Document:

Exhibit 10.5

 

EXECUTION

 

[Osprey/Taxable]

 

SERIES
CERTIFICATE AGREEMENT
 

by and between

FEDERAL HOME LOAN MORTGAGE
CORPORATION,

in its corporate capacity

and

FEDERAL HOME LOAN MORTGAGE
CORPORATION,

in its capacity as Administrator

Dated as of December 1, 2007

incorporating by reference

STANDARD TERMS OF THE SERIES CERTIFICATE AGREEMENT

Dated as of December 1, 2007

FREDDIE MAC

TAXABLE MULTIFAMILY VARIABLE RATE CERTIFICATES

Series M014

$30,850,060 Class A
Certificates

$1,623,688 Class B Certificates

relating to

the Assets described herein

SPONSOR:  CENTERLINE SPONSOR 2007-1
SECURITIZATION, LLC

 

 

SERIES
CERTIFICATE AGREEMENT

 

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

 

RECITALS:

 

A.            Freddie Mac desires to issue the
Certificates and create the Series Pool into which the Bonds identified on
Schedule 1 hereto and the other Property 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 Assets to such Series Pool for the
benefit of the Holders of the Certificates, together with all of its interest
in (a) all Asset Payments made from and after the Date of Original Issue
and all certificates and instruments, if any, representing the Assets, (b) the
Distribution Account and (c) all proceeds of the Assets and the
Distribution Account of every kind and nature. 
The Assets consist solely of Bonds and all references in the Standard
Terms to “Mortgage Loan(s)” or “Mortgage Loan Documents” shall be null, void
and of no force or effect with respect to the Series Pool and the related
Certificates.

 

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 $30,850,060 and the Class B Certificates will be
issued with an Initial Certificate Balance of $1,623,688 in substantially the
forms set forth in Exhibit B and Exhibit C to the Standard
Terms.  Upon initial issuance, the Class A
Certificates shall be registered in the name of CEDE & Co., as nominee
for DTC.  Upon initial issuance, the Class B
Certificates shall be registered in the name of the Pledge Custodian for the benefit
of the Sponsor subject to the security interest created by the Reimbursement
Agreement in favor of Freddie Mac, and will be held in definitive form.

 

Section 4.              The Sponsor will be Centerline Sponsor 2007-1
Securitization, LLC (or any permitted successor in such capacity appointed
under Section 3.07 of the Standard Terms).

 

 

Section 5.              The initial Reset Rate Method for the Class A
Certificates shall be the Term Reset Rate Method.  The initial Term Reset Rate with respect to
the Class A Certificates shall be 5.602% and shall be in effect from the
Date of Original Issue until June 15, 2022.

 

Section 6.              The Assets 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.              [Reserved].

 

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

 

Section 9.              The CUSIP Numbers for the Certificates are the following:

 

	
   

  	
   

  	
  CUSIP Number

  
	
  Class A Certificates

  	
   

  	
  31397PPZ7

  
	
  Class B Certificates

  	
   

  	
  31397PQ29

  

 

Section 10.            The provisions of the Standard Terms related to the Holdback
Requirement and the establishment and operation of the Asset Payment Subaccount
– Holdback will not be applicable to the Series Pool.

 

Section 11.            The provisions of the Standard Terms relating to the making
of Administrator Advance and the payment of Daily Administrator Advance Charges
will not be applicable to the Series Pool.

 

Section 12.            The Notional Accelerated Principal Amortization Schedule and
the Class A Certificate Notional Accelerated Principal Paydown Amount will
not be applicable to the Series Pool.

 

Section 13.            For purposes of Section 7.02 of the Standard Terms, the
other series pools for which payments of principal on “Class B
Certificates” and liquidation proceeds on termination thereof will generate a
Special Adjustment Event with respect to Class A Certificates are the
series pools with the designations “Series M012” and “Series M013”.

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

“First
Optional Disposition Date” - shall mean the Payment
Date on June 15, 2015.

 

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

 

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

 

“Proportional
Amount” - shall mean initially $30,850,060 Class A
Certificates to $1,623,688 Class B Certificates.

 

“Rating
Agency”  – shall
mean S&P.

 

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

 

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

 

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

 

Section 17.            Notices under this Series Certificate Agreement to be
provided to the Sponsor and the Rating Agency will be provided in the manner
set forth in Section 14.02 of the Standard Terms as follows:

 

	
  Sponsor:

  	
   

  	
  Centerline
  Sponsor 2007-1 Securitization, LLC

  
	
   

  	
   

  	
  c/o
  Centerline Capital Group

  
	
   

  	
   

  	
  625 Madison
  Avenue

  
	
   

  	
   

  	
  New York,
  New York 10022

  
	
   

  	
   

  	
  Attention:
  John D’Amico

  
	
   

  	
   

  	
  Facsimile:
  (212) 593-5796

  
	
   

  	
   

  	
   

  
	
  Rating
  Agency:

  	
   

  	
  Standard &
  Poor’s

  
	
   

  	
   

  	
  55 Water
  Street, 38th Floor

  
	
   

  	
   

  	
  New York,
  New York 10041

  
	
   

  	
   

  	
  Attention:
  Muni Structured Group

  
	
   

  	
   

  	
  Facsimile:
  (212) 438-2152

  

 

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

 

[Signatures
follow]

 

3

 

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

 

	
   

  	
  FEDERAL HOME LOAN MORTGAGE

  CORPORATION, in its corporate capacity

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael
  L. Dawson

  	
   

  
	
   

  	
   

  	
  Michael L.
  Dawson

  
	
   

  	
   

  	
  Vice
  President, Multiclass Issuance

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FEDERAL HOME LOAN MORTGAGE

  CORPORATION, as Administrator

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ W.
  Kimball Griffith

  	
   

  
	
   

  	
   

  	
  W. Kimball
  Griffith

  
	
   

  	
   

  	
  Vice
  President, Multifamily Affordable

  
	
   

  	
   

  	
   Housing
  Production & Investments

  
					

 

[SIGNATURE PAGE TO SERIES CERTIFICATE
AGREEMENT - OSPREY SERIES M014]

 

 

SPONSOR
ACCEPTANCE

 

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

 

	
   

  	
  CENTERLINE SPONSOR 2007-1

  SECURITIZATION, LLC, a Delaware limited

  liability company, as Sponsor

  
	
   

  	
   

  
	
   

  	
  By:
  CENTERLINE HOLDING TRUST, a

  Delaware statutory trust, its manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marc D.
  Schnitzer

  	
   

  
	
   

  	
   

  	
  Marc D.
  Schnitzer

  
	
   

  	
   

  	
  President

  

 

[ACCEPTANCE PAGE TO SERIES CERTIFICATE
AGREEMENT - OSPREY SERIES M014]

 

 

APPENDIX A

 

STANDARD TERMS

 

 

[See Tab 2]

 

 

EXECUTION

 

[Osprey/Taxable]

 

FREDDIE MAC

TAXABLE MULTIFAMILY VARIABLE RATE CERTIFICATES

STANDARD TERMS OF THE

SERIES CERTIFICATE AGREEMENT

 

DATED AS OF DECEMBER 1, 2007

 

The Taxable Multifamily
Variable Rate Certificates will represent undivided ownership interests in a
pool of (i) taxable Bonds issued to finance multifamily affordable housing
projects and (ii) taxable Mortgage Loans originated for such purpose
(collectively, the “Assets”).  The term “Assets”
includes such Bonds or Mortgage Loans as well as custodial receipts, trust
receipts or any other similar instruments evidencing an ownership interest in
Bonds or Mortgage Loans held in a pass-through arrangement.  Each offering of Taxable Multifamily Variable
Rate Certificates will be issued as a Series. 
Each Series will be comprised of Class A Certificates and Class B
Certificates that have different specified rights in the related Series Pool
(the Class A Certificates and Class B Certificates, collectively, the
“Certificates”).  Each Series Pool will
be separate from each other Series Pool, and the Certificates of any Series will
relate only to the Property of a single Series Pool.

 

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

 

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

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  
	
   

  	
   

  	
   

  
	
  DEFINITIONS, CERTAIN
  CALCULATIONS AND RULES OF CONSTRUCTION

  
	
   

  	
   

  	
   

  
	
  Section 1.01

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
  Section 1.02

  	
   

  	
  Certain Interest Calculations

  	
   

  	
  1

  
	
  Section 1.03

  	
   

  	
  Other Definitional Provisions

  	
   

  	
  1

  
	
  Section 1.04

  	
   

  	
  Rules of Construction

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
   

  	
   

  	
   

  
	
  THE CERTIFICATES AND
  THE SERIES POOL

  
	
   

  	
   

  	
   

  
	
  Section 2.01

  	
   

  	
  Classes of Certificates

  	
   

  	
  2

  
	
  Section 2.02

  	
   

  	
  Book-Entry Only for Class A Certificates

  	
   

  	
  2

  
	
  Section 2.03

  	
   

  	
  Denominations

  	
   

  	
  4

  
	
  Section 2.04

  	
   

  	
  Execution and Authentication; Persons Deemed Owners

  	
   

  	
  4

  
	
  Section 2.05

  	
   

  	
  Registration of Transfer and Exchange

  	
   

  	
  4

  
	
  Section 2.06

  	
   

  	
  Transfer Restrictions Related to Class B Certificates

  	
   

  	
  5

  
	
  Section 2.07

  	
   

  	
  Mutilated, Destroyed, Lost or Stolen Certificates

  	
   

  	
  5

  
	
  Section 2.08

  	
   

  	
  No Additional Liabilities or Indebtedness

  	
   

  	
  5

  
	
  Section 2.09

  	
   

  	
  Initial Authentication and Delivery of Certificates

  	
   

  	
  5

  
	
  Section 2.10

  	
   

  	
  Identification of the Property to a Series Pool

  	
   

  	
  6

  
	
  Section 2.11

  	
   

  	
  Delivery and Possession of Assets

  	
   

  	
  6

  
	
  Section 2.12

  	
   

  	
  Purposes and Powers

  	
   

  	
  7

  
	
  Section 2.13

  	
   

  	
  Recharacterization

  	
   

  	
  7

  
	
  Section 2.14

  	
   

  	
  Decrease of Aggregate Outstanding Class B Certificate Balance

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
   

  	
   

  	
   

  
	
  SPONSOR COVENANTS;
  RELEASE EVENT

  
	
   

  	
   

  	
   

  
	
  Section 3.01

  	
   

  	
  Negative Covenants

  	
   

  	
  8

  
	
  Section 3.02

  	
   

  	
  Other Obligations

  	
   

  	
  8

  
	
  Section 3.03

  	
   

  	
  Maintenance of Office or Agency

  	
   

  	
  8

  
	
  Section 3.04

  	
   

  	
  Payment of Certain Fees and Expenses

  	
   

  	
  8

  
	
  Section 3.05

  	
   

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

  	
   

  	
  9

  
	
  Section 3.06

  	
   

  	
  The Sponsor’s Interest and Net Worth

  	
   

  	
  10

  
	
  Section 3.07

  	
   

  	
  Successor Sponsor

  	
   

  	
  10

  
	
  Section 3.08

  	
   

  	
  Release Event

  	
   

  	
  11

  
	
  Section 3.09

  	
   

  	
  Sponsor’s Indemnification of the Administrator

  	
   

  	
  11

  

 

i

 

	
  ARTICLE IV

  
	
   

  	
   

  	
   

  
	
  ACCOUNTS AND
  DISBURSEMENTS; CREDIT ENHANCEMENT

  
	
   

  	
   

  	
   

  
	
  Section 4.01

  	
   

  	
  Collection of Money

  	
   

  	
  12

  
	
  Section 4.02

  	
   

  	
  Distribution Account; Establishment; Investments

  	
   

  	
  12

  
	
  Section 4.03

  	
   

  	
  Distributions and Payments from Asset Payment Subaccounts

  	
   

  	
  13

  
	
  Section 4.04

  	
   

  	
  Administrator May Appoint Paying Agents

  	
   

  	
  16

  
	
  Section 4.05

  	
   

  	
  General Provisions Regarding Accounts

  	
   

  	
  16

  
	
  Section 4.06

  	
   

  	
  Pledged Class A Certificates

  	
   

  	
  16

  
	
  Section 4.07

  	
   

  	
  Reports to Holders

  	
   

  	
  17

  
	
  Section 4.08

  	
   

  	
  Reductions of the Aggregate Outstanding Amounts

  	
   

  	
  17

  
	
  Section 4.09

  	
   

  	
  Administrator Advances and Daily Administrator Advance Charges

  	
   

  	
  17

  
	
  Section 4.10

  	
   

  	
  [Reserved]

  	
   

  	
  18

  
	
  Section 4.11

  	
   

  	
  Credit Enhancement

  	
   

  	
  18

  
	
  Section 4.12

  	
   

  	
  Confirming Credit Facility

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  
	
   

  	
   

  	
   

  
	
  RESET RATES; RESET RATE
  METHOD; RESET DATES

  
	
   

  	
   

  	
   

  
	
  Section 5.01

  	
   

  	
  Determination of Reset Rates, Reset Rate Methods and Reset Dates

  	
   

  	
  20

  
	
  Section 5.02

  	
   

  	
  Weekly Reset Rate; Monthly Reset Rate

  	
   

  	
  21

  
	
  Section 5.03

  	
   

  	
  Term Reset Rate; Term Reset Date

  	
   

  	
  22

  
	
  Section 5.04

  	
   

  	
  Notice of Reset Rate

  	
   

  	
  25

  
	
  Section 5.05

  	
   

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

  	
   

  	
  25

  
	
  Section 5.06

  	
   

  	
  Maximum Reset Rate

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  
	
   

  	
   

  	
   

  
	
  THE LIQUIDITY FACILITY;
  THE TENDER OPTION; MANDATORY TENDER

  
	
   

  	
   

  	
   

  
	
  Section 6.01

  	
   

  	
  Tender Option; Rights of Holders; Liquidity Facility

  	
   

  	
  25

  
	
  Section 6.02

  	
   

  	
  Funds Held by Administrator

  	
   

  	
  27

  
	
  Section 6.03

  	
   

  	
  Exercise of Tender Option

  	
   

  	
  28

  
	
  Section 6.04

  	
   

  	
  Mandatory Tender Events

  	
   

  	
  29

  
	
  Section 6.05

  	
   

  	
  Notice of Mandatory Tender

  	
   

  	
  29

  
	
  Section 6.06

  	
   

  	
  Funding Procedures; Payment of Purchase Price

  	
   

  	
  30

  
	
  Section 6.07

  	
   

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

  	
   

  	
  35

  
	
  Section 6.08

  	
   

  	
  Sole Sources of Payment of Purchase Price

  	
   

  	
  35

  

 

ii

 

	
  ARTICLE VII

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

  
	
   

  	
   

  	
   

  
	
  Section 7.01

  	
   

  	
  Tender Option Termination Events

  	
   

  	
  35

  
	
  Section 7.02

  	
   

  	
  Special Adjustment Event

  	
   

  	
  36

  
	
  Section 7.03

  	
   

  	
  Liquidity Provider Termination Event

  	
   

  	
  37

  
	
  Section 7.04

  	
   

  	
  Sponsor Act of Bankruptcy

  	
   

  	
  37

  
	
  Section 7.05

  	
   

  	
  Optional Disposition Date

  	
   

  	
  37

  
	
  Section 7.06

  	
   

  	
  Clean-Up Event

  	
   

  	
  39

  
	
  Section 7.07

  	
   

  	
  Credit Enhancement Expiration Date

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  
	
   

  	
   

  	
   

  
	
  THE REMARKETING AGENT

  
	
   

  	
   

  	
   

  
	
  Section 8.01

  	
   

  	
  Duties of the Remarketing Agent

  	
   

  	
  39

  
	
  Section 8.02

  	
   

  	
  Resignation or Removal of the Remarketing Agent

  	
   

  	
  40

  
	
  Section 8.03

  	
   

  	
  Successor Remarketing Agent

  	
   

  	
  40

  
	
  Section 8.04

  	
   

  	
  Merger or Consolidation of the Remarketing Agent

  	
   

  	
  40

  
	
  Section 8.05

  	
   

  	
  Notices by Remarketing Agent

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  
	
   

  	
   

  	
   

  
	
  EVENTS OF DEFAULT AND
  RIGHTS AND REMEDIES OF HOLDERS

  
	
   

  	
   

  	
   

  
	
  Section 9.01

  	
   

  	
  Event of Default

  	
   

  	
  41

  
	
  Section 9.02

  	
   

  	
  Remedies

  	
   

  	
  41

  
	
  Section 9.03

  	
   

  	
  Waiver of Past Defaults

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  
	
   

  	
   

  	
   

  
	
  THE ADMINISTRATOR;
  HOLDERS’ LISTS AND REPORTS; BONDHOLDER REPRESENTATIVE

  
	
   

  	
   

  	
   

  
	
  Section 10.01

  	
   

  	
  Certain Duties and Responsibilities

  	
   

