Document:

Exhibit
10.1

 

EXECUTION

 

FHLMC
Approved Form

 

[Osprey TEBs]

 

 

 

BOND
EXCHANGE AND SALE AGREEMENT

among

FEDERAL HOME LOAN MORTGAGE CORPORATION

CENTERLINE 2007-1 EIT SECURITIZATION, LLC

as Transferor

CENTERLINE 2007-1 SU SECURITIZATION, LLC

as Transferor

CENTERLINE 2007-1 T SECURITIZATION, LLC

as Transferor

and

CENTERLINE SPONSOR 2007-1 SECURITIZATION, LLC

as Sponsor

 

Relating to

Freddie Mac

Multifamily Variable Rate Certificates

Series M012 and Series M013

and

Freddie Mac

Taxable Multifamily Variable Rate Certificates

Series M014

Dated as of December 1, 2007

 

 

TABLE OF CONTENTS

Page

ARTICLE I

DEFINITIONS AND INTERPRETATION

 

	
  Section 1.1

  	
  Definitions

  	
   

  	
  2

  
	
  Section 1.2

  	
  Interpretation

  	
   

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II

  
	
  REPRESENTATIONS
  AND WARRANTIES

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Representations
  and Warranties of the Sponsor and Each Transferor

  	
   

  	
  3

  
	
  Section 2.2

  	
  Representations
  and Warranties of Freddie Mac

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III

  
	
  AGREEMENT
  TO EXCHANGE

  
	
   

  
	
  Section 3.1

  	
  Exchange

  	
   

  	
  5

  
	
  Section 3.2

  	
  Mandatory
  Delivery; Ownership; Registration of Transfer

  	
   

  	
  5

  
	
  Section 3.3

  	
  Failure to Deliver

  	
   

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV

  
	
  MISCELLANEOUS

  
	
   

  
	
  Section 4.1

  	
  Counterparts

  	
   

  	
  6

  
	
  Section 4.2

  	
  Amendments, Changes and Modifications

  	
   

  	
  6

  
	
  Section 4.3

  	
  Governing Law; Severability

  	
   

  	
  6

  
	
  Section 4.4

  	
  Further Assurances and Corrective Instruments

  	
   

  	
  6

  
	
  Section 4.5

  	
  Headings

  	
   

  	
  6

  
	
  Section 4.6

  	
  Survival of Representation and Warranties

  	
   

  	
  6

  
	
  Section 4.7

  	
  Waiver of Claims

  	
   

  	
  7

  
	
  Section 4.8

  	
  Waivers of Jury
  Trial

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule A-1:

  	
  Pool
  12 Bonds, Related Bonds and Certificate Series Designations

  	
   

  
	
  Schedule A-2:

  	
  Pool
  13 Bonds, Related Bonds and Certificates Series Designations

  	
   

  
	
  Schedule A-3:

  	
  Taxable
  Pool 14 Bonds, Related Bonds and Certificate Series Designations

  	
   

  
							

 

 

BOND
EXCHANGE AND SALE AGREEMENT

 

THIS BOND EXCHANGE AND
SALE AGREEMENT dated as of December 1, 2007  (as amended, modified or supplemented from time to time, this “Agreement”)  by and between
the FEDERAL HOME LOAN MORTGAGE CORPORATION
(together with its successors and assigns, “Freddie Mac”), a shareholder-owned government-sponsored enterprise
organized and existing under the laws of the United States, CENTERLINE 2007-1 EIT SECURITIZATION, LLC, a Delaware
limited liability company, (together with its successors and assigns, “EIT Transferor”),
CENTERLINE 2007-1 SU SECURITIZATION, LLC,
a Delaware limited liability company, (together with its successors and
assigns, “SU Transferor”), CENTERLINE 2007-1 T
SECURITIZATION, LLC, a Delaware limited liability company, (together
with its successors and assigns, “T Transferor”) each as Transferor (together
with its successors and assigns, the “Transferor”) and CENTERLINE
SPONSOR 2007-1 SECURITIZATION, LLC, a Delaware limited liability
company, as Sponsor (together with its successors and assigns, the “Sponsor”).

 

R
E C I T A L S:

 

1.             EIT Transferor is the owner of the
tax exempt multifamily housing bonds listed on Schedule A-1 (the “Pool
12 Bonds”), SU Transferor is the owner of the tax exempt multifamily housing
bonds listed on Schedule A-2 (the “Pool 13 Bonds” and collectively with
the Pool 12 Bonds, the “Tax-exempt Bonds”), and T Transferor is the owner of
the taxable multifamily housing revenue bonds listed on Schedule A-3
(the “Taxable Pool 14 Bonds”), all such bonds being referred to herein as the “Bonds”.  EIT Transferor, SU Transferor and T Transferor
are each an Affiliate of the Sponsor and are sometimes referred to herein,
individually or collectively as the context may require, as the “Transferor”.

 

2.             Pursuant and subject to the terms
hereof, Freddie Mac has agreed with (i) EIT Transferor to exchange the Series M012
Certificates issued by Freddie Mac for the Pool 12 Bonds, (ii) SU Transferor
to exchange the Series M013 Certificates issued by Freddie Mac for the
Pool 13 Bonds, and (iii) T Transferor to exchange the Series M014
Certificates issued by Freddie Mac for the Taxable Pool 14 Bonds.  Freddie Mac is depositing the Bonds pursuant
to the terms of three separate Series Certificate Agreements, each
respectively dated as of the date hereof (together with the Standard Terms
incorporated therein, each a “Series Certificate Agreement”), between
Freddie Mac, in its corporate capacity and Freddie Mac in its capacity as
Administrator under the applicable Series Certificate
Agreement.  Separate Series of
Certificates are being issued pursuant to each Series Certificate
Agreement.  Each Class of
Certificates has certain specified rights with respect to the related Bonds as
provided therein.

 

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

 

 

ARTICLE I

DEFINITIONS AND INTERPRETATION

 

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

 

“Bonds” means collectively the Pool 12 Bonds, the Pool 13 Bonds and the
Taxable Pool 14 Bonds.

 

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

 

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

 

“Class B Certificates”  means the subordinate certificates designated as such and issued
pursuant to each Series Certificate Agreement, evidencing an undivided
ownership interest in the related Bonds.

 

“Closing Date” is defined in Section 3.1.

 

“Transferor” means EIT Transferor,
SU Transferor and T Transferor, respectively, as transferor of the Bonds and
any permitted successors thereto in such capacity.

 

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

 

“Pool 12 Bonds” means the
tax-exempt multifamily housing revenue bonds listed on Schedule A-1
hereto.

 

“Pool 13 Bonds” means the
tax-exempt multifamily housing revenue bonds listed on Schedule A-2
hereto.

 

“Pool 14 Taxable Bonds” means the
taxable multifamily housing revenue bonds listed on Schedule A-3 hereto.

 

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

 

“Sponsor” means Centerline Sponsor 2007-1 Securitization, LLC, a
Delaware limited liability company, and any permitted successors or assigns.

 

“Subclass” means with respect to the Class A Certificates designated Series M012,
each subclass designated A1 and each subclass designated A2.

 

2

 

“Tax
Exempt Bonds” means, collectively, the
Pool 12 Bonds and the Pool 13 Bonds.

 

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

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES

 

Section 2.1            Representations and Warranties of the Sponsor and Each Transferor.

 

(a)           Sponsor and each Transferor
represents and warrants as of the Closing Date, as follows:

 

(i)            This Agreement has been duly authorized, is valid and
binding, and is enforceable against it in accordance with its terms.

 

(ii)           It (A) is a limited liability company, duly organized
and existing pursuant to the laws of the state of its organization, (B) has
the power and authority to own its properties and to carry on its business as
now being conducted and (C) has the power and authority to execute and
perform all the undertakings contemplated hereby.

 

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

 

(iv)          It is not in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement or instrument to which it is a party which default would in its good
faith and reasonable judgment 

 

3

 

materially adversely affect the transactions
contemplated hereby.  There is no action,
suit or proceeding at law or in equity or by or before any governmental
instrumentality or other agency now pending or threatened in writing against or
affecting it or any of its properties or rights, which, if adversely
determined, would in Transferor’s good faith and reasonable judgment (A) materially
impair the its right to carry on its business as now conducted or (B) have
a material adverse effect on its financial condition.

 

(v)           It has not taken, or omitted to take, any action that, if
taken or omitted, would jeopardize or adversely affect the exclusion from gross
income for federal income tax purposes of the interest payable on the Bonds
which it owns or for which it has been the “Majority Owner” (as defined in the Bond
Documents).

 

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

 

(b)           Each Transferor represents and
warrants as of the Closing Date with respect to the Bonds it is depositing
hereunder, as follows:

 

(i)            The
Bonds are genuine and outstanding.  The Transferor
has all necessary power and authority to transfer, and has duly authorized by
all necessary action the transfer of, the Bonds.  Any consents or approvals required to
transfer the Bonds to Freddie Mac have been obtained.  Immediately prior to such transfers, the Transferor
owned the Bonds free and clear of any lien, pledge, encumbrance or other security
interest, and had not sold, assigned or pledged any of its interest in the
Bonds to any person or entity, and had not entered into any agreement to effect
such a sale, assignment or pledge except as contemplated hereby.  Upon such transfers, the Transferor has
released all right, title and interest in and to the Bonds.

 

(c)           Freddie Mac’s remedies against the
Sponsor for breach of (i) the representation and warranty set forth in Section 2.1(a)(vi) above
shall be limited to the applicable remedies available to Freddie Mac under
Sections 2.4(c) and 9.11(b)(3) of the Reimbursement Agreement, and (ii) any
other representation or warranty made under this Agreement shall be limited to
the applicable remedies available to Freddie Mac under Section 9.11(b)(4) of
the Reimbursement Agreement.

 

Section 2.2            Representations and
Warranties of Freddie Mac.  Freddie
Mac represents and warrants as of the Closing Date, as follows:

 

(a)           It (A) is a shareholder-owned
government-sponsored enterprise duly organized and validly existing under the
laws of the United States of America, (B) has the power and authority to
own its properties and to carry on its business as now being conducted and as
contemplated by this Agreement and (C) has the power and authority to
execute and perform all of its undertakings in this Agreement.

 

(b)           This Agreement is a valid and binding
obligation of Freddie Mac, the making and performance of which by Freddie Mac
have been duly authorized by all necessary corporate and other action and the
consummation of the transactions contemplated hereby by Freddie Mac does not
nor will conflict with, result in a breach of,

 

4

 

or is a default under, in
any material respect, any of the terms, conditions or provisions of any legal
restriction or any instrument to which Freddie Mac is now a party or by which
Freddie Mac is bound, or constitute a violation of any law regulating the
affairs of Freddie Mac or internal governing documents of Freddie Mac, and does
not and will not result in the creation of any lien, charge or encumbrance of
any nature except, in each case, as would not reasonably be expected to have a
material adverse effect on Freddie Mac’s ability to perform its obligations
under this Agreement

 

ARTICLE III

AGREEMENT TO EXCHANGE

 

Section 3.1            Exchange.  Freddie Mac and the Transferor agree to
exchange the Certificates for the Bonds in accordance with and subject to the
terms and provisions of this Agreement. 
The exchange shall take place on December 27, 2007 at the offices
of Ballard Spahr Andrews & Ingersoll, LLP, Washington DC, at 10:00 a.m.,
eastern time (such date, location and time of exchange of the Bonds for the
Certificates being herein called the “Closing Date”).  On the Closing Date, in consideration for the
delivery and transfer of ownership and possession of the Bonds from the Transferor
to Freddie Mac, Freddie Mac shall simultaneously deliver to the Transferor the
respective Class A Certificates and Class B Certificates, and in
consideration for the transfer of the respective Certificates from Freddie Mac
to the Transferor, the Transferor shall simultaneously deliver the related
Bonds and transfer and assign to Freddie Mac all of its right, title and
interest in and to the such Bonds together with all interest due thereon from
and after the Closing Date (and by its execution and delivery of this
Agreement, each Transferor acknowledges and affirms such assignment).

 

Section 3.2            Mandatory Delivery;
Ownership; Registration of Transfer 
No later than the Closing Date, the Transferor shall complete
the delivery of the Bonds to Freddie Mac in accordance with this Agreement in
physical form with executed bond assignments in favor of the Federal Home Loan
Mortgage Corporation certified by an appropriate medallion seal or with respect
to physical bonds held by Deutsche Bank National Trust Company, as custodian,
evidence satisfactory to Freddie Mac that Deutsche Bank National Trust Company is
holding such Bonds as custodian for Freddie Mac and that any previous custodial
arrangements have been terminated.  Ownership
of the Bonds shall pass from the Transferor to Freddie Mac on the Closing Date
as provided in Section 3.1.  The Transferor
shall execute and deliver any further instruments necessary or appropriate to
effect or evidence the transfer and delivery of all the Transferor’s interest
in and to the Bonds to Freddie Mac, and shall fully and promptly cooperate with
Freddie Mac in connection with the same.

 

Section 3.3            Failure to Deliver.  If any Transferor fails to deliver all of the
Bonds to Freddie Mac or fails to comply fully with any material precondition to
Freddie Mac’s obligation to exchange Certificates for the Bonds, on or before
the Closing Date, Freddie Mac shall have no obligation to exchange Certificates
for the Bonds, and the Sponsor shall promptly reimburse Freddie Mac for all of
its out-of-pocket expenses in connection with the proposed transaction,
including, but not limited to, Freddie Mac’s reasonable legal costs.

 

5

 

ARTICLE IV

MISCELLANEOUS

 

Section 4.1            Counterparts.  This Agreement may be executed in
counterparts by the parties hereto, and each such counterpart shall be
considered an original, and all such counterparts shall constitute one and the
same instrument.

 

Section 4.2            Amendments, Changes and Modifications.  This Agreement
may be amended, changed, modified, altered or terminated only by a written
instrument or written instruments signed by the parties to this Agreement.  Unless otherwise specified in such waiver or
consent, a waiver or consent given hereunder shall be effective only in the
specific instance, and for the specific purpose for which given.

 

Section 4.3            Governing Law; Severability.  This Agreement
shall be construed, and the rights and obligations of the parties hereunder
determined, in accordance with federal statutory or common law (“federal law”).  Insofar as there may be no applicable rule or
precedent under federal law and insofar as to do so would not frustrate the purposes
of any provision of this Agreement and the Freddie Mac Act, the local law of
the State of New York shall be deemed reflective of federal law.  The parties agree that any legal actions
among Freddie Mac and the Transferor regarding each party hereunder shall be
originated in the United States District Court in and for the Eastern District
of Virginia, and the parties hereby consent to the jurisdiction and venue of
said Court in connection with any action or proceeding initiated concerning
this Agreement.  The invalidity or
enforceability of any provision of this Agreement shall not affect the validity
of any other provision, and all other provisions shall remain in full force and
effect.

 

Section 4.4            Further Assurances and Corrective Instruments.  To the extent
permitted by law, the parties to this Agreement agree that they will, from time
to time, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, such supplements to this Agreement and such further
instruments as Freddie Mac may reasonably request and as may be reasonably
required in the opinion of Freddie Mac or its counsel to effectuate the
intention of or to facilitate the performance of this Agreement or any other Transferor
Document.

 

Section 4.5            Headings.  Article and section headings used herein
are for convenience of reference only, are not part of this Agreement and are
not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.

 

Section 4.6            Survival of Representation and Warranties.  All statements
contained herein, or in any certificate, financial statement or other
instrument delivered by or on behalf of the Transferor or the Sponsor pursuant
to or in connection with this Agreement (including but not limited to any such
statement made in or in connection with any amendment hereto or thereto) shall
constitute representations and warranties made under this Agreement.  All representations and warranties made under
this Agreement (a) shall be made and shall be true at and as of the
Closing Date and (b) shall survive the execution and delivery of this
Agreement, regardless of any investigation made by Freddie Mac or on its
behalf.

 

6

 

Section 4.7            Waiver of Claims.  IN ORDER TO INDUCE FREDDIE MAC TO EXECUTE AND
DELIVER THE SERIES CERTIFICATE AGREEMENT, THE SPONSOR HEREBY REPRESENTS AND
WARRANTS THAT IT HAS NO CLAIMS, SET-OFFS OR DEFENSES AS OF THE CLOSING DATE IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR IN
CONNECTION HEREWITH.  TO THE EXTENT ANY
SUCH CLAIMS, SET-OFFS OR DEFENSES MAY EXIST, WHETHER KNOWN OR UNKNOWN,
THEY ARE EACH HEREBY WAIVED AND RELINQUISHED IN THEIR ENTIRETY.

 

Section 4.8            Waivers of Jury Trial.  THE SPONSOR, EACH DEPOSITOR AND FREDDIE MAC
EACH (A) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO
ANY ISSUE ARISING OUT OF THIS AGREEMENT 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.

 

[remainder of page intentionally
blank]

 

7

 

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

 

	
   

  	
  FEDERAL HOME LOAN MORTGAGE

  
	
   

  	
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ W. Kimball Griffith

  
	
   

  	
  W. Kimball Griffith

  
	
   

  	
  Vice President,
  Multifamily Affordable

  
	
   

  	
  Housing
  Production & Investments

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael L. Dawson

  
	
   

  	
  Michael L. Dawson

  
	
   

  	
  Vice President, Multiclass
  Issuance

  

 

 

[SIGNATURE
PAGE TO OSPREY TEBS BOND EXCHANGE AND SALE AGREEMENT]

 

 

	
   

  	
  CENTERLINE SPONSOR 2007-1

  SECURITIZATION, LLC

  as Sponsor

  
	
   

  	
   

  
	
   

  	
  By:

  	
  CENTERLINE HOLDING TRUST, a

  
	
   

  	
  Delaware statutory trust, its manager

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marc D. Schnitzer

  
	
   

  	
  Marc D. Schnitzer

  
	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CENTERLINE 2007-1 EIT

  SECURITIZATION, LLC

  
	
   

  	
  as Transferor

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  CENTERLINE EQUITY ISSUER TRUST,

  
	
   

  	
  a Delaware statutory trust, its manager

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marc D. Schnitzer

  
	
   

  	
  Marc D. Schnitzer

  
	
   

  	
  Managing Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CENTERLINE 2007-1 SU

  SECURITIZATION, LLC

  
	
   

  	
  as Transferor

  
	
   

  	
   

  
	
   

  	
  By:

  	
  CENTERLINE EQUITY ISSUER TRUST,

  
	
   

  	
  a Delaware statutory trust, its manager

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marc D. Schnitzer

  
	
   

  	
  Marc D. Schnitzer

  
	
   

  	
  Managing Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CENTERLINE 2007-1 T

  SECURITIZATION, LLC

  
	
   

  	
  as Transferor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  CENTERLINE HOLDING TRUST, a

  
	
   

  	
  Delaware statutory trust, its manager

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marc D. Schnitzer

  
	
   

  	
  Marc D. Schnitzer

  
	
   

  	
  President

  

 

[Counterpart Signature Page to
Osprey TEBS Bond Exchange And Sale Agreement]Exhibit 10.2

 

EXECUTION

 

FHLMC Approved Form

 

[Osprey TEBs]

 

REIMBURSEMENT, PLEDGE AND SECURITY AGREEMENT

between

FEDERAL HOME LOAN MORTGAGE CORPORATION

and

CENTERLINE SPONSOR 2007-1 SECURITIZATION, LLC

as Sponsor

Relating to

Freddie Mac

Multifamily Variable Rate Certificates

Series M012 and Series M013 

and

Freddie Mac

Taxable Multifamily Variable Rate Certificates

Series M014

Dated as of December 1, 2007

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  
	
  DEFINITIONS
  AND INTERPRETATION

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Definitions

  	
  2

  
	
  Section 1.2

  	
  Interpretation

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II

  
	
   

  	
   

  	
   

  
	
  ASSUMPTIONS,
  REPRESENTATIONS, COVENANTS,

  
	
  WARRANTIES
  AND CONDITIONS

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Assumptions

  	
  12

  
	
  Section 2.2

  	
  Other Representations and Warranties by the Sponsor and Representations
  and Warranties by Freddie Mac

  	
  24

  
	
  Section 2.3

  	
  Conditions

  	
  25

  
	
  Section 2.4

  	
  Consequences of Inaccuracies

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III

  
	
  COVENANTS
  OF THE SPONSOR

  
	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  Freddie Mac Closing Fee and Closing
  Expenses

  	
  29

  
	
  Section 3.2

  	
  Reimbursement of Credit Advances

  	
  29

  
	
