certificate evidences an ownership interest in the Assets, including the related Bonds as specified in the Series Certificate Agreement as hereinafter defined, constituting the Series Pool related to the Freddie Mac Multifamily M Certificates, Series M-045.  The Bonds are being held in the Series Pool by Federal Home Loan Mortgage Corporation, as Administrator (the “Administrator” and “Certificate Registrar”) pursuant to the terms of a Series Certificate Agreement dated as of August 1, 2018, by and between Federal Home Loan Mortgage Corporation (“Freddie Mac”), in its corporate capacity, and in its capacity as Administrator, including and incorporating therein the Standard Terms of the Series Certificate Agreement dated as of August 1, 2018 (the “Standard Terms”), together with all other exhibits, schedules, appendices, supplements and amendments thereto between Freddie Mac, in its corporate capacity and in its capacity as Administrator (collectively, the “Series Certificate Agreement”).  A summary of certain of the provisions of the Series Certificate Agreement is set forth below.  Capitalized terms used but not defined herein have the respective meanings ascribed thereto in the Series Certificate Agreement.  This Class A Certificate is issued pursuant to and is subject to the terms, provisions and conditions of the Series Certificate Agreement to which Series Certificate Agreement the Holder of this Class A Certificate (“Class A Certificate Holder”) by virtue of the acceptance hereof assents and by which such Holder is bound.  A copy of the Series Certificate Agreement is available for inspection at the Corporate Office of the Administrator.

In the event of any conflict between the terms of this Class A Certificate and the terms of the Series Certificate Agreement, the terms of the latter shall control.

All distributions of interest, principal and redemption premium, if any, will be made with respect to the Class A Certificates in accordance with the Series Certificate Agreement, subject 

B-1

 

to the rules and regulations of DTC.  The Class A Certificates will bear interest per annum as provided in the Series Certificate Agreement.  Moreover, the final distribution will be paid only upon surrender of this Class A Certificate to the Administrator (subject to the rules and regulations of DTC).

Pursuant to the Series Certificate Agreement, Class A Certificates are subject to redemption from time to time, in whole or in part, in the manner and under the circumstances set forth in the Series Certificate Agreement.

Pursuant to the Series Certificate Agreement and subject to certain conditions specified therein, Class A Certificates may be optionally tendered, if applicable to the Series Pool, or subject to mandatory tender upon the occurrence of certain events applicable to the Series Pool, in each case in the manner and under the circumstances set forth in the Series Certificate Agreement. 

The transfer of this Class A Certificate shall be registered in the Certificate Register upon surrender of this Class A Certificate for registration of transfer at the office or agency maintained by the Certificate Registrar therefor pursuant to Section 2.05(a) of the Series Certificate Agreement, and such Class A Certificate shall be duly endorsed or accompanied by a written instrument of transfer in a form satisfactory to the Certificate Registrar and the Administrator duly executed by the Holder hereof, or by an attorney for such Class A Certificate Holder duly authorized in writing, such signature to be guaranteed by an “eligible guarantor institution” meeting the requirements of the Administrator, which requirements will include membership or participation in STAMP or such other “signature guarantee program” as may be determined by the Administrator in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.  No service charge shall be made to a Class A Certificate Holder for any registration of transfer or exchange of this Class A Certificate, but the Certificate Registrar or the Administrator may require payment of a sum sufficient to cover any transfer tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Class A Certificates.

Subject to certain conditions in the Series Certificate Agreement, the obligations of Freddie Mac and the Administrator created by the Series Certificate Agreement shall terminate upon the occurrence of certain events set forth therein.

The recitals contained herein shall be taken as statements of Freddie Mac, and the Administrator assumes no responsibility for their accuracy.

[Signatures follow]

B-2

 

In Witness Whereof, Freddie Mac, as Administrator, has caused this Class A Certificate to be duly executed under its corporate seal and pursuant to the manual or facsimile signatures of Freddie Mac’s duly authorized officers or agents.

 

	
Dated as of:
	
 
	
 
	
FEDERAL HOME LOAN MORTGAGE

	
 
	
 
	
 
	
CORPORATION, as Administrator

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
By:
	
 

	
 
	
 
	
 
	
 
	
Chief Executive Officer

	
 
	
 
	
 
	
 

	
Attest:
	
 
	
 
	
 

	
 
	
Secretary
	
 
	
 

 

 

 

 

 

 

 

 

Certificate of Authentication

This is the Class A Certificate, Series              referred to in the within-mentioned Series Certificate Agreement.