  	
  42

  
	
  Section 10.02

  	
   

  	
  Notice of Non-Monetary Default

  	
   

  	
  43

  
	
  Section 10.03

  	
   

  	
  Certain Rights of the Administrator

  	
   

  	
  43

  
	
  Section 10.04

  	
   

  	
  Parties that May Hold Certificates

  	
   

  	
  44

  
	
  Section 10.05

  	
   

  	
  Information Regarding Holders

  	
   

  	
  44

  
	
  Section 10.06

  	
   

  	
  Corporate Administrator Required; Eligibility

  	
   

  	
  44

  
	
  Section 10.07

  	
   

  	
  Resignation

  	
   

  	
  44

  
	
  Section 10.08

  	
   

  	
  Preservation of Information; Communications to Holder

  	
   

  	
  46

  
	
  Section 10.09

  	
   

  	
  Bondholder Representative

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  
	
   

  	
   

  	
   

  
	
  PROFITS AND LOSSES

  
	
   

  	
   

  	
   

  
	
  Section 11.01

  	
   

  	
  Tax Information

  	
   

  	
  47

  
	
  Section 11.02

  	
   

  	
  Capital Accounts

  	
   

  	
  47

  
	
  Section 11.03

  	
   

  	
  Allocations of Profits, Market Discount Gains and Capital Gains

  	
   

  	
  48

  

 

iii

 

	
  Section 11.04

  	
   

  	
  Allocations of Losses and Capital Losses

  	
   

  	
  49

  
	
  Section 11.05

  	
   

  	
  Special Allocations

  	
   

  	
  49

  
	
  Section 11.06

  	
   

  	
  Tax Allocations; Code Section 704(c)

  	
   

  	
  51

  
	
  Section 11.07

  	
   

  	
  Allocation Among Holders

  	
   

  	
  52

  
	
  Section 11.08

  	
   

  	
  Tax Matters; Tax Election

  	
   

  	
  52

  
	
  Section 11.09

  	
   

  	
  Accounting Method

  	
   

  	
  52

  
	
  Section 11.10

  	
   

  	
  Tax Matters Partner

  	
   

  	
  52

  
	
  Section 11.11

  	
   

  	
  Compliance with Code Requirements

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII

  
	
   

  	
   

  	
   

  
	
  AMENDMENTS

  
	
   

  	
   

  	
   

  
	
  Section 12.01

  	
   

  	
  Amendments

  	
   

  	
  53

  
	
  Section 12.02

  	
   

  	
  Execution of Amendments

  	
   

  	
  55

  
	
  Section 12.03

  	
   

  	
  Effect of Amendment

  	
   

  	
  55

  
	
  Section 12.04

  	
   

  	
  Reference in Certificates to Amendments

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  
	
   

  	
   

  	
   

  
	
  TERMINATION

  
	
   

  	
   

  	
   

  
	
  Section 13.01

  	
   

  	
  Termination

  	
   

  	
  55

  
	
  Section 13.02

  	
   

  	
  Final Distribution on the Series Expiration Date

  	
   

  	
  56

  
	
  Section 13.03

  	
   

  	
  Terminating Mandatory Tender Date

  	
   

  	
  57

  
	
  Section 13.04

  	
   

  	
  Exchange Date

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIV

  
	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
  Section 14.01

  	
   

  	
  Acts of Holders

  	
   

  	
  60

  
	
  Section 14.02

  	
   

  	
  Notices

  	
   

  	
  61

  
	
  Section 14.03

  	
   

  	
  Notices to Holders; Waiver

  	
   

  	
  61

  
	
  Section 14.04

  	
   

  	
  Successors and Assigns

  	
   

  	
  61

  
	
  Section 14.05

  	
   

  	
  Severability

  	
   

  	
  61

  
	
  Section 14.06

  	
   

  	
  Benefits of Series Certificate Agreement

  	
   

  	
  61

  
	
  Section 14.07

  	
   

  	
  Governing Law

  	
   

  	
  62

  
	
  Section 14.08

  	
   

  	
  Counterparts

  	
   

  	
  62

  
	
  Section 14.09

  	
   

  	
  Non-Petition Covenants

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A — Definitions

  	
   

  	
  A-1

  
	
  Exhibit B — Form of Class A
  Certificates

  	
   

  	
  B-1

  
	
  Exhibit C — Form of Class B
  Certificates

  	
   

  	
  C-1

  
	
  Exhibit D — Form of Class B
  Investor Letter

  	
   

  	
  D-1

  

 

iv

 

ARTICLE I

DEFINITIONS, CERTAIN CALCULATIONS AND RULES OF CONSTRUCTION

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

ARTICLE II

THE CERTIFICATES AND THE SERIES POOL

 

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

 

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

 

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

 

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

 

(c)           Any successor securities
depository must be a clearing agency registered with the Commission pursuant to
Section 17A of the Securities Exchange Act, and must enter into an
agreement with Freddie Mac and the Administrator agreeing to act as the
depository and clearing 

 

2

 

agency
for all the Class A Certificates. 
After any such agreement has become effective, DTC will present all the Class A
Certificates for registration of transfer in accordance with Section 2.05,
and the Administrator will register them in the name of the successor
securities depository or its nominee.  If
a successor securities depository has not entered into such agreement or
otherwise accepted such position at least 10 days before the effective date of
termination of DTC’s services, the book-entry system will automatically
terminate and may not be reinstated without the consent of all the Holders of
the Class A Certificates.

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

Section 2.09         Initial Authentication and Delivery of Certificates.  The initial Certificates will be executed,
authenticated and delivered by the Administrator only after Freddie Mac
executes the Series Certificate Agreement and thereby directs the
execution, authentication and delivery of the Certificates.  The Series Certificate Agreement will
identify the Persons in whose names the Class A Certificates are to be
registered, the Current Certificate Balances to be registered to each such
Person, and also state that the Class B Certificates are to be registered
in the name of the Pledge Custodian for the benefit of the Sponsor subject to
the security interest 

 

5

 

created by the Reimbursement
Agreement in favor of Freddie Mac, but only after each of the following is
delivered or has occurred:

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 2.10         Identification of the Property to a Series Pool.  (a)  Freddie Mac acknowledges its
ownership of the Assets on the Date of Original Issue.  By its execution of the Series Certificate
Agreement, Freddie Mac will simultaneously transfer the Assets 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
Assets, including all Asset Payments made from and after the Date of Original
Issue and all certificates and instruments, if any, representing the Assets, (b) the
Distribution Account (including all investments held therein and earnings
thereon) and (c) all proceeds of the Assets and the Distribution Account
of every kind and nature.

 

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

 

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

 

6

 

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

 

Section 2.13         Recharacterization.  The parties intend that the transfer of the
Property 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
Property.  The parties do not intend that
such transfer be deemed a pledge of the Series Pool Property by Freddie
Mac to secure a debt or other obligation of Freddie Mac.  However, if in spite of the parties’ intent,
the Series Pool Property 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
Property 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 Property, and
all amounts payable to the holders of the Series Pool Property 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
Property in favor of the Administrator in the event of any such recharacterization.

 

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

 

7

 

ARTICLE III

SPONSOR COVENANTS; RELEASE EVENT

 

Section 3.01         Negative Covenants. 
The Sponsor will not:

 

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

 

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

 

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

 

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

 

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

 

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

 

(b)           except as otherwise expressly provided in the Series Certificate
Agreement or the last paragraph of Section 3.5 of the Reimbursement
Agreement, to reimburse or cause reimbursement of the Administrator for all
reasonable out-of-pocket expenses, disbursements and advances incurred or made
by it in accordance with the Series Certificate Agreement (including the
reasonable compensation, expenses and disbursements of its respective agents
and counsel), except any such expense, disbursement or advance as may be
attributable to its gross negligence, bad faith, fraud or willful misconduct;
and

 

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

 

8

 

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

 

Section 3.05         Liabilities and Recourse Against Freddie Mac and the Sponsor for
Liabilities of the Series Pool.  (a)  The Sponsor will perform only those
duties of it that are specifically set forth in the Series Certificate
Agreement, and does not assume any other obligation or liability under the Series Certificate
Agreement.  If the Series Certificate
Agreement provides that the Partnership Factors apply to the Series Pool,
the Sponsor will be corporately liable for any fees, expenses and other
liabilities of the Series Pool arising under the Series Certificate
Agreement to the extent not otherwise satisfied (excluding amounts due to
Holders in respect of their Certificates). 
Except to the extent payable from the cash flow of the Assets 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 Assets or any other Property 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
related Owner is the sole obligor with respect to the payment of the principal
of or interest on any Mortgage Loan.  The
payments on the Assets, amounts in the Distribution Account, the Credit
Enhancement and the Liquidity Facility constitute the sole security for the
Certificates.  Neither the Sponsor nor
Freddie Mac has any obligation whatsoever with respect to any Asset or any
payments due on the Assets or with respect to the security for, or the
sufficiency of, any such payments or any obligations of any Issuer, any Owner,
any related credit enhancer or any other Person arising in connection with the
Assets, other than the obligations of Freddie Mac under the Credit Enhancement
and the Liquidity Facility.  In the event
of a default in the payment of the principal of or interest on, or any other
amount payable with respect to, any of the Assets, or in the event of a default
under any credit enhancement with respect to any Bond, each of the Sponsor and
Freddie Mac will have no duty to proceed against the Issuer, the Owner or any
related credit enhancer and no obligation to assert any rights and privileges
of the Holders with respect to such Assets or such credit enhancement.  Each of the Sponsor and Freddie Mac will be
under no obligation to the Class A Holders whatsoever to appear in,
prosecute or defend any action, suit or other proceeding in respect of such
Assets or such credit enhancement.  The
Servicer and Special Servicer will be entitled to service and conduct asset
resolution with respect to the Bonds and the related Bond Mortgage Loans and
the Mortgage Loans subject to the terms of the Servicing Agreement with Freddie
Mac.

 

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

 

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

 

(e)           Without limiting the
foregoing, it is expressly acknowledged and agreed by the parties to the Series Certificate
Agreement and other Documents, and any beneficiary of the Series Certificate
Agreement by acceptance of its status as such beneficiary, and by Holders 

 

9

 

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 3.06         The Sponsor’s Interest and Net Worth.  The
Sponsor represents, warrants and covenants that it (a) has and will
maintain throughout the term of the Series Certificate Agreement a Capital
Account Balance in an amount not less than the Minimum Sponsor Interest and, if
the Series Certificate Agreement provides that the Partnership Factors
will apply to the Series Pool, a net worth as determined in compliance
with Section 4.07 of Revenue Procedure 89-12; and (b) will not take a
distribution of any amount from the Property 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 Assets and the Certificates.

 

Section 3.07         Successor Sponsor.  If a party other than
Freddie Mac is the Sponsor and the Sponsor wishes to assign its rights and
obligations under the Series Certificate Agreement to another Person and
Freddie Mac provides its prior written consent, the Sponsor will provide notice
to the Administrator, the Remarketing Agent and each applicable Rating Agency,
together with the written consent of Freddie Mac, which shall not be
unreasonably withheld, at least 10 

 

10

 

Business Days prior to the
proposed effective date of such assignment. 
Such notice (a “Successor Sponsor
Notice”) will set forth (A) a brief statement that the Sponsor
is assigning its rights and obligations hereunder to the successor Sponsor
named therein and (B) the proposed effective date of such assignment.  When the Administrator has received the
Successor Sponsor Notice, with the required Freddie Mac consent, the assignment
of the Sponsor to its successor will be irrevocable and will take place on the
proposed date set forth in the Successor Sponsor Notice.  The Administrator shall, promptly after its
receipt of a Successor Sponsor Notice, provide notice of the same to the
Registered Holders of the Class A Certificates.

 

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

 

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

 

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

 

11

 

ARTICLE IV

 

ACCOUNTS AND DISBURSEMENTS;
CREDIT ENHANCEMENT

 

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

 

Section 4.02         Distribution Account; Establishment; Investments.  (a)  On or before the Date of Original
Issue, the Administrator will establish the Distribution Account into which the
Administrator will deposit all Asset Payments received from time to time,
including 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
Asset Payment Subaccount – Interest; (ii) the Asset Payment Subaccount –
Principal; and (iii) the Asset Payment Subaccount – Holdback.

 

(b)           The Administrator will
deposit into the Asset Payment Subaccount–Interest or Asset Payment Subaccount–Principal,
as applicable, promptly upon receipt, Asset Payments in respect of each Asset
Interest Payment Date or Redemption Date, as applicable, Payments in connection
with any Release Event and any Bankruptcy Coverage Payments.  The Administrator will also deposit into the
Asset Payment Account–Interest any Administrator Advances it makes pursuant to Section 4.09.  Prior to any Asset Interest Payment Date or
Redemption Date, as applicable, the Administrator will notify Freddie Mac of
the amounts of each Asset 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 Assets.  If the Administrator receives any Redemption
Premium, it will promptly deposit it into the Asset Payment Subaccount –
Principal.

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

(ii)           second, to the Special Servicer, the amount of the Special
Servicing Fee (if any) due and payable on such date;

 

(iii)          third, pro rata
to

 

(A)          the Registered
Holders of Class A Certificates (other than Pledged Class A
Certificates), the aggregate of the amounts of interest accrued, for each day
in the Accrual Period related to that Payment Date at the Reset Rate in effect
for each such day, on the Current Certificate Balance of such Certificates; and

 

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

 

(iv)          fourth, to the Administrator, the amount of the
aggregate accrued Daily Administrator Advance Charges unpaid on such date (if Section 4.09
is made applicable under the Series Certificate Agreement);

 

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

 

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

 

13

 

(vii)         seventh, to the Administrator, the amount of the
Administrator Fee due and payable on such date and all other reasonable amounts
payable to the Administrator upon the issuance of a new Certificate pursuant to
Section 2.05 or Section 2.07 or as reimbursement for its
out-of-pocket expenses;

 

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

 

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

 

(x)            tenth, to the
Asset Payment Subaccount—Holdback, the amount necessary to fully fund the
Holdback Requirement, if applicable, as of such Payment Date; and

 

(xi)           eleventh, to
the Pledge Custodian for the benefit of the Holders of Class B
Certificates to be distributed in accordance with the terms of the
Reimbursement Agreement, the remainder.

 

(b)           No later than 11:00a.m. on
each Redemption Date, the Administrator will withdraw from the Asset Payment
Subaccount — Principal the Available Funds deposited into that subaccount and
will distribute the following amounts in the following priority, in each case
to the extent of remaining Available Funds:

 

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

 

Amount to be paid = X + Y

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

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

THAN ZERO]

 

and where:

 

A =                            the principal
amount paid by Freddie Mac related to the applicable Bonds or Mortgage Loans
subject to a Release Event

 

14

 

B =                              the outstanding
principal amount of tax-exempt bonds that financed the same Project as the
applicable Bonds

 

C =                              the Current Class B
Certificate Balance

 

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

 

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

 

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

 

(1) 
Example 1:

Assumptions:

1.             Release Event applicable to
Bonds only; no Mortgage Loan involved.

2.             Outstanding Asset Balance of
applicable Bonds:  $9,000,000

3.             Outstanding principal amount
of related tax-exempt bonds:  $1,000,000

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

5.             Partnership Factors have not
been elected

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

 

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

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

X =          $6,000,000 minus $1,000,000

X =          $5,000,000

 

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

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

Y =          $9,000,000 minus $24,995,000

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

 

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

 

Example
2:

Assumptions:       1.        Same assumptions, with the
only difference being that the Current Class B Balance is $2,000,000.

 

X
= $5,000,000

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

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

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

Y
= $2,005,000

 

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

 

15

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 4.06         Pledged Class A Certificates.  (a)  The Administrator will not obtain
separate CUSIP identification numbers for Pledged Class A Certificates
unless required by DTC.  The
Administrator will take any reasonable action requested by Freddie Mac in order
to perfect or otherwise safeguard its security interest in the Pledged Class A
Certificates, including arranging for such pledge to be noted in the records of
DTC Participants.

 

16

 

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

 

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

 

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

 

(i)            the
related Payment Date for such monthly report;

 

(ii)           the
Class Factor for the Class A Certificates; and

 

(iii)          the
weighted average of the Reset Rate for the preceding monthly period.

 

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

 

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

 

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

 

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

 

(a)           Administrator
to Make Administrator Advances. 
The Administrator may, but need not, make Administrator Advances to
Holders of Class A Certificates on a Payment Date in an amount up to the
Required Class A Certificate Interest Distribution Amount for the prior
Accrual Period.  The decision by the
Administrator to make an Administrator Advance in any amount will be made in
the sole discretion of the Administrator, and no decision to make an
Administrator Advance on any Payment Date will impose any obligation to make an
Administrator Advance of any further amount. 
On each occasion when the Administrator determines to make an
Administrator Advance, the Administrator will notify the Remarketing Agent and
Freddie Mac of such determination prior to 12:00 noon, on the Business Day
prior to such Payment Date.