  Section 3.3

  	
  Scheduled Payments and Deposits

  	
  30

  
	
  Section 3.4

  	
  Reimbursement of Liquidity Advances

  	
  30

  
	
  Section 3.5

  	
  Payment of Costs, Fees and
  Expenses

  	
  31

  
	
  Section 3.6

  	
  Application and Timing of Payments

  	
  32

  
	
  Section 3.7

  	
  Computation of Fees

  	
  33

  
	
  Section 3.8

  	
  Prepayment Premium

  	
  33

  
	
  Section 3.9

  	
  Substitution of Credit Enhancement or Liquidity Facility

  	
  33

  
	
  Section 3.10

  	
  [Reserved]

  	
  33

  
	
  Section 3.11

  	
  Remarketing Agent for the Class A Certificates

  	
  33

  
	
  Section 3.12

  	
  Indemnification

  	
  33

  
	
  Section 3.13

  	
  Freddie Mac Not Liable

  	
  35

  
	
  Section 3.14

  	
  Pledged Class A Certificates and Class B Certificates

  	
  36

  
	
  Section 3.15

  	
  Other Covenants of Sponsor

  	
  36

  
	
  Section 3.16

  	
  Liability of the Sponsor

  	
  36

  
	
  Section 3.17

  	
  Waivers and Consents

  	
  37

  
	
  Section 3.18

  	
  Subrogation

  	
  38

  
	
  Section 3.19

  	
  Rate Resets

  	
  38

  
	
  Section 3.20

  	
  Quality Control Packages

  	
  38

  
	
  Section 3.21

  	
  Stabilization Escrow Obligations

  	
  38

  

 

 

	
  ARTICLE
  IV

  
	
  [RESERVED]

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  
	
  SPECIAL
  SERVICING

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Special Servicing Rights

  	
  38

  
	
  Section 5.2

  	
  Sponsor Option

  	
  39

  
	
  Section 5.3

  	
  Special Servicing Procedures

  	
  39

  
	
  Section 5.4

  	
  Servicing Limitations

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VI

  
	
  UNIFORM COMMERCIAL
  CODE SECURITY AGREEMENT

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  
	
  REMEDY
  EVENTS; REMEDIES

  
	
   

  	
   

  	
   

  
	
  Section 7.1

  	
  Remedy Events

  	
  43

  
	
  Section 7.2

  	
  Remedies; Waivers

  	
  45

  
	
  Section 7.3

  	
  Release Events; Bond Purchase Loans

  	
  47

  
	
  Section 7.4

  	
  No Remedy Exclusive

  	
  49

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  
	
   

  	
   

  	
   

  
	
  PLEDGE, SECURITY AND CUSTODY OF PLEDGED SECURITY COLLATERAL

  
	
   

  	
   

  	
   

  
	
  Section 8.1

  	
  Pledged Security Collateral; Taxable Collateral

  	
  50

  
	
  Section 8.2

  	
  Delivery of Pledged Security Collateral

  	
  50

  
	
  Section 8.3

  	
  Amounts Received on Class B Certificates and Pledged
  Class A Certificates

  	
  50

  
	
  Section 8.4

  	
  Amounts Received on Purchased Bonds

  	
  51

  
	
  Section 8.5

  	
  Release of Purchased Bonds

  	
  52

  
	
  Section 8.6

  	
  Release of Class B Certificates and Pledged Class A
  Certificates

  	
  52

  
	
  Section 8.7

  	
  Loss to Pledged Security Collateral

  	
  53

  
	
  Section 8.8

  	
  Use of Proceeds Arising from Redemption of Class B Certificates;
  Special Adjustment Events

  	
  53

  
	
  Section 8.9

  	
  Ownership Restrictions

  	
  53

  
	
  Section 8.10

  	
  Representations and Warranties of the Sponsor to the Pledge Custodian

  	
  53

  
	
  Section 8.11

  	
  Custody Account

  	
  54

  
	
  Section 8.12

  	
  Appointment and Powers of the Pledge Custodian

  	
  54

  
	
  Section 8.13

  	
  Successor Pledge Custodian

  	
  55

  
	
  Section 8.14

  	
  Qualifications of Pledge Custodian

  	
  56

  
	
  Section 8.15

  	
  [Reserved]

  	
  56

  
	
  Section 8.16

  	
  No Additional Waiver Implied by One Waiver

  	
  56

  
	
  Section 8.17

  	
  Cooperation

  	
  57

  
	
  Section 8.18

  	
  Termination

  	
  57

  
	
  Section 8.19

  	
  Transfers

  	
  57

  

 

ii

 

	
  ARTICLE IX

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
  Section 9.1

  	
  Counterparts

  	
  58

  
	
  Section 9.2

  	
  Amendments, Changes and
  Modifications

  	
  58

  
	
  Section 9.3

  	
  Payment Procedure

  	
  58

  
	
  Section 9.4

  	
  Payments on Business Days

  	
  58

  
	
  Section 9.5

  	
  Governing Law; Severability

  	
  58

  
	
  Section 9.6

  	
  Notices

  	
  59

  
	
  Section 9.7

  	
  Further Assurances and
  Corrective Instruments

  	
  60

  
	
  Section 9.8

  	
  Term of this Agreement

  	
  61

  
	
  Section 9.9

  	
  Assignments; Transfers;
  Third-Parties Rights

  	
  61

  
	
  Section 9.10

  	
  Headings

  	
  61

  
	
  Section 9.11

  	
  Limitation on Personal Liability

  	
  61

  
	
  Section 9.12

  	
  Consent of Freddie Mac

  	
  62

  
	
  Section 9.13

  	
  Disclaimer; Acknowledgments

  	
  62

  
	
  Section 9.14

  	
  Entire Agreement

  	
  62

  
	
  Section 9.15

  	
  Survival of Representation and
  Warranties

  	
  62

  
	
  Section 9.16

  	
  Waiver of Claims

  	
  62

  
	
  Section 9.17

  	
  Waivers of Jury Trial

  	
  62

  
	
   

  	
   

  	
   

  
	
  Schedule A:

  	
  Mortgaged Properties

  	
   

  
	
  Schedule
  A-1:

  	
  Pool 12 Bonds

  	
   

  
	
  Schedule
  A-2:

  	
  Pool 13 Bonds

  	
   

  
	
  Schedule
  A-3:

  	
  Taxable Pool 14 Bonds

  	
   

  
	
  Schedule B:

  	
  Non-Stabilized Mortgaged Properties

  	
   

  
	
  Schedule C:

  	
  [Reserved]

  	
   

  
	
  Schedule D:

  	
  Qualifications to Assumptions

  	
   

  
	
  Schedule E:

  	
  Quality Control Documents

  	
   

  
	
  Schedule F:

  	
  Insurance Requirements

  	
   

  
	
  Schedule G:

  	
  Insurer Rating Requirements

  	
   

  
	
  Schedule H:

  	
  Stabilization Standards

  	
   

  
	
  Schedule I:

  	
  Subordinate Debt Standards

  	
   

  

 

iii

 

REIMBURSEMENT, PLEDGE AND SECURITY AGREEMENT

 

THIS
REIMBURSEMENT, PLEDGE AND SECURITY AGREEMENT dated as of December 1, 2007  (as amended,
modified or supplemented from time to time, this “Agreement”)  by and between
the FEDERAL HOME LOAN MORTGAGE CORPORATION
(together with its permitted successors and assigns, “Freddie Mac”), a shareholder-owned government-sponsored enterprise
organized and existing under the laws of the United States, and CENTERLINE SPONSOR 2007-1 SECURITIZATION, LLC,
a Delaware limited liability company, as Sponsor (together with its permitted
successors and assigns, the “Sponsor”).

 

R E C I T A L S:

 

1.             Pursuant to the
Bond Exchange Agreement, Freddie Mac has agreed to exchange the Certificates
designated Series M012, M013 and M014 issued by Freddie Mac as described
on the cover page of this Agreement for the following multifamily housing
revenue bonds (collectively, the “Bonds”): 
(a) tax-exempt bonds listed on Schedule A-1 (the “Pool 12
Bonds”), (b) tax-exempt bonds listed on Schedule A-2 (the “Pool 13
Bonds”, and collectively with the Pool 12 Bonds, the “Tax-Exempt Bonds”), and (c) certain
related taxable bonds (as listed on Schedule A-3, the “Taxable Pool 14
Bonds”).

 

2.             Freddie Mac is
depositing the Pool 12 Bonds, the Pool 13 Bonds and Taxable
Pool 14 Bonds pursuant to the terms of three separate Series Certificate
Agreements, each respectively dated as of the date hereof (together with the
Standard Terms incorporated therein, each a “Series Certificate Agreement”
and, collectively, the “Certificate Agreement”), between Freddie Mac, in its
corporate capacity and Freddie Mac as Administrator.  Separate Series of Class A
Certificates and Class B Certificates are being issued pursuant to each Series Certificate
Agreement.  Each Series of
Certificates represents an ownership interest in the related underlying Bonds
deposited pursuant to the related Series Certificate Agreement.  Each Class of Certificates has certain
specified rights with respect to the related underlying Bonds as provided
therein.

 

3.             As further
described in the Bond Exchange Agreement, each series of Class A
Certificates has been transferred to the Transferors identified in the Bond
Exchange Agreement for subsequent placement and sale pursuant to the terms of
each related Remarketing Agreement.

 

4.             As further
described in the Bond Exchange Agreement, each series of Class B
Certificates has been subsequently transferred to the Sponsor.

 

5.             Pursuant to each Series Certificate
Agreement and this Agreement, at the request of the Sponsor, Freddie Mac has
agreed to provide the Credit Enhancement and the liquidity support with respect
to the Class A Certificates issued thereunder and the related Bonds on the
terms provided in each Series Certificate Agreement.

 

6.             The Sponsor will
pledge the Class B Certificates to Freddie Mac as a portion of the
security for its obligations to Freddie Mac hereunder in connection with
Freddie Mac’s provision of such Credit Enhancement and liquidity support.

 

7.             The Sponsor’s
obligations under this Agreement are secured by (i) a pledge of the Class B
Certificates and any Pledged Class A Certificates purchased pursuant to Section 6.06
of

 

 

the Series Certificate
Agreement and held for the benefit of Freddie Mac pursuant to Article VIII
and (ii) a pledge of any Purchased Bonds held for the benefit of Freddie
Mac pursuant to Article VIII and (iii) a pledge of the Stabilization
Collateral delivered to and pledged to Freddie Mac by the Sponsor pursuant to
the Stabilization Guaranty, Escrow and Security Agreement in connection with
those Mortgaged Properties that have not achieved Stabilization.  In addition, the Sponsor will cause Freddie
Mac to be appointed as Bondholder Representative under the Bond Documents and
the Bond Mortgage Documents contemporaneous with the execution hereof for all
Bonds.

 

8.             As a further condition
to Freddie Mac’s provision of its Credit Enhancement and liquidity support, the
Sponsor has also arranged to be delivered for the benefit of Freddie Mac (i) the
Guaranty, (ii) the Parent Guaranty, (iii) the Parent Stabilization
Guaranty and (iv) the Stabilization Guaranty, Escrow and Security
Agreement.

 

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

 

ARTICLE I

DEFINITIONS AND INTERPRETATION

 

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

 

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

 

“Administrator
Fee” means the monthly fee payable to Freddie Mac for
serving as Administrator as specified in each applicable Series Certificate
Agreement, equal to one-twelfth of 0.01% (1 basis point) per annum of the
outstanding principal balance of each Bond Mortgage Loan held in the applicable
Series Pool.

 

“Advance” means
either a Credit Advance or a Liquidity Advance.

 

“Allocable Expense Amount” has the meaning set
forth in Section 8.3(c).

 

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

 

“Asset
Resolution” means, with respect to an issue of
Specially Serviced Bonds, (i) the sale of the related Mortgaged Property
at Foreclosure or thereafter, (ii) the sale of such issue of Specially
Serviced Bonds, or (iii) the execution of a workout agreement pursuant to
which the related Bond Mortgage Loan and Bonds are modified.

 

2

 

“Bank
Credit Facility” means that certain revolving credit
and term loan facility among, inter alia,
Bank of America, N.A., as lender and administrative agent, for the benefit of
Parent Guarantor and Centerline Capital Group, Inc., as borrowers,
pursuant to a Revolving Credit and Term Loan Agreement, dated as of December 27,
2007, as the same may be renewed, extended, expanded, modified, amended or
supplemented from time to time.

 

“Bankruptcy
Code” means Title 11 of the United States Code
entitled “Bankruptcy”, as now or hereafter in effect, or any successor statute.

 

“Bondholder
Representative” shall mean Freddie Mac as “majority
owner” of the Bonds under the Bond Documents.

 

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

 

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

 

“Bond
Exchange Agreement” means the Bond Exchange and Sale
Agreement dated as of the Closing Date among Freddie Mac, the Sponsor and each
Transferor, as amended, supplemented or restated.

 

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

 

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

 

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

 

“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

 

3

 

supplemented from time to time, which Bond Mortgage Note has been
assigned by the Issuer to the Bond Trustee.

 

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

 

“Bonds” means collectively the Pool 12 Bonds,
the Pool 13 Bonds and the Taxable Pool 14 Bonds.

 

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

 

“Class A
Balance”
shall have the meaning set forth in Section 7.3(b).

 

“Class A
Certificates” means the senior certificates designated
as such and issued pursuant to each Series Certificate Agreement,
evidencing an undivided ownership interest in the related Bonds.

 

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

 

“Class B
Certificates” means the subordinate certificates designated as such and issued
pursuant to each Series Certificate Agreement, evidencing an undivided
ownership interest in the related Bonds.

 

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

 

“Credit
Advance” means any advance by Freddie Mac under this
Agreement or any Series Certificate Agreement, including but not limited
to (i) an advance to pay principal on any Bond or interest distributable
with respect to any Class A Certificates, (ii) any advance pursuant
to Section 2.4(d) to cure an Inaccuracy, (iii) any advance in
connection with a Mandatory Tender Event pursuant to Sections 6.04(a), (c) or
(h) of any Series Certificate Agreement relating to a Liquidity
Provider Termination Event, the Credit Enhancement Termination Date or a
Clean-Up Event, or in connection with an Optional Disposition Right pursuant to
Section 7.05 of any Series Certificate Agreement, (iv) an
advance in connection with a Release Event pursuant to Section 3.08 of any
Series Certificate Agreement, (v) any advance in connection with an
Enforcement Action and (vi) an advance to pay any portion of the Fee
Component or any other fee due and owing that the Sponsor fails to cause to be
paid in accordance with the Sponsor Documents, the non-payment of which
jeopardizes the security pledged hereunder.

 

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

 

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

 

“Data Tape”
means the data tape dated December 20, 2007 submitted by or on behalf
of the Sponsor to Freddie Mac with respect to the Bonds and the Mortgaged
Properties.

 

4

 

“Default
Rate” means the base rate or prime rate of Citibank,
N.A. until such time as another “Money Center” bank is designated by Freddie
Mac in its discretion by notice to the Sponsor, plus two percent (2%).

 

“Delegated
Guide” means the Freddie Mac Delegated Underwriting
for Targeted Affordable Housing Guide, as amended or supplemented from time to
time.

 

“Discount
Rate” means for purposes of calculating the Prepayment
Premium under (i) Section 2.4(c), a rate (determined at the time the
Prepayment Premium is due) equal to the yield on the U.S. Treasury Security due
June 15, 2022 and (ii) Section 3.8, a rate (determined at
the time the Prepayment Premium is due) equal to the yield on the U.S. Treasury
Security due five years after the date of determination or such lesser period
as provided in Section 3.8; or in the case of either clause (i) or (ii) above,
if such U.S. Treasury Security is not available, the U.S. Treasury Security due
on the closest date after the applicable date. 
In the event that no yield is published on the applicable date for the
Treasury Security used to determine the Discount Rate, Freddie Mac, in its
discretion, shall select the non-callable Treasury Security maturing in the
same year as the Treasury Security specified above with the lowest yield
published in The Wall Street Journal as of the
applicable date.  If publication of such
yields in The Wall Street Journal is discontinued
for any reason, Freddie Mac shall select a security with comparable coupon and
term to the Treasury Security used to determine the Discount Rate.  The selection of an alternate security
pursuant to this paragraph shall be made in Freddie Mac’s discretion.

 

“Enforcement
Action” means, with respect to any Mortgaged Property,
the advertising of or commencement of any foreclosure or trustee’s sale
proceedings, the exercise of any power of sale, the obtaining of or seeking of
the appointment of a receiver, the taking of possession or control or the
collecting of rents, the commencement of any suit or other legal,
administrative, or arbitration proceeding against the Mortgaged Property or the
Owner based upon any of the Bond Mortgage Documents, or the taking of any other
enforcement or remedial action against the Owner arising under or connected
with the Mortgaged Property.

 

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

 

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

 

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

 

“Freddie
Mac Fee” means an amount equal to 0.25% (25 basis
points) per annum of the Current Certificate Balance of the Class A
Certificates, payable as provided in Section 3.3; provided upon and after
the delivery of any confirming credit facility by the Sponsor as provided in Section 4.12
of each Series Certificate Agreement, such amount shall be 0.05% (5 basis
points) per annum.

 

5

 

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

 

“Freddie
Mac Reimbursement Amount” means the amounts that the
Sponsor is required (subject to Section 9.11 hereof) to cause to be paid
to Freddie Mac pursuant to this Agreement to reimburse Freddie Mac for any
Advances, which amounts shall be equal to the sum of all Advances not
previously reimbursed on behalf of the Sponsor, together with any interest
thereon, late charges, default interest and other amounts payable to Freddie
Mac under this Agreement (except any share of collected late charges that the
Servicer is entitled to retain as additional servicing compensation) as a
result of a default under the Owner Documents, and shall be paid as provided in
Sections 3.2, 3.3 and 3.4 of this Agreement.

 

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

 

“Guarantor” means Centerline Guarantor LLC, and its
permitted successors and assigns under the Guaranty.

 

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

 

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

 

“Guidelines” means the Freddie Mac Multifamily Forward Commitment External
Guidelines and Procedures - Full Delegation, as amended and supplemented from
time to time.

 

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

 

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

 

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

 

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

 

“Liquidity
Advance” means an advance by Freddie Mac pursuant to
the terms of the applicable Series Certificate Agreement to pay the
Purchase Price of any Class A Certificates tendered optionally by Class A
Certificateholders pursuant to Section 6.03 of such Series Certificate
Agreement or subject to Mandatory Tender in connection with the establishment
of a Term Effective Date or a Reset Rate Method Change Date pursuant to Section 6.04(d),
(e) or (f) of such Series Certificate Agreement that have not
been remarketed by the Remarketing Agent

 

6

 

pursuant to the applicable Remarketing Agreement and such Series Certificate
Agreement and therefore, with respect to which there are no proceeds of
remarketing.

 

“Liquidity
Commitment” has the meaning set forth in each Series Certificate
Agreement.

 

“Liquidity
Commitment Termination Date” means, with respect to
any applicable Series Certificate Agreement, the earlier of (i) the
date that the Reset Rate Method for the Class A Certificates is changed to
the Term Reset Rate Method for a term interval that ends on the latest maturity
date of the Bonds, (ii) the termination of the Series pursuant to Article XIII
of the Standard Terms, (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.

 

“Liquidity
Facility” has
the meaning set forth in each Series Certificate Agreement.

 

“Liquidity
Rate” means the base rate or prime rate of interest of
Citibank, N.A. until such time as another “Money Center” bank is designated by
Freddie Mac in its discretion by notice to the Sponsor.

 

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

 

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

 

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

 

“Mortgage
Default” means the occurrence with respect to any of
the Bond Mortgage Documents of a monetary Event of Default (as defined in the
Bond Mortgage Documents) or any other Event of Default under the Owner
Documents of which the Sponsor has actual knowledge.

 

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

 

“Non-Stabilized
Mortgaged Property” means any Mortgaged Property with
respect to which Stabilization has not occurred.  Non-Stabilized Mortgaged Properties as of the
Closing Date are listed on Schedule B.

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

“Parent
Guarantor” means Centerline Holding Company, and its
permitted successors and assigns under the Parent Guaranty and the Parent
Stabilization Guaranty.

 

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

 

“Placement
Agent” means Morgan Stanley & Co.
Incorporated, as placement agent for each series of the Class A
Certificates pursuant to each Remarketing Agreement.

 

“Placement
Agreement” means the Certificate Placement Agreement
dated as of the Closing Date among the Placement Agent, Freddie Mac and
Centerline Holding Company, as amended, supplemented or restated.