 

	
 
	
 
	
 
	
Federal Home Loan Mortgage Corporation, as Administrator or Certificate Registrar

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
By:
	
 

	
 
	
 
	
 
	
 
	
Chief Executive Officer

 

 

B-3

 

Assignment

FOR VALUE RECEIVED, the undersigned does hereby sell, assign and transfer unto                                                                                         

(Name, Address and Taxpayer Identification Number of Assignee)

all its right, title and interest in and to the within Class A Certificate and hereby irrevocably constitutes and appoints                                                                                           (Attorney) to register the transfer of the within Certificate on the books kept for the registration thereof, with full power of substitution in the premises.

Dated:                                                    

Signature:                                                   

Notice:  The signature on this assignment must correspond with the name as written upon the face of this Certificate in every particular, without alteration or enlargement or any change whatsoever.

Signature(s) Guaranteed:                                                   

Notice:  Signature(s) must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Administrator, which requirements include membership or participation in STAMP or such other “signature guarantee program” as may be determined by the Administrator in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

 

B-4

 

EXHIBIT C

[FORM OF CLASS B CERTIFICATES]

No Sale, Assignment, Pledge, Hypothecation or other transfer or grant of any lien, security interest, options or charges in the Class B Certificates will be effective unless it is made in compliance with the provisions described herein, the Series Certificate Agreement and the Bond Exchange, Reimbursement, Pledge and Security Agreement dated as of August 1, 2018 (as the same may be amended, supplemented or restated from time to time, the “Reimbursement Agreement”) between ATAX TEBS IV, LLC and Federal Home Loan Mortgage Corporation ("Freddie Mac"), including obtaining the prior written consent of Freddie Mac to such transfer or grant.   Unless a transfer or grant of an interest in a Class B Certificate is made in accordance with the provisions herein, the purported transfer or grant will be void ab initio and the purported transferor will continue to be deemed the Holder of such Class B Certificate.

Freddie Mac
Multifamily M Certificates
Series M-045
Class B Certificate

 

	
CUSIP No.:                                          
	
Certificate No.:     

 

Initial Certificate Balance of this

Class B Certificate (as of               ):$             

	
Registered Owner:
	
ATAX TEBS IV, LLC

 

Date of Original Issue:                 

This Class B Certificate evidences an ownership interest in the Assets, including the related Bonds as specified in the Series Certificate Agreement as hereinafter defined, constituting the Series Pool related to the Freddie Mac Multifamily M Certificates, Series M-045.  The Bonds are being held in the Series Pool by Federal Home Loan Mortgage Corporation, as Administrator (the “Administrator” and “Certificate Registrar”) pursuant to the terms of a Series Certificate Agreement dated as of August 1, 2018, by and between Federal Home Loan Mortgage Corporation, in its corporate capacity (“Freddie Mac”) and in its capacity as Administrator, including and incorporating therein the Standard Terms of the Series Certificate Agreement dated as of August 1, 2018 (the “Standard Terms”), together with all other exhibits, schedules, appendices, supplements and amendments thereto between Freddie Mac and the Administrator (collectively, the “Series Certificate Agreement”).  A summary of certain of the provisions of the Series Certificate Agreement is set forth below.  Capitalized terms used but not defined herein have the respective meanings ascribed thereto in the Series Certificate Agreement.  This Class B Certificate is issued pursuant to and is subject to the terms, provisions and conditions of the Series Certificate Agreement to which Series Certificate Agreement the Holder of this Class B Certificate (“Class B Certificate Holder”) by virtue of the acceptance hereof assents and by which such Holder is bound.  A copy of the Series Certificate Agreement is available for inspection at the Corporate Office of the Administrator.

In the event of any conflict between the terms of this Class B Certificate and the terms of the Series Certificate Agreement, the terms of the latter shall control.

C-1

 

All distributions of interest, principal and redemption premium, if any, will be made with respect to the Class B Certificates in accordance with the Series Certificate Agreement.  Interest with respect to the Class B Certificates will be determined in accordance with the provisions of the Series Certificate Agreement.  Moreover, the final distribution will be paid only upon surrender of this Class B Certificate to the Administrator.  Payments with respect to the Class B Certificates are subordinate to payments to the Class A Certificates.