 

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

 

17

 

Interest
as provided in Section 4.03(a) or from proceeds of Assets 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 Assets or in the Asset Payment Subaccount–Holdback before
payments to Class A Holders on each Payment Date and as elsewhere herein
upon the withdrawal, sale or redemption of Assets.

 

(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 Assets any
unreimbursed Administrator Advances, unpaid Daily Administrator Advance
Charges, and accrued fees and reimbursements due to Freddie Mac, the
Administrator, the Remarketing Agent or the Servicer.

 

(f)            If the Administrator determines not to make Administrator
Advances for any reason, interest distributions on the Class A
Certificates will be made on each Payment Date in the manner described in Section 4.03(a) by
the payment of the Available Funds in the Asset Payment Subaccount-Interest and
the Asset Payment Subaccount-Holdback. 
After the payment of Administrator Fees and aggregate Daily
Administrator Advance Charges, all amounts remaining in the Asset Payment
Subaccount Interest and the Asset Payment Subaccount Holdback will be paid
immediately to Holders of Class A Certificates on each Payment Date.  Interest on the Class A Certificates
will continue to accrue at the Reset Rate in effect for each Accrual Period
without an increase in the accrual rate for any delay in payment.

 

Section 4.10         [Reserved].

 

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

 

(a)           Freddie Mac hereby guarantees to each
Registered Holder of a Class A Certificate the timely payment on each
Payment Date of such Holder’s pro rata portion of

 

(i)            the
Required Class A Certificate Interest Distribution Amount; and

 

(ii)           that
portion of the scheduled principal then due and payable on any Asset on the
most recent Asset Redemption Date that was not received by the Administrator on
such Asset Redemption Date (excluding any Redemption Premium).

 

(b)           Freddie Mac hereby guarantees to each
Registered Holder of a Class A Certificate or a Class B Certificate
the timely payment on each Release Event Date of the applicable Release
Purchase Price (but not any Hypothetical Gain Share payable on such date).

 

18

 

(c)           Freddie Mac hereby guarantees to the
Registered Holder of the Class B Certificates the timely payment on each Payment
Date of such Holder’s residual interest set forth in Section 4.03(a) and
the payment of the remainder of principal set forth in Section 4.03(b) (but
in each such case only to the extent the Administrator has received Available
Funds required to be paid to the Pledge Custodian, as Registered Holder,
pursuant to Section 4.03(a) or Section 4.03(b), as applicable).

 

(d)           In addition, with respect to any
Asset, if all or any portion of a payment of principal of (but not premium
related to such Assets), or interest on, such Assets 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 Assets, or any
other Person (other than Freddie Mac) making such payment, Freddie Mac will pay
to the Administrator, within five (5) Business Days after receiving a
written notice from the affected Registered Holders of the Certificates that
were required to pay such recovery, an amount equal to the amount of such
recovery.  Nothing contained in this
paragraph will preclude Freddie Mac, after making the payment referred to in
the prior sentence, from contesting, directly or indirectly, in any such
proceeding, any such attempted recovery or stay, or from seeking to lift or
modify the automatic stay, and Freddie Mac in its capacity as Administrator,
will have the right to contest any attempted recovery or stay, or to seek to
lift or modify any automatic stay.  The
amounts payable pursuant to this paragraph will be deposited into the
applicable Asset Payment Subaccount within the Distribution Account.

 

(e)           Except as provided in the next
sentence, Freddie Mac’s obligations under the Credit Enhancement will terminate
on the Credit Enhancement Expiration Date. 
Under certain circumstances involving an Owner Act of Bankruptcy,
Freddie Mac’s obligations under the immediately preceding paragraph will
continue beyond the Credit Enhancement Expiration Date, as follows:  Freddie Mac’s obligations under the
immediately preceding paragraph will continue beyond the Credit Enhancement
Expiration Date with respect to any payment (a “Covered Payment”) on any Assets
made by any person (other than Freddie Mac) within three hundred sixty-six
(366) days prior to an Owner Act of Bankruptcy with respect to such Bonds, and
will terminate on the later to occur of (i) the date on which Freddie Mac
has paid to the Administrator an amount equal to all Covered Payments recovered
from the Holders pursuant to such proceeding, and (ii) the date on which
all claims with respect to any such proceeding have been denied with prejudice
by a final, nonappealable order of a court of competent jurisdiction, and (b) if
no Owner Act of Bankruptcy has occurred, the last expiration date of all
statutes of limitations applicable to claims against Holders pursuant to an
Owner Act of Bankruptcy.  However, all
Credit Enhancement obligations of Freddie Mac with respect to any Assets will
terminate on the earlier of (A) the receipt by the Administrator of a
certificate of the applicable owner dated not earlier than 366 days following
the applicable Credit Enhancement Expiration Date to the effect that as of the
date of the certificate no Owner Act of Bankruptcy has occurred or (B) 380
days following such Credit Enhancement Expiration Date provided that the
Administrator has not received notice that an Owner Act of Bankruptcy has
occurred.

 

19

 

(f)            Freddie Mac will be subrogated to
all the rights, interest, remedies, powers and privileges of the Holders with
respect to any payments made by Freddie Mac pursuant to its Credit Enhancement
set forth in this Section 4.11.  In
particular, to the extent Freddie Mac makes a payment pursuant to its Credit
Enhancement under this Section 4.11 and to the extent Freddie Mac has not
been fully reimbursed for such payment pursuant to the terms of the
Reimbursement Agreement, the Administrator will remit to Freddie Mac any
subsequent Bond Payments or other payments received by the Administrator in
satisfaction of the obligations with respect to which such Credit Enhancement
payment was made.  In the event Freddie
Mac makes a payment pursuant to its Credit Enhancement under this Section 4.11
and is fully reimbursed for such Credit Enhancement payment in accordance with
the Reimbursement Agreement, then any subsequent Bond Payments or other
payments received by the Administrator in satisfaction of the obligations with
respect to which such reimbursed Credit Enhancement payment was made, shall be
paid to the Pledge Custodian for the benefit of the Holders of the Class B
Certificates to be distributed in accordance with the terms of the
Reimbursement Agreement.  Each Holder of
Certificates will be deemed to have consented to these subrogation rights.

 

(g)           Any payments by Freddie Mac pursuant
to its guaranty set forth in this Section 4.11 will be made by Freddie Mac
using its own funds, and not any funds of the Sponsor or otherwise derived from
the Assets.

 

(h)           For sake of clarity, if the Bonds
deposited with respect to a Series Pool are custodial receipts, trust
receipts or any other similar instrument evidencing an ownership interest in
municipal securities held in a pass-through arrangements, then payments
guaranteed by Freddie Mac in this Section 4.11 with respect to the Bonds
will refer to such payments with respect to the Underlying Bonds.

 

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

 

ARTICLE V

RESET RATES; RESET RATE METHOD; RESET DATES

 

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

 

(a)           Each Series of Class A Certificates may have a Reset Rate
Method that is a Weekly Reset Rate Method, a Monthly Reset Rate Method or a
Term Reset Rate Method.  The Series Certificate
Agreement will designate the initial Reset Rate Method as of the Date of
Original Issue.  The Remarketing Agent
will determine the Reset Rate for the Class A Certificates in accordance
with this Article V.  The Holders of
not less than 51% of the Aggregate Outstanding Class B Certificate
Balance, with the consent of Freddie Mac, will have 

 

20

 

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

 

(b)           (i) Any change in the Reset Rate
Method from a Weekly Reset Rate Method or a Monthly Reset Method will be
conditioned upon the remarketing of all Available Remarketing Class A
Certificates for a price equal to the Current Class A Certificate Balance
thereof; and (ii) any change in the Reset Rate Method from a Term Reset Rate
Method (but not a continuation of a Term Reset Rate Method) will be conditioned
upon the remarketing of all Available Remarketing Class A Certificates for
a price equal to the Current Class A Certificate Balance thereof.

 

(c)           If all Available Remarketing Class A
Certificates are not remarketed for a purchase price equal to the Current Class A
Certificate Balance thereof as provided in Section 5.01(b), beginning on
the date that would have been the Reset Rate Method Change Date, the Reset Rate
Method that will be in effect will be a Weekly Reset Rate Method, and the
Weekly Reset Rate will be determined by the Remarketing Agent on or prior to
the Reset Rate Method Change Date, and will be effective from the day that
would have been the Reset Rate Method Change Date through the next succeeding
Wednesday.  The Reset Rate Method
thereafter will continue to be a Weekly Reset Rate Method unless and until a
Reset Rate Method Change Date occurs.

 

Section 5.02         Weekly
Reset Rate; Monthly Reset Rate.

 

(a)           Weekly Reset Rate; Weekly
Reset Date.  If the Reset Rate
Method is, or is being changed to, a Weekly Reset Rate Method, the Remarketing
Agent will determine, by not later than 5:00 p.m. on each Weekly Reset
Date, the Weekly Reset Rate for the Class A Certificates, which rate will
be the per annum rate, not exceeding the Maximum Reset Rate, determined by the
Remarketing Agent as the minimum rate of interest which would, in the judgment
of the Remarketing Agent, under then prevailing market conditions (taking into
account that such rate will be reset on the next Weekly Reset Date), result in
a sale of the Class A Certificates at a market price equal to the Current
Certificate Balance thereof, plus accrued interest.  The Weekly Reset Rate applicable on the
Weekly Reset Date in each week will be in effect from Thursday of such week
through Wednesday of the following week, or, if earlier, through the day
preceding the next Reset Rate Method Change Date.  However, if on any Weekly Reset Date, the
Remarketing Agent fails to establish the Weekly Reset Rate, the then applicable
Reset Rate will be the lesser of the previous Reset Rate or the Maximum Reset
Rate.

 

(b)           Monthly Reset Rate;
Monthly Reset Date.  If the
Reset Rate Method is, or is being changed to, a Monthly Reset Rate Method, the
Remarketing Agent will determine, by not later than 5:00 p.m. on each
Monthly Reset Date, the Monthly Reset Rate for the Class A Certificates,
which rate will be the per annum rate, not exceeding the Maximum Reset Rate,
determined by the Remarketing Agent as the minimum rate of interest which
would, in the judgment of the Remarketing Agent, under then prevailing market
conditions (taking into account that such rate will be reset on the next
Monthly Reset Date), result in a sale of the Class A Certificates at a
market price equal to the Current Certificate Balance thereof, plus accrued
interest.  The Monthly Reset Rate will be
in effect from the first day of the month through the last day of such month
or, if earlier, on the day preceding the next Reset Rate Method Change
Date.  However, if on any Monthly Reset
Date, the Remarketing Agent fails to establish the Monthly Reset Rate, the then

 

21

 

applicable
Reset Rate will be the lesser of the previous Reset Rate or the Maximum Reset
Rate.  Six Business Days before any
Monthly Reset Date, the Remarketing Agent will determine the Preliminary Class A
Certificate Rate pursuant to the standard set forth in the first sentence of
this Subsection 5.02(b).  Upon such
determination, the Remarketing Agent will immediately give telephonic notice of
the Preliminary Class A Certificate Rate to each Holder requesting such
notice.  The Monthly Reset Rate may be
more than, but will be at least equal to such Preliminary Class A
Certificate Rate, provided that it may not exceed
the Maximum Reset Rate.

 

(c)           Reset Rate Method Change
Notice and Related Mandatory Tender.  If
the Holders of not less than 51% of the Aggregate Outstanding Class B
Certificate Balance, with the written consent of Freddie Mac (which may be
conditioned upon a repricing by the Remarketing Agent), at any time determine
to change the Reset Rate Method from a Weekly Reset Rate Method to a Monthly
Reset Rate Method, or from a Monthly Reset Rate Method to a Weekly Reset Rate
Method, and gives the Administrator notice of such determination along with a
copy of such consent if applicable, the Administrator will give, by Electronic
Notice, a Reset Rate Method Change Notice to the Remarketing Agent and to the
Registered Holders of the Class A Certificates, not later than the second
Business Day following the date Freddie Mac consents to or initiates such
change.  Each such Reset Rate Method
Change Notice must be provided to the Holders of Class A Certificates no
later than eight Business Days prior to the Reset Rate Method Change Date and
state (A) that a Weekly Reset Rate Method or Monthly Reset Rate Method,
whichever is applicable, will be in effect, following the Reset Rate Method
Change Date, (B) the date on which such Weekly Reset Rate Method or
Monthly Reset Rate Method will become effective, (C) that the Class A
Certificates will be subject to Mandatory Tender on the Reset Rate Method
Change Date (subject to the Class A Holders’ right to retain their Class A
Certificates) and (D) that the change in Reset Rate Method will be subject
to the remarketing of all Available Remarketing Class A Certificates for a
price equal to the Current Class A Certificate Balance thereof and if not
remarketed, the Reset Rate Method will change to the Weekly Reset Rate
Method.  Such notice will be attached to
the Mandatory Tender Notice that is required to be provided pursuant to Section 6.05.

 

Section 5.03         Term
Reset Rate; Term Reset Date.

 

(a)           Determination of Term
Reset Rate.  Subject to the
next sentence of this Section 5.03(a), if the Reset Rate Method is, or is
being changed to, a Term Reset Rate Method, the Remarketing Agent will
determine by not later than 5:00 p.m. on the Term Reset Date the Term
Reset Rate for the Class A Certificates, which rate will be the per annum
rate, not exceeding the Maximum Reset Rate (or in the case of a continuation of
the Term Reset Rate Method, the initial Term Reset Rate plus fifty basis points
(0.50%)), determined by the Remarketing Agent as the minimum rate of interest
which would, in the judgment of the Remarketing Agent, under then prevailing
market conditions (taking into account that such rate will be reset on the next
Term Reset Date), result in a sale of the Class A Certificates at a price
equal to the Current Certificate Balance thereof, plus accrued interest.  If the Reset Rate Method is being changed to
a Term Reset Rate Method, the Class A Certificates will only bear interest
at the Term Reset Rate if on the Term Reset Date all Available Remarketing Class A
Certificates are remarketed for a price equal to the Current Class A
Certificate Balance thereof and if all such Available Remarketing Class A
Certificates are not remarketed for a price equal to the Current Class A
Certificate Balance thereof, beginning on the date that would have been the
Term Reset Date, the Class A Certificates will bear interest at the Weekly
Reset Rate.

 

22

 

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

 

The Holders of not less than
51% of the Aggregate Outstanding Class B Certificate Balance shall, in
conjunction with the Remarketing Agent, with the written consent of Freddie
Mac, establish the length of the period during which the Term Reset Rate will
be effective.  In the case of a
continuation of the Term Reset Rate Method, if Freddie Mac does not provide its
consent to such period or such Holders do not provide the applicable Notice to
the Administrator when required by Section 5.03(b), the Term Reset Rate
for the ensuing term shall be established in accordance with the parameters of
this Subsection 5.03(a) for a period extending to the 

 

Maximum Reset Date or (if
all the Class A Certificates cannot be remarketed at a rate equal to or
lower than the maximum rate at a price equal to the Current Certificate Balance
thereof, plus accrued interest, to such date) then to such next shorter period
in the determination of the Remarketing Agent that would result in a sale of
all the applicable Class A Certificates at a rate equal to or lower than
the applicable maximum rate at a price equal to the Current Certificate Balance
thereof, plus accrued interest.

 

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

 

Six Business Days before any
Term Reset Date, the Remarketing Agent will determine the Preliminary Class A
Certificate Rate pursuant to the standard set forth in the first sentence of
this Subsection 5.03(a).  Upon such
determination, the Remarketing Agent will immediately give telephonic notice of
the Preliminary Class A Certificate Rate and the length of the ensuing
term to each Holder requesting such notice. 
The Term Reset Rate may be more than but will be at least equal to such
Preliminary Class A Certificate Rate, provided that it may not exceed the
Maximum Reset Rate (or in the case of a continuation of the Term Reset Rate
Method, the initial Term Reset Rate (plus fifty basis points (0.50%)).