 

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

 

“Pledged Class A
Certificate” means (i) any Class A
Certificate following an optional tender by its Holder or the exercise by such
Holder of its Optional Disposition Right during the period from and including
the date of its purchase by the Administrator on behalf of and as agent for the
Sponsor with an Advance under Section 6.01(b) of the applicable Series Certificate
Agreement, but excluding the date on which such Class A Certificate is
remarketed to any person other than Freddie Mac, the Sponsor or any Affiliate
of the Sponsor, (ii) any Class A Certificate purchased by the Sponsor
in connection with a Special Adjustment Event and pledged to Freddie Mac
pursuant to this Agreement and (iii) any Class A Certificate
purchased by the Administrator on behalf of and as agent for the Sponsor from
monies paid by Freddie Mac pursuant to the Liquidity Facility following the
occurrence of a Mandatory Tender Event.

 

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

 

“Pool 12
Bonds” means
the tax-exempt multifamily housing revenue bonds listed on Schedule A-1.

 

“Pool 13
Bonds” means the tax-exempt multifamily housing
revenue bonds listed on Schedule A-2.

 

“Prepayment
Premium” means with respect to any event identified in
Section 2.4(c) during the 15 year period commencing on the Closing
Date, and with respect to Section 3.8, a period of five years or such
lesser period remaining until the Credit Enhancement Expiration Date, an amount
equal to the present value (discounted at the applicable Discount Rate) of the

 

8

 

monthly payments of the Freddie Mac Fee that would have been earned
assuming scheduled principal payments of the Bonds during the remainder of the
applicable period had such event not occurred.

 

“Purchase
Date” means (a) during the  Weekly
Reset  Period, any Business Day specified by
a Class A Certificateholder as the date on which Class A Certificates
owned by such Class A Certificateholder are to be purchased in accordance
with the provisions of Section 6.03 of either Series Certificate
Agreement, (b) any date on which the Class A Certificates are subject
to mandatory tender in accordance with the provisions of Section 6.04 of
either Series Certificate Agreement and (c) any date on which the Class A
Certificates are subject to optional disposition in accordance with the
provisions of Section 7.05 of either Series Certificate Agreement.

 

“Purchased
Bond” means a
Bond purchased by Freddie Mac on behalf of the Sponsor from monies paid by
Freddie Mac pursuant to the Credit Enhancement following the occurrence of a
Release Event or delivered to the Pledge Custodian pursuant to Section 8.6
or Section 8.8 hereof.

 

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

 

“Quality
Control Package” means the documents and reports
submitted by or on behalf of the Sponsor to Freddie Mac listed on Schedule E
in connection with the Underwriting of a Bond Mortgage Loan and a Mortgaged
Property.

 

“Rating
Agency” means Moody’s or S&P or any other
nationally recognized rating agency maintaining a rating on the Class A
Certificates.

 

“Remarketing Agent” means Morgan Stanley &
Co. Incorporated, as remarketing agent under each applicable Remarketing
Agreement, and any successor in such capacity.

 

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

 

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

 

“Repurchase
Inaccuracy” means an Inaccuracy relating to an
assumption described in Section 2.1(d)(vii), 2.1(d)(viii), 2.1(d)(x),
2.1(h)(2) or 2.1(x)(ii) and the event described in the last paragraph
of Section 3.12(b).

 

“Required
Stabilization Date” means December 1, 2012;
provided such date may be extended for two additional one-year periods upon the
written request of the Sponsor to Freddie Mac if immediately prior to the
beginning of each requested one-year extension period, (i) the aggregate outstanding
principal amount of Bonds relating to Non-Stabilized Mortgaged Properties does
not exceed (in the case of the first requested extension) $800,000,000, and
does not exceed (in the case of any second requested extension) $500,000,000,
and (ii) the amount held by Freddie Mac pursuant to the Stabilization
Guaranty, Escrow and Security Agreement

 

9

 

(including Sponsor contributions) equals at least 4.5% of such
aggregate outstanding principal amount of Bonds relating to Non-Stabilized
Mortgaged Properties.

 

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

 

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

 

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

 

“Servicer”
means the eligible servicing institution designated by Freddie Mac, or its
successor, as servicer of each Bond Mortgage Loan and the Bonds.  Initially, Centerline Mortgage Capital Inc.
shall serve as the Servicer.  Pursuant to
the terms of the Servicing Agreement, the Servicer may appoint a Sub-Servicer
to perform its duties, and as of the Closing Date, has appointed Centerline
Servicing Inc. in such capacity.

 

“Servicer’s Institutional Underwriting Standards” means the rules, underwriting model,
analytical and due diligence requirements, risk evaluation and risk mitigation
practices that Servicer and its affiliates, from time to time, adheres to when
originating mortgage loans and properties comparable to the Bond Mortgage Loans
and the Mortgaged Properties.  With
respect to all of the Stabilized Mortgaged Properties and with respect to
Non-Stabilized Mortgaged Properties relating to Bonds issued on or before June 30, 2005,
the reference to “Servicer’s Institutional Underwriting Standards” shall refer
to such standards as in effect on the date hereof.  With respect to Non-Stabilized Mortgaged
Properties relating to Bonds issued after June 30, 2005, the
reference to “Servicer’s Institutional Underwriting Standards” shall refer to
such standards as in effect at the time of issuance of such Bonds.

 

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

 

“Servicing
Fee” means the monthly fee due the Servicer under the
Servicing Agreement in an amount equal to one-twelfth of 0.05% (5 basis
points) per annum of the outstanding principal balance of each Bond Mortgage
Loan.

 

“Specially
Serviced Bond(s)” has the meaning provided in Article V.

 

“Special
Servicer” means the servicing entity designated by the
Sponsor or Freddie Mac, as applicable, pursuant to Article V hereof and
the Servicing Agreement to act as Special Servicer with respect to the
Specially Serviced Bonds.  Initially, the
Sponsor has appointed Centerline Mortgage Capital Inc. to act as Special
Servicer.  Pursuant to the terms of the
Servicing Agreement, the Special Servicer may appoint a sub-special servicer to
perform its duties, and as of the Closing Date, has appointed Centerline
Servicing Inc. in such capacity.

 

“Special
Servicing Crossover Date” has the meaning provided in Article V.

 

10

 

“Special
Servicing Fee” means the fee due the Special Servicer
equal to 0.15% (15 basis points) per annum of the outstanding principal amount
of Bonds in Special Servicing pursuant to the Servicing Agreement plus any
expenses permitted under the Servicing Agreement.

 

“Sponsor
Documents” means this Agreement, the Series Certificate
Agreements, the Servicing Agreement, each Remarketing Agreement, the Bond
Exchange Agreement, the Stabilization Guaranty, Escrow and Security Agreement,
and any other agreement, instrument or certificate executed by the Sponsor in
connection with the transactions contemplated hereby.

 

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

 

“Sponsor’s
Retained Interest” means, with respect to each Series Certificate Agreement, a Class B
Certificate with a certificate balance of $5,000.

 

“Stabilization” means with respect to each of the Non-Stabilized Mortgaged Properties
listed on Schedule B attached hereto, satisfaction of the elements set forth in
the definition of “Stabilization” as such term is defined (and as such elements
are set forth) in the Bond Documents related to each Non-Stabilization
Mortgaged Property executed in connection with the financing thereof.

 

“Stabilization
Collateral” means the cash collateral described in and
pledged by the Stabilization Guarantor to Freddie Mac pursuant to the
Stabilization Guaranty, Escrow and Security Agreement.

 

“Stabilization
Escrow Required Additional Deposits” has the meaning
specified in the Stabilization Guaranty, Escrow and Security Agreement.

 

“Stabilization Guarantor” means Centerline Stabilization 2007-1
Securitization, LLC, or any successors or permitted assigns thereof pursuant to
the Stabilization Guaranty, Escrow and Security Agreement.

 

“Stabilization Guaranty, Escrow and Security Agreement” means the Stabilization Guaranty, Escrow
and Security Agreement dated as of December 1, 2007 between the
Stabilization Guarantor and Freddie Mac, as amended or supplemented.

 

“Stabilized
Mortgaged Property” means initially each Mortgaged
Property not listed on Schedule B, together with any Non-Stabilized
Mortgaged Property that achieves Stabilization after the Closing Date.

 

“Taxable
Pool 14 Bonds” means the taxable multifamily housing revenue
bonds listed on Schedule A-3 hereto.

 

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

 

“Tax-Exempt
Bonds” means, collectively, the Pool 12 Bonds and
the Pool 13 Bonds.

 

11

 

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

 

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

 

“Termination
Event” means each Remedy Event listed in Subsection
7.1(a) through (k) hereof.

 

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

 

“Transferor”
means each of Centerline 2007-1 EIT Securitization, LLC, Centerline 2007-1 SU
Securitization, LLC, and Centerline 2007-1 T Securitization, LLC.

 

“Underwriting”
means the analysis of risk factors associated with a
Bond Mortgage Loan secured by a Mortgaged Property, including, but not limited
to, the determination of the net operating income of the Mortgaged Property,
the applicable debt service coverage ratio, and all material risk factors
associated with the transaction structure.

 

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

 

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

 

ARTICLE II

 

ASSUMPTIONS, REPRESENTATIONS, COVENANTS,

WARRANTIES AND CONDITIONS

 

Section 2.1            Assumptions.  As of the Closing Date, the parties are
making certain assumptions, not constituting representations or warranties of
Sponsor, set forth below in this Section 2.1, as to various matters with
respect to each Owner, each Mortgaged Property and each series of related Bonds
and related Bond Mortgage.  The Sponsor
acknowledges that such assumptions, as qualified by Schedules B and D
attached hereto, together with the corporate

 

12

 

representations, covenants,
warranties and agreements of the Sponsor contained in this Agreement, are
relied upon by Freddie Mac and serve as a basis for the agreement of Freddie
Mac to issue the Certificates and exchange the Certificates for the Bonds and
the undertakings of Freddie Mac contained in each Series Certificate
Agreement with respect to the Credit Enhancement and the Liquidity
Facility.  Freddie Mac acknowledges that,
except for the corporate representations and warranties contained in Section 2.2,
the assumptions set forth in this Section 2.1 are intended solely to
allocate risk between the Sponsor and Freddie Mac and to establish the
consequence of an Inaccuracy as provided in Section 2.4, are not
assurances by the Sponsor that such assumptions are factually correct or true
as to each Bond Mortgage and may not be the basis for a claim of breach or
default under this Agreement or a claim of personal liability hereunder except
as provided in Section 9.11(b) hereinbelow.  The corporate representations and warranties
of Sponsor contained in Section 2.2 are intended to be assurances that the
matters warranted to in those Subsections are factually correct; a breach of
such representations is a Remedy Event hereunder and may be the basis for a
claim of personal liability.

 

The truth and
accuracy of the following assumptions are relied upon by Freddie Mac for the
purposes recited above:

 

(a)           Rent Schedule; Data Tape.  The rent schedules submitted to Freddie Mac
contain no material errors, and accurately state in all material respects the
gross potential rents and the actual leased rents for each Mortgaged Property
as of the effective date thereof, and all other information regarding the
Mortgaged Property contained in the Data Tape provided to Freddie Mac regarding
the Mortgaged Property is true, complete and correct in all material respects.

 

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

 

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

 

13

 

(d)           Mortgaged Property.

 

(i)            The Mortgaged
Property is in good and habitable condition except as noted on Schedule D
and except for normal wear and tear and except for the Mortgaged Properties
listed on Schedule B that are designated new construction or
rehabilitation properties.

 

(ii)           Except as set forth on Schedule D,
there is no material uncured violation at the Mortgaged Property of any
building or housing code or similar law or ordinance.

 

(iii)          Except for the Mortgaged Properties listed
on Schedule B that are designated new construction or rehabilitation
properties, all repairs and improvements to the Mortgaged Property required by
the any repair escrow agreement in effect with respect to the Mortgaged
Property have been completed in accordance with the terms thereof.

 

(iv)          Sponsor has completed a site
inspection of the Mortgaged Property on or after December 1, 2006.  Except as set forth on Schedule D,
Sponsor’s inspection of the Mortgaged Property did not disclose any conditions
that would adversely affect the value of the Mortgaged Property, including, but
not limited to, environmental hazards, needed repairs, tenancy issues, the
condition of adjoining properties and other similar matters.

 

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

 

(vi)          Except as set forth on Schedule D,
the Mortgaged Property is in material compliance with all applicable statutes, rules and
regulations, including, but not limited to, subdivision, health, safety, fire
and building codes.  The Mortgaged
Property is in material compliance with all regulatory agreements and
restrictive covenants which affect the Mortgaged Property.  (With respect to the exceptions listed on Schedule
D, the Sponsor shall make reasonably diligent efforts to cause the general
partner of the related Owner to address all issues which form the basis of the Form 8823’s
noted thereon.)

 

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

 

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

 

(ix)           The Mortgaged Property is not
operated as a manufactured housing park.

 

(x)            If the Mortgaged Property includes
any retail, commercial or other non-residential units (“mixed uses”), (A) (1) it
is a single structure; or (2) it

 

14

 

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

 

(xi)           The Mortgaged Property is not a
Seniors Housing Property (as defined in the Guide).

 

(e)           Condemnation.  Except as set forth on Schedule D, no
material part of the Mortgaged Property has been taken by condemnation or any
similar proceeding since the date of the related Bond Mortgage, which
condemnation or proceeding would adversely effect the operations or value of
such Mortgaged Property, and there is no pending condemnation or similar
proceeding with respect to all or any material part of the Mortgaged Property.

 

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

 

(g)           Loan Proceeds.  Except with respect to Non-Stabilized
Mortgaged Properties with respect to which bond proceeds remain to be
disbursed, all proceeds of the Bond Mortgage for any Mortgaged Property have
been disbursed directly to, or for the account of, the Owner in a manner that
materially satisfied the requirements of the Bond Documents.

 

(h)           Insurance.  (1) The Mortgaged Property is covered by
commercially appropriate hazard, flood, liability and rent loss insurance that
meets the requirements on Schedule F hereto as of the applicable Closing
Date.  (2) For any Bond Mortgage
secured by a Mortgaged Property located in whole or in part in a Special Flood
Hazard Area (“SFHA”) identified by the Federal Emergency Management Agency, (i) each
building that lies within the SFHA is covered by flood insurance in an amount
at least equal to the least of (A) its insurable replacement cost, (B) its
prorated portion of the unpaid principal balance of the related Bonds as of the
Closing Date in the case of a Mortgaged Property, or (C) the maximum limit
of coverage available under the National Flood Insurance Program, and (ii) the
community where the Mortgaged Property is located participates in the National
Flood Insurance Program.

 

(i)            Delinquencies
and Defaults.  All payments due under the terms of the
related Bond Documents and Bond Mortgage Documents have been made.  Except as described on Schedule D, (i) there
have been no delinquencies of 30 days or more since the origination of the Bond
Mortgage that have not been cured, (ii) there are no existing material
non-monetary defaults under the terms of the Bond Mortgage Documents, and (iii) there
have been no material non-monetary defaults since the date of the origination

 

15

 

of the Bond Mortgage
that remain uncured.  The related Bond
Mortgage Documents are not cross-defaulted (except to other indebtedness of the
Borrower related to the Mortgaged Property), and the related Bond Mortgage is
not cross-collateralized with any other transaction except as described on Schedule
D.

 

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

 

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

 

(l)            Third-Party Reports.  The Servicer or its Affiliates obtained all
third-party reports required by the Servicer’s Institutional Underwriting
Standards relating to the Mortgaged Property or the Owner, including, without
limitation, any credit report, appraisal, engineering report, environmental
report or audit, title insurance policy, flood zone determinations and surveys.  With respect to each such report, (i) the
Servicer has examined the report, (ii) the preparer of the report is
appropriately qualified, required by the Servicer’s Institutional Underwriting
Standards, and (iii) the report was prepared in the manner required by the
Servicer’s Institutional Underwriting Standards.

 

(m)          Undisclosed Information about Owner.  The Sponsor has actual knowledge of the facts
and circumstances affecting the Owners, and the guarantors or indemnitors of
the Owners’ obligations with respect to the Mortgaged Properties that may
materially and adversely affect the Owners’ ability to meet their respective
obligations under the Bond Mortgage in a timely manner, which is disclosed on Schedule
D.  Other than as disclosed on Schedule
D, the Sponsor has no actual knowledge of any other such fact or
circumstance.  The description of the
Owner, and each principal of the Owner, contained in the Data Tape is true,
complete and correct in all material respects.

 

(n)           Insolvency.  Except as specifically disclosed on Schedule D,
no bankruptcy, insolvency, reorganization or comparable proceeding has ever
been instituted by or against the Owner or any guarantor or indemnitor of the
Owner’s obligations, and no such proceeding is now pending against any such
party.

 

(o)           [Reserved].

 

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

 

(q)           Enforceability.  The Bond Mortgage and the related Bond
Mortgage Documents are enforceable in accordance with their terms, subject to
the effect of bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to or affecting the
enforcement of creditors, rights generally, and general principles of equity
(whether such enforcement is considered in a proceeding

 

16

 

at law or in equity)
and any other qualifications set forth in any legal opinion delivered at the
closing of the Bond Mortgage relating to such enforceability.  The Owner has no rights of offset, defense,
counterclaim or rescission with respect to the Bond Mortgage Documents.  The Sponsor has complied with all applicable
laws, regulations and administrative requirements, state, local and federal,
which would affect in any material respect the enforceability of the Bond
Mortgage Documents against the Owner, and the Bond Mortgage Documents comply
with all applicable laws, regulations and requirements with respect to usury.

 

(r)            Title;
First Lien.  (i) The Owner holds its interest in the
Mortgaged Property in fee simple, or if indicated on Schedule D,
pursuant to a ground lease that complies with the Guide.

 

(ii)           The lien of each
Bond Mortgage is insured by one or more lender’s title insurance policies
insuring the applicable Bond Trustee, and its successors and assigns, as to the
first priority lien (except as noted on Schedule D  with
respect to the Bonds of a subordinate series) of such Bond Mortgage in the
aggregate principal amount of the Bonds to which it relates, subject only to: (i) the
lien of current real property taxes, ground rents, water charges, sewer rents
and assessments not yet due and payable; and (ii) the exceptions (general
and specific) set forth in such title policies, including all covenants,
conditions and restrictions, rights of way, easements and other matters of
public record, none of which, individually or in the aggregate, materially
interferes with (A) the current use of the Mortgaged Property or the
security intended to be provided by such Bond Mortgage, (B) the Owner’s
ability to pay its obligations when they become due, or (C) the value of
the Mortgaged Property under its current use. 
Except for LURAs, tax credit regulatory agreements and customary
easements that do not materially impair the value of the Mortgaged Property for
its current use, no new liens or other matters of record have been filed against
the Mortgaged Property since the date of the applicable title insurance policy
that would not be insured by the title insurance policy as being subordinate to
the lien of the Bond Mortgage, and no such lien, individually or in the
aggregate, materially interferes with (A) the current use of the Mortgaged
Property or the security intended to be provided by such Bond Mortgage, (B) the
Owner’s ability to pay its obligations when they become due, or (C) the
value of the Mortgaged Property under its current use.  No claims have been made under any of such
title insurance policies.

 

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

 

17

 

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

 

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

 

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

 

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

 

No Bond
Mortgage was originated by a person other than the Sponsor or its Affiliates or
predecessors thereof other than as identified on Schedule D.

 

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

 

(v)           Environmental.  Except as disclosed on Schedule D,
there is not now:

 

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

 

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

 

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

 

At the time of
issuance of the Bonds, the Sponsor or the Servicer obtained an acceptable
Phase I Environmental Assessment of the Mortgaged Property meeting the
requirements of the Servicer’s Institutional Underwriting Standards, and, if
necessary and appropriate, a Phase II Assessment.  Either (a) such Environmental Assessment(s) did
not reveal any hazardous substances or conditions that are unacceptable under
the requirements of the Servicer’s Institutional Underwriting Standards that
have not been remediated; or (b) the Owner is required under the terms of
the Bond Mortgage Documents to implement an operations and maintenance plan
where required or considered advisable by the Environmental Assessment(s), and
no violations of the operations and maintenance plan by the Owner have occurred
that have not been remediated.  The
Sponsor has received no notice and is not otherwise aware of any unremediated
adverse environmental concerns with respect to the Mortgaged Property other
than such matters as set forth on Schedule D

 

18

 

hereto, and
the Sponsor is not aware of any action or proceeding which is pending or
threatened by any public authority with respect to environmental matters.