Pursuant to the Series Certificate Agreement, Class B Certificates are subject to redemption from time to time, in whole or in part, in the manner and under the circumstances set forth in the Series Certificate Agreement.

Subject to the restrictions and upon satisfaction of the conditions set forth in Section 2.06 of the Series Certificate Agreement (including the delivery of an Investor Letter), the transfer of this Class B Certificate shall be registered in the Certificate Register upon surrender of this Class B Certificate for registration of transfer at the office or agency maintained by the Certificate Registrar therefor pursuant to Section 2.05(a) of the Series Certificate Agreement, and such Class B Certificate shall be duly endorsed or accompanied by a written instrument of transfer in a form satisfactory to the Certificate Registrar and the Administrator duly executed by the Holder hereof, or by an attorney for such Class B Certificate Holder duly authorized in writing, such signature to be guaranteed by an “eligible guarantor institution” meeting the requirements of the Administrator, which requirements will include membership or participation in STAMP or such other “signature guarantee program” as may be determined by the Administrator in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.  No service charge shall be made to a Class B Certificate Holder for any registration of transfer or exchange of this Class B Certificate, but the Certificate Registrar or the Administrator may require payment of a sum sufficient to cover any transfer tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Class B Certificates.

Subject to certain conditions in the Series Certificate Agreement, the obligations of Freddie Mac and the Administrator created by the Series Certificate Agreement shall terminate upon the occurrence of certain events set forth therein.

The recitals contained herein shall be taken as statements of Freddie Mac, and the Administrator assumes no responsibility for their accuracy.

[Signatures follow]

C-2

 

In Witness Whereof, Freddie Mac, as Administrator, has caused this Class B Certificate to be duly executed under its corporate seal and pursuant to the manual or facsimile signatures of Freddie Mac’s duly authorized officers or agents.

 

	
Dated as of:
	
 
	
 
	
FEDERAL HOME LOAN MORTGAGE

	
 
	
 
	
 
	
CORPORATION, as Administrator

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
By:
	
 

	
 
	
 
	
 
	
 
	
Chief Executive Officer

	
 
	
 
	
 
	
 

	
Attest:
	
 
	
 
	
 

	
 
	
Secretary
	
 
	
 

 

 

 

 

 

 

 

 

 

Certificate of Authentication

This is the Class B Certificate, Series            referred to in the within-mentioned Series Certificate Agreement.

 

	
 
	
 
	
 
	
Federal Home Loan Mortgage Corporation, as Administrator or Certificate Registrar

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
By:
	
 

	
 
	
 
	
 
	
 
	
Chief Executive Officer

 

 

C-3

 

Assignment

FOR VALUE RECEIVED, the undersigned does hereby sell, assign and transfer unto                                                                                                                                                                                                                                                     (Name, Address and Taxpayer Identification Number of Assignee) all its right, title and interest in and to the within Class B Certificate and hereby irrevocably constitutes and appoints                                                                                                              (Attorney) to register the transfer of the within Certificate on the books kept for the registration thereof, with full power of substitution in the premises.

Dated:____________________________

Signature:____________________________

Notice:  The signature on this assignment must correspond with the name as written upon the face of this Certificate in every particular, without alteration or enlargement or any change whatsoever.

 

Signature(s) Guaranteed: ____________________________

Notice:  Signature(s) must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Administrator, which requirements include membership or participation in STAMP or such other “signature guarantee program” as may be determined by the Administrator in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

 

 

C-4

 

EXHIBIT D

[FORM OF CLASS B INVESTOR LETTER]

Freddie Mac
Multifamily M Certificates

Series M-045
Class B Certificates 

 

 

The Sponsor

The Administrator

The Certificate Registrar

The Remarketing Agent

The Liquidity Provider

Ladies and Gentlemen:

This letter applies to privately offered Certificates designated as the Series of Class B Certificates described above (“Class B Certificates”) that are currently being offered or that may be offered in the future.  We may from time to time offer to purchase, purchase, offer to sell and/or sell Class B Certificates, and we agree that this letter shall apply to all such purchases, acquisitions, sales and offers.  Certain terms of the Class B Certificates are generally described in the Offering Circular and Offering Circular Supplement with respect to the related senior Class A Certificates (as the same may be amended or supplemented, collectively, the “Offering Circular”).  Furthermore, although not described in detail in the Offering Circular, the Class B Certificates and all proceeds thereof are subject to the terms and provisions of the Bond Exchange, Reimbursement, Pledge and Security Agreement dated as of August 1, 2018 (the “Reimbursement Agreement”) between ATAX TEBS IV, LLC (“Sponsor”) and Federal Home Loan Mortgage Corporation (“Freddie Mac”).  Undefined capitalized terms used herein shall generally have the meanings ascribed to such terms in the Offering Circular; however, the terminology used herein is intended to be general in its application and not to exclude any Class B Certificates in respect of which (in the Offering Circular or otherwise) alternative terminology is used.

1.In connection with its purchase of the Class B Certificates and intending to be bound by the terms hereof, the undersigned (the “Purchaser”) hereby represents, warrants and agrees for the benefit of the above addressees as follows:

A.On the date hereof, the Purchaser is purchasing a beneficial ownership interest in $_____________ of Class B Certificates issued pursuant to the Series Certificate Agreement dated as of August 1, 2018, by and between Freddie Mac, in its corporate capacity and Freddie Mac in its capacity as Administrator (the “Administrator”), incorporating by reference the Standard Terms of the Series Certificate Agreement dated as of August 1, 2018 by and between Freddie Mac and the Administrator (the “Standard Terms” and, collectively with the Series Certificate Agreement, the “Series Certificate Agreement”).  Prior to the purchase of any Class B 

 

 

Certificates, the Purchaser has reviewed the Series Certificate Agreement and the Offering Circular, and asked questions and received answers concerning the terms and conditions of the transactions contemplated by the Series Certificate Agreement and the Offering Circular and has requested and obtained additional information deemed necessary to verify the accuracy and completeness of any information furnished to the Purchaser or to which the Purchaser has access.  The Purchaser has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of a purchase of the Class B Certificates.  The Purchaser is an “accredited investor” within the meaning of Rule 501(a) of Regulation D or a “qualified institutional buyer” as defined in Rule 144A (“Rule 144A”), both Rules promulgated under the Securities Act of 1933, as amended (the “1933 Act”).

B.The Purchaser (i) acknowledges that it will treat the Series Pool as a partnership for federal, state and local income tax purposes and that it intends and expects to be treated as a partner for such purposes and (ii) consents to all federal and other tax elections made on behalf of the Series Pool pursuant to the Series Certificate Agreement.  The Purchaser acknowledges that no Person is authorized under Treas. Reg. Section 301.7701-3(c) or any applicable state or local law to have the Series Pool classified as a corporation for federal, state or local income tax purposes.  The Purchaser consents to an election under Revenue Procedure 2003-84 (or any successor Revenue Procedure or other guidance issued by the Internal Revenue Service) to account for items of Series Pool tax-exempt income, taxable income (if any), gain, loss and deduction on the basis of a monthly closing of the books, and agrees to comply with the alternative reporting requirements prescribed by Revenue Procedure 2003-84, if such election is made by Freddie Mac.

C.The Purchaser’s intention is to acquire the Class B Certificates for investment (a) for the Purchaser’s own account and not as a nominee or agent or (b) for resale to “accredited investors” in a transaction exempt from the registration requirements of the 1933 Act or for resale to “qualified institutional buyers” in transactions under Rule 144A, and not with the view to, or for resale in connection with, any other distribution thereof (although it retains the right to resell, subject to the transfer restrictions set forth herein and in the Series Certificate Agreement and the Reimbursement Agreement).

D.The Purchaser acknowledges that the Class B Certificates are being purchased pursuant to an exemption under the 1933 Act which depends upon, among other things, the bona fide nature of the Purchaser’s investment intent (or intent to resell only in transactions exempt from the registration requirements of the 1933 Act) as expressed herein and may not be transferred unless an exemption from registration under the 1933 Act and any applicable state “Blue Sky” or securities laws is available.  In addition, the Purchaser understands that the Class B Certificates have not been registered under the securities laws of any state.  The Purchaser agrees to comply with applicable restrictions on the transfer of the Class B Certificates contained and referred to herein, the Series Certificate Agreement and the Reimbursement Agreement.