 

(b)           Term Reset Method Notice
and Related Mandatory Tender.  A Term Reset Rate may be set or reset
as of the applicable Term Effective Date and may be set or reset at a fixed
rate.  If the Holders of not less than
51% of the Aggregate Outstanding Class B Certificate Balance determine to continue
the Term Reset Rate Method in effect with respect to the Class A
Certificates, or with the written consent of Freddie Mac, determine to change
the Reset Rate Method from a Weekly Reset Rate Method or Monthly Reset Rate
Method to a Term Reset Rate 

 

23

 

Method
(and gives the Administrator notice of such determination along with a copy of
such consent if applicable, in all events before any Term Reset Date and on or
prior to the ninth Business Day prior to the Term Effective Date) the
Administrator will give by Electronic Notice, a Term Reset Method Notice to the
Remarketing Agent and to the Registered Holders of the Class A
Certificates not later than the Business Day following the date Freddie Mac
consents to or initiates such change. 
Such notice will be attached to the Mandatory Tender Notice that is
required to be provided pursuant to Section 6.05, if applicable.  Each such Term Reset Method Notice will set
forth: (A) a statement that the ensuing Reset Rate Method will be a Term
Reset Rate Method, (B) the Term Effective Date on which the Term Reset
Rate Method will take effect and the length of the period during which the Term
Reset Rate will be in effect, (C) a statement that the Class A
Certificates will be subject to Mandatory Tender on the Term Effective Date
(subject to the Class A Holders’ right to retain their Class A
Certificates), provided that such date will be no earlier than eight Business
Days following the date on which such notice is given to the Registered Holders
by the Administrator, (D) the Term Reset Date on which the Term Reset Rate
for such Term Effective Date will be determined, (E) a statement that the
Preliminary Class A Certificate Rate will be determined six Business Days
before the Term Reset Date, and (F) a statement that the beginning of the
Term Reset Rate Method on the Term Reset Date in the case of a change to (but
not a continuation of) the Term Reset Rate Method will be subject to the
remarketing of all Available Remarketing Class A Certificates for a price
equal to the Current Class A Certificate Balance thereof and if not so
remarketed, beginning on the date that would have been the Term Reset Date, the
Class A Certificates will bear interest at the Weekly Reset Rate.

 

(c)           Reset Rate Method Change
Notice and Related Mandatory Tender.  If
the Holders of not less than 51% of the Aggregate Outstanding Class B
Certificate Balance, with the written consent of Freddie Mac (which may be
conditioned upon a repricing by the Remarketing Agent), determine to change the
Reset Rate Method from a Term Reset Rate Method to a Weekly Reset Rate Method
or Monthly Reset Rate Method and give the Administrator notice of such
determination along with a copy of such consent if applicable, no later than
the ninth Business Day prior to the day that would be the Term Effective Date
if the Term Reset Rate Method were to continue, the Administrator will give by
Electronic Notice a Reset Rate Method Change Notice to the Remarketing Agent
and to the Registered Holders of the Class A Certificates not later than
the Business Day following the date Freddie Mac consents or initiates such
change.  Such Reset Rate Method Change
Notice will set forth (A) a statement that a Weekly Reset Rate Method or
Monthly Reset Rate Method, whichever is applicable, will be in effect, (B) the
date on which such Weekly Reset Rate Method or Monthly Reset Rate Method will
become effective; provided that such date will be a Business Day not earlier
than the first day following the end of the term which was in effect and not
earlier than eight Business Days following the date on which such notice is
given by the Administrator to the Registered Holders, (C) a statement that
the Class A Certificates will be subject to Mandatory Tender on the Reset
Rate Method Change Date (subject to the Class A Holders’ right to retain
their Class A Certificates) and (D) a statement that if all Available
Remarketing Class A Certificates are not remarketed for a price equal to
the Current Class A Certificate Balance thereof, beginning on the Reset
Method Change Date all Class A Certificates will bear interest at the
Weekly Reset Rate, notwithstanding, if applicable, the prior election to change
the Reset Rate Method to the Monthly Reset Method.  Such notice will be attached to the Mandatory
Tender Notice that is required to be provided pursuant to Section 6.05.

 

24

 

(d)           Reversion to Weekly Reset
Rate Method.  In the case of a
change to (but not a continuation of) the Term Reset Rate Method, if the
Administrator has not received a Term Reset Method Notice pursuant to Section 5.03(b),
or a Reset Rate Method Change Notice pursuant to Section 5.03(c), by the
ninth Business Day prior to the day that would be the Term Effective Date if
the Term Reset Rate Method were to continue or if all Available Remarketing Class A
Certificates have not been remarketed for a price equal to the Current Class A
Certificate Balance thereof, the Reset Rate Method that will be in effect as of
the end of such term will be a Weekly Reset Rate Method, and the Weekly Reset
Rate will be determined by the Remarketing Agent on the last Business Day on or
prior to the end of such term and will be effective from the day following the
end of such term through the next succeeding Wednesday, or, if earlier, through
the day preceding the next Reset Rate Method Change Date.  Unless any such Reset Rate Method Change Date
occurs on or prior to such Wednesday, the Reset Rate Method thereafter will continue
to be a Weekly Reset Rate Method unless and until a Reset Rate Method Change
Date occurs.  On the eighth Business Day
prior to the day that would be the Term Effective Date if the Term Reset Rate
Method were to continue, the Administrator will give a notice to Freddie Mac
and the Registered Holders of Class A Certificates setting forth (A) a
statement that a Weekly Reset Rate Method will be in effect, (B) the date
on which such Weekly Reset Rate Method will become effective, and (C) a
statement that the Class A Certificates will be subject to Mandatory
Tender on the Reset Rate Method Change Date (subject to the Class A
Holders’ right to retain their Class A Certificates).  Such notice will be attached to the Mandatory
Tender Notice that is required to be provided pursuant to Section 6.05.

 

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

 

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

 

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

 

ARTICLE
VI

THE LIQUIDITY FACILITY; THE TENDER OPTION; MANDATORY TENDER

 

Section 6.01         Tender
Option; Rights of Holders; Liquidity Facility.  (a)  Each Holder of a Class A
Certificate will have the right, at its option, at the times and in compliance
with the

 

25

 

requirements, and subject to
the provisions of Section 6.03, to tender such Holder’s Class A
Certificate in Authorized Denominations to the Administrator for purchase and
to receive payment of the Purchase Price thereof pursuant to Section 6.06.  This right of tender is not available to
Affected Certificates after the occurrence of an applicable Tender Option
Termination Event or to Pledged Class A Certificates.

 

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

 

(ii)           The initial Liquidity Commitment is
an amount equal to the sum of (A) the Aggregate Outstanding Class A
Certificate Balance as of the Date of Original Issue plus (B) an amount
equal to interest for thirty five (35) days on the Aggregate Outstanding Asset
Balance at a rate per annum equal to the Weighted Average Asset Rate assuming
that the Asset Rate is the maximum possible rate for the related Asset.  The Liquidity Commitment will be increased on
the date on which Class B Certificates are converted to Class A
Certificates pursuant to Section 2.14 so that as of such date of
conversion, the Liquidity Commitment will be the Aggregate Outstanding Class A
Certificate Balance plus an amount equal to interest for thirty five (35) days
on the Aggregate Outstanding Asset Balance at a rate per annum equal to the
Weighted Average Asset Rate assuming that the Asset Rate is the maximum
possible rate for the related Asset.  The
Liquidity Commitment will be decreased on any date on which Class A
Certificates (A) are canceled or exchanged for Assets or proceeds from the
Disposition of Assets 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 

 

26

 

Mac
receives such notice from the Remarketing Agent after 9:00 a.m., or from
the Paying Agent, if applicable, after 10:00 a.m., it will pay the amounts
required under the Liquidity Facility no later than 2:00 p.m. on the
Business Day following the Purchase Date, as applicable.

 

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

 

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

 

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

 

Section 6.02         Funds Held by Administrator.  In connection with an exercise of the Tender
Option pursuant to Section 6.03, if a Mandatory Tender Event occurs
pursuant to Section 6.04, or in connection with an exercise of the Optional
Disposition Right pursuant to Section 7.05, the Administrator, on behalf
of the Holders of Class A Certificates (other than Affected Certificates
and Pledged Class A Certificates), agrees to accept and hold all moneys
related to 

 

27

 

the Purchase Price of such
Certificates separate and apart from its other assets, until such funds are to
be disbursed in accordance with the terms of the Series Certificate
Agreement.

 

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

 

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

 

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

 

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

 

(e)           Re-Delivery in Event of Failed
Exercise.  If the
Administrator deems the Tender Option not to have been exercised with respect
to any Class A Certificate, or if any Class A Certificates are
delivered to the Administrator in connection with an attempted exercise of the
Tender Option, but such attempted exercise does not comply with the
requirements of subsection 

 

28

 

(b) above,
the Administrator will reject such exercise and use its best efforts to
redeliver such Class A Certificates by requesting the transfer of such
Certificates “free” on the records of DTC to the Holder’s DTC Participant.

 

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

 

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

 

Section 6.05         Notice
of Mandatory Tender.  (a)  When any Mandatory Tender Event
occurs, the Administrator will give to the Registered Holders a Mandatory
Tender Notice, as applicable, with one copy to Freddie Mac, the Sponsor and the
Remarketing Agent (i) on the Business Day on which such notice is required
to be given pursuant to Section 7.03(b) in connection with the
occurrence of a Liquidity Provider Termination Event, (ii) on the Business
Day on which such notice is required to be given pursuant to Section 7.04
in connection with the occurrence of a Sponsor Act of Bankruptcy, (iii) on
the Business Day on which notice is required to be given pursuant to Section 7.07
preceding the Credit Enhancement Expiration Date, (iv) on the Business Day
on which such notice is required to be given in connection with a Term Reset
Method Notice, a Reset Method Change Notice or a reversion to a Weekly Rate
Reset Method, (v) on the Business Day on which such notice is required to
be given with respect to a Special Adjustment Date pursuant to Section 7.02(b) and
(vi) on the Business Day on which notice is required to be given pursuant
to Section 7.06(b) in connection with the occurrence of a Clean-Up
Event.  Each Mandatory Tender Notice will
set forth (A) the Mandatory Tender Date, (B) a brief statement
specifying the applicable Mandatory Tender Event, (C) a statement that the
Purchase 

 

29

 

Price payable to the Holders
of Class A Certificates (other than Affected Certificates, Pledged Class A
Certificates or Class A Certificates with respect to which the Holders
thereof have timely delivered a Retention Notice) pursuant to Section 6.06
will be payable on the Mandatory Tender Date, and that interest payable with
respect to such Class A Certificates will cease to accrue from and after
such Mandatory Tender Date, (D) in connection with a Terminating Mandatory
Tender Date, a statement that Hypothetical Gain Share, if any, will be paid to
the Holders of Class A Certificates based upon a valuation of the Bonds, (E) if
applicable, a statement that such Class A Holder will have the right to
elect to retain such Certificates by delivering a Retention Notice to the Administrator
under the circumstances, at the time and in the manner provided in Section 6.07,
(F) a statement that even if the Holder of Class A Certificates fails
to surrender its Class A Certificate on the Mandatory Tender Date, the
Tender Option with respect to such Certificates will terminate on the Mandatory
Tender Date, and any Class A Certificates not surrendered on the Mandatory
Tender Date will, for all purposes of the Series Certificate Agreement, be
deemed to have been surrendered unless the applicable Holder of Class A
Certificates has delivered a conforming Retention Notice; and (G) a
statement that, notwithstanding such Mandatory Tender Notice, each affected
Holder of Class A Certificates will continue to have the right to exercise
the Tender Option in accordance with the terms and provisions of the Series Certificate
Agreement; provided  that,
if the Series is terminated as a result of such Mandatory Tender Event,
such right will terminate at the last applicable time and date on which an
Exercise Notice may be given by or on behalf of such Holder of Class A
Certificates in accordance with the terms and provisions of the Series Certificate
Agreement.

 

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

 

Section 6.06         Funding Procedures; Payment of Purchase Price.

 

(a)           Funding Procedures.  (i) The Purchase Price of any Class A
Certificate will be paid as follows if the applicable conditions have been
satisfied:

 

(A)          A
Holder of Class A Certificates that has properly exercised its Tender
Option will be paid on the Purchase Date designated in the related Exercise
Notice.

 

(B)           A
Holder of Class A Certificates subject to Mandatory Tender will be paid on
the Mandatory Tender Date designated in the related Mandatory Tender Notice.

 

(C)           A
Holder of Class A Certificates that has properly exercised its Optional
Disposition Right will be paid on the Optional Disposition Date.

 

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:

 

30

 

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

 

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

 

(ii)           Upon receipt by the Administrator and the Remarketing
Agent of (A) an Exercise Notice with respect to Tendered Class A Certificates, (B) notice of a
Mandatory Tender Date with respect to a Term Effective Date (that is not a
Reset Rate Method Change Date) or a Reset Rate Method Change Date relating to a
change (but not a continuation) in the Reset Rate Method, and (C) unless
otherwise directed by Freddie Mac, notice that any Holder of Class A
Certificates has exercised its Optional Disposition Right (all Certificates
being subject to any such notice being referred to as “Available Remarketing Class A Certificates”),
the Remarketing Agent will solicit offers for purchases of such Available
Remarketing Class A Certificates in accordance with the Remarketing
Agreement and the Series Certificate Agreement.

 

(iii)          Not later than 9:00 a.m. on the Purchase Date, a
Mandatory Tender Date or an Optional Disposition Date, as applicable, the
Administrator will confirm with the Remarketing Agent the Purchase Price of
such Available Remarketing Class A Certificates.  Not later than 9:00 a.m. on the Purchase
Date,  Mandatory Tender Date or Optional
Disposition Date, as applicable, the Remarketing Agent will give to Freddie Mac
and the Administrator, a Remarketing Agent Notice by Electronic Notice,
promptly confirmed by first class mail. 
Such Remarketing Agent Notice will contain (A) a statement that
such Available Remarketing Class A Certificates have been fully
remarketed, and that the net remarketing proceeds will be deposited with the
Administrator by not later than 9:15 a.m. on such Purchase Date, Mandatory
Tender Date or Optional Disposition Date, as applicable, or (B) a
statement that only a portion of such Available Remarketing Class A
Certificates have been remarketed and the remarketing proceeds that were
obtained will be deposited with the Administrator by not later than 9:15 a.m.
on the Purchase Date, Mandatory Tender Date or Optional Disposition Date, as
applicable, or (C) a statement that such Available Remarketing Class A
Certificates have not been remarketed by the Remarketing Agent and that no
funds will be deposited with the Administrator on the Purchase 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

 

31

 

Administrator, from the remarketing proceeds,
immediately available funds in the amount specified in the Remarketing Agent
Notice.

 

(iv)          If Freddie Mac has received a Remarketing Agent Notice from
the Remarketing Agent as described in Section 6.06(a)(iii) indicating
a failure to remarket any of the Available Remarketing Class A
Certificates and requesting payment, Freddie Mac will make a payment in
accordance with the conditions set forth in the Liquidity Facility of the
Purchase Price of such Available Remarketing Class A Certificates not
remarketed (net of any remarketing proceeds that have been received) no later
than 2:00 p.m. on the Purchase Date. 
Any such Remarketing Agent Notice must be sent to Freddie Mac’s Special
Transaction Accounting by facsimile transmission at (703) 714-3273, immediately
confirmed by overnight delivery service (or to such other facsimile number or
using such other means of electronic communication as otherwise instructed by
Freddie Mac).

 

(v)           If the Administrator has appointed a Paying Agent, it will
be an additional condition precedent to Freddie Mac’s obligations to pay
pursuant to the Liquidity Facility that no later than 10:00 a.m. on the
Purchase Date, Mandatory Tender Date or Optional Disposition Date, as
applicable, the Paying Agent will have provided proper notice by facsimile
means to Freddie Mac to the effect that monies held by the Paying Agent for the
purpose of paying the Purchase Price of Tendered Class A Certificates are
insufficient and that Freddie Mac is required pursuant to the Liquidity
Facility to cover such deficit.

 

(b)           Purchase Price
Excesses.  If, as of any time
preceding the payment of the Purchase Price of Class A Certificates the
sum of the amounts deposited with the Administrator pursuant to Section 6.06(a) exceeds
the aggregate Purchase Price of such Class A Certificates (any such
excess, a “Purchase Price Excess”), the
Administrator will (i) give to the Remarketing Agent and Freddie Mac
notice of the amount of such Purchase Price Excess by Electronic Notice, and (ii) pay
by wire transfer of immediately available funds unless otherwise requested (A) first,
to Freddie Mac, that portion of the Purchase Price Excess funded by Freddie Mac
pursuant to the Liquidity Facility and (B) second, to the Remarketing
Agent, the balance of such Purchase Price Excess.  Such payments will be made by the
Administrator in accordance with written instructions for such transfer
provided by Freddie Mac.  Concurrently
with the receipt by Freddie Mac or the Remarketing Agent, as the case may be,
of any payment made pursuant to this Section 6.06(b), such Person will
execute and deliver to the Administrator a receipt therefor.