 

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

 

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

 

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

 

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

 

(iii)          all Bonds bear interest at fixed rate
to maturity or an earlier reset date (and in the case of any earlier reset
date, will bear interest at a fixed rate thereafter to be determined in
accordance with the related Bond Documents);

 

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

 

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

 

(vi)          no interest rate swap or cap or other
interest rate hedge is in effect with respect to any series of Bonds which
would affect Freddie Mac’s receipt of a fixed rate of interest as set forth in
the Bond Documents; and

 

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

 

(y)           Ineligible Bond
Mortgages.  The Bond Mortgage and the Bond Mortgage
Documents include none of the following features, except as described on Schedule
D:

 

(i)            Other than with respect to Bonds
related to Non-Stabilized Mortgaged Properties, a principal balance that
includes capitalization of interest, taxes, hazard insurance premiums or late
charges.

 

(ii)           [Reserved].

 

19

 

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

 

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

 

(v)           A lender equity participation
feature.

 

(vi)          [Reserved].

 

(vii)         A ground lease.

 

(viii)        A Mortgaged Property that is encumbered
by financing that is subordinate to the Bond Mortgage, which subordinate
financing does not meet the standards as set forth on Schedule I for “soft”
subordinate financing, except if identified on the Data Tape as having “hard”
subordinate financing (in which case the debt service payments required under
such subordinate debt instruments are included in the related debt service
coverage ratio on the Data Tape).

 

(z)            Title Insurance.  There are no conditions or encumbrances that
have not been disclosed to the title insurer and that the title insurer could
cite as grounds for refusing to honor a claim.

 

(aa)         Survey.  The survey delivered to Servicer in
accordance with the Servicer’s Institutional Underwriting Standards as of the
issuance date for the related Bonds correctly depicts for the Mortgaged
Property the boundary lines, improvements and exceptions to title that can be
shown on a survey required to be shown on a survey under the ALTA/ACSM
requirements for urban surveys.

 

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

 

(cc)         Access.  The Mortgaged Property does not share ingress
and egress through an easement or private road, or share on-site or off-site
recreational facilities and amenities that are not located on the Mortgaged
Property and under the exclusive control of the Owner; or where there is shared
ingress and egress or amenities, there exists an easement or joint use and
maintenance agreement, and such agreement (i) provides that access to and
use and enjoyment of the easement or private road and/or recreational
facilities and amenities is perpetual, (ii) specifies the Owner’s
responsibilities and share of expenses, and (iii) states that the failure
to pay any maintenance fee will not result in a loss of usage of the
easement.  In addition, the Owner’s share
of expenses was taken into account in connection with the Underwriting of the
Mortgaged Property.

 

(dd)         Zoning.  The overall character of the existing use of
the Mortgaged Property is consistent with the zoning classification of the
Mortgaged Property, except to the extent such use may constitute a legal
nonconforming use.  Any existing
violation of

 

20

 

applicable zoning
law would not have a materially adverse effect on the operations or the value
of the Mortgaged Property, and reconstruction of the Mortgaged Property in its
current configuration would be permitted by applicable zoning laws following destruction
of part or all of the Mortgaged Property by fire or other casualty or, in lieu
thereof, building law and ordinance insurance coverage satisfying the
requirements of the Guide as of the Closing Date has been provided.  No proceedings are pending that would result
in a change of the zoning of the Mortgaged Property.

 

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

 

(ff)           Party Liability.  [Reserved].

 

(gg)         LURA and Bond Documents.  Except as set forth on Schedule D, (i) the
use and operation of the Mortgaged Property is currently in compliance with the
provisions of the Land Use Restriction Agreement, the Regulatory Agreement or
other similar agreement imposing operating restrictions on the Mortgaged
Property executed in connection with the Bonds (the “LURA”), and no prior
violations have occurred and remain uncured that would result in any related
tax exempt bonds becoming taxable, loss or material diminution in value of the
tax credits, forfeiture or reversion of title to the Mortgaged Property or
other material loss or risk of loss on the part of the Owner or the Mortgaged
Property; (ii) there have been no actions, claims, demands or proceedings
brought against the Owner or related to the Mortgaged Property arising out of
any violations or claimed violations of any Tax Regulatory Agreement; (iii) no
circumstances exist which, with the giving of notice or the expiration of any
applicable grace or cure period, would constitute an event of default under the
Bond Documents; (iv) there are no fees currently due and owing under the
Bond Documents which have not been paid; and (v) no claims for
indemnification under the Bond Documents have been made or are pending, and no
basis for such a claim for indemnification exists.  With respect to the exceptions listed on Schedule
D, pertaining to (i) above, the Sponsor shall make reasonably diligent
efforts to cause the general partner of the related Owner to address all issues
which constitute breaches of the LURA.

 

(hh)         Nonexistent Documents.  None of the following documents has been
executed with respect to any Mortgaged Property:

 

(i)            A mortgage note or any other
obligation secured by a lien on the Mortgaged Property payable to the Sponsor
or its Affiliates.

 

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

 

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

 

21

 

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

 

(jj)           Single Asset Requirements.  In the case of each of the Mortgaged
Properties, except as disclosed on Schedule D, the Bond Mortgage
prohibits the applicable Owner from owning substantial assets other than its
Mortgaged Property and prohibits the applicable Owner from engaging in any
business enterprises other than the operation of its Mortgaged Property.  Each Owner is in compliance with the
above-described provision of its Bond Mortgage.

 

(kk)         [Reserved]

 

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

 

(mm)       Payment of Fee Component.  There are no defaults with respect to payment
of any portion of the Fee Component that is secured by a foreclosable mortgage
lien.

 

(nn)         State Allocating Agency Requirements.  The only operating restrictions imposed on
any Mortgaged Property by any state tax credit allocating agency are those
imposed by the California Debt Limit Allocation Committee (“CDLAC”), and are
reflected in the related LURA.

 

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

 

(pp)         Exemption from Real Property Taxes.  For every Mortgaged Property indicated on the
Data Tape as having qualified for an exemption from real property taxes, (i) the
Owner is in compliance with the requirements of the Regulatory Agreement
applicable to the Mortgaged Property, (ii) the Mortgaged Property
qualifies for exemption from real property taxes for the current real property
tax year and (iii) no event has occurred which would cause the Mortgaged
Property to lose its current exemption from real property taxes.

 

(qq)         Amortization Schedules.  The amortization schedules provided by the
Sponsor to Freddie Mac by the posting of such schedules on the Sponsor’s
electronic website, do not contain material errors, and accurately state the
maturity and the principal and interest payments for the applicable Bond
Mortgage Loan and related Bond as of each monthly payment date.

 

22

 

(rr)           [Reserved].

 

(ss)         Tax Credit Matters.  Except as indicated on Schedule D, for
all Mortgaged Properties that have achieved Stabilization, a Form 8609 has
been issued by the applicable tax credit allocating agency with respect to each
Mortgaged Property evidencing the final allocation of tax credits with respect
thereto in an amount such that no adjustment to or repayment of any tax credit
investor’s capital contribution is necessary, and all tax credit investor
capital contributions have been fully funded to the Owner.  For any such tax credit investor
contributions not fully funded as indicated on Schedule D, the only
remaining conditions to such full funding is Stabilization.

 

(tt)           Laundry and Other Leases.  Each laundry or telecommunications lease in
effect with respect to a Mortgaged Property does not materially interfere with
the security provided by the related Bond Mortgage and does not materially
impair the value of the Mortgaged Property.

 

(uu)         Earthquake Insurance.  With respect to each Mortgaged Property
located in California, Oregon or Washington, a seismic analysis has been
conducted by a recognized firm experienced in conducting such analyses.  For each such Mortgaged Property with respect
to which the applicable seismic analysis shows either, (a)(i) a probable
maximum loss or bounded maximum loss of greater than 30% or (ii) a level
of seismic risk (as measured by another metric) which is jointly agreed by the
parties to be equivalent to a PML of less than 30% and (b) total “Property
Equity” that is greater than the dollar amount of the property’s “Theoretical
Maximum Expected Loss”, where “Property Equity” is defined as the difference
between (i) the current Value of the property (excluding the value of
remaining tax credits) as agreed by Centerline and Freddie Mac; and (ii) the
current Unpaid Principal Balance of the Bond(s), and “Theoretical Maximum
Expected Loss” is defined as that dollar figure determined by the Seismic
Assessment report prepared at the time of the original bond underwriting,
earthquake insurance is currently maintained by the related Owner with a
deductible not in excess of $50,000 from an insurance company with an insurer
rating (based on loan size) as indicated on Schedule G, with the Bond
Trustee named as a loss payee or additional insured.

 

(vv)         Bondholder Representative Obligations.  None of the Bond Documents requires or
obligates the Bondholder Representative to pay the fees and expenses of any
party, including any obligations of the Owner, or to pay capitalized interest
or any other costs during any construction or rehabilitation period for any
Mortgaged Property.

 

(ww)       Escrows.  Except
as set forth on Schedule D, each Owner has established all escrows and
reserves required by the Bond Mortgage and the Bond Mortgage Documents.

 

(xx)          Underwriting.  Each Bond Mortgage Loan and Mortgaged
Property was underwritten in compliance with the Servicer’s Institutional
Underwriting Standards, and the information contained in the Data Tape is true
and accurate in all material respects, or, in the case of pro forma net
operating income, was developed in a manner that satisfies the requirements of
the Servicer’s Institutional Underwriting Standards.

 

23

 

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

 

(zz)          Stabilization Standards.  The conditions to achieve Stabilization set
forth in the related Bond Documents with respect to each Non-Stabilized
Mortgage Property and the calculations to be performed with respect to the
financial tests related to achievement of Stabilization and the methodology for
such calculations to be used by the Servicer in connection therewith meet the
minimum conditions set forth on Schedule H hereto.

 

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

 

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

 

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

 

(ii)           Since June 30, 2007 and September 30,
2007, as the case may be, which is the date of Guarantor’s most recently
submitted financial statement to Freddie Mac, and since September 30,
2007, which is the date of Parent Guarantor’s most recently filed SEC Form 10-Q,
there has been no material adverse change in the general financial position of
Guarantor or Parent Guarantor.  For the
purposes of this representation and warranty, the “general financial position
of Guarantor or Parent Guarantor” shall be deemed to exclude any short-term
adverse changes that occur solely as a result of daily interest rate
fluctuations.

 

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

 

(iv)          The execution and performance by the
Sponsor of the Sponsor Documents to which it is a party and other agreements
required pursuant to such agreements (A) will not violate in any material
respect or, as applicable, have not violated in any material respect any
provision of any law, rule or regulation or any order of any court or
other agency or government and (B) will not violate in any material
respect, or as applicable,

 

24

have not violated in any
material respect any provision of any indenture, agreement or other instrument
to which the Sponsor is a party or is otherwise subject, or result in the
creation or imposition of any material lien, charge or encumbrance of any
nature.

 

(v)           The Sponsor is not in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument to which it is a party
which default would in Sponsor’s good faith and reasonable judgment materially
adversely affect the transactions contemplated by the Sponsor Documents.  There is no action, suit or proceeding at law
or in equity or by or before any governmental instrumentality or other agency
now pending or threatened in writing against or affecting the Sponsor or any of
its properties or rights, which, if adversely determined, would in Sponsor’s
good faith and reasonable judgment (A) materially impair the right of the
Sponsor to carry on its business as now conducted or (B) have a material
adverse effect on the financial condition of the Sponsor.

 

(vi)          The Bonds are genuine and
outstanding.  Each Transferor
transferring the Bonds to Freddie Mac has all necessary power and authority to transfer,
and has duly authorized by all necessary action the transfer of, the Bonds to
Freddie Mac pursuant to the Bond Exchange Agreement.  Any consents or approvals required to
transfer the Bonds to Freddie Mac have been obtained.  Immediately prior to such transfers, each
Transferor owned the Bonds free and clear of any lien, pledge, encumbrance or
other security interest, and has not sold, assigned or pledged any of its
interest in the Bonds to any Person other than Freddie Mac, and has not entered
into any agreement to effect such a sale, assignment or pledge except as
contemplated by the Bond Exchange Agreement. 
Upon such transfers, each Transferor has released all right, title and
interest in and to the Bonds.

 

Section 2.3            Conditions.   The obligation of Freddie Mac to exchange the
Certificates for the Bonds, execute and deliver each Series Certificate
Agreement and provide the Credit Enhancement and the Liquidity Facility is
subject to the satisfaction of the following conditions precedent on or prior
to the Closing Date (if the Closing Date occurs without satisfaction of any
such condition, such condition shall be deemed waived for purposes of the
Closing Date occurring unless otherwise set forth in a closing letter between
the parties:

 

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

 

(i)            The Bond Mortgage.

 

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

 

25

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

 

(iv)          The Title Insurance Policy insuring
the Bond Mortgage and naming the applicable Bond Trustee as the insured if not
included in the closing transcript with respect to the related Bonds.

 

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

 

(vi)          A true and correct copy of the rent
schedule supplied by the Owner as of June 30, 2007, except as
otherwise set forth thereon.

 

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

 

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

 

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

 

(ii)           [Reserved];

 

(iii)          there shall have occurred no material
adverse change in the financial condition or business of any Owner, or in the
physical condition, operating performance or value of the Owner’s Mortgaged
Property since the date of the Data Tape;

 

(iv)          Except as set forth on Schedule D,
there shall exist no “Bond Event of Default” under any of the Owner Documents
with respect to any Mortgaged Property; and

 

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

 

(A)          an executed copy of the Bond Exchange
Agreement, each Series Certificate Agreement, each Remarketing Agreement,
the Stabilization Guaranty, Escrow and Security Agreement, the Servicing
Agreement, the Guaranty and each other Sponsor Document and the satisfaction of
all conditions precedent set forth in such documents;

 

(B)           a pass-through opinion(s) of
special tax counsel acceptable to Freddie Mac to the effect that the interest
on the Class A Certificates and the Class B Certificates are not includable
in gross income to the

 

26

 

holders thereof for federal
income tax purposes to the same extent as though the holders of such
certificates owned the underlying Bonds;

 

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

 

(D)          opinions of counsel to the Sponsor,
Guarantor, the Servicer and each Transferor under the Bond Exchange Agreement
dated the Closing Date and addressed to Freddie Mac, in form and substance
acceptable to Freddie Mac;

 

(E)           such opinion(s) of counsel to
the Remarketing Agent as Freddie Mac shall require in form and substance
satisfactory to Freddie Mac;

 

(F)           copies of the no-adverse effect tax
opinions to be delivered by bond counsel in connection with the restructuring
of the Bonds, if applicable; and

 

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

 

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

 

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

 

Section 2.4            Consequences of
Inaccuracies.

 

(a)           The
Sponsor shall notify Freddie Mac within 15 days following a discovery by the
Sponsor of the existence of facts that make an assumption set forth in Section 2.1
inaccurate, which facts materially and adversely affect the value of a Bond
Mortgage or the related Bonds (an “Inaccuracy”).  Freddie Mac agrees to use its best efforts to
provide notice to the Sponsor within 30 days following a discovery by Freddie
Mac of an Inaccuracy; provided, however, that the failure of Freddie Mac to so
notify the Sponsor of such an Inaccuracy shall not relieve the Sponsor of its
obligation to cure such Inaccuracy upon receiving notice from Freddie Mac or
obtaining knowledge thereof.

 

27

 

(b)           Within
60 days after the earlier of (i) discovery by the Sponsor of an
Inaccuracy, or (ii) the Sponsor’s receipt of notice from Freddie Mac of
such Inaccuracy, the Sponsor shall commence commercially reasonable efforts to
cure such Inaccuracy in all material respects.

 

(c)           Subject
to the last sentence of this subsection (c), if an Inaccuracy is not cured by
the Sponsor as aforesaid within 60 days after the discovery or receipt of
notice of such Inaccuracy as set forth in subsection (b) above, Freddie
Mac shall have the right to require that the Sponsor, at the Sponsor’s option,
and within 5 days of written notice from Freddie Mac, either:  (i) fund or cause the funding of the
purchase from the Administrator of the series of Bonds related to the
Inaccuracy, to the extent that Freddie Mac may exercise its purchase right
following the occurrence of a Release Event with respect to the same (which
funding by, or caused by, the Sponsor shall be accomplished via the exercise of
such right of the Sponsor’s in accordance with Section 7.3(a) hereof
and applicable provisions of the Series Certificate Agreement), or (ii) indemnify
and hold harmless Freddie Mac for any cost or expense that Freddie Mac suffers
or incurs as a result of such Inaccuracy and any loss or damage that Freddie
Mac suffers or incurs as a direct result of such Inaccuracy.  Any such loss or damage with respect to a
Mortgaged Property or the related Bonds shall be determined at the time of
Asset Resolution, and any such cost or expense with respect to a Mortgaged
Property or the related Bonds will be subject to indemnification under this
Subsection 2.4(c) at the time of incurrence.  If any Inaccuracy is a Repurchase Inaccuracy,
then Freddie Mac may require the Sponsor to repurchase the related Bond through
the funding of a Release Event and the Sponsor shall not have the
aforementioned option with respect to such Repurchase Inaccuracy).  Freddie Mac shall also have the right to
require payment by the Sponsor of a Prepayment Premium in connection with any
Release Event caused by a Repurchase Inaccuracy, which remedies in addition to
the recovery of enforcement costs from the Sponsor, proceeding under the
Guaranty (which Freddie Mac may do if the Sponsor has failed to perform its
obligations when required under this Section) and taking action as provided in
subsection (d) below shall be the sole rights and remedies available to
Freddie Mac as the result of an Inaccuracy. 
In the event the Inaccuracy is non-monetary and such that it can be
corrected, but not within 60 days, Freddie Mac shall not pursue any remedies
hereunder if corrective action is instituted by the Sponsor within such 60 days
and diligently pursued until the Inaccuracy is cured, provided such Inaccuracy
must be cured not later than the earlier of 90 days after the discovery or
receipt of notice of such Inaccuracy, as set forth in subsection 2.4(b) above;
if a cure cannot be effected within such 90-day period, the Sponsor shall have
the options set forth in clause (i) or (ii) above except as provided
above with respect to a Repurchase Inaccuracy.

 

(d)           If
Sponsor fails to cure an Inaccuracy within the time provided in subsection (c) above,
and fails to repurchase the related Bonds or provide indemnification in accordance
with the provisions of Subsection 2.4(c) above, Freddie Mac, after
written notice to the Sponsor, shall have the right, but not the obligation, to
cure any such Inaccuracy, and any costs, fees or expenses actually incurred by
Freddie Mac shall be a Credit Advance and shall be paid by the Sponsor in
accordance herewith.  Amounts expended by
the Sponsor to cure an Inaccuracy shall be at the sole cost and expense of the
Sponsor.

 

(e)           The
assumptions set forth in Section 2.2 of this Agreement, the representations
and warranties set forth in Section 2.2 of this Agreement, and Freddie Mac’s
right to rely on them, shall not be affected or limited by any investigation
(including any pre-purchase review of documentation) made by, or on behalf of,
Freddie Mac, except to the extent that the Sponsor can

 

28

 

establish that one or more of the following Freddie Mac employees had
actual knowledge (as opposed to imputed knowledge arising from the receipt of
the documents required to be delivered by the Sponsor hereunder) of such
Inaccuracy or breach prior to the Closing Date and did not inform the Sponsor
of such Inaccuracy or breach prior to the Closing Date:

 

Clayton A. Davis; W. Kimball Griffith; Christopher
Propert; Shaun Smith; Michael McRoberts; David Brickman; Victoria Bourgeois;
Stephen G. Johnson; Margaret F. Smith; Brian E. King; and Xiangxiu Meng

 

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

 

(f)            Whenever
an assumption set forth in Section 2.1 is qualified by the phrase Sponsor’s
“knowledge”, “actual knowledge”, “best knowledge” or similar phase, such
assumption will be treated as an Inaccuracy only if it can be established that
one of the following individuals employed by an Affiliate of the Sponsor had
such knowledge, best knowledge or actual knowledge, as applicable:

 

Marc Schnitzer; James Spound; Robert Levy; John D’Amico;
Rachel Diller; Lindsay Soyka; Howard Sereda; and Greg Calvert

 

provided that
the inclusion of John D’Amico in the above list shall not imply a waiver of the
attorney-client privilege, which may be asserted by the Sponsor or its
Affiliates.