E.The Purchaser is neither a “substantial user” nor a “related person” to a substantial user (within the meanings of Section 147(a) of the Internal Revenue Code of 

S-2

 

1986, as amended and Section 103(b)(13) of the Internal Revenue Code of 1954, as amended) of the property financed by a Bond held by the Series Pool or any Underlying Bond, as applicable.

F.The Purchaser has had adequate opportunity to consult with legal, tax and investment advisors of its own choosing concerning its investment, and the Purchaser is not relying upon legal, tax or investment advice from the Administrator, the Sponsor or Remarketing Agent or any of their respective professionals or agents (provided the Purchaser is entitled to rely on the opinions delivered on the Date of Original Issue to the extent and with respect to the matters provided therein).  The Purchaser has relied on its own investigation of the Bonds, the Issuers of the Bonds, any underlying obligors, the security provided therefor, and acknowledges that no investigation has been made by the Administrator, the Sponsor or the Remarketing Agent in connection with (i) the offering of Certificates, (ii) the Bonds and (iii) the financial condition or creditworthiness of the Issuers or underlying obligors with respect to the Bonds.

G.The Purchaser acknowledges and agrees that pursuant to the Series Certificate Agreement and the Reimbursement Agreement Freddie Mac's prior written consent is required for any sale, assignment, pledge, hypothecation or other transfer of the Purchaser's interest in the Class B Certificates or to grant any lien, security interest, options or other charges or encumbrances with respect to the Class B Certificates, and that unless a transfer or grant is made in accordance with the foregoing, such transfer or grant will be void ab initio with respect to the Purchaser and any transferee and the Purchaser will continue to be the Holder of the Class B Certificates.

H.The foregoing representations, warranties and agreements are made by the Purchaser with the intent that they may be relied upon in determining its qualification and suitability to purchase Class B Certificates, and the Purchaser hereby agrees that such representations, warranties and agreements shall survive its purchase thereof, and that if any such representations, warranties or agreements are no longer accurate, it shall promptly notify the Administrator, the Remarketing Agent and the Sponsor.  The Purchaser hereby agrees to indemnify and hold harmless the Series Pool, the Sponsor, the Remarketing Agent, the Administrator and agents of each of them from and against any losses, claims, damages, liabilities, expenses (including attorneys’ reasonable fees and disbursements), judgments and amounts paid in settlement resulting from the untruth of any of the warranties and representations contained herein or the breach by the Purchaser of any of the covenants made by it herein.  Notwithstanding the foregoing, however, no representation, warranty, acknowledgment or agreement by the Purchaser made herein shall in any manner be deemed to constitute a waiver of any rights granted to it under Federal or state securities laws.

I.If this letter is signed by an investment adviser on behalf of one or more investment companies identified on Appendix A hereto (each a “Fund”), the investment adviser hereby represents and warrants that (i) each of the statements, agreements, covenants and representations and warranties herein are made on behalf of each such Fund and are true and correct, and (ii) the investment adviser is authorized to execute this letter on behalf of each Fund.

S-3

 

J.This letter shall apply to all Class B Certificates owned by the Purchaser.

K.The Purchaser represents and warrants that the signatory of this letter is authorized to execute and deliver this letter on behalf of such Purchaser, and acknowledges and agrees that the representations, warranties, agreements and acknowledgements set forth herein are legal, valid and binding, and enforceable against such Purchaser.

2.Any xerographic or other copy of this letter shall be deemed of equal effect as a signed original.

3.Information regarding the Purchaser’s taxpayer identification number is listed on Appendix A attached hereto.  

4.The Purchaser’s telephone and facsimile numbers for purposes of receiving Electronic Notice under the Series Certificate Agreement are listed on Appendix A attached hereto.

5.Information regarding the Purchaser’s Participant of The Depository Trust Company and its account number are listed on Appendix A attached hereto.

6.This letter supersedes any version of this letter delivered by us and dated earlier than the date hereof.

Date: _______________________

 

	
[CLASS B INVESTOR]

	
 
	
 

	
 
	
 

	
By:
	
 

	
Name (Print):
	
 

	
Title:
	
 

	
Mailing Address of Purchaser:

 

 

S-4

 

APPENDIX A

[Investor Letter Information]

 

 

S-5

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