 

(c)           (i)            Payment of Purchase Price of Tendered Class A Certificates.  Payment of the Purchase Price of any Tendered
Class A Certificates will be made by the Administrator at or before 3:00 p.m.
to the Class A Holders, upon receipt by the Administrator of such Class A
Certificates pursuant to Section 6.03(b), from amounts provided to the
Administrator by 2:00 p.m., by wire transfer of immediately available
funds to such account as such Holder’s DTC Participant has specified in writing
to the Administrator.  If all or a
portion of funds for the payment of the Purchase Price of any Tendered Class A
Certificates are provided the Administrator after 2:00 p.m. on any
Business Day, the Administrator will pay such Purchase 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 

 

32

 

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

 

(iii)          Failure
to Pay Purchase Price.  If
payment of the Purchase Price is not made as described in Section 6.06(c)(i) or
(ii), as applicable, on any Purchase Date for Class A Certificates for
which the Tender Option has been exercised, any Mandatory Tender Date or the
Optional Disposition Date for Class A Certificates for which the Optional
Disposition Right has been exercised because of a failure by the Liquidity
Provider to comply with the terms of the Liquidity Facility (a “Liquidity Failure”), then, unless such failure is cured on or
before the third Business Day after such date, each Class A Holder will be
required to exchange its Class A Certificates for its pro rata share of
the Assets or sales proceeds thereof in accordance with Section 13.04 on
the related Exchange Date.  The Administrator
will immediately notify the Sponsor upon the occurrence of a Liquidity Failure,
and the Sponsor will advise the Administrator of the related Exchange
Date.  The Administrator will notify the
Registered Holders, each applicable Rating Agency and the Remarketing Agent
within one Business Day after the occurrence of a Liquidity Failure.  Any distribution made in connection with such
a Liquidity Failure is in no way intended to, and will not, negate or waive any
rights of the Holders of Class A Certificates or the Administrator on
their behalf, to take any action against, or to pursue any other remedy
available to them under the Series Certificate Agreement, under any other
document related to the Series Certificate Agreement, at law, in equity or
otherwise against Freddie Mac, with respect to any failure by Freddie Mac to
pay the Purchase Price for Class A Certificates when required to do so and
such failure is not cured on or before the third Business Day after the related
Mandatory Tender Date or Purchase Date.

 

(d)           Disposition
of Tendered Class A Certificates and Class A Certificates Subject to
Mandatory Tender.  (i) 
Concurrently with the payment of the Purchase Price for Available Remarketing Class A
Certificates on any Purchase Date, Mandatory Tender Date or Optional
Disposition Date (or payment of the Purchase Price for Class A
Certificates subject to Mandatory Tender as a result of a Special Adjustment
Event), the Administrator will (A) to the extent that the Remarketing
Agent deposited with the Administrator remarketing proceeds in the amount of
such Purchase Price pursuant to Section 6.06(a)(i), deliver to the
Remarketing Agent (for redelivery to the purchasers of such Class A
Certificates) the Class A Certificates with respect to 

 

33

 

which
the Remarketing Agent deposited with the Administrator the Purchase Price and (B) to
the extent Freddie Mac pursuant to the Liquidity Facility deposited with the
Administrator the amount of any Purchase Price with respect to any such Class A
Certificates, deliver such Class A Certificates to the Pledge Custodian
for the benefit of Freddie Mac, or in the case of Class A Certificates
subject to Mandatory Tender related to a Special Adjustment Event, to the extent
the Pledge Custodian deposited with the Administrator, the amount of any
Purchase Price with respect to any such Class A Certificates corresponding
to any principal payment and liquidation proceeds received with respect to a
related Series Pool in accordance with Section 7.02 hereof, deliver
such Class A Certificates to the Pledge Custodian, for the benefit of
Freddie Mac.  In the case of a delivery
described by clause (A) above, the Administrator will deliver such Class A
Certificates to the Remarketing Agent registered in such name and to such
address as the Remarketing Agent directs in writing.  In the case of a delivery described by clause
(B) above, the Administrator will deliver such Class A Certificates
to the Pledge Custodian registered in such name, and to such address, as
Freddie Mac directs in writing, and the Administrator and the Certificate
Registrar will note the pledge of such Class A Certificates to the Pledge
Custodian on behalf of Freddie Mac on the books and records of the
Administrator and the Certificate Registrar, and the Administrator will send
confirmation of such delivery to Freddie Mac. 
Any Class A Certificates delivered to the Pledge Custodian as
described in the preceding sentence will be Pledged Class A Certificates
subject to Section 4.06.  Following
such registration, Freddie Mac will be entitled to receive payments on the
Pledged Class A Certificates in accordance with its interest.

 

(ii)           If any Class A Certificate that is subject to
Mandatory Tender is not surrendered by the Holder of such Certificate on a
Mandatory Tender Date (except for a Class A Certificate which the
respective Holder has elected to retain as provided in Section 6.07), such
Class A Certificate will be deemed surrendered for all purposes under the Series Certificate
Agreement.  After the Mandatory Tender
Date, except to the extent of the portion, if any, of the Current Class A
Certificate Balance of such Class A Certificates that is not subject to
Mandatory Tender on such Mandatory Tender Date, the Class A Holder will
have no further rights with respect to such Class A Certificates except
the right to receive payment of the Purchase Price, without interest from or
after the Mandatory Tender Date, and its portion of the Hypothetical Gain
Share, if any, pursuant to Section 13.03 upon the presentation and
surrender of such Class A Certificate at the Delivery Office of the
Administrator.

 

(e)           Reductions of the
Aggregate Outstanding Amounts.  The
Aggregate Outstanding Class A Certificate Balance will be reduced by the
aggregate Current Certificate Balance of such Class A Certificates subject
to Mandatory Tender that are canceled.

 

(f)            No Investment.  Any amounts received pursuant to
the Liquidity Facility or as remarketing proceeds will be held uninvested.

 

(g)           Substitution of Procedure
Times.  Any times specified in Sections 6.03
and 6.06 may be modified pursuant to (i) a Series Certificate
Agreement applicable to any Series of 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.

 

34

 

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

 

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

 

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

 

ARTICLE
VII

 

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

 

Section 7.01         Tender Option Termination Events.  (a)        Without
notice, on or prior to any Purchase Date, Mandatory Tender Date, or Optional
Disposition Date, if Freddie Mac fails to pay under the Credit Enhancement set
forth in Section 4.11 and such failure continues for a period of three (3) Business
Days (a “Tender Option Termination Event”), the
Tender Option will be terminated as provided below.

 

(b)           When the Administrator has Knowledge of a Tender Option
Termination Event it will promptly give the Remarketing Agent a Tender Option
Termination Notice with respect thereto by Electronic Notice, promptly
confirmed by mailing a copy thereof.  The
Tender Option Termination Notice will set forth (1) a description of the
Tender Option Termination Event that has occurred and (2) the date when
such Tender Option Termination Event occurred.

 

35

 

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

 

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

 

Section 7.02         Special
Adjustment Event.  (a)  Subject to Section 8.8 of the
Reimbursement Agreement, Freddie Mac will have the right to cause a Mandatory
Tender in part of the Class A Certificates upon the Pledge Custodian’s
receipt of any principal paid with respect to any “Class B Certificates”
of another designated Series with respect to such Certificates and
liquidation proceeds of such designated Series received upon termination
thereof; provided that in such event, the aggregate Current Certificate Balance
of Class A Certificates subject to Mandatory Tender will equal such amount
of principal and liquidation proceeds received by the Pledge Custodian as of
the tenth Business Day of the month (rounded down to the nearest $5,000
increment) which, at the direction of Freddie Mac, is to be remitted to the
Administrator on or before the related Mandatory Tender Date.  The Series Certificate Agreement will
designate the other series pool that will result in a Special Adjustment Event.

 

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

 

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

 

36

 

Tender
Date for the account of each related holder of Class B Certificates of the
other Series (an “Exchanging Holder”).

 

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

 

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

 

Section 7.03         Liquidity
Provider Termination Event.  When any Liquidity Provider Termination Event
occurs with respect to which Freddie Mac exercises its right to cause a
Mandatory Tender, Freddie Mac will give a Liquidity Provider Termination Notice
to the Administrator, the Remarketing Agent, the Sponsor and each applicable
Rating Agency by Electronic Notice, promptly confirmed by first class mail,
which notice will set forth (i) a brief statement describing the Liquidity
Provider Termination Event giving rise to such termination, and (ii) the
Mandatory Tender Date specified by Freddie Mac on which the Class A
Certificates will be subject to Mandatory Tender, which date will be no earlier
than five (5), nor later than ten (10), Business Days after the Administrator
provides notice to the Holders, as described in the following sentence.  Not later than 5:00 p.m. on the second
Business Day following the date on which a Liquidity Provider Termination
Notice is received by the Administrator, the Administrator will give to the
Registered Holders a Mandatory Tender Notice. 
Any Liquidity Provider Termination Notice executed by Freddie Mac under
the Series Certificate Agreement will become irrevocable when the related
Mandatory Tender Notice is given by the Administrator to the Registered
Holders.

 

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

 

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

 

Section 7.05         Optional
Disposition Date.  (a)  The Class A Certificates
(other than Class A Certificates held by any Sponsor Parties) may be
tendered at a price equal to the Optional Disposition Price on any Optional
Disposition Date, in accordance with the following provisions.

 

37

 

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

 

(b)           On any Business Day not earlier than 10 Business Days
before an Optional Disposition Date, any Holder of Class A Certificates
may request a valuation of the Assets from the Remarketing Agent.  The Remarketing Agent will then determine
such valuation for such Business Day in the manner specified in the definition
of “Hypothetical Gain Share”.  Such
valuation will be provided to any such Holder solely for informational purposes
and will be non-binding on any Person.

 

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

 

38

 

received
upon completion of any such sale).  In
connection with any sale of Assets pursuant to the preceding sentence,
Hypothetical Gain Share payable to such tendering Certificateholders shall also
be paid from such proceeds, and the Assets sold shall be selected to permit
payment of such Purchase Price and such Hypothetical Gain Share.  In the event of such sale of Assets to fund
the Purchase Price of tendered Class A Certificates, the Class A
Certificates paid as a result shall be cancelled.

 

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

 

Section 7.06         Clean-Up
Event.  (a) 
Each of Freddie Mac and the Sponsor has the right to cause a Mandatory Tender
of the Class A Certificates at any time after the Aggregate Outstanding
Asset Balance is not more than 5% of the Aggregate Outstanding Asset 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.

 

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

 

ARTICLE VIII

THE REMARKETING AGENT

 

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

 

39

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

40

 

ARTICLE IX

EVENTS OF DEFAULT AND RIGHTS AND REMEDIES OF HOLDERS

 

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

 

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

 

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

 

Section 9.02         Remedies.  (a)  If an Event of Default occurs and
continues, then the Holders (other than Freddie Mac) representing a majority of
the then Current Certificate Balance of any affected Class of Certificates
may, by written notice to Freddie Mac, remove the Administrator and nominate a
successor Administrator under the Series Certificate Agreement, which
nominee will be deemed appointed as successor Administrator unless within 10
days after such nomination Freddie Mac objects, in which case Freddie Mac may
petition any court of competent jurisdiction for the appointment of a successor
Administrator, or any Holder (other than Freddie Mac), which has been a bona
fide Holder of any affected Class for at least six months may, on behalf
of such Holder and all others similarly situated, petition any such court for
appointment of a successor Administrator. 
Such court may thereupon, after such notice, if any, as it may deem
proper, appoint a successor Administrator.

 

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

 

41

 

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

 

ARTICLE
X

THE ADMINISTRATOR; HOLDERS’ LISTS AND REPORTS;

BONDHOLDER REPRESENTATIVE

 

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

 

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

 

(iii)          In the absence of gross negligence or willful misconduct on
its part, the Administrator may conclusively rely upon certificates or opinions
furnished to the Administrator and conforming to the requirements of the Series Certificate
Agreement; provided, that, as to
the truth of the statements and the correctness of the opinions expressed
therein in the case of any such certificates or opinions which by any provision
of the Series Certificate Agreement are specifically required to be
furnished to the Administrator, the Administrator will be under a duty 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 

 

42

 

percentage will not include
those Certificates, if any, that are to be disregarded in accordance with the
definition of the term “Outstanding”) relating to the time, method and place of
conducting any Proceeding for any remedy available to the Administrator, or
relating to the exercise of any power conferred upon the Administrator under
the Series Certificate Agreement with respect to the Certificates.

 

(c)           No provision of the Series Certificate Agreement will
require the Administrator to expend or risk its own funds, or otherwise to
incur any financial liability in the performance of any of its duties under the
Series Certificate Agreement, or in the exercise of any of its rights or
powers, if it has reasonable grounds for believing that repayment of such funds,
or adequate indemnity against such risk or liability, is not reasonably assured
to it.  However, the Administrator agrees
to perform and continue performing fully its duties under any other provision
of the Series Certificate Agreement even following any Person’s failure to
perform any repayment or indemnity obligation owed to the Administrator by such
Person as described in this Section 10.01(c); but such performance will
not be deemed a waiver of the Administrator’s right to repayment or indemnity.

 

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

 

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

 

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

 

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

 

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

 

(a)           the Administrator may rely, and will
be protected in acting or refraining from acting, (i) upon any document or
facsimile transmission believed by it to be genuine and to have been signed or
presented by the proper party or parties, or (ii) following consultation,
upon any advice of counsel;

 

(b)           the Administrator will be under no
obligation to exercise any of the rights or powers vested in it by the Series Certificate
Agreement (other than with respect to the Administrator’s obligation to make
demands on the Liquidity Facility or the Credit 

 

43

 

Enhancement at the request or
direction of any of the Holders of Class A Certificates pursuant to the Series Certificate
Agreement), unless such Holders of Class A Certificates have offered to
the Administrator reasonable security or reasonable indemnity against the
costs, expenses and liabilities which might be incurred by it in comply with
such request or direction;

 

(c)           the Administrator will not be liable
for any action that it takes or omits to take in good faith and, in the absence
of gross negligence or willful misconduct, that it believes to be authorized or
within its rights or powers.

 

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

 

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

 

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

 

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

 

Section 10.07       Resignation.  (a)  Freddie Mac may resign from the
duties imposed upon Freddie Mac in its capacity as Administrator by the terms
of the Series Certificate Agreement at any time provided that at the time
of its resignation a successor administrator meeting the 

 

44

 

qualifications set forth in Section 10.06
is appointed by Freddie Mac and has accepted such appointment.  If Freddie Mac resigns in accordance with
these terms, it promptly will furnish written notice to all Holders.  Subsequent to such resignation, Freddie Mac
will continue to be obligated pursuant to the Credit Enhancement and the
Liquidity Facility.

 

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

 

(i)            No
resignation or removal of the Administrator, and no appointment of a successor
Administrator pursuant to this Article X, will become effective until the
successor Administrator has accepted its appointment under this Section 10.07(b).

 

(ii)           The
Administrator, or any Administrator or Administrators appointed as successors,
may resign at any time by giving written notice of resignation to Freddie Mac,
the Sponsor, the Remarketing Agent and each applicable Rating Agency, and by
mailing notice of resignation to Registered Holders of the Certificates at
their addresses appearing on the Certificate Register. Upon receiving notice of
resignation, Freddie Mac will promptly appoint a successor Administrator or
Administrators by delivering a Depositor Order to both the resigning
Administrator and the successor administrator. 
If no successor administrator has been appointed and has accepted its
appointment within 30 days after the giving of such resignation notice, the
resigning Administrator may petition any court of competent jurisdiction for
the appointment of a successor Administrator, or any Holder of a Certificate
may, subject to Section 10.07(b)(vii), petition any such court for the
appointment of a successor Administrator. 
Such court may, after receiving such notice, if any, as it may deem
proper, appoint a successor administrator.

 

(iii)          If
at any time:

 

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

 

(B)           (1) the
Administrator becomes incapable of acting or (2) there is entered a decree
or order for relief by a court having jurisdiction in an involuntary case against
the Administrator under the Bankruptcy Code or any other applicable federal or
state bankruptcy, insolvency, or other similar law, or appointing a receiver,
or similar official of the Administrator, for any substantial part of its
property, or ordering the winding-up or liquidation of its affairs, and any
such 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.

 

45

 

(iv)          At
any time Freddie Mac may, upon five days’ written notice to the Administrator,
and with or without cause, remove the Administrator and appoint a successor
Administrator.

 

(v)           If
the Administrator is removed or if a vacancy occurs in the office of the
Administrator for any cause, Freddie Mac will promptly appoint in writing a
successor Administrator.  If no successor
administrator is so appointed and accepts its appointment as provided below
within 30 days any Holder may petition any court of competent jurisdiction to
appoint a successor administrator.  Such
court may thereupon, after such notice, if any, as it may deem proper, appoint
a successor administrator.

 

(vi)          Freddie
Mac will give notice of each removal of the Administrator, and each appointment
of, and the acceptance of its duties by, a successor administrator by mailing
notice of such event to the Registered Holders, and by Electronic Notice to the
Remarketing Agent, the Sponsor and each applicable Rating Agency.

 

(vii)         Every
successor Administrator appointed under the Series Certificate Agreement
will, within 10 days or its appointment, execute, acknowledge and deliver to
Freddie Mac, the Sponsor and its predecessor Administrator an instrument
accepting such appointment, and thereupon the resignation or removal of the
predecessor Administrator will become effective, and such successor
administrator, without any further act, deed, or conveyance, will become vested
with all the rights, powers, duties and obligations of its predecessor under
the Series Certificate Agreement. 
All relevant legal documents and records held by the predecessor
Administrator in such circumstance will be transferred to the successor
Administrator.

 

(viii)        No
successor Administrator will accept its appointment unless, at the time of such
acceptance, such successor administration is qualified and eligible under Section 10.06
and satisfies the requirements for a “trustee” under Section 26(a)(1) of
the Investment Company Act.