 

ARTICLE
III

 

COVENANTS
OF THE SPONSOR

 

Section 3.1            Freddie Mac Closing Fee and
Closing Expenses. 
The Sponsor shall pay, or cause to be paid, to Freddie Mac on the
Closing Date a closing fee in the amount of $500,000, together with Freddie Mac’s
expenses.  The Sponsor shall also pay on
the Closing Date the reasonable fees and actual out-of-pocket expenses of
Freddie Mac’s outside counsel in accordance with the instructions of such
counsel on the Closing Date and the reasonable fees and actual out-of-pocket
expenses of the Placement Agent, Deutsche Bank National Trust Company, as bond
custodian, the Rating Agency and Deloitte & Touche (for its “cold
comfort” letter), each as set forth on the closing fee schedule delivered on
the Closing Date.

 

Section 3.2            Reimbursement of Credit Advances.  The Sponsor shall reimburse Freddie Mac the
amount of each Credit Advance on the date such Credit Advance was made by
Freddie Mac, together with interest on the Credit Advance as provided in Section 3.3(a)(i) that
has accrued but has not been paid on the fifteenth day of the month in which
such Credit Advance occurs, from the sources and in the priority established in
accordance with the provisions of this Agreement and Section 4.03 of the
applicable Series Certificate Agreement or from the cash flow from the
Pledged Security Collateral hereunder, and subject to the limitations contained
in Section 9.11 hereof; provided, however, a Credit Advance that funded a
Bond Purchase Loan pursuant to Section 7.3 shall be repaid in accordance
with the provisions thereof

 

29

 

(but from the same sources and
subject to the same limitations as described above for other Credit Advances).

 

Section 3.3            Scheduled Payments and Deposits.

 

(a)           Monthly
Payments.  With respect to each Bond Mortgage Loan, the
Sponsor shall pay solely from the sources and in the priority established in
accordance with the provisions of this Agreement and Section 4.03 of the
applicable Series Certificate Agreement or from the cash flow from the
Pledged Security Collateral hereunder and subject to the limitations contained
in Section 9.11, the following amounts on the fifteenth (15th)
day of each month while any Bond Mortgage Loan is outstanding, beginning on the
fifteenth (15th) day of the first month following the Closing Date:

 

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

 

(ii)           Interest on Liquidity Advances.  Accrued but unpaid interest on
each outstanding Liquidity Advance, from the date such Liquidity Advance was
made, at the Liquidity Rate, to the date on which reimbursement of such
Liquidity Advance is due, and thereafter at the Default Rate until such
Liquidity Advance is reimbursed.

 

(iii)          Freddie
Mac Fee.  One-twelfth of the Freddie Mac
Fee, as calculated in accordance with Section 3.7.

 

(iv)          Administrator
Fee.  One twelfth of the
Administrator Fee, as calculated in accordance with Section 3.7.

 

(v)           Remarketing Agent Fee.  One twelfth of the Remarketing Agent Fee (if
applicable).

 

(vi)          Servicing
Fee.  One-twelfth of the
annual Servicing Fee, as calculated in accordance with Section 3.7.

 

(vii)         Special
Servicing Fee.  Any
accrued Special Servicing Fee as set forth in the Servicing Agreement.

 

(b)           Certain Third Party Fees.  To the extent not
paid by the Owner with respect to any Bond Mortgage Loan, the Sponsor shall
pay, from the sources and in the priority established in accordance with the
provisions of this Agreement and Section 4.03 of the applicable Series Certificate
Agreement (and subject to the limitations contained in Section 9.11), pay
the regular, ongoing fees due from time to time to the Bond Trustee, the Issuer
and the rebate analyst appointed under the Indenture, as applicable, to the
party entitled to payment thereof not later than ten (10) days after the
date such payment is due.

 

Section 3.4            Reimbursement of Liquidity Advances.  The Sponsor shall reimburse Freddie Mac for
each Liquidity Advance, from the sources and in the priority established in

 

30

 

accordance with the provisions
of this Agreement and Section 4.03 of the applicable Series Certificate
Agreement (except to the extent that remarketing proceeds have already become
available for application to such reimbursement) and subject to the limitations
contained in Section 9.11 hereof, together with interest on the Liquidity
Advance that has accrued but has not been paid, under Section 3.3(a) on
the first to occur of:

 

(a)           365 days following
the Liquidity Advance.

 

(b)           if the related
Pledged Class A Certificates are remarketed by the Remarketing Agent, the
date on which the proceeds of that remarketing are delivered to the
Administrator;

 

(c)           the date on which
the related Pledged Class A Certificates are redeemed or otherwise paid in
full and canceled;

 

(d)           the Liquidity
Commitment Termination Date; or.

 

(e)           the Credit
Enhancement Expiration Date.

 

Section 3.5            Payment of Costs, Fees and
Expenses.  In
addition to the Sponsor’s other obligations set forth in this Article III
and in the other Sponsor Documents, the Sponsor shall pay, upon written demand,
to Freddie Mac (solely from the sources and in the priority established in
accordance with the provisions of this Agreement and Section 4.03 of the
applicable Series Certificate Agreement and subject to the limitations
contained in Section 9.11 hereof) all of the following:

 

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

 

(b)           any and all fees,
costs, charges and expenses incurred by Freddie Mac (including the reasonable
fees and actual out-of-pocket expenses of accountants and other experts and the
reasonable fees and actual out-of-pocket expenses of attorneys) in connection
with (i) any amendments, consents or waivers to this Agreement, the
Sponsor Documents and any other documents related to the transactions
contemplated by the Sponsor Documents (whether or not any such amendments,
consents or waivers are entered into), (ii) any requests by the Sponsor
for Freddie Mac to consider providing credit enhancement for any other certificate
issue, (iii) any proposed investments under the Series Certificate
Agreement, (iv) any adjustment or conversion of the interest rate on the Class A
Certificates, (v) any tender, purchase, refunding, reoffering or
remarketing of the Bonds, or the Certificates, (vi) any collection,
disbursement or application of insurance or condemnation awards, proceeds,
damages or other payments including,

 

31

 

without
limitation, all costs incurred in connection with the application of insurance
or condemnation awards to restore or repair the Mortgaged Property, including,
reasonable appraiser fees, (vii) the transfer, assignment and
re-registration of the Bonds to Freddie Mac, (viii) any audit of any
Mortgaged Property, the Bonds or the Certificates by the Internal Revenue
Service or (ix) the administration of the Series Pools;

 

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

 

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

 

(e)           all out-of-pocket
expenses (including reasonable fees and actual out-of-pocket expenses for legal
services) of, or incident to, the preservation of rights under, or enforcement
of, any of the provisions of this Agreement, or performance by Freddie Mac of
any obligations of the Sponsor in respect of the Pledged Security Collateral
which the Sponsor shall have failed or refused to perform, or any actual or
attempted sale, or any exchange, enforcement, collection, compromise or
settlement of Pledged Security Collateral, and defending or asserting rights
and claims of Freddie Mac in respect thereof, by litigation or otherwise;

 

(f)            all reasonable
out-of-pocket costs and expenses incurred by the Pledge Custodian in connection
with the administration and enforcement of Article VIII of this Agreement
or by Freddie Mac in connection with the administration and enforcement of the
Stabilization Guaranty, Escrow and Security Agreement; and

 

(g)           interest at the
Liquidity Rate on any and all amounts referred to in Subsections (a) through
(h) above from the date which is fifteen (15) days following the date when
due until payment of all such amounts in full.

 

32

 

Section 3.6            Application and Timing of
Payments.

 

(a)           Application of Payments.  Except as otherwise provided in Section 5.1
and Section 7.1(a) hereof, if the Servicer or Freddie Mac receives on
any date less than the full amount that is due and payable on or before that
date under Sections 3.2 through 3.5 of this Agreement, the amount received
shall be applied to amounts due and payable under such provisions in such order
as Freddie Mac may, in its sole discretion, determine.

 

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

 

Section 3.7            Computation of Fees. 
The Freddie Mac Fee, the Administrator Fee and the Servicing Fee shall
accrue monthly in an amount equal to one-twelfth of the Freddie Mac Fee, the
Administrator Fee and the Servicing Fee, respectively, calculated in each case
on the basis of a 360-day year consisting of twelve (12) thirty-day months.

 

Section 3.8            Prepayment Premium.  So long as no Termination Event has occurred
and is continuing hereunder, Freddie Mac agrees that it will direct the
Remarketing Agent not to remarket the Class A Certificates tendered
pursuant to the exercise of the Optional Disposition Right as described in Section 7.05
of the applicable Series Certificate Agreement, if so requested in writing
by the Sponsor and if the Sponsor causes to be paid within three business days
to Freddie Mac the Prepayment Premium with respect to any Bonds sold or
liquidated from the related Series Pool as a result.

 

Section 3.9            Substitution of Credit Enhancement or Liquidity Facility.  The Sponsor acknowledges that it does not
have the right to substitute credit enhancement or liquidity for the Class A
Certificates (except the Sponsor may provide a confirming credit facility as
provided in Section 4.12 of each Series Certificate Agreement).

 

Section 3.10         [Reserved].

 

Section 3.11         Remarketing Agent for the Class A Certificates.  The Sponsor shall not remove or replace the
Remarketing Agent without Freddie Mac’s prior written consent, which consent
shall not be unreasonably withheld.

 

Section 3.12         Indemnification.  (a)  Subject to the limitations
contained in Section 9.11, the Sponsor shall indemnify and hold harmless
Freddie Mac, the Pledge Custodian and their respective officers, directors,
officials, employees, agents, attorneys, accountants, advisors, consultants and
servants, past, present or future (each, an “Indemnified Party”), from and against any and all claims, losses,
liabilities, damages, penalties, judgments, costs or expenses (collectively, “Losses”) arising directly from any
unlawful, wrongful or negligent act or omission of the Sponsor, Guarantor,
Parent Guarantor, Stabilization Guarantor, any Transferor or any of their
respective agents, contractors, servants, employees or licensees in connection
with any of the Sponsor Documents (other than acts or failures to act of the
Servicer or Special Servicer (or a subservicer of either) acting pursuant to
the terms of the Servicing Agreement) or the Guaranty or Parent Guaranty or the
Parent Stabilization Guaranty or in connection with each Offering Circular
related to the Class A Certificates (but in the case of each Offering
Circular only with

 

33

 

respect to the information set
forth in Appendix A and the accuracy of the name of the Sponsor); together with
all actual out-of-pocket costs, and reasonable counsel fees or expenses
incurred in connection with any such claim or proceeding brought thereon;
except that the Sponsor shall not be required to indemnify any Indemnified
Party for damages caused by the willful misconduct, negligence or unlawful acts
of such Indemnified Party or for any claims, costs, counsel fees, expenses or
liabilities incurred by an Indemnified Party as a result of any action taken by
an Indemnified Party at the direction of Freddie Mac.  In the event that any action or proceeding is
brought, or claim made, against any Indemnified Party, with respect to which
indemnity may be sought hereunder, the Sponsor, upon written notice thereof
from the Indemnified Party, shall assume the investigation and defense thereof,
including the employment of counsel reasonably acceptable to Freddie Mac and
the payment of all expenses associated therewith.  The Indemnified Party shall have the right to
approve a settlement to which it is a party (which consent shall not be
unreasonably withheld) and, in the event there exists an actual or potential
legal conflict of interest which prevents the same counsel from representing
all parties, to employ separate counsel in any such action or proceedings and
to participate in the investigation and defense thereof, and the Sponsor shall
pay or cause to be paid the reasonable fees and expenses of such separate
counsel.  The provisions of this Section shall
survive the termination of this Agreement.

 

(b)           Subject to the limitations contained
in Section 9.11, the Sponsor also shall indemnify and hold harmless each Indemnified Party, from and against
any and all Losses (i) arising
from or associated with those Mortgaged Properties as indicated on Schedule
A with respect to which Southwest Housing Development Corporation has an
ownership interest until such time as Southwest Housing Development Corporation
no longer has an ownership interest therein or (ii) arising from or
associated with those Mortgaged Properties as indicated on Schedule A
with respect to which Odyssey Residential Holdings or James R. “Bill” Fisher
has an ownership interest until the earlier of (1) the mediation with the
Sponsor’s Affiliate(s) is completed to the reasonable satisfaction of the
Special Servicer, (2) construction on all such Mortgaged Properties has
been completed and Form 8609’s have been received, or (3) such time
as Odyssey Residential Holdings or James R. “Bill” Fisher no longer has an
ownership interest therein; together with all costs, counsel fees, expenses or
liabilities incurred in connection with any such claim or proceeding brought
thereon; except that the Sponsor shall not be required to indemnify any
Indemnified Party for damages caused by the willful misconduct, negligence or
unlawful acts of such Indemnified Party or for any claims, costs, counsel fees,
expenses or liabilities incurred by an Indemnified Party as a result of any
action taken by an Indemnified Party at the direction of Freddie Mac.  In the event that any action or proceeding is
brought, or claim made, against any Indemnified Party, with respect to which
indemnity may be sought hereunder, the Sponsor, upon written notice thereof
from the Indemnified Party, shall assume the investigation and defense thereof,
including the employment of counsel reasonably acceptable to Freddie Mac and
the payment of all expenses associated therewith.  The Indemnified Party shall have the right to
approve a settlement to which it is a party (which consent shall not be
unreasonably withheld) and, in the event there exists an actual or potential legal
conflict of interest which prevents the same counsel from representing all
parties, to employ separate counsel in any such action or proceedings and to
participate in the investigation and defense thereof, and the Sponsor shall pay
or cause to be paid the reasonable fees and expenses of such separate
counsel.  The provisions of this Section shall
survive the termination of this Agreement.

 

34

 

Freddie Mac
acknowledges and agrees that (i) the circumstances of the foregoing
transactions shall not be the basis of a claim under Section 2.4(c) hereof
or a Remedy Event under Section 7.1(k) hereof, and (ii) such
transactions have been removed from the scheduled exceptions to the assumptions
by mutual agreement of the parties and such removal should not be construed as
an indication that there are not Inaccuracies in the assumptions in respect of
such transactions.

 

Sponsor agrees
to repurchase the $16,500,000 Housing Authority of the City of McDonough
Multifamily Housing Revenue Bonds (Woodlawn Park Apartments Project) Series 2003
held in the Series Pool related to the Pool 13 Bonds if Sponsor does not
provide on or before January 31, 2008 to the reasonable satisfaction of
Freddie Mac documentation (including a tax analysis of the investment
structure, capital accounts and projections of the partnership which owns the
Woodlawn Park Apartment Project and of the Pool 13 Bonds structure) supporting
Sponsor’s determination that Freddie Mac’s participation in this Agreement will
not have an adverse effect on the anticipated allocation of tax items of the
LIHTC Funds holding an interest in the partnership which owns the Woodlawn Park
Apartment Project.  If Freddie Mac does
not concur in such determination, it shall be deemed a Repurchase Inaccuracy
hereunder, and Freddie Mac may require that the Sponsor, within 5 days of
written notice from Freddie Mac, fund a Release Event to repurchase such Bonds
from the related Series Pool.

 

Section 3.13         Freddie Mac Not Liable.  None of Freddie Mac’s officials, officers,
directors, members, shareholders, agents, attorneys, independent contractors or
employees shall be responsible for, or liable to, the Sponsor or any of its
officials, officers, directors, shareholders, members, partners, affiliates,
independent contractors or employees for (a) any act or omission of
Freddie Mac or any other Person made in good faith with respect to the
validity, sufficiency, accuracy or genuineness of documents, or of any
endorsement(s) thereon (except for documents and endorsements provided by Freddie
Mac), even if such documents should be in fact, or prove to be in any or all
respects, invalid, insufficient, fraudulent or forged; (b) the validity or
sufficiency of any instrument transferring or assigning, or purporting to
transfer or assign the Sponsor’s beneficial ownership in the Class B
Certificates or any other rights or benefits under the Series Certificate
Agreement as permitted by Section 8.19, that may prove to be invalid or
ineffective for any reason; (c) failure of the Administrator to comply
fully with all conditions required in order to effect any applicable Advance; (d) errors,
omissions, interruptions or delays in transmission or delivery of any messages
by the Administrator, by mail, cable, telegraph, telex, telecopier or otherwise
that may be required under any Series Certificate Agreement; (e) any
loss or delay by the Administrator in the transmission or otherwise of any
document or draft required in order to make any Advance; (f) failure of
any trustee with respect to the Bonds, to comply fully with all terms of the
related Bond Documents; or (g) any consequences arising from causes beyond
the control of Freddie Mac.  In
furtherance, and not in limitation of the foregoing, Freddie Mac may accept
documents that appear on their face to be valid and in order, without any
responsibility for further investigation. None of the above shall affect,
impair, or prevent the vesting of any rights or powers of Freddie Mac under
this Agreement.

 

In furtherance
and extension, and not in limitation, of the specific provisions set forth
above, any action taken or omitted by Freddie Mac (including in its capacity as
Bondholder Representative) under or in connection with the Sponsor Documents or
any Owner Document, or any related certificates or other documents, if taken or
omitted in good faith and not in

 

35

 

contravention of the terms
hereof, shall be binding upon the applicable Owner, the Bond Trustee, the
Issuer, the Sponsor, Guarantor, the Remarketing Agent, the Administrator, the
Pledge Custodian and Freddie Mac, and shall not, under any circumstance, put
Freddie Mac under any resulting liability to any of them.

 

Section 3.14         Pledged Class A Certificates and Class B Certificates.

 

(a)           The
Sponsor acknowledges that Pledged Class A Certificates will be purchased
by the Administrator, on behalf of the Sponsor, to the extent that Freddie Mac
has made a Liquidity Advance to purchase such Pledged Class A Certificates
or the Pledge Custodian has funded such a purchase in connection with a Special
Adjustment Event.  Such Pledged Class A
Certificates will be pledged to Freddie Mac pursuant to Article VIII of
this Agreement.

 

(b)           As
a condition to delivery by Freddie Mac of each Series Certificate
Agreement, the Sponsor will deliver the Class B Certificates to Freddie
Mac, as Pledge Custodian under this Agreement, to be held in the name of the
Sponsor for the benefit of Freddie Mac as security for the Obligations of the
Sponsor hereunder.  Any transfer, pledge
or assignment of the Class B Certificates shall be subject to the lien and
covenants set forth in Article VIII of this Agreement.

 

Section 3.15         Other Covenants of Sponsor.

 

(a)           Sponsor Documents.  The Sponsor shall comply with all terms and
conditions of each Sponsor Document to which it is a party, or by which it is
bound, and shall use commercially reasonable efforts in cooperating with
Freddie Mac to cause the Bond Trustee and the Issuer at all times to comply
with the terms of the Bond Documents to which either of them is a party.

 

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

 

(i)            appoint a “Successor Sponsor” (as
defined in the Series Certificate Agreement) or permit a pledge or the
assignment of the membership interests in the Sponsor (other than the pledge
made as of the Closing Date to a consortium of banks led by Bank of America,
N.A.), or amend its organizational documents; or

 

(ii)           change the accrual mode for interest
on the Class A Certificates.

 

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

 

36

 

Subject to the
limitations contained in Section 9.11, the obligations of the Sponsor
under this Agreement shall be absolute, unconditional and irrevocable, and
shall be paid and performed in accordance with the terms of this Agreement
under all circumstances whatsoever, including, without limitation, the
following circumstances: (a) any invalidity or unenforceability of any of
the Owner Documents, the Sponsor Documents (other than a Series Certificate
Agreement) or any other agreement or instrument related to the Owner Documents
or the Sponsor Documents (other than a Series Certificate Agreement); (b) any
waiver of, or any consent to or departure from, the terms of a Series Certificate
Agreement, any of the Owner Documents or the Sponsor Documents, or any other
agreement or instrument related to the Owner Documents or the Sponsor
Documents, or any extensions of time or other modifications of the terms and
conditions for any act to be performed in connection with a Series Certificate
Agreement; (c) the existence of any claim, set-off, defense or other right
that the Sponsor may have at any time against Freddie Mac, the Servicer, any
Issuer, any Bond Trustee, the Sponsor, Guarantor, the Administrator, the Pledge
Custodian, Freddie Mac, the Remarketing Agent or any other Person, whether in
connection with this Agreement, any of the other Owner Documents, the Sponsor
Documents, the Guaranty, any Mortgaged Property, or any unrelated transaction; (d) the
surrender or impairment of any security for the performance or observance of
any of the terms of this Agreement,  the
Owner Documents or the Sponsor Documents; (e) any defect in title to any
Mortgaged Property, any acts or circumstances that may constitute failure of
consideration, destruction of, damage to or condemnation of any Mortgaged
Property, commercial frustration of purpose, or any change in the tax or other
laws of the United States of America or of any state or any political
subdivision of the same, (f) the breach by Freddie Mac, the Servicer, any
Issuer, any Bond Trustee, the Administrator, the Sponsor, the Guarantor, the
Pledge Custodian, the Remarketing Agent or any other Person of its obligations
under any Owner Document, the Guaranty or any Sponsor Document; or (g) any
other circumstance, happening or omission whatsoever.

 

Section 3.17         Waivers and Consents.  THE SPONSOR AGREES TO BE BOUND BY
THIS AGREEMENT AND, TO THE EXTENT PERMITTED BY LAW, (A) WAIVES AND
RENOUNCES ANY AND ALL REDEMPTION AND EXEMPTION RIGHTS AND THE BENEFIT OF ALL
VALUATION AND APPRAISAL PRIVILEGES (EXCEPT AS EXPRESSLY PROVIDED IN THE SPONSOR
DOCUMENTS) AGAINST THE INDEBTEDNESS AND OBLIGATIONS EVIDENCED BY THIS AGREEMENT
AND THE OTHER SPONSOR DOCUMENTS OR BY ANY EXTENSION OR RENEWAL OF THIS
AGREEMENT AND THE OTHER SPONSOR DOCUMENTS; (B) WAIVES PRESENTMENT AND
DEMAND FOR PAYMENT, NOTICES OF NONPAYMENT AND OF DISHONOR, PROTEST OF DISHONOR
AND NOTICE OF PROTEST; (C) WAIVES ALL NOTICES IN CONNECTION WITH THE
DELIVERY AND ACCEPTANCE OF THIS AGREEMENT AND THE OTHER SPONSOR DOCUMENTS AND
ALL OTHER NOTICES IN CONNECTION WITH THE PERFORMANCE, DEFAULT OR ENFORCEMENT OF
THE PAYMENT OF ANY OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER SPONSOR
DOCUMENTS EXCEPT AS REQUIRED BY THIS AGREEMENT OR THE OTHER SPONSOR DOCUMENTS; (D) AGREES
THAT ITS LIABILITIES UNDER THIS AGREEMENT AND THE OTHER SPONSOR DOCUMENTS SHALL
BE UNCONDITIONAL AND WITHOUT REGARD TO THE LIABILITY OF ANY OTHER PERSON AND (E) AGREES
THAT ANY CONSENT, WAIVER OR FORBEARANCE UNDER THIS AGREEMENT AND THE OTHER
SPONSOR DOCUMENTS WITH

 

37

 

RESPECT TO AN EVENT SHALL
OPERATE ONLY FOR SUCH EVENT AND NOT FOR ANY SUBSEQUENT EVENT.

 

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

 

Section 3.19         Rate Resets.  The Sponsor agrees to cooperate fully with
the Remarketing Agent and Freddie Mac and take all other necessary action under
the terms of each Series Certificate Agreement and each related
Remarketing Agreement to effect the remarketing of Class A Certificates
upon the expiration of any period during which a Term Reset Rate is in effect
or upon any conversion to a different Reset Rate Method.

 

Section 3.20         Quality Control Packages.  The Sponsor agrees to cooperate fully with
and assist the Servicer as necessary with respect to the Servicer’s obligations
under Section 11(j) of the Servicing Agreement to deliver Quality
Control Packages with respect to 45 Mortgaged Properties to Freddie Mac
following the Closing Date.

 

Section 3.21         Stabilization Escrow Obligations.  Upon the occurrence of any of the Termination
Events specified in Section 7.1 (f), (g), (h) or (i), the Sponsor
shall upon demand pay and perform all of the Stabilization Guarantor’s
obligations under Sections 2.1(b) and 2.2 of the Stabilization Escrow
Guaranty, Escrow and Security Agreement.

 

ARTICLE IV

 

[RESERVED]

 

ARTICLE V

 

SPECIAL SERVICING

 

Section 5.1            Special Servicing Rights.  (a)  The Special Servicer initially
appointed by the Sponsor may direct special servicing of Specially Serviced
Bonds and the Bond Mortgage Loans related thereto as long as the aggregate
Current Certificate Balance of the Class B Certificates outstanding with
respect to all of the Series Pools remains at $15,000,000 or above and no
Termination Event exists hereunder.  Once
such aggregate Current Certificate Balance of the Class B Certificates has
been reduced to below $15,000,000 or a Termination Event exists hereunder (the
date of occurrence of either such event, a “Special Servicing Crossover Date”),
Freddie Mac may control and direct all special servicing activities, but such
Special Servicer may continue as special servicer under the direction of
Freddie Mac, subject to termination for cause. 
(For purposes of calculating the aforementioned reduction in Class B
Certificates, any

 

38

 

reduction of Class A
Certificates from amounts applied under the Credit Enhancement as indicated in Section 5.3
below due to there being no Class B Certificates above the Minimum Sponsor
Interest shall also be deemed a reduction of the Current Certificate Balance of
the Class B Certificates.)

 

The foregoing
notwithstanding if Freddie Mac has not been repaid at least 50% of any amount
due to Freddie Mac under Sections 3.2, 3.3(a)(i) through (iv) and/or
Section 3.5 within six months of the date any such amount was originally
due and payable hereunder, then thereafter, Freddie Mac may terminate the
Special Servicer for cause, and until any such termination, may direct and
control all special servicing activities. 
Notwithstanding Section 3.6 hereof, Freddie Mac shall apply all
repayments received by it under Sections 3.2, 3.3(a)(i) through (iv) and
Section 3.5 to the unpaid amounts that have been due and unpaid for the
longest time period.

 

(b)           Any Bond shall be a “Specially
Serviced Bond” for purposes of this Agreement if:  (i) any payment is more than
60 days past due or has not been made on or before the second due date
following the date such payment was due; (ii) the Owner has become the
subject of a decree or order issued under a bankruptcy, insolvency or similar
law; (iii) the Special Servicer (or on and after the Special Servicing
Crossover Date, Freddie Mac) has received notice of the foreclosure or proposed
foreclosure of any lien on the related Mortgaged Property; (iv) the
Special Servicer (or on and after the Special Servicing Crossover Date, Freddie
Mac) has actual knowledge of a Bond Event of Default; (v) the Owner admits
in writing its inability to pay its debts generally as they become due; or (vi) in
the determination of the Special Servicer in accordance with the Servicing
Standard set forth in the Servicing Agreement (or on and after the Special
Servicing Crossover Date, Freddie Mac), (a) a payment default is imminent
or is likely to occur within 60 days, or (b) any other default is
imminent or is likely to occur within 60 days and such default will have a
material adverse effect on the value of the Mortgaged Property.

 

Section 5.2            Sponsor Option.  The Sponsor shall have the option to purchase
any series of Bonds with respect to which a Release Event exists subject to and
in accordance with the terms of Section 7.3 hereof.

 

Section 5.3            Special Servicing Procedures.  In addition to the duties applicable to the
Special Servicer under the Servicing Agreement, the following procedures shall
be applicable and followed by the Special Servicer and the Sponsor prior
to the Special Servicing Crossover Date:

 

(a)           Upon the occurrence
of Asset Resolution with respect to any issue of Specially Serviced Bonds that relate
to a Stabilized Mortgaged Property and involve a Foreclosure of the related
Bond Mortgage and a shortfall of amounts available from such action to redeem
in full the outstanding principal of the related outstanding Bonds, the Special
Servicer shall provide written notice of such action and the amount of such
principal shortfall to Freddie Mac.  In
accordance with its Credit Enhancement, Freddie Mac shall, contemporaneously
with the application of the proceeds of the Asset Resolution to pay the redemption
price of the related outstanding Bonds in part to the extent of such proceeds,
declare a Release Event with respect to such Bonds in the amount of the
aforementioned principal shortfall and shall fund the amount of the applicable
Release Purchase Price pursuant to its Credit Enhancement, which amount

 

39

 

shall be applied
pursuant to the terms of the applicable Series Certificate Agreement to
pay down a corresponding amount of the related Class B Certificates (or to
the extent there are no Class B Certificates above the amount of the
Minimum Sponsor Interest left to redeem in the related Series Pool, to pay
down a corresponding amount of the related Class A Certificates).  Such amount paid with respect to such Class B
Certificates shall be used to reimburse Freddie Mac for the amount of the
corresponding Credit Advance under its Credit Enhancement.  Any Credit Advance arising from such a pay
down of Class A Certificates shall be payable from the sources described
in Section 4.03(b) of each Series Certificate Agreement and the
cash flow from the Pledged Security Collateral. 
The Bonds purchased in connection with such Release Event shall be
subsequently cancelled upon withdrawal from the related Series Certificate
Agreement.

 

(b)           Upon the occurrence
of Asset Resolution with respect to any issue of Specially Serviced Bonds that
relate to a Non-Stabilized Mortgaged Property and involve a Foreclosure of the
related Bond Mortgage and a shortfall of amounts available from such action to
redeem in full the outstanding principal of the related outstanding Bonds, the
Special Servicer shall provide written notice to Freddie Mac and the Sponsor of
such action.  Following receipt of such
written notice, Freddie Mac shall declare a Release Event with respect to such
Bonds in the amount of the aforementioned principal shortfall and the Release
Purchase Price so payable shall be funded on behalf of the Sponsor from amounts
available under the Stabilization Guaranty, Escrow and Security Agreement, and
applied in accordance with the related Series Certificate Agreement as a
Sponsor-funded Release Event to pay down the related Class A Certificates
in a corresponding amount; provided, however, if monies are not available under
the Stabilization Guaranty, Escrow and Security Agreement, Freddie Mac shall
fund the amount of the applicable Release Purchase Price pursuant to its Credit
Enhancement, which amount shall be applied pursuant to the terms of the
applicable Series Certificate Agreement to pay down a corresponding amount
of the related Class B Certificates (or to the extent there are no Class B
Certificates above the amount of the Minimum Sponsor Interest left to redeem in
the related Series Pool, to pay down a corresponding amount of the related
Class A Certificates).  Any such
amount paid with respect to such Class B Certificates shall be used to
reimburse Freddie Mac for the amount of the corresponding Credit Advance under
its Credit Enhancement.  Any Credit
Advance arising from such a pay down of Class A Certificates shall be
payable from the sources described in Section 4.03(b) of each Series Certificate
Agreement and the cash flow from the Pledge Security Collateral.  The Bonds purchased in connection with such
Release Event shall be subsequently cancelled upon withdrawal from the related Series Certificate
Agreement.

 

(c)           Upon the occurrence
of Asset Resolution with respect to any issue of Specially Serviced Bonds that
relate to a Stabilized Mortgaged Property and which Asset Resolution involves
the execution of a work-out agreement pursuant to which the related Bond
Mortgage Loan and Bonds are modified to write-down the outstanding principal
thereof, the Special Servicer shall provide written notice to Freddie Mac of
such action.  In accordance with its
Credit Enhancement, Freddie Mac shall, contemporaneously with the execution of
such work-out agreement to effect such principal write-down, declare a Release
Event with respect to such Bonds in the amount of the aforementioned principal
write-down and shall fund the amount of the applicable Release Purchase Price
pursuant to its Credit Enhancement, which amount shall be applied pursuant to
the terms of the

 

40

 

applicable Series Certificate
Agreement to pay down a corresponding amount of the related Class B
Certificates (or to the extent there are no Class B Certificates above the
amount of the Minimum Sponsor Interest left to redeem in the related Series Pool,
to pay down a corresponding amount of the related Class A
Certificates).  Such amount with respect
to such Class B Certificates shall be used to reimburse Freddie Mac for
the amount of the corresponding Credit Advance under its Credit
Enhancement.  Any Credit Advance arising from
such a pay down of Class A Certificates shall be payable from the sources
described in Section 4.03(b) of each Series Certificate
Agreement and the cash flow from the Pledge Security Collateral.  The Bonds purchased in connection with such
Release Event shall be subsequently cancelled upon withdrawal from the related Series Certificate
Agreement.

 

(d)           Upon the occurrence
of Asset Resolution with respect to any issue of Specially Serviced Bonds that
relate to a Non-Stabilized Mortgaged Property and involve the execution of a
work-out agreement pursuant to which the related Bond Mortgage Loan and Bonds
are modified to write-down the outstanding principal thereof in an amount
necessary in order to achieve Stabilization, the Special Servicer shall provide
written notice to Freddie Mac and the Sponsor of such action.  Following receipt of such written notice,
Freddie Mac shall declare a Release Event with respect to such Bonds in such
amount necessary in order for such Mortgaged Property to achieve Stabilization
and the Release Purchase Price so payable shall be funded on behalf of the
Sponsor from amounts available under the Stabilization Guaranty, Escrow and
Security Agreement and applied in accordance with the related Series Certificate
Agreement as a Sponsor-funded Release Event to pay down the related Class A
Certificates in a corresponding amount; provided, however, if monies are not
available under the Stabilization Guaranty, Escrow and Security Agreement,
Freddie Mac shall fund the amount of the applicable Release Purchase Price
pursuant to its Credit Enhancement, which amount shall be applied pursuant to
the terms of the applicable Series Certificate Agreement to pay down a
corresponding amount of the related Class B Certificates (or to the extent
there are no Class B Certificates above the amount of the Minimum Sponsor
Interest left to redeem in the related Series Pool, to pay down a
corresponding amount of the related Class A Certificates).  Any such amount paid with respect to such Class B
Certificates shall be used to reimburse Freddie Mac for the amount of the
corresponding Credit Advance under its Credit Enhancement.  Any Credit Advance arising from such a pay
down of Class A Certificates shall be payable from the sources described
in Section 4.03(b) of each Series Certificate Agreement and the
cash flow from the Pledge Security Collateral. 
The Bonds purchased in connection with such Release Event shall be
subsequently cancelled upon withdrawal from the related Series Certificate
Agreement.

 

(e)           Upon the occurrence
of Asset Resolution with respect to any issue of Specially Serviced Bonds that
relate to a Stabilized Mortgaged Property and involve a sale of such Bonds and
a shortfall of amounts available from such action to fund the related Release Purchase
Price, the Special Servicer shall provide written notice of such action and the
amount of such shortfall to Freddie Mac. 
Freddie Mac shall declare a Sponsor-funded Release Event with respect to
a portion of such Bonds in the amount of the sale proceeds of such Bonds and a
Freddie Mac-funded Release Event with respect to a portion of such Bonds in the
amount of the aforementioned shortfall. 
The proceeds from the sale of such Bonds shall fund the applicable Release
Purchase Price and be

 

41

 

applied to pay down Class A
Certificates in accordance with the related Series Certificate Agreement
and Freddie Mac shall fund the amount of the applicable Release Purchase Price
corresponding to the shortfall pursuant to its Credit Enhancement, which amount
shall be applied pursuant to the terms of the applicable Series Certificate
Agreement to pay down a corresponding amount of the related Class B
Certificates (or to the extent there are no Class B Certificates above the
amount of the Minimum Sponsor Interest left to redeem in the related Series Pool,
to pay down a corresponding amount of the related Class A
Certificates).  Such amount paid with
respect to such Class B Certificates shall be used to reimburse Freddie Mac
for the amount of the corresponding Credit Advance under its Credit
Enhancement.  Any Credit Advance arising
from such a pay down of Class A Certificates shall be payable from the
sources described in Section 4.03(b) of each Series Certificate
Agreement and the cash flow from the Pledged Security Collateral.  The Bonds purchased in connection with such
Release Event shall be subsequently withdrawn from the related Series Certificate
Agreement and delivered to the Special Servicer to effect the sale of such
Bonds.

 

(f)            Upon the occurrence
of Asset Resolution with respect to any issue of Specially Serviced Bonds that
relate to a Non-Stabilized Mortgaged Property and involve a sale of such Bonds
and a shortfall of amounts available from such action to fund the related
Release Purchase Price, the Special Servicer shall provide written notice to
Freddie Mac and the Sponsor of such action. 
Following receipt of such written notice, Freddie Mac shall declare a
Sponsor-funded Release Event with respect to a portion of such Bonds in the
amount of the sale proceeds of such Bonds and a Sponsor-funded Release Event
with respect to such Bonds in the amount of the aforementioned shortfall.  The proceeds from the sale of such Bonds
shall fund the applicable Release Purchase Price and be applied to pay down Class A
Certificates in accordance with the related Series Certificate
Agreement.  The Release Purchase Price
with respect to such shortfall shall be funded on behalf of the Sponsor from
amounts available under the Stabilization Guaranty, Escrow and Security
Agreement, and applied in accordance with the related Series Certificate
Agreement as a Sponsor-funded Release Event also to pay down the related Class A
Certificates in a corresponding amount; provided, however, if monies are not
available under the Stabilization Guaranty, Escrow and Security Agreement,
Freddie Mac shall fund the amount of the applicable Release Purchase Price
related to the shortfall pursuant to its Credit Enhancement, which amount shall
be applied pursuant to the terms of the applicable Series Certificate
Agreement to pay down a corresponding amount of the related Class B
Certificates (or to the extent there are no Class B Certificates above the
amount of the Minimum Sponsor Interest left to redeem in the related Series Pool,
to pay down a corresponding amount of the related Class A
Certificates).  Any such amount paid with
respect to such Class B Certificates shall be used to reimburse Freddie
Mac for the amount of the corresponding Credit Advance under its Credit
Enhancement.  Any Credit Advance arising
from such a pay down of Class A Certificates shall be payable from the
sources described in Section 4.03(b) of each Series Certificate
Agreement and the cash flow from the Pledge Security Collateral.  The Bonds purchased in connection with such
Release Event shall be subsequently withdrawn from the related Series Certificate
Agreement and delivered to the Special Servicer to effect the sale of such
Bonds.

 

42

 

Section 5.4            Servicing Limitations.  The Sponsor shall not provide any direction
to the Servicer or Special Servicer inconsistent with the provisions of the
Servicing Agreement or this Agreement.

 

ARTICLE
VI

 

UNIFORM COMMERCIAL
CODE SECURITY AGREEMENT

 

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

 

ARTICLE VII

 

REMEDY
EVENTS; REMEDIES

 

Section 7.1            Remedy Events.  The occurrence of any one or more of the
following events shall constitute a Remedy Event hereunder (provided only those
Remedy Events set forth in (a) through (k) below shall also
constitute a Termination Event):

 

(a)           Freddie Mac, as
provider of the Credit Enhancement, has not been paid in full any amount due it
under Sections 3.2, 3.3(a)(i) through (iv) and/or Section 3.5,
within one year of the date on which such amount became originally due and
payable hereunder; provided that if the Administrator or Pledge Custodian has
such amounts in its possession pursuant to the Series Certificate
Agreement or this Agreement, which amounts are available thereunder or
hereunder to pay such amounts to Freddie Mac, such occurrence will not be a
Termination Event.  Notwithstanding Section 3.6
hereof, Freddie Mac shall apply all repayments received by it under Sections
3.2, 3.3(a)(i) through (iv) and Section 3.5 hereof to the unpaid
amounts that have been due and unpaid for the longest time period;

 

43

 

(b)           Freddie Mac shall have
given the Sponsor written notice that Pledged Class A Certificates (other
than Pledged Class A Certificates created as a result of a Special
Adjustment Event) have not been remarketed as of the 365th day
following purchase by the Administrator on behalf of the Sponsor, and Freddie
Mac has not been reimbursed for the applicable Liquidity Advance, together with
interest thereon;

 

(c)           failure to pay
principal of, and interest on, any Bond Purchase Loan when due at maturity
thereof;

 

(d)           failure of both the
Sponsor and the Guarantor to indemnify or repurchase in connection with an
Inaccuracy when required under Section 2.4(c);

 

(e)           failure of both the
Sponsor and the Guarantor to indemnify when required under Section 3.12(a),
or failure of both the Sponsor and the Parent Guarantor to indemnify when
required under Section 3.12(b);

 

(f)            failure of both the
Sponsor and the Guarantor to cause all Stabilization Escrow Required Additional
Payments under Section 2.1(b) of the Stabilization Guaranty, Escrow
and Security Agreement and Shortfall Fees payable under Section 2.2 of the
Stabilization Guaranty, Escrow and Security Agreement to be paid on or before June 30,
2009;

 

(g)           failure of both the
Sponsor and the Parent Guarantor to cause to be paid when due any Stabilization
Escrow Required Additional Deposit required under Section 2.1(b)(i) of
the Stabilization Guaranty, Escrow and Security Agreement;

 

(h)           an “Event of Default”
under the Bank Credit Facility (provided the occurrence of any such Event of
Default shall not be a Termination Event hereunder if (1) the exercise of
remedies under the Bank Credit Facility as a result thereof is limited solely
to the acquisition of the membership interests in the Sponsor; (2) the
prohibition on payment of Distributions under Article 10 of the Bank
Credit Facility has not been waived; (3) the Administrative Agent under
the Bank Credit Facility has provided Freddie Mac written notice certifying
that no remedial action other than as set forth in item (1) above has been
taken and no such waiver as described under item (2) above has occurred,
which written notice shall also provide that the Administrative Agent will
notify Freddie Mac prior to taking any such other remedial action or agreeing
to any such waiver; and provided further, notwithstanding the foregoing, the
occurrence of any such Event of Default shall not be a Termination Event
hereunder at such time as all Stabilization Escrow Required Additional Payments
and Shortfall Fees shall have been paid);

 

(i)            any amendment is
made to the Bank Credit Facility documents without first obtaining the written
consent of Freddie Mac, as and to the extent required by Section 23.4 of
the Revolving Credit and Term Loan Agreement in respect of the Bank Credit
Facility;

 

(j)            Guarantor or Parent
Guarantor fails to perform its obligations when required under the Guaranty or
Parent Guaranty, as applicable (after the expiration of any cure period
contained therein);

 

44

 

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

 

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

 

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

 

(n)           the Sponsor shall
fail to observe or perform any other term, covenant, condition or agreement set
forth in any of the other Sponsor Documents, or there shall otherwise occur an
event of default caused by the Sponsor under any of the other Sponsor Documents
(taking into account any applicable notice and cure period);

 

(o)           any representation
made by the Sponsor in Section 2.2 or in Section 8.10 of this
Agreement shall prove to have been incorrect in any material respect when made;
provided, however, to the extent any such breach of representation is capable
of being cured, such breach shall not constitute a Remedy Event hereunder if
corrective action is instituted by the Sponsor within 15 days and diligently
pursued until the breach is cured, provided such cure must be effected in all
events within 90 days.