 

(ix)           No
successor Administrator shall be appointed under this Section (other than
one appointed by Court order) without the prior written consent of the Sponsor
(provided no such consent shall be required if a Liquidity Provider Termination
Event has occurred and is continuing).

 

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

 

(i)            afford
such Holder access to the information regarding the names and addresses of all
other Holders provided by the Remarketing Agent pursuant to Section 14.03,
or

 

46

 

(ii)           inform
the requesting Holder(s) of the approximate number of Holders whose names
and addresses appear in the information provided by the Remarketing Agent
pursuant to Section 14.03, and as to the approximate cost of mailing to
such Holders the form of proxy or other communication, if any, specified in
such written request.

 

If the Administrator does
not allow the requesting Holder(s) access to the information described in
subsection (i) above, the Administrator will, upon the written request of
such Holder(s), mail to each current Holder a copy of the form of proxy or
other communication that is specified in such request, with reasonable
promptness, upon the Administrator’s receipt of the material to be mailed and
payment of the reasonable mailing expenses. 
The Holder(s) requesting such mailing will be solely responsible
for complying with any state and Federal securities laws and regulations
regarding any communication pursuant to this Section, and the Administrator
will have no responsibility in that regard. 
At the request of Freddie Mac, a requesting Holder may be required to
provide an Opinion of Counsel that all securities laws have been complied with
in connection with any such mailing.

 

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

 

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

 

ARTICLE
XI

PROFITS AND LOSSES

 

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

 

Section 11.02       Capital Accounts.  (a)  There will be established for each
Holder a capital account (the “Capital Account”)
on the books for the Series Pool to be maintained and adjusted pursuant to
the Series Agreement, which will control (pursuant to the provisions of Article XIII)
the division of Series Pool Property upon the termination of the Series Pool
and liquidation and/or distribution of the Series Pool Property or the
redemption of any Certificate.  Such
Capital Account will be increased by (i) the amount of all Capital
Contributions made or deemed made 

 

47

 

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 Profits, 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 Property were sold at such time at
their Fair Market Values.  In the case of
any distribution of Assets to any Holder, the Capital Account of such Holder
will be adjusted in the manner described in the preceding sentence.

 

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

 

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

 

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

 

48

 

(b)           Market Discount Gains realized under applicable Federal
income tax provisions from a Disposition of any Asset 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 Asset, the
Gain Share is only determined with respect to Holders that are redeemed as a
result thereof.

 

Section 11.04       Allocations of Losses and Capital Losses.  (a)  Other than in connection with the
occurrence of an Exchange Date, Losses and Capital Losses that result from a
liquidation of the related Assets as a result of a mandatory purchase, failure
to remarket tendered Class A Certificates or redemption of any related
Assets 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 Assets 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 Assets or sales proceeds, as applicable, to the Holders,
both Losses and Capital Losses will be allocated (i) first, to the Holders
of Class B Certificates and Class A Certificates on a pro rata basis
in proportion to the Aggregate Outstanding Certificate Balances until their
Capital Account Balances have been reduced to zero; and (ii) thereafter,
to the Sponsor.

 

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

 

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

 

Section 11.05       Special Allocations.  (a)  Notwithstanding anything to the
contrary contained in this Article XI, no allocation of a loss or
deduction will be made to a Holder to the extent such allocation would cause or
increase an Adjusted Capital Account Deficit with respect 

 

49

 

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 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 Property 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
Property) or loss (if the adjustment decreases such basis) in respect of the
relevant Series Pool Property 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.

 

50

 

(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.

 

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

 

(b)           If there is a difference between the adjusted tax basis of
any Series Pool Property and its fair market value when such asset was
contributed to the Series Pool, allocations of gain or loss and
amortization of 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.

 

51

 

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

 

Section 11.08       Tax Matters; Tax Election.  It is the intention of the
parties that the Series Pool will be classified as a partnership for all
Federal, state and local tax purposes. 
Each Holder and transferee of Certificates acknowledges that it will
treat the Series Pool as a partnership for Federal, State and local income
tax purposes and that it intends and expects to be treated as a partner for
such purposes.  No Person is authorized
to elect under Section 301.7701-3(c) of the Regulations or any
applicable State or local law to have the Series Pool classified as a
corporation for Federal or any applicable State or local income tax
purposes.  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 for Federal, state or local tax
purposes by virtue of its execution and delivery of the Liquidity
Facility.  Freddie Mac agrees to timely
file the necessary or appropriate elections and all tax returns and tax reports
consistent with and based upon this Section 11.08 and neither Freddie Mac
nor any Holder will take any position on any tax return or report or in any
proceeding or audit which is inconsistent with this Section 11.08.

 

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

 

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

 

(b)           Each Registered Holder and Holder by acceptance of its
Certificate agrees (i) to hold the Tax Matters Partner and Freddie Mac
(and any officer, director, agent, employee, member, stockholder, or Affiliate
of Freddie Mac) harmless from, and (ii) in connection with any 

 

52

 

action
taken at the request of such Registered Holder or Holder, to indemnify the Tax
Matters Partner and Freddie Mac (and any officer, director, agent, employee,
member, stockholder, or Affiliate of Freddie Mac) against, any actual out-of-pocket
loss, liability, expense, damages or injury suffered, sustained or incurred to
the extent that they are a direct result of any acts, omissions, or alleged
acts or omissions arising out of the activities or actions of the Tax Matters
Partner and Freddie Mac in connection with the performance of its duties as Tax
Matters Partner or as agent or attorney-in-fact for the Tax Matters Partner,
including but not limited to any penalties or interest thereon assessed under
the Code or other applicable tax laws, judgments, fines, amounts paid in
settlement, reasonable attorneys’ fees and expenses and other costs or expenses
incurred in connection with the defense of any actual or threatened action,
proceeding or claim, unless such acts, omissions or alleged acts or omissions
constitute fraud, gross negligence, or willful misconduct by Freddie Mac and
the Tax Matters Partner, respectively.

 

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

 

ARTICLE XII

AMENDMENTS

 

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

 

(i)            to
cure any formal defect, omission, inconsistency or ambiguity in a manner not
materially adverse to the Holders of Class A Certificates;

 

(ii)           to
grant to or confer upon the Administrator for the benefit of the Holders any
additional rights, remedies, powers or authority that may lawfully be granted
or conferred and that are not contrary to or inconsistent with the Standard
Terms or Series Certificate Agreement or the rights of the Administrator
hereunder as theretofore in effect;

 

(iii)          to
modify, amend or supplement the Standard Terms or Series Certificate
Agreement as required by the Rating Agency to obtain or maintain a rating or
ratings for the Class A Certificates;

 

(iv)          to
modify, amend or supplement the Standard Terms or Series Certificate
Agreement in any other respect which is not materially adverse to the Holders
of the Class A Certificates after the effective date of the change and
which does not involve a change described in Section 12.01(b).

 

53

 

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

 

(b)           The Standard Terms may be amended in order to amend any of
the provisions relating to (i) distributions and payments from the
Distribution Account and Asset Payment Subaccounts, (ii) the determination
of the Reset Rate and changes in the Reset Rate, (iii) the Tender Option
or Tender Option Termination Events or (iv) this Section 12.01(b), if
the conditions provided in Section 12.01(c) have been satisfied, provided, that such amendments will be subject to the
consent of 100% of the Holders of Class A Certificates affected
thereby.  The Standard Terms may also be
amended in order to amend any other provision not addressed by the prior
sentence or by Section 12.01(a), if the conditions provided in Section 12.01(c) have
been satisfied, provided that any such amendment
will be subject to the consent of Holders representing not less than 51% of the
Current Class A Certificate Balance affected thereby.

 

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

 

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

 

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

 

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

 

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

 

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

 

54

 

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

 

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

 

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

 

ARTICLE XIII

TERMINATION

 

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

 

(i)            the
Series Expiration Date;

 

(ii)           the
Exchange Date on which all Certificates are exchanged for either Assets or
sales proceeds in connection with a Tender Option Termination Event or a
Liquidity Failure;

 

(iii)          the
Mandatory Tender Date arising in connection with a Liquidity Provider
Termination Event, a Clean-Up Event, the Credit Enhancement Expiration Date,
or, if applicable, following a Sponsor Act of Bankruptcy (collectively, a “Terminating Mandatory Tender Date”); or

 

55

 

(iv)          the
date on which the Optional Disposition Right has been exercised with respect to
the last Class A Certificate (unless such Class A Certificate has
been remarketed).

 

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

 

(b)           On the Exchange Date, the applicable Terminating Mandatory
Tender Date, or the applicable Optional Disposition Date described in Section 13.01(a)(iv),
(i) the amounts, if any, on deposit in the Asset Payment
Subaccount—Interest, or Asset 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 Asset Payment
Subaccount — Holdback, will be distributed to the Holders of Class B
Certificates.

 

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

 

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

 

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

 

56

 

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

 

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

 

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

 

(b)           By the close of business on the related Terminating
Mandatory Tender Date, the Administrator will liquidate the Series Pool in
accordance with the following provisions. 
On the second Business Day immediately preceding the Terminating
Mandatory Tender Date, the Administrator will solicit (1) at least three
commitments to purchase the Assets 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 or mortgage loans and (2) a
commitment to purchase the Assets from any interested Specified Parties,
provided, however, that none of the Sponsor Parties may purchase the Assets if
any of the Sponsor Parties could receive any of the gain from such sale as
either the Holder of Class B Certificates or Class A
Certificates.  (In connection, with any
proposed sale of the Assets, the Sponsor shall direct the 

 

57

 

Administrator
to pay one hundred percent of the potential gain realized on the proposed sale
to the Holders of the Class A Certificates (other than any of the Sponsor
Parties) if a Sponsor Affiliate is the successful bidder).  If the Assets can be sold for a price that is
at least equal to the sum of the amounts specified in clauses (A) through (C) of
the next subparagraph (the “Terminating Mandatory
Tender Date Required Exchange Price”), the Series Pool will be
liquidated in accordance with the provisions of the next subparagraph.  If the Assets cannot be sold for a price that
is at least equal to the Terminating Mandatory Tender Date Required Exchange
Price, the Series Pool will be liquidated in accordance with the
provisions of Section 13.03(c).

 

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

 

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

 

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

 

58

 

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

 

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

 

(b)           Liquidity Failure or
Tender Option Termination Event.  If the Exchange Date arises from a Liquidity
Failure or a Tender Option Termination Event, the following provisions will
govern.

 

(i)            On the Business Day immediately preceding such Exchange
Date, the Administrator will solicit (1) at least three commitments to
purchase the Assets 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 or mortgage loans and (2) a
commitment to purchase the Bonds from any interested Specified Parties,
provided, however, that neither the Sponsor nor any of its Affiliates (“Sponsor
Parties”) may purchase the Assets if any of the Sponsor Parties could receive
any of the gain from such sale as either the Holder of Class B
Certificates or Class A Certificates. 
(In connection, with any proposed sale of the Assets, the Sponsor shall
direct the Administrator to pay one hundred percent of the potential gain
realized on the proposed sale to the Holders of the Class A Certificates
(other than any of the Sponsor Parties) if a Sponsor Affiliate is the
successful bidder).  If the Assets can be
sold for a price that is at least equal to the sum of the amounts specified in
clauses (A) through (C) of the next subparagraph (the “Termination Required Exchange Price”), the Series Pool
will be liquidated in accordance with the provisions of the next
subparagraph.  If the Assets cannot be
sold for a price that is at least equal to the Termination Required Exchange
Price, the Series Pool will be liquidated in accordance with the
provisions of Section 13.04(b)(iii).

 

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

 

59

 

Freddie
Mac in accordance with Section 11.02 (generally, Gain Share as calculated
pursuant to the Series Certificate Agreement); and (E) fifth, to pay
to the Holders of Class B Certificates the amount of each such Holder’s
remaining Capital Account Balance (after taking into account all allocations
pursuant to Article XI of these Standard Terms and previously distributed
pursuant to clause (C)) as determined by Freddie Mac in accordance with Section 11.02
(including Gain Share and Market Discount Share).

 

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

 

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

 

(B)           After completing the
sale required pursuant to preceding clause (A), the Administrator will
distribute each Asset, 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 Asset 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 Asset Balance and (B) the ratio of their Current Certificate
Balance to the Aggregate Outstanding Certificate Balance.

 

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

 

ARTICLE
XIV

 

MISCELLANEOUS

 

Section 14.01       Acts of Holders.  (a)  Any request or other action
provided by the Series Certificate Agreement to be given or taken by
Holders may be evidenced by one or more instruments of substantially similar
tenor signed by such Holders or their agents; and, except as otherwise
expressly provided in the Series Certificate Agreement, such action will
become effective when such instrument or instruments are delivered to the
Administrator and Freddie Mac.  (Such an
instrument is sometimes referred to in the Series Certificate Agreement as
the “action” of the Holders
signing such instrument).  Proof of
execution of any such instrument, or of the appointment of any such agent, will
be sufficient for any purpose of the Series Certificate Agreement and
(subject to Section 10.01) conclusive in favor of the Administrator and
Freddie Mac, if made in the manner provided in this Section.

 

60

 

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

 

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

 

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

 

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

 

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

 

Section 14.06       Benefits of Series Certificate Agreement.  Nothing in the Series Certificate
Agreement or in the Certificates, express or implied, will give to any Person,
other than the parties to the Series Certificate Agreement and their
successors, the Remarketing Agent and the Holders, any benefit of any legal or
equitable right, remedy or claim under the Series Certificate Agreement.

 

61

 

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

 

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

 

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

 

[End
of Standard Terms]

 

62

 

EXHIBIT A

DEFINITIONS

 

A-1

[Osprey/Taxable]

 

EXHIBIT A

to Taxable Standard Terms

 

FREDDIE MAC

MULTIFAMILY TAXABLE VARIABLE RATE CERTIFICATES

SERIES M014

 

DEFINITIONS

 

“Accreted
Price” means, with respect to any Asset, the Deposit
Price, adjusted for (i) the amortization of 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 Asset.

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

(a)           Credit to such Capital Account
any amounts which such Holder is obligated to restore or is deemed to be
obligated to restore pursuant to the penultimate sentences of Sections
1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations; and

 

(b)           Debit to such Capital Account the
items described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of
the Regulations.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

“Asset
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 Assets are deposited by
the Administrator.

 

“Asset
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 Redemption Premium payments on the
Assets and Hypothetical Gain Share are deposited by the Administrator.

 

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

 

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

 

“Asset
Redemption Date” means with respect to any Asset, any
date on which the principal of such Asset is paid in whole or in part pursuant
to the applicable Bond Documents or Mortgage Loan Documents.

 

“Assets”
means the Bonds and the Mortgage Loans.

 

“Authorized
Denomination” means, with respect to any Class A
Certificate, an initial certificate balance of at least $100,000 with integral
multiples of $1.00 in excess of $100,000, and with respect to any Class B
Certificate, an initial certificate balance of at least $5,000, with 

 

3

 

integral multiples of $1.00 in excess of $5,000, subject to, with
respect to any Certificate, necessary adjustments due to redemptions after the
Date of Original Issue.

 

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

 

“Available
Interest Amount” means, as of any date of
determination, accrued and to accrue interest on an Asset 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 Assets are not
fixed rate and is only calculated on a Reset Date.  Accrued and to accrue interest on an Asset
will be determined on an Asset by Asset basis as the product of the Asset Rate
and the related Outstanding Asset 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 Asset Rate has not been determined for any day up to and
including the next Reset Date, then the Asset Rate for such day will be deemed
to be the minimum stated rate of interest on the Assets.  Available Interest Amount will never be more
than interest on the Assets regardless of any calculation previously made.  Available Interest Amount is expressed as the
variable “AIA” in the following formula:(1)

 

	
  (1)  Example 1:

  Assumptions:

  	
  1.

  	
  Assets bear interest at a variable rate, which is 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
  priorinterest accrual.

  
	
   

  	
  3.

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

  
	
   

  	
  4.

  	
  $100,000,000 in Outstanding Asset 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 Asset Rate for the last 10
days of the month, no additional accrued interest on the Assets can be
projected and taken into account.

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

 

Example 3:

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

Interest accruals are the same as in Example 1.

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

 

4

 

AIA =     AI+TAI

where

 

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

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

“Bonds” means, collectively, the securities
identified in the Series Certificate Agreement on the Date of Original
Issue and “Bond” shall mean any one of such Bonds.  The term “Bonds” 

 

shall include
municipal securities as well as custodial receipts, trust receipts or any other
similar instrument evidencing an ownership interest in municipal securities
held in a pass-through arrangement.

 

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

 

“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 

 

6

 

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 Assets 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 Assets.

 

“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 Assets.

 

“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 Asset Balance is not more than 5% of the Aggregate
Outstanding Asset Balance on the Date of Original Issue.