 

Section 7.2            Remedies; Waivers.

 

(a)           Remedies.  Subject to Section 9.11 and the last
paragraph of this Section 7.2(a), upon the occurrence and during the
continuance of a Termination Event, (i)  Freddie Mac may declare all
of the Obligations hereunder to be immediately due and payable, in which case
all such Obligations shall become due and payable, without presentment, demand,
protest or notice of any kind, including notice of default, notice of intent to
accelerate or notice of acceleration; (ii) at the written direction of a
Freddie Mac Authorized Officer, the Pledge Custodian shall deliver all Pledged
Security Collateral to Freddie Mac; (iii) Freddie Mac may, or the Pledge
Custodian at the written direction of a Freddie Mac Authorized Officer shall,
without further notice, exercise all rights, privileges or options pertaining
to the UCC Collateral as if Freddie Mac were the absolute owner thereof, upon
such terms and conditions as Freddie Mac may determine, all without liability
except to account for property actually received by Freddie Mac or the Pledge
Custodian (but neither Freddie Mac nor the Pledge Custodian shall have any duty
to exercise any of those rights, privileges or options and shall not be
responsible for any failure to do so or delay in so doing); and (iv) except
as provided in the last paragraph of this Section 7.2, Freddie Mac may, or
the Pledge Custodian at the written direction of a Freddie Mac 

 

45

 

Authorized Officer shall, exercise in respect of the UCC Collateral, in
addition to other rights and remedies provided for in this Agreement or
otherwise available to it, all of the rights and remedies of a secured party
under the Uniform Commercial Code, including the right to sell the UCC
Collateral at public or private sale. 
The Sponsor agrees that, to the extent notice of sale shall be required
by law, at least ten (10) days’ prior notice to the Sponsor of the time
after which any private sale is to be made shall constitute reasonable
notification.  Neither Freddie Mac nor
the Pledge Custodian shall be obligated to make any sale of UCC Collateral
regardless of notice of sale having been given. 
Freddie Mac may, or the Pledge Custodian at the written direction of a
Freddie Mac Authorized Officer shall, adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it was
so adjourned.

 

To the extent provided in each Series Certificate
Agreement, Freddie Mac shall also have the right (but only if a Remedy Event is
also a Termination Event hereunder) to provide notice to the Administrator of a
Liquidity Provider Termination Event, in which event the funds advanced by
Freddie Mac to purchase Class A Certificates shall be a Credit Advance and
immediately due and payable hereunder.

 

In addition to the foregoing, subject to the
limitations contained in Section 9.11, following a Termination Event,
Freddie Mac shall have the right to take such action at law or in equity,
without notice or demand, as it deems advisable to protect and enforce the
rights of Freddie Mac against the Sponsor in and to the UCC Collateral,
including, but not limited to, (i) the exercise of any rights and remedies
available to Freddie Mac under any of the Sponsor Documents and (ii) the
right to cause a Mandatory Tender of all Certificates.

 

Notwithstanding
anything contained in this Section 7.2 to the contrary, following a
Termination Event and prior to any liquidation of the UCC Collateral, the
Sponsor shall continue to be the beneficial owner of all Purchased Bonds,
Pledged Class A Certificates and other Pledged Security Collateral, subject
to all liens in favor of Freddie Mac created by this Agreement, until written
notice to the contrary is provided by a Freddie Mac Authorized Officer under
this Section 7.2.

 

With respect to and upon the occurrence of any
Remedy Event that is not a Termination Event, subject to the limitations
contained in Section 9.11 hereof, Freddie Mac shall be entitled to pursue
all remedies at law or equity and to apply the cash flow from the Pledged
Security Collateral against any monetary claim reduced to judgment.

 

Notwithstanding
anything contained in this Section 7.2 or elsewhere herein to the
contrary, Freddie Mac may not take any action to levy upon or to sell the Class B
Certificates or to levy upon or to sell Pledged Class A Certificates or
Purchased Bonds (if such Pledged Class A Certificates or Purchased Bonds
were pledged as the result of a Special Adjustment Event) due to the occurrence
of a Remedy Event hereunder; provided the foregoing shall not be deemed to
restrict Freddie Mac’s ability to apply cash flow from the pledged Class B
Certificates, any such Pledged Class A Certificates or any such Purchased
Bonds to the satisfaction of any of the Obligations owed hereunder.

 

(b)           Application of
Proceeds.  The Pledge Custodian shall apply (i) the
cash flow available from the Class B Certificates and any Pledged Class A
Certificates pledged as the 

 

46

 

result of a Special Adjustment Event or Purchased Bonds held under Section 8.4(b) and
8.5(b) pursuant to a Sponsor election under Section 8.8(c), and (ii) the
cash proceeds actually received from any sale or other disposition of any
Pledged Class A Certificates pledged other than as a result of a Special
Adjustment Event and any Purchased Bonds held under Section 8.4(a) or
Section 8.5(a) as follows: (a) first, to reimburse the Pledge
Custodian for the reasonable expenses of preparing for sale, selling and the
like and to reasonable attorneys’ fees and expenses and legal expenses incurred
by the Pledge Custodian in connection therewith, (b) second, to Freddie
Mac to be applied to the repayment of all amounts then due and unpaid on the
Obligations and (c) then, to pay the balance, if any, to (i) the
Sponsor, or (ii) as otherwise required by law.  The Sponsor shall not be liable for any
deficiency, subject to Section 9.11(b) of this Agreement, which sets
forth circumstances under which personal liability applies to the Sponsor, if
the cash flow from or the proceeds of any final sale or other disposition of
the Pledged Security Collateral as described above and any other security
provided by the Sponsor for its Obligations hereunder are insufficient to pay
the Obligations.

 

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

 

Section 7.3            Release Events; Bond Purchase Loans.

 

(a)           Exercise of Right of Sponsor to Fund or
Cause Funding in Connection with Release Event.  Subject to the last sentence of this Section 7.3(a),
upon the occurrence of circumstances which constitute a Release Event under any
Series Certificate Agreement, the Sponsor shall have the right to direct
Freddie Mac to designate a Release Event with respect to the related issue of
Bonds, along with the right economically to fund or cause the funding of the
purchase of such Bonds as provided in this Section 7.3(a).  (The Sponsor shall be required to exercise
such right and to fund or cause such funding when required to by Freddie Mac in
connection with a Repurchase Inaccuracy pursuant to Section 2.4.)  If the Sponsor elects to exercise any such
right by giving notice to Freddie Mac (or is required to do so pursuant to Section 2.4),
the Sponsor shall provide or cause to be provided sufficient immediately
available funds to Freddie Mac to fund the outstanding principal balance,
together with all accrued interest thereon (the “Purchase Price”) of the
affected Bonds not later than 11:00 a.m. Washington, D.C. time, on the
Business Day prior to the Release Event Date designated by Freddie Mac,
together with Hypothetical Gain Share, if any, in connection with such Release
Event.  (If the Sponsor makes such
election and fails to provide or cause to be provided such funds to Freddie Mac
when required, such Release Event shall be cancelled.)  All moneys provided or caused to have been
provided by the Sponsor to Freddie Mac for the purchase of such Bonds, shall be
applied as provided in the Series Certificate Agreement.  To the extent that such application results
in the redemption of all Class A Certificates within the related Series Pool(s),
the balance, if any, of such purchase price will be used to redeem Class B
Certificates and shall be paid to the Pledge Custodian under this
Agreement.  Pursuant to, and to the
extent required in Section 8.8 relating to Special Adjustment Events, such
monies, along with the liquidation proceeds from any remaining related Bonds,
shall be used to purchase Class A Certificates in the unrelated Series Pool
designated in the Series Certificate Agreement for such purpose, and those
Class A Certificates so purchased shall be deemed Pledged Class A
Certificates and held under Article 

 

47

 

VIII of this Agreement.  Any such
Pledged Class A Certificates shall not be remarketed without the prior
written consent of Freddie Mac in its sole discretion.  The foregoing notwithstanding, the Sponsor
may only exercise its option to direct Freddie Mac to designate a Release Event
as aforesaid and for the Sponsor to fund the related Purchase Price if the
Release Event (i) arises from a Tax Event, (ii) relates to an
Inaccuracy which the Sponsor has elected to cure through its funding of a
Release Event pursuant to Section 2.4, or relates to a Repurchase
Inacurracy (in which case the Release Event must be funded by the Sponsor when
required by Freddie Mac pursuant to Section 2.4), or (iii) relates to
an issue of Specially Serviced Bonds (in any such case, the Sponsor’s required
notice to Freddie Mac shall detail the facts supporting the exercise of the
Sponsor’s option pursuant to this subsection 7.3(a) hereof); and provided
however, if an issue of Bonds to be purchased is secured by a common Bond
Mortgage that also secures another issue of Bonds in a Series Pool, such
option may only be exercised if all Bonds secured by such Bond Mortgage are
purchased.

 

(b)           Exercise of Purchase Right by Freddie Mac.  In addition to Release Events that may be
designated by Freddie Mac under Section 5.3, upon the occurrence of a
Release Event under any Series Certificate Agreement which Release Event (i) relates
to a Tax Event, (ii) relates to the failure of a Non-Stabilized Mortgaged
Property to achieve Stabilization by the Required Stabilization Date, (iii) occurs
after the Special Servicing Crossover Date or (iv) occurs after and during
the continuance of a Remedy Event hereunder, Freddie Mac shall have the right
to designate the Release Event and to fund the purchase of the related series
of Bonds if the Sponsor declines or fails to exercise properly its right to
fund or cause funding with respect to the same. 
Prior to any exercise of such right, Freddie Mac shall provide written
notice to the Sponsor (the “Freddie Mac Purchase Notice”) not less than fifteen (15)
days prior to the proposed Release Event Date identifying each series of Bonds
giving rise to a Release Event, the circumstances giving rise to such Release
Event and the proposed purchase date and stating that the Sponsor may elect to
fund or cause the funding of such purchase of the series of Bonds.

 

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

 

In the event
the Sponsor does not elect to fund or cause the funding of the purchase of the
affected series of Bonds, and Freddie Mac does not decide to terminate the
Release Event, the affected series of Bonds are required to be purchased with
funds drawn pursuant to the Credit Enhancement by Freddie Mac under the Series Certificate
Agreement, and such series of Bonds shall be delivered to the Pledge Custodian
and held in the name of the Pledge Custodian as applicable for the benefit of
the Sponsor subject to the lien in favor of Freddie Mac.  All such moneys for the purchase of such
series of Bonds shall be applied as provided in applicable Series Certificate
Agreement.  To the extent that such
application results in the redemption of all Class A Certificates within
the related Series Pool and there is a balance remaining that would have
been allocated to redeem Class A Certificates but cannot redeem Class A
Certificates because none remain outstanding within that Series Pool, such
balance (the “Class A Balance”)
shall be used to redeem related Class B Certificates and shall be paid to
the Pledge Custodian hereunder.  Pursuant
to, and to the extent required under Section 8.8 of this Agreement
relating to Special Adjustment Events, the amount of the Class A Balance,
along with the liquidation proceeds from any remaining related Bonds, shall be
used to purchase Class A Certificates in the unrelated Series Pool(s) designated
in the Series Certificate Agreement for such purpose, and those Class A
Certificates so purchased shall be deemed Pledged Class A Certificates and
held under Article 

 

48

 

VIII of this Agreement.  Any such
Pledged Class A Certificates shall not be remarketed without the prior
written consent of Freddie Mac in its sole discretion.  To the extent required hereunder, all moneys
that would have been received by the owners of the Class B Certificates so
redeemed shall be paid by the Pledge Custodian 
hereunder immediately upon receipt to the Administrator of the unrelated
Series Pool in immediately available funds.

 

Any Credit
Advance by Freddie Mac under this Section 7.3(b) to fund the purchase
of an affected series of Bonds, shall be deemed to be a loan from Freddie Mac
to the Sponsor (a “Bond Purchase Loan”).  The maturity date of any Bond Purchase Loan
shall be two years from the date of purchase, on which maturity date the
outstanding principal of and any accrued and unpaid interest on such Bond
Purchase Loan shall be due and payable in full; provided however, that such
Bond Purchase Loan shall be subject to mandatory prepayment in whole or in part
from and to the extent of the proceeds of the sale or transfer of all of the
related series of Bonds, or the foreclosure, deed in lieu of foreclosure or
comparable conversion of the related Bond Mortgage.  Any Bond Purchase Loan may be prepaid by the
Sponsor at any time.  Interest on any
Bond Purchase Loan shall accrue at a rate of interest per annum equal to the
prime rate of interest of Citibank, N.A., until such time as another “Money
Center” bank is designated by Freddie Mac in its sole discretion by notice to
the Sponsor, which shall be payable on the fifteenth (15th) day of
each calendar month.  The principal of
any Bond Purchase Loan shall be payable from amounts applied as provided in Section 4.03(b) of
the Series Certificate Agreement, except, prior to the payment in full of
all Class A Certificates under the applicable Series Certificate
Agreement and prior to the termination thereof, the principal of any
outstanding Bond Purchase Loan shall not be payable (nor be deemed due for
payment) from amounts applied pursuant to the aforementioned Section 4.03(b) if
such amounts are derived from a Credit Advance by Freddie Mac in connection
with a subsequent Release Event.  The
principal of any outstanding Bond Purchase Loan shall also be payable from any
payments of principal in respect of a Purchased Bond pursuant to Article VIII
hereof.  Subject to Section 5.1, (i) Freddie
Mac shall retain all rights and remedies with respect to any such Purchased
Bond and the related Owner Documents and (ii) the Sponsor hereby
acknowledges and agrees that it has relinquished and has no rights to exercise
remedies with respect to the Mortgaged Property or the related Owner Documents
except as specifically provided under any Sponsor Documents and that with
respect thereto the Sponsor shall not exercise any such rights without the
prior written consent of Freddie Mac.

 

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

 

49

 

party to exercise or to refrain from
exercising any right or remedy available to it under any of the Sponsor
Documents.

 

ARTICLE VIII

 

PLEDGE,
SECURITY AND CUSTODY OF PLEDGED SECURITY COLLATERAL

 

Section 8.1            Pledged Security Collateral; Taxable Collateral.  To secure the payment to Freddie Mac in full
of all Obligations now or hereafter existing under this Agreement, the Sponsor
shall cause to be deposited with the Pledge Custodian all of the Class B
Certificates on the date of delivery of the Series Certificate
Agreements.  Subject to the provisions of
Section 8.18, the Sponsor hereby assigns and pledges to the Pledge
Custodian, and grants to the Pledge Custodian, for the benefit of Freddie Mac,
a continuing security interest in, and a lien on, all of the Sponsor’s right,
title and interest in and to the following property (collectively, the “Pledged
Security Collateral”):

 

(a)           all Purchased Bonds;

 

(b)           the Class B
Certificates issued pursuant to each Series Certificate Agreement;

 

(c)           all Pledged Class A
Certificates;

 

(d)           all interest and
other amounts payable on, and all rights with respect to, any Purchased Bonds, Class B
Certificates and Pledged Class A Certificates (including, without
limitation, all payments of principal and interest thereon); and

 

(e)           all proceeds of any
of the foregoing.

 

Section 8.2            Delivery of Pledged Security Collateral.  On the Closing Date, and at such time as a Class A
Certificate becomes a Pledged Class A Certificate or a Bond becomes a
Purchased Bond in accordance with a Series Certificate Agreement and this
Agreement, subject to and except as permitted by the provisions of Section 8.19,
the Sponsor shall be the beneficial owner of each of the Class B
Certificates, Pledged Class A Certificates and Purchased Bonds, as
applicable, which, regardless of the identity of the beneficial owner thereof,
shall be held by the Pledge Custodian subject to the security interest created
by the terms of this Agreement.  All
Pledged Security Collateral shall be deposited in the Custody Account (as
defined in Section 8.11 below).  The
Pledge Custodian shall cause the Purchased Bonds, the Class B Certificates
and the Pledged Class A Certificates, as applicable, to be registered in
the name of the Pledge Custodian or, if transfers are recorded in book-entry
form only, cause the appropriate records of the applicable financial
intermediary to reflect that the Pledge Custodian holds a security interest in
the Purchased Bonds, the Class B Certificates and the Pledged Class A
Certificates, as applicable, for the benefit of Freddie Mac.

 

Section 8.3            Amounts Received on Class B
Certificates and Pledged Class A Certificates.

 

(a)           Provided
that (i) no Advance has been made pursuant to any Series Certificate Agreement
and remains unreimbursed, (ii) all fees and any other amounts due and
owing to 

 

50

 

Freddie Mac under this Agreement have been paid and (iii) the
Pledge Custodian has not received a written notice from Freddie Mac of the
occurrence of a Termination Event, or notice of a Remedy Event involving a
monetary claim that has been reduced to judgment and that remains unreimbursed,
subject to the provisions of Sections 8.3(b) and 8.3(c) and the Series Certificate
Agreement, then the Pledge Custodian shall pay to the Sponsor or any Class B
Holders designated by the Sponsor pursuant to Section 8.19 within one (1) Business
Day of receipt all amounts received by the Pledge Custodian with respect to the
Class B Certificates, and to the Sponsor all amounts received by the
Pledge Custodian with respect to any Pledged Class A Certificates until
the Class B Certificates and all Pledged Class A Certificates are
released in accordance with the terms of this Agreement.

 

(b)           If
an Advance has been made pursuant to any Series Certificate Agreement and
remains unreimbursed as of the date due and payable, or if all fees and any
other amounts due and owing to Freddie Mac, or a Remedy Event involving a
monetary claim that has been reduced to judgment, have not been timely paid, or
if the Pledge Custodian receives a written notice from Freddie Mac of the
occurrence of a Termination Event under this Agreement, the Pledge Custodian
shall pay, first, to Freddie Mac within
one (1) Business Day of receipt such amounts received by the Pledge
Custodian with respect to the Class B Certificates and any Pledged Class A
Certificates as are equal to the amount of any such unreimbursed Advance or
other amounts due and owing to Freddie Mac under this Agreement and, second, subject to the provisions of
Section 8.3(c) and the Series Certificate Agreement, the
balance, if any, to the Sponsor (or any Class B Holders designated by the
Sponsor pursuant to Section 8.19) or, with respect to Pledged Class A
Certificates, the Sponsor, as applicable, until the Class B Certificates
and all Pledged Class A Certificates are released from the Custody Account
in accordance with the terms of this Agreement.