 

7

 

“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 Assets subject to sale
or distribution on such date obtained by the Administrator by soliciting in
good faith (i) at least three commitments to purchase such Assets from
Persons (other than Specified Parties) that customarily provide such bids,
including, but not limited to, investment dealers and brokers that customarily
deal in municipal bonds or mortgage loans and (ii) commitments to purchase
the Assets from any interested Specified Parties.

 

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

 

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

 

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

 

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

 

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

 

“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 Assets and payments arising from a Release Event; (ii) plus,
(A) on each Payment Date, the amount obtained by multiplying the Class A
Certificate Notional Accelerated Principal Paydown Amounts, if any, distributed
to the Holders of Class A Certificates under Section 4.03(a)(v) of
the Standard Terms on such Payment Date by the ratio of the Current Certificate
Balance of such Class B Certificate to the Aggregate Outstanding Class B
Certificate Balance.

 

8

 

“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 Asset, the Federal
income tax basis of such Asset determined in accordance with the Code at the
time of transfer and deposit as set forth in the Series Certificate
Agreement with respect to Assets transferred and deposited on the Date of
Original Issue.

 

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

 

“Disposition”
means, with respect to any Asset, any redemption, maturation, sale or other
disposition of such Asset, 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
Asset 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 Asset (including, if applicable, any Redemption Premium) or
portion of such Asset.

 

“Disposition
Loss” means, with respect to a Disposition of any
Asset, or portion thereof, the excess, if any, of the Accreted Price of such
Asset, 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, 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.

 

9

 

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

 

“Event of
Default” means:

 

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

 

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

 

“Excess
Accrued Net Interest Amount” means, as of any date of
determination, the excess of accrued interest on the Assets 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 Assets are fixed rate
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 Asset Rate on the Outstanding Asset
Balance of each related Asset 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 Assets are fixed
rate 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:(2)

 

	
  (2) 
  Example 1:

  	
   

  	
   

  
	
  Assumptions
  =

  	
  1.

  	
  Weekly Reset
  Rate

  
	
   

  	
  2.

  	
  Excess
  Accrued Net Interest Amount: $50,000

  
	
   

  	
  3.

  	
  Aggregate
  Outstanding Class A Certificate Balance:

  
	
   

  	
   

  	
    $80,000,000

  
	
   

  	
   

  	
   

  

 

10

 

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 accordance with Section 13.04 of the Standard Terms, which
date will be designated by Freddie Mac and will occur within five Business Days
after the occurrence of a Tender Option Termination Event or Liquidity Failure.

 

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

 

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

 

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

 

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

 

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

 

	
   

  	
  365

  	
  X

  	
  $50,000

  	
   

  	
   

  
	
   

  	
  7

  	
   

  	
  $80,000,000

  	
   

  
	
   

  	
  (52.1428) (0.000625)

  	
   

  
	
   

  	
  .03258

  	
   

  
	
  Example 2:

  	
   

  
	
  Assumptions:

  	
  Same assumptions except
  that there is a Monthly Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  365

  	
  X

  	
  $50,000

  	
   

  	
   

  
	
   

  	
  30

  	
   

  	
  $80,000,000

  	
   

  
	
   

  	
  (12.1666) (0.000625)

  	
   

  
	
   

  	
  .00760

  	
   

  

 

11

 

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

 

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

 

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

 

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

 

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

 

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

  
	
   

  	
  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 with respect to any Series of
book-entry Class A Certificates, a global certificate executed and
authenticated by the Administrator, substantially in 

 

12

 

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

 

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

 

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

 

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

 

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

 

“Hypothetical
Gain Share” means, for any Class A Certificate,
with respect to a Release Event Date, an Optional Disposition Date or a
Mandatory Tender Date relating to a Liquidity Provider Termination Event, a
Sponsor Act of Bankruptcy (if applicable), a Credit Enhancement Expiration Date
(if applicable) or a Clean-Up Event, (i) the product of (a) the
aggregate of, for each Asset, (1) the second highest bid (not including
accrued interest) obtained after the Remarketing Agent solicits three bids to
purchase such Asset from Persons that customarily provide such bids, other than
the Administrator, Freddie Mac, the Remarketing Agent, any Holder of Class B
Certificates, or any Affiliate of any such Person, including but not limited to
investment dealers and brokers that customarily deal in municipal bonds or
mortgage loans, 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 Asset 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, provided
that, with respect
to any particular Asset, the subtraction described in (a) for purposes of
determining the aggregate may result in a number that is less than zero, and
this negative number will be used for purposes of 

 

13

 

calculating
the aggregate amount described in (a). 
Hypothetical Gain Share is expressed as the variable “HGS” in the
following formula:(3)

 

 

where

	
   

  	
  MV =

  	
  second highest bid obtained from qualified bidder

  
	
   

  	
  AP =

  	
  Accreted Price for that Asset

  
	
   

  	
  ACAC =

  	
  Current Certificate Balance of applicable Class A Certificate

  
	
   

  	
  CLA =

  	
  Aggregate Outstanding Class A Certificate Balance

  
	
   

  	
  CLB =

  	
  Aggregate Outstanding Class B Certificate Balance

  
	
   

  	
  HGSPP =

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

  

 

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

 

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

 

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

 

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

 

	
  (3) 
  Example:

  	
   

  	
   

  	 

	
  Assumptions:

  	
  1.

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

  	 

	
   

  	
  2.

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

  	 

	
   

  	
  7.

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

  	 

	
   

  	
  8.

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

  	 

	
   

  	
  9.

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

  	 

	
   

  	
  10.

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

  	 

	
  Asset 1:

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

  
	
   

  	
   

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

  
	
  Asset 2:

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

  
	
   

  	
   

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

  
	
  Asset 3:

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

  
	
   

  	
   

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

  
						

Aggregating
the hypothetical gain share

                Asset
1 + Asset 2 + Asset 3 - HGSPP

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

 

14

 

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

 

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

 

“Knowledge”
means actual knowledge.

 

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

 

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

 

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

 

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

 

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

 

“Liquidity
Provider” means Freddie Mac.

 

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

 

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

 

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

 

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

 

15

 

“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 Asset or portion of an Asset, 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 Asset or portion thereof.

 

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

 

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

 

The Maximum
Reset Rate, if all the Assets are fixed rate assets, is equal to the Excess
Accrued Net Interest Amount Rate, if any, plus a rate determined by dividing
the product of the lowest Asset Rate (unless the Series Certificate
Agreement provides for the use of the Weighted Average Asset Rate) times the
Aggregate Outstanding Asset Balance by the Aggregate Outstanding Class A
Certificate Balance as of such day.  For
any Reset Rate Method other than a Weekly Reset Rate method, the calculation
will not include the Excess Accrued Net Interest Amount Rate because the
Maximum Reset Rate is calculated on a Reset Date and there will be no Excess
Accrued Net Interest Amount on a Reset Date for a Monthly Reset Rate Method or
a Term Reset Rate Method.  This Maximum
Reset Rate is expressed as the variable MRR(FRB) in the following formula:(4)

 

	
  (4) 
  Example 1:

  	
   

  	
   

  
	
  Assumptions:

  	
  1.

  	
  Aggregate
  Outstanding Asset Balance: $100,000,000

  
	
   

  	
  2.

  	
  Lowest Asset
  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%

  

 

16

 

 

This Maximum
Reset Rate is determined in four steps.

 

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

 

 

	
   

  	
  7.

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

  

 

STEP ONE:

Asset 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 Asset 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:

  	
   

  
	
   

  	
  Asset
  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 Asset interest to interest rate related to Class A Certificates.
  Same result as Example 1 = 8.125%

  
							

 

	
  STEP FOUR:

  	
  add STEP TWO
  and STEP THREE

  	
   

  
	
   

  	
  8.649991%+
  8.125% = 16.774991%

  	
   

  

 

17

 

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

 

where

 

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

EA =       Excess Accrued Net Interest Amount

CLA =    Aggregate Outstanding Class A Certificate
Balance

 

STEP
THREE:  interest on the Assets at the
lowest Asset 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
Asset Rate

BB =   Aggregate Outstanding Asset Balance

 

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

 

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

 

The Maximum
Reset Rate, if any of the Assets are not fixed rate assets, 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 Assets are fixed rate assets, this calculation
will apply to all Reset Rate Methods because the determination of the Available
Interest Amount includes both accrued interest on the Assets and interest on
the Assets that will accrue over the balance of the applicable Reset Period, to
the extent that amount is known.  This
Maximum Reset Rate is expressed as the variable MRR(NFRB) in the following
formula:(5)

 

	
  (5)  Example 1:

  	
   

  	
   

  
	
  Assumptions:

  	
  1.

  	
  Weekly Reset for Class A Certificates

  

 

18

	
   

  	
  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.

  	
  Assets 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 Asset 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 Assets:
  $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 Assets
  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 Assets:
  $51,780.82

  
	
   

  	
  (7 days until next Weekly Reset Date since rate on Assets 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)

  
																

 

19

 

 

MRR(NFRB) = 365/6  (AIA-ACI)

                             D

 

where

 

	
   

  	
  D =

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

  
	
   

  	
  AIA =

  	
  Available Interest Amount

  
	
   

  	
  ACI =

  	
  Accrued Certificate Interest

  

 

This Maximum
Reset Rate is determined in three steps.

 

STEP ONE:  establish the Reset Rate period factor

365

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

                                                            be in effect

 

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

 

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

 

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

 

	
   

  	
   

  	
  $80,000,000

  	
   

  	
   

  
	
   

  	
   

  	
  3.337% =
  Maximum Reset Rate

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Example 4:

  	
   

  	
   

  	
   

  	
   

  
	
  Assumptions:

  	
  1.

  	
  Same as Example 3 except that $20,000,000 of Assets bear interest at
  90% of 30 day LIBOR and $80,000,000 of Assets are fixed rate Assets 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 Assets

  	
   

  	
   

  
	
   

  	
   

  	
  $20,000,000
  LIBOR-based Assets =

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  ($20,000,000)(2.7%)(7)

  	
  = $10,356.16

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  365

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  ($80,000,000)(6.8%)(7)

  	
  = $104,328.76

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  365

  	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  	
   

  
	
  STEP THREE: 

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (52.1428)($114,684.92)

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  $80,000,000

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.47499% =
  Maximum Reset Rate

  	
   

  	
   

  
											

 

20

 

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

 

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

 

“Monthly
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.

 

“Mortgage
Loan” means
each conventional mortgage loan identified in the Series Certificate
Agreement on the Date of Original Issue. 
The term “Mortgage Loan” shall include any custodial receipts, trust
receipts or other similar instrument evidencing an ownership interest in a
mortgage loan held in a pass-through arrangement.

 

“Mortgage
Loan Documents” means,
with respect to any Mortgage Loan, the related promissory note from the Owner
of the Project evidencing the same, the related deed of trust or mortgage and
assignment of rents, and any other document, agreement or instrument evidencing
or securing the obligations of the Owner with respect to the Mortgage Loan, as
the same may be amended, supplemented or restated.

 

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

 

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

 

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

 

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

 

21

 

“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 status of interests in trusts and partnerships,
which counsel is satisfactory to the Administrator and Freddie Mac and which
opinion is addressed to the Administrator and Freddie Mac, and is in form and
in substance satisfactory to the Administrator and Freddie Mac.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

22

 

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

 

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

 

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

 

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

 

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

 

Custodian and
pledged to Freddie Mac as security for the obligations of the Sponsor under the
Reimbursement Agreement.

 

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

 

23

 

“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 will not be
taken into account in computing Profits or Losses.

 

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

 

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

 

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

 

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

 

“Purchase
Price” means, with respect to any Class A
Certificate, an amount equal to the sum of (i) the Current Certificate
Balance of such Class A Certificate and (ii) the accrued and 

 

24

 

unpaid
Required Class A Certificate Interest Distribution Amount on such Current
Certificate Balance to but not including the Purchase Date; provided, that “Class A
Certificates”, for purposes of this definition, refers solely to Class A
Certificates that are not Affected Certificates.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

25

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

26

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Selected
by Lot” means, with respect to Class A
Certificates held by DTC, the procedure by which Holders of Certificates are
selected to be affected by a given action affecting less than all of the
Holders under any CUSIP number are selected, which procedure will be initiated
by the Administrator by notifying DTC of a requirement for such a selection.  With respect to such Certificates, DTC will
select, in such manner as it determines from a position listing of the
aggregate Current Certificate Balances of such Class A Certificates as of
the close of business on the date of such notice, the interests in Class A
Certificates held by DTC Participants with respect to which such action will be
taken.  DTC will give the DTC Participant(s) for
the interests so selected written notice of the selection, which will specify
the date and nature of such action and the aggregate Current Certificate
Balance of Class A Certificates to be selected.  Each such DTC Participant will thereupon
select, in such manner as it determines, the Holders with respect to whose
interests such action will be taken.  The
Remarketing Agent will contact each such DTC Participant to request such DTC
Participant to disclose to the Remarketing Agent the Holders so selected.  With respect to the Class B 

 

27

 

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 Assets or sales proceeds in connection with a
Tender Option Termination Event or a Liquidity Failure;

 

(iii)          the Mandatory Tender Date relating to
a Mandatory Tender Event arising in connection with a Liquidity Provider
Termination Event, a Sponsor Act of Bankruptcy (if applicable), the Credit
Enhancement Expiration Date (if applicable) or a Clean-Up Event; or

 

(iv)          the date on which the Optional
Disposition Right has been exercised with respect to the last Class A
Certificate (unless such Class A Certificate has been remarketed).

 

“Servicer”
means the party designated as the Servicer in the Series Certificate
Agreement.

 

“Servicing Fee” means the fee payable to the
Servicer in accordance with the servicing arrangement between Freddie Mac and
the Servicer.

 

“Special Adjustment Date” means the Mandatory
Tender Date arising from a Special Adjustment Event.

 

“Special Adjustment Event” means the
occurrence of the receipt of principal paid with respect to any “Class B
Certificates” of another Series, as described in Section 7.02 of the
Standard Terms.

 

28

 

“Special Adjustment Event Notice” means the notice
given to the Administrator by Freddie Mac pursuant to Section 7.02 of the
Standard Terms.

 

“Special
Servicer” means the party designated as Special
Servicer in the Series Certificate Agreement.

 

“Special
Servicing Fee” means the fee payable to the Special
Servicer in accordance with the special servicing arrangement between Freddie
Mac and the Special Servicer plus any expenses permitted under the Servicing
Agreement.

 

“Specified
Party” means, collectively, the Administrator, Freddie
Mac, the Remarketing Agent and any Holder of Class B Certificates or any
Affiliate of any such Person.

 

“Sponsor” means the party designated as the Sponsor
in the Series Certificate Agreement.

 

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

 

“Sponsor
Parties”
means the Sponsor and its Affiliates.

 

“S&P” shall mean Standard & Poor’s
Ratings Services, a division of The McGraw-Hill Companies, Inc, or its
successor in interest.  If neither such
rating agency nor any successor remains in existence, “S&P”
shall be deemed to refer to such other nationally recognized statistical rating
agency or other comparable Person designated by Freddie Mac, notice of which
designation shall be given to the Administrator, the Sponsor and the Remarketing
Agent, and specific ratings of S&P referenced herein shall be deemed to
refer to the equivalent ratings of the party so designated.

 

“Standard
Terms” means the Standard Terms of Series Certificate
Agreement, together with all exhibits, as it may be amended or supplemented
from time to time.

 

“State”
means any one of the 50 states of the United States of America, or the District
of Columbia.

 

“Tender
Advice” means the notice delivered by the
Administrator to Freddie Mac pursuant to Section 6.03 or 6.05 of the
Standard Terms.

 

“Tender
Option” means the right granted to the Holders of Class A
Certificates pursuant to Section 6.01(a) of the Standard Terms to
tender or cause to be tendered such Class A Certificates (other than
Affected Certificates or Pledged Class A Certificates) for purchase by the
Administrator from amounts deposited pursuant to Section 6.06 of the
Standard Terms.

 

“Tender
Option Termination Event” has the meaning provided in Section 7.01(a) of
the Standard Terms.

 

29

 

“Tender
Option Termination Notice” means the notice given by
the Administrator to the Registered Holders pursuant to Section 7.01 of
the Series Certificate Agreement in connection with the occurrence of a
Tender Option Termination Event.

 

“Tendered Class A
Certificates” means any Certificate as to which an
Exercise Notice has been given.

 

“Term
Effective Date” means the date on which a particular
Term Reset Rate will be effective.

 

“Term Reset
Date” means the Business Day immediately preceding a
Term Effective Date.

 

“Term Reset
Method Notice” means the notice given to the
Remarketing Agent and the Administrator, and given by the Administrator to the
Registered Holders, pursuant to Section 5.03(b) of the Standard
Terms.

 

“Term Reset
Rate” means a Reset Rate determined by the Remarketing
Agent for a specified term as provided in Article V of the Standard Terms.

 

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

 

“Terminating
Mandatory Tender Date” means a Mandatory Tender Date relating to a Mandatory Tender Event
arising in connection with a Liquidity Provider Termination Event, a Clean-Up
Event, a Credit Enhancement Expiration Date (if applicable) or, following a
Sponsor Act of Bankruptcy (if applicable).

 

“UCC”
means the Uniform Commercial Code as in effect in the relevant jurisdiction.

 

“Underlying
Bond” means a municipal security, note, bond or other
evidence of indebtedness issued by a State or local government unit the
ownership of which is evidenced by a custodial receipt, trust receipt or any
other similar instrument that evidences the ownership based on a pass-through
arrangement.

 

“Vice
President” means, with respect to Freddie Mac and the
Administrator, any Senior Vice President, Vice President, or Assistant Vice
President.

 

“Weekly
Reset Date” means Wednesday of each week, or if
Wednesday is not a Business Day, the immediately preceding Business Day,
provided that, if the Reset Rate Method is being changed to the Weekly Reset
Rate Method, the initial Weekly Reset Date will be the Business Day preceding
the Reset Rate Change Date.

 

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

 

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

 

30

 

“Weighted
Average Asset Rate” means, as of any date of
determination, (i) the aggregate of, for each Asset, the product of the
Outstanding Asset Balance and the related Asset Rate, divided by (ii) the
Aggregate Outstanding Asset Balance, expressed as a percentage.

 

31Exhibit 10.6

 

EXECUTION

 

[Osprey TEBS]

 

LIMITED
SUPPORT AGREEMENT

 

This Limited Support
Agreement (as amended, modified or supplemented from time to time, this “Agreement”)
is entered into as of December 1, 2007, between CENTERLINE
GUARANTOR LLC, a limited liability company organized and existing
under the laws of the State of Delaware (together with its successor and
permitted assigns, (“Agreement Provider”), and FEDERAL HOME
LOAN MORTGAGE CORPORATION a shareholder-owned, government-sponsored
enterprise organized and existing under the laws of the United States, as
obligee under the Reimbursement Agreement (together with any successor obligee
under said Reimbursement Agreement and their respective successors and assigns,
the “Obligee”).

 

RECITALS

 

A.                                   Pursuant to the Bond Exchange and Sale Agreement dated as of
the date hereof (the “Bond Exchange Agreement”) among Obligee, the Transferors
named therein and the Centerline Sponsor 2007-1 Securitization, LLC, a limited liability
company organized and existing under the laws of the State of Delaware (together
with its successors and permitted assigns, the “Sponsor”), the Bonds therein
described are being exchanged for the Class A Certificates and the Class B
Certificates therein described (the latter being pledged back to Obligee
pursuant to the Reimbursement, Pledge and Security Agreement dated as of the
date hereof between Obligee and the Sponsor (as the same may be amended,
modified or supplemented from time to time, the “Reimbursement Agreement”, to
secure the Sponsor’s obligations thereunder). 
Pursuant to the Reimbursement Agreement and each Series Certificate
Agreement (as therein defined), Obligee has agreed to provide its Credit
Enhancement (as therein defined) and liquidity support for the Class A
Certificates on the terms provided therein.

 

B.                                     Sponsor is an Affiliate of the Agreement Provider.

 

C.                                     It is a condition precedent to Obligee’s obligation to
provide the Credit Enhancement and liquidity support that Agreement Provider
shall have entered into this Agreement to guarantee certain obligations of the
Sponsor to Obligee.

 

NOW, THEREFORE, in order to
induce Obligee to provide its Credit Enhancement and liquidity support, and in
consideration of the Recitals, and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby Agreement Provider and Obligee hereby agree as follows:

 

1.                                       “Obligations” and other capitalized terms used but not
defined in this Agreement shall have the meanings assigned to them in the
Reimbursement Agreement.

 

2.                                       The following terms shall have the respective meanings set
forth below for purposes of this Agreement:

 

1

 

(a)                                  “Net Worth” means, at any date, the Tangible Assets of a
Person which (after deducting depreciation, obsolescence, amortization, and any
valuation or other reserves on account of upward revaluation of assets and
without reduction for any unamortized debt discount or expense) would be shown,
in accordance with generally accepted accounting principles, on its balance
sheet, minus liabilities (other than capital stock and surplus but including
all reserves for contingencies and other potential liabilities) which would be
shown, in accordance with generally accepted accounting principles, on such
balance sheet.

 

(b)                                 “Person” means any individual, partnership, corporation,
association, joint venture, trust (including any beneficiary thereof) or
unincorporated organization, and a government or agency or political
subdivision thereof.

 

(c)                                  “Tangible Assets” means total assets except: (i) that
portion of deferred assets and prepaid expenses (other than prepaid insurance,
prepaid rent and prepaid taxes) which do not mature or, in accordance with
generally accepted accounting principles, are not amortizable within one year
from the date of calculation, and (ii) trademarks, trade names, good will,
and other similar intangibles.

 

3.                                       Agreement Provider hereby absolutely, unconditionally and
irrevocably guarantees to Obligee the full and prompt payment when due, whether
at maturity or earlier, by reason of acceleration or otherwise, and at all
times thereafter, and the full and prompt performance when due, of all of the
following:

 

(a)                                  All amounts for which Sponsor is personally liable under Section 9.11(b) of
the Reimbursement Agreement.

 

(b)                                 All actual out-of-pocket costs and expenses, including
reasonable fees and out of pocket expenses of attorneys and expert witnesses,
incurred by Obligee in enforcing its rights under this Agreement.

 

(c)                                  The payment and performance of all obligations of Sponsor
pursuant to Section 2.4(c) and Section 3.12(a) of the
Reimbursement Agreement.

 

4.                                       The obligations of Agreement Provider under this Agreement
shall survive any foreclosure proceeding, any foreclosure sale and any release
of record of the collateral securing the Reimbursement Agreement.

 

5.                                       Agreement Provider’s obligations under this Agreement
constitute an unconditional guaranty of payment and performance and not merely
a guaranty of collection.

 

6.                                       The obligations of Agreement Provider under this Agreement
shall be performed within five (5) days of written demand therefor
(provided with respect to the guarantee of the Sponsor’s obligations under Section 2.4(c) of
the Reimbursement Agreement, such demand may not be made by the Obligee until
the time period 

 

2

 

 

(including the time period for
cure) set forth in such Section 2.4(c) has expired), by Obligee and
shall be unconditional irrespective of the genuineness, validity, regularity or
enforceability of the Reimbursement Agreement or any Sponsor Document, and
without regard to any other circumstance which might otherwise constitute a
legal or equitable discharge of a surety, a guarantor, a borrower or a
mortgagor.  Agreement Provider hereby
waives the benefit of all principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms of this Agreement
and agrees that Agreement Provider’s obligations shall not be affected by any
circumstances, whether or not referred to in this Agreement, which might
otherwise constitute a legal or equitable discharge of a surety, a guarantor, a
borrower or a mortgagor.  Agreement
Provider hereby waives the benefits of any right of discharge under any and all
statutes or other laws relating to a guarantor, a surety, a borrower or a
mortgagor and any other rights of a surety, a guarantor, a borrower or a
mortgagor thereunder.  Without limiting
the generality of the foregoing, Agreement Provider hereby waives, to the
fullest extent permitted by law, diligence in collecting the Obligations,
presentment, demand for payment (except as expressly set forth herein),
protest, all notices with respect to the Reimbursement Agreement and this
Agreement which may be required by statute, rule of law or otherwise to
preserve Obligee’s rights against Agreement Provider under this Agreement,
including, but not limited to (except as expressly set forth herein or in the
Reimbursement Agreement), notice of acceptance, notice of any amendment of the
Sponsor Documents, notice of the occurrence of any default or Event of Default,
notice of intent to accelerate, notice of acceleration, notice of dishonor,
notice of foreclosure, notice of protest, and notice of the incurring by
Sponsor of any obligation or indebtedness. 
Agreement Provider also waives, to the fullest extent permitted by law,
all rights to require Obligee to (a) proceed against Sponsor or any other
guarantor of Sponsor’s payment or performance with respect to the Obligations
(an “Other
Guarantor”) (b) if any Other
Guarantor is a partnership, proceed against any general partner of the Other
Guarantor, or (c) proceed against or exhaust any collateral held by Obligee
to secure the repayment of the Obligations. 
Agreement Provider further waives, to the fullest extent permitted by
applicable law, any right to revoke this Agreement as to any future advances by
Obligee under the Reimbursement Agreement to protect Obligee’s interest in the
UCC Collateral securing the Reimbursement Agreement.

 

7.                                       At any time or from time to time and any number of times,
without notice to Agreement Provider and without affecting the liability of
Agreement Provider, (a) the time for payment of the Obligations may be
extended or the Obligations may be renewed in whole or in part; (b) the
time for Sponsor’s performance of or compliance with any covenant or agreement
contained in the Reimbursement Agreement or any other Sponsor Document, whether
presently existing or hereinafter entered into, may be extended or such
performance or compliance may be waived; (c) the maturity of the
Obligations may be accelerated as provided in the Reimbursement Agreement or
any other Sponsor Document; (d) the Reimbursement Agreement, and the
security instrument or any other loan document evidencing or securing the
obligations of Owners (as defined in the 

 

3

 

Reimbursement Agreement) may be
modified or amended by Obligee and Sponsor in any respect, including, but not
limited to, an increase in the principal amount; and (e) any security for
the Obligations may be modified, exchanged, surrendered or otherwise dealt with
or additional security may be pledged or mortgaged for the Obligations.

 

8.                                       Obligee, in its sole and absolute discretion, may (a) bring
suit against Agreement Provider, or any one or more of the persons constituting
Agreement Provider and any Other Guarantor, jointly and severally, or against
any one or more of them; (b) compromise or settle with any one or more of
the persons constituting Agreement Provider for such consideration as Obligee
may deem proper; (c) release one or more of the persons constituting
Agreement Provider or any Other Guarantor, from liability; and (d) otherwise
deal with Agreement Provider and any Other Guarantor, or any one or more of
them, in any manner, and no such action shall impair the rights of Obligee to
collect from Agreement Provider any amount guaranteed by Agreement Provider
under this Agreement.  Nothing contained
in this paragraph shall in any way affect or impair the rights or obligations
of Agreement Provider with respect to any Other Guarantor.

 

9.                                       Any indebtedness of Sponsor held by Agreement Provider now
or in the future is and shall be subordinated to the Obligations and any such
indebtedness of Sponsor shall be collected, enforced and received by Agreement
Provider, as trustee for Obligee, but without reducing or affecting in any
manner the liability of Agreement Provider under the other provisions of this
Agreement.

 

10.                                 Agreement Provider shall have no right of, and hereby waives
any claim for, subrogation or reimbursement against Sponsor or any member of
Sponsor by reason of any payment by Agreement Provider under this Agreement,
whether such right or claim arises at law or in equity or under any contract or
statute, until the Obligations has been paid in full and there has expired the
maximum possible period thereafter during which any payment made by Sponsor to Obligee
with respect to the Obligations could be deemed a preference under the United
States Bankruptcy Code.

 

11.                                 If any payment by Sponsor is held to constitute a preference
under any applicable bankruptcy, insolvency, or similar laws, or if for any
other reason Obligee is required to refund any sums to Sponsor, such refund
shall not constitute a release of any liability of Agreement Provider under
this Agreement.  It is the intention of Obligee
and Agreement Provider that Agreement Provider’s obligations under this Agreement
shall not be discharged except by Agreement Provider’s performance of such
obligations and then only to the extent of such performance.

 

12.                                 Agreement Provider shall from time to time, upon request by Obligee,
deliver to Obligee such financial statements as are reasonably needed to
determine compliance with Section 16 hereof, but not more frequently than
once each year.  As a condition to
Agreement Provider’s delivery of its financial information, Obligee agrees that
such information is confidential information, shall not be used for any purpose
other than evaluating compliance by the Agreement Provider with 

 

4

 

this
Agreement, and shall be disclosed only to those employees, directors, officers
and agents of Obligee who need to know such information for purposes of
performing or enforcing Obligee’s obligations and rights under this Agreement
and who are advised of the need to maintain the confidentiality of such
information.  Obligee shall not otherwise
use or disclose Agreement Provider’s financial information without Agreement
Provider’s prior written consent.  The
restrictions on use and disclosure set forth above shall not apply when and to
the extent that the information received by Obligee (a) is or becomes
generally available to the public through no fault of Obligee (or anyone acting
on its behalf); (b) was previously known by Obligee free of any obligation
to keep it confidential; (c) is subsequently disclosed to Obligee by a
third party who may rightfully transfer and disclose such information without
restriction and free of any obligation to keep it confidential; or (d) is required
to be disclosed by Obligee by applicable law.

 

13.                                 Solely in connection with an assignment by Obligee of its
rights and obligations under the Reimbursement Agreement to which the Sponsor
has consented (unless no such consent is necessary because a Remedy Event
exists under the Reimbursement Agreement), Obligee may assign its rights under
this Agreement in whole or in part to the transferee of its rights and
obligations under the Reimbursement Agreement and upon any such assignment, all
the terms and provisions of this Agreement shall inure to the benefit of such
assignee to the extent so assigned.  Obligee
agrees to notify Agreement Provider of any such assignment.  The terms used to designate any of the
parties herein shall be deemed to include the heirs, legal representatives,
successors and assigns of such parties; and the term “Obligee” shall include, in addition to Obligee, any lawful owner,
holder or pledgee of the Reimbursement Agreement to whom Sponsor has consented
(unless no such consent is necessary because a Remedy Event exists under the
Reimbursement Agreement).  Reference
herein to “person” or “persons” shall be deemed to include individuals and
entities.

 

14.                                 This Agreement and the other Sponsor Documents represent the
final agreement between the parties and may not be contradicted by evidence of
prior, contemporaneous or subsequent oral agreements. There are no unwritten
oral agreements between the parties.  All
prior or contemporaneous agreements, understandings, representations, and
statements, oral or written, are merged into this Agreement and the other
Sponsor Documents.  Agreement Provider
acknowledges that Agreement Provider has received copies of the Reimbursement
Agreement and all other Sponsor Documents. 
Neither this Agreement nor any of its provisions may be waived,
modified, amended, discharged, or terminated except by an agreement in writing
signed by the party against which the enforcement of the waiver, modification,
amendment, discharge, or termination is sought, and then only to the extent set
forth in that agreement.

 

15.                                 This Agreement shall be construed, and the rights and
obligations of Agreement Provider hereunder determined, in accordance with
federal statutory or common law (“federal law”).  Insofar as there may be no applicable rule or
precedent under 

 

5

 

federal
law and insofar as to do so would not frustrate the purposes of any provision
of this Agreement, the local law of the State of New York shall be deemed
reflective of federal law.  The parties
agree that any legal actions among the Agreement Provider and the Obligee
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 exclusive jurisdiction and venue of said Court in
connection with any action or proceeding initiated concerning this
Agreement.  Agreement Provider
irrevocably consents to service, jurisdiction, and venue of such court for any
such litigation and waives any other venue to which it might be entitled by
virtue of domicile, habitual residence or otherwise.

 

16.                                 Net Worth.  As of the date of this Agreement, the
Agreement Provider represents and warrants to Obligee that it has a Net Worth
equal to at least $20,000,000 and, during the term of this Agreement, Agreement
Provider shall at all times maintain a Net Worth equal to at least $20,000,000.

 

17.                                 Maintenance of Existence.  During the term of the Reimbursement
Agreement, the Agreement Provider agrees (a) to maintain its existence as
a limited liability company under the laws of the State of Delaware and (b) that
it will not dissolve or otherwise dispose of all or substantially all of its
assets, and will not consolidate with or merge into any Person or permit any
Person to consolidate with or merge into it.

 

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

 

19.                               AGREEMENT PROVIDER AND OBLIGEE EACH (A) AGREES
NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS
AGREEMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS AGREEMENT PROVIDER AND OBLIGEE
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]

 

6

 

IN WITNESS WHEREOF, Agreement
Provider and Obligee have signed and delivered this Agreement or have caused
this Agreement to be signed by their duly authorized representatives.

 

	
   

  	
  AGREEMENT
  PROVIDER:

  
	
   

  	
   

  
	
   

  	
  CENTERLINE
  GUARANTOR LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marc D. Schnitzer

  
	
   

  	
   

  	
  Marc D. Schnitzer

  
	
   

  	
   

  	
  Executive Vice President

  

 

[SIGNATURE PAGE TO OSPREY TEBS LIMITED
SUPPORT AGREEMENT]

 

 

	
   

  	
  OBLIGEE:

  
	
   

  	
   

  
	
   

  	
  FEDERAL
  HOME LOAN MORTGAGE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ W. Kimball Griffith

  
	
   

  	
   

  	
  W. Kimball Griffith

  
	
   

  	
   

  	
   Vice President, Multifamily
  Affordable

  
	
   

  	
   

  	
  Housing
  Production & Investments

  

 

[SIGNATURE PAGE TO OSPREY TEBS LIMITED
SUPPORT AGREEMENT]

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