 

(c)           Before
making any payments to the Sponsor (or any Class B Holders designated by
the Sponsor as provided in Section 8.19) pursuant to this Section 8.3,
the Administrator shall confirm the aggregate amounts of the Freddie Mac Fee,
and the Remarketing Agent Fee paid directly, or caused to be paid, by the Sponsor
since the immediately preceding date on which payments were made to the Sponsor
(or any Class B Holders designated by the Sponsor as provided in Section 8.19)
pursuant to this Section 8.3 (the “Sponsor
Paid Expenses”).  For purposes of such confirmation, the
Administrator shall be entitled to rely on a statement setting forth such
Sponsor Paid Expenses (separately and in the aggregate) delivered by facsimile
by the Sponsor to the Pledge Custodian at least two (2) Business Days
prior to the date payments are to be made pursuant to this Section 8.3.  Notwithstanding any other provision of this
Agreement or the Series Certificate Agreement (including without
limitation Section 4.03(a)(viii) of the Series Certificate
Agreement), with respect to any Class B Certificate, distributions that
would otherwise be made to a permitted transferee of the Sponsor as provided in
Section 8.19 shall be reduced by an amount equal to the product of (i) the
Sponsor Paid Expenses and (ii) the ratio of the Current Certificate Balance
of such Class B Certificate, to the Aggregate Outstanding Class B
Certificate Balance (the “Allocable Expense Amount”), and such Allocable Expense
Amount shall be paid by the Pledge Custodian to the Sponsor.

 

Section 8.4            Amounts Received on Purchased Bonds.  (a)  The Pledge Custodian shall pay to
Freddie Mac within one (1) Business Day all amounts received by the Pledge
Custodian with respect to any Purchased Bonds relating to a Bond Purchase Loan
under Section 7.3(b) or received in connection with a Terminating
Mandatory Tender Date pursuant to Section 8.6, for 

 

51

 

credit to the
obligations of the Sponsor hereunder until such Purchased Bonds are released to
the Sponsor in accordance with the terms of Section 8.5(a) of this
Agreement.

 

(b)           The Pledge Custodian shall pay to
Freddie Mac within one (1) Business Day all amounts received by the Pledge
Custodian with respect to any Purchased Bonds held hereunder as a result of the
early termination of a Series Pool pursuant to Section 8.8(c) hereof  for credit to the obligations of the Sponsor
hereunder; provided if not needed to pay amounts then owed to Freddie Mac
hereunder, the Pledge Custodian shall release such amounts received to the
Sponsor.

 

Section 8.5            Release of Purchased Bonds.  (a)  If the Pledge Custodian has
received written notice from Freddie Mac that Freddie Mac has been fully
reimbursed by the Sponsor for all Obligations with respect to a Purchased Bond,
relating to a Bond Purchase Loan under Section 7.3(b) that no
Advances remain unreimbursed, that all fees and other amounts currently owing
to Freddie Mac have been paid, that no Termination Event exists hereunder, and
that no Remedy Event involving a monetary claim that has been reduced to judgment
and remains unreimbursed, exists hereunder, then the Pledge Custodian shall
release such Purchased Bond together with the proceeds thereof remaining in the
possession of the Pledge Custodian, if any, to the Sponsor.  No Purchased Bond held hereunder that relates
to a Series Certificate Agreement that has been terminated in connection
with a Terminating Mandatory Tender Date shall be released by the Pledge
Custodian (absent prior written direction from Freddie Mac) until the Pledge
Custodian has received written notice from Freddie Mac that all Obligations
under this Agreement have been satisfied and this Agreement has been
terminated.  The release of any such
Purchased Bond shall be free and clear of the security interest created by this
Agreement.

 

(b)           No Purchased Bond held hereunder as a
result of the early termination of a Series Pool pursuant to Section 8.8(c) shall
be released by the Pledge Custodian (absent prior written direction from
Freddie Mac) until the Pledge Custodian has received written notice from
Freddie Mac that all Obligations under this Agreement have been satisfied and
this Agreement has been terminated.  The
release of any such Purchased Bond shall be free and clear of the security
interest created by this Agreement.

 

Section 8.6            Release
of Class B Certificates and Pledged Class A Certificates.  If the Pledge Custodian has received written
notice from Freddie Mac that Freddie Mac has been fully reimbursed by the
Sponsor for all Obligations relating to any Available Remarketing Class A
Certificate, the Pledge Custodian shall release such Available Remarketing Class A
Certificate to the Administrator for delivery to the Sponsor or, if applicable,
in connection with a remarketing to the purchasers of such Pledged Class A
Certificates; provided, however, that in no event will a Pledged Class A
Certificate that is not an Available Remarketing Class A Certificate be
released from the pledge of this Agreement until the date of termination of the
pledge of all Class B Certificates pursuant to Section 8.18.  The Pledge Custodian shall not release any Class B
Certificates to the Sponsor (or any permitted transferee thereof under Section 8.19)
until the date of termination of the pledge of the Class B Certificates
pursuant to Section 8.18 unless the Pledge Custodian receives prior
written direction from Freddie Mac with respect to the release of all or a
portion of the Class B Certificates. 
The release of any Pledged Class A Certificate or Class B
Certificate, as applicable, shall be free and clear of the security interest
created by this Agreement.  If directed
in writing by Freddie Mac after a Termination Event or other event giving rise
to a Terminating Mandatory Tender Date under Section 13.01 of each Series 

 

52

 

Certificate Agreement, the Pledge Custodian
shall deliver Pledged Class A Certificates to the Administrator for
cancellation in exchange for the underlying Bonds related thereto as soon as
such underlying Bonds have been received by the Pledge Custodian from the
Administrator pursuant to Section 13.03 of each Series Certificate
Agreement.  Any such underlying Bonds so
received shall be held hereunder as Purchased Bonds and notice thereof shall be
provided to the Sponsor.

 

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

 

Section 8.8            Use of Proceeds Arising from Redemption of Class B Certificates;
Special Adjustment Events.

 

(a)           Except
as provided in Section 8.8(c) below, following the termination of any
Series Pool on a Series Expiration Date when other Series Pools
still remain in existence, at the direction of Freddie Mac, the Pledge
Custodian shall either liquidate such Bonds to fund a Special Adjustment Event
with respect to the remaining Series Pool(s) or direct the Administrator
to do so pursuant to Section 13.02 of the related Series Certificate
Agreement to effect a Special Adjustment Event. 
Such liquidation proceeds shall be applied by the Pledge Custodian,
along with any principal or redemption payment with respect to Class B
Certificates due to the funding of a Release Event under Section 7.3
hereof, after any payments described in Section 8.3(a) or (b) to
be made to Freddie Mac have been made, to effect the Special Adjustment Event
as provided in Section 7.02 of the related Series Pool(s) as
directed by Freddie Mac.

 

(b)           Pledged
Class A Certificates that are the result of a purchase of Class A
Certificates pursuant to this Section 8.8 shall be delivered to the Pledge
Custodian and pledged pursuant to the terms of this Agreement.

 

(c)           Notwithstanding
the foregoing provisions of this Section, the Sponsor by written notice given
to the Pledge Custodian prior to any liquidation of Bonds to fund a Special
Adjustment Event as provided in Section 8.8(a) above, may elect that
such liquidation not occur and instead that such Bonds be held hereunder as
Purchased Bonds pursuant to the provisions of Section 8.4(b) and Section 8.5(b).

 

Section 8.9            Ownership Restrictions.  Notwithstanding any provisions of this
Agreement, ownership by and release to the Sponsor (or any Class B Holder
designated under Section 8.19) of any Pledged Security Collateral as
described hereunder shall be in all respects subject to the provisions of any
documents restricting or governing transfers and ownership of such Pledged
Security Collateral.

 

Section 8.10         Representations and Warranties of the Sponsor to the
Pledge Custodian.  The Sponsor represents and warrants to the
Pledge Custodian on the Closing Date, that:

 

(a)           it is the legal and
beneficial owner of (and has full right and authority to pledge and assign) the
Class B Certificates, free and clear of all liens, security interests, 

 

53

 

options or other
charges or encumbrances (collectively, “Liens”) except Liens granted pursuant
to this Agreement; and

 

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

 

Section 8.11         Custody Account.  On or prior to the Closing Date, the Pledge
Custodian shall establish on its books and in its records the Custody
Account.  The Pledge Custodian shall
maintain the Custody Account until the termination of this Agreement.  At no time shall the Custody Account be
maintained on behalf of, or be payable to, any person other than Freddie
Mac.  Neither the Sponsor nor any Holder
of the Class B Certificates shall not have any right of withdrawal from
the Custody Account other than as provided herein.  No property other than Pledged Security
Collateral shall be deposited by the Pledge Custodian in the Custody Account.  Segregation of the Pledged Security
Collateral in the Custody Account from other property maintained with the
Pledge Custodian shall be accomplished by appropriate identification on the
Pledge Custodian’s books and records. 
The Pledge Custodian shall, at all times prior to the termination of
this Agreement, maintain a record of all Purchased Bonds, Class B
Certificates, Pledged Class A Certificates and other property in the
Custody Account separately identifying such Purchased Bonds, Class B
Certificates, Pledged Class A Certificates, or other property received
with respect thereto as being subject to the security interest granted to the
Pledge Custodian on behalf of Freddie Mac in this Agreement.  So long as the internal procedures set forth
in this Section are met by the Pledge Custodian, the Pledge Custodian may
hold the Pledged Security Collateral in its vaults or in a commingled account
(whether book-entry or otherwise) of the Pledge Custodian, as agent for its
customers, with any bank, central depository or clearing organization as the
Pledge Custodian’s subcustodian, in nominee name or otherwise.

 

Section 8.12         Appointment and Powers of
the Pledge Custodian.

 

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

 

(b)           The
Pledge Custodian shall have no duty to exercise any discretionary right,
remedy, power or privilege granted to it by this Agreement, or to take any
affirmative action 

 

54

 

under this Agreement, unless directed to do so by Freddie Mac in
writing, and shall not, without the prior written approval of Freddie Mac,
consent to any departure by the Sponsor from the terms of this Agreement, waive
any default on the part of the Sponsor under this Agreement or amend, modify,
supplement or terminate, or agree to any surrender of, this Agreement or the
Pledged Security Collateral; provided, that the Pledge Custodian shall not be
required to take any action that exposes the Pledge Custodian to personal
liability, or which is contrary to this Agreement or any other agreement or
instrument relating to the Pledged Security Collateral or applicable law.

 

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

 

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

 

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

 

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

 

Section 8.13         Successor Pledge Custodian.

 

(a)           If
Freddie Mac no longer acts as Pledge Custodian, if required by the successor
pledge custodian or Freddie Mac, the Sponsor and the successor pledge custodian
shall execute a new pledge, security and custody agreement that contains
substantially the same terms as Article VIII of this Agreement and which
is in form and substance satisfactory to Freddie Mac and the Sponsor.  The Pledge Custodian acting under this
Agreement may at any time resign by an instrument in writing addressed and
delivered to the Sponsor and, if applicable, Freddie Mac (provided, however,
that, if the Pledge Custodian (if other than Freddie Mac) is Administrator
under the Series Certificate Agreement, the Pledge Custodian must have
resigned as 

 

55

 

Administrator under the Series Certificate Agreement), and may be
removed at any time with or without cause by an instrument in writing duly
executed by or on behalf of Freddie Mac.

 

(b)           Freddie
Mac shall have the right to appoint a successor Pledge Custodian upon any such
resignation or removal by an instrument of substitution complying with the
requirements of applicable law, or, in the absence of any such requirements,
without formality other than appointment and designation in writing, at no
additional expense to the Sponsor.  Upon
the making and acceptance of such appointment, the execution and delivery by
such successor Pledge Custodian of a ratifying instrument pursuant to which
such successor Pledge Custodian agrees to assume the duties and obligations
imposed on the Pledge Custodian by the terms of this Agreement, and the
delivery to such successor Pledge Custodian of the Pledged  Security Collateral and documents and
instruments then held by the retiring Pledge Custodian, such successor Pledge
Custodian shall thereupon succeed to and become vested with all the estate,
rights, powers, remedies, privileges, immunities, indemnities, duties and
obligations by this Agreement granted to or conferred or imposed upon the
Pledge Custodian named in this Agreement, and any such appointment and
designation shall not exhaust the right to appoint and designate further
successor Pledge Custodians under this Agreement.  No Pledge Custodian shall be discharged from
its duties or obligations under this Agreement until the Pledged Security
Collateral and documents and instruments then held by such Pledge Custodian
shall have been transferred or delivered to the successor Pledge Custodian, and
until such retiring Pledge Custodian shall have executed and delivered to the
successor Pledge Custodian appropriate instruments assigning the retiring
Pledge Custodian’s security or other interest in the Pledged Security
Collateral to the successor Pledge Custodian. 
The retiring Pledge Custodian shall not be required to make any
representation or warranty in connection with any such transfer or assignment.

 

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

 

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

 

Section 8.15         [Reserved].

 

Section 8.16         No Additional Waiver Implied by One Waiver.  If any provision of this Article VIII is
breached by the Sponsor and thereafter waived by the Pledge Custodian, such
waiver shall be limited to the particular breach so waived and shall not be
deemed to waive any 

 

56

 

other breach
under this Article VIII; provided that no waiver of any breach or default
hereunder may be granted by the Pledge Custodian without the prior written
consent of Freddie Mac.  Any forbearance
by the Pledge Custodian to demand payment for any amounts payable under this Article VIII
shall be limited to the particular payment for which the Pledge Custodian
forbears demand for payment and will not be deemed a forbearance to demand any
other amount payable under this Article VIII.

 

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

 

Section 8.18         Termination.  The assignments, pledges and security
interests created or granted by this Article VIII shall terminate
contemporaneously with the termination of this Agreement, at which time the
Pledge Custodian shall reassign, without recourse to, or any warranty
whatsoever by the Pledge Custodian, and deliver to the Sponsor (or Class B
Holders designated by the Sponsor under Section 8.19), as applicable, all
Pledged Security Collateral and documents then in the custody or possession of
the Pledge Custodian, and, if requested by the Sponsor, shall execute and
deliver to the Class B Beneficial Owners in accordance with Sections 8.5
and 8.6, all Pledged Security Collateral and documents then in the custody or
possession of the Pledge Custodian, and, if requested by the Sponsor, shall
execute and deliver to the Sponsor for recording or filing in each office in
which any assignment or financing statement relative to the Pledged Security
Collateral or the agreements relating thereto, or any part thereof, shall have
been filed or recorded, a termination statement or release under applicable law
(including, if relevant, the U.C.C.) releasing the Pledge Custodian’s interest
therein, and such other documents and instruments as the Sponsor may reasonably
request, all without recourse to or any warranty whatsoever by the Pledge
Custodian, and at the cost and expense of the Sponsor.  Freddie Mac shall notify the Pledge Custodian
in writing of any such termination, and the Pledge Custodian shall be entitled
to rely upon such notice.

 

Section 8.19         Transfers.  Notwithstanding any other provision of this
Agreement or any other Sponsor Document, subject to the provisions of each Series Certificate
Agreement regarding (i) the delivery of an investor letter and (ii) the
requirement that any transfer of a beneficial ownership interest in the Class B
Certificates shall be made only in accordance with or subject to an exemption
from, the Securities Act of 1933, as amended, the Sponsor and any transferee
thereof shall be permitted to transfer any portion of its beneficial ownership
interest in Class B Certificates. 
Any beneficial ownership interest in a Class B Certificate
transferred, and all proceeds thereof, shall nonetheless remain subject to the
security interest created by this Agreement, and each transferee shall be
deemed to have agreed to each and every provision of this Agreement, including
without limitation (a) the assignment and pledge to the Pledge Custodian
and grant to the Pledge Custodian, for the benefit of Freddie Mac, of a
continuing security interest in and a lien on, all of its right, title and
interest in and to the Class B Certificates acquired and all proceeds
thereof, pursuant to Section 8.1 and (b) the appointment and powers
of the Pledge Custodian as collateral agent for Freddie Mac as set forth in
this Article VIII.  In addition, the
Pledge Custodian shall have no duty to ascertain the identity of any 

 

57

 

transferee of
a beneficial ownership interest in the Class B Certificates, and shall
make all payments with respect to any Class B Certificate that is
permitted to be paid to the Sponsor only to the Sponsor or a single entity
designated by the Sponsor in accordance with the written instructions
thereof.  The Pledge Custodian shall be
permitted to rely on and assume the accuracy of any such instructions.

 

ARTICLE
IX

 

MISCELLANEOUS

 

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

 

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

 

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

 

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

 

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

 

58

 

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

 

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

 

	
  Freddie Mac:

  	
  Federal Home
  Loan Mortgage Corporation

  
	
   

  	
  8100 Jones
  Branch Drive

  
	
   

  	
  McLean,
  Virginia 22102-3110

  
	
   

  	
  Attention:
  Director of Multifamily Loan Accounting

  
	
   

  	
  Facsimile:
  (703) 714-3273

  
	
   

  	
  Telephone:
  (703) 903-2000

  

 

	
  with a copy
  to:

  	
  Federal Home
  Loan Mortgage Corporation

  
	
   

  	
  8200 Jones
  Branch Drive

  
	
   

  	
  McLean,
  Virginia 22102-3110

  
	
   

  	
  Attention:
  Associate General Counsel – Negotiated

  
	
   

  	
  Transactions

  
	
   

  	
  Facsimile:
  (703) 903-3693

  
	
   

  	
  Telephone:
  (703) 903-2000

  
	
   

  	
   

  
	
  with a copy to:

  	
  Federal Home Loan Mortgage Corporation

  
	
   

  	
  8100 Jones Branch Drive

  
	
   

  	
  McLean, Virginia 22102

  
	
   

  	
  Attention: Director of Multifamily Loan Servicing

  
	
   

  	
  Facsimile: (703) 714-3003

  
	
   

  	
  Telephone:
  (703) 903-2000

  
	
   

  	
   

  
	
  Sponsor:

  	
  Centerline
  Sponsor 2007-1 Securitization, LLC

  
	
   

  	
  c/o
  Centerline Capital Group, Inc.

  
	
   

  	
  625 Madison
  Avenue

  
	
   

  	
  New York,
  New York 10022

  
	
   

  	
  Attention:
  John D’Amico

  
	
   

  	
  Facsimile:
  (212) 593-5796

  
	
   

  	
   

  
	
  with a copy
  to:

  	
  Greenberg
  Traurig, LLP

  
	
   

  	
  Two Commerce
  Square, Suite 2700

  
	
   

  	
  2001 Market
  Street

  
	
   

  	
  Philadelphia,
  PA 19103

  
	
   

  	
  Attention:
  Michael Lehr

  
	
   

  	
  Facsimile:
  (215) 988-7801

  

 

59

 

	
  Guarantor:

  	
  Centerline Guarantor LLC

  
	
   

  	
  c/o
  Centerline Capital Group Inc.

  
	
   

  	
  625
  Madison Avenue

  
	
   

  	
  New
  York, New York 10022

  
	
   

  	
  Attention: John D’Amico

  
	
   

  	
  Facsimile: (212) 593-5796

  
	
   

  	
  Telephone: (212) 588-2075

  
	
   

  	
   

  
	
  with a copy to:

  	
  Greenberg Traurig, LLP

  
	
   

  	
  Two Commerce Square, Suite 2700

  
	
   

  	
  2001 Market Street

  
	
   

  	
  Philadelphia, PA 19103

  
	
   

  	
  Attention: Michael Lehr

  
	
   

  	
  Facsimile: (215) 988-7801

  
	
   

  	
   

  
	
  Servicer:

  	
  Centerline Mortgage
  Capital Inc.

  
	
   

  	
  c/o
  Centerline Capital Group Inc.

  
	
   

  	
  625
  Madison Avenue

  
	
   

  	
  New
  York, New York 10022

  
	
   

  	
  Attention: John D’Amico

  
	
   

  	
  Facsimile: (212) 593-5796

  
	
   

  	
  Telephone: (212) 588-2075

  
	
   

  	
   

  
	
  with a copy to:

  	
  Greenberg Traurig, LLP

  
	
   

  	
  Two Commerce
  Square, Suite 2700

  
	
   

  	
  2001 Market
  Street

  
	
   

  	
  Philadelphia,
  PA 19103

  
	
   

  	
  Attention:
  Michael Lehr

  
	
   

  	
  Facsimile:
  (215) 988-7801

  

 

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

 

60

 

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

 

Section 9.9            Assignments; Transfers;
Third-Parties Rights.  The Sponsor shall not assign this Agreement,
or delegate any of its obligations hereunder, without the prior written consent
of Freddie Mac.  This Agreement may not
be transferred in any respect without the prior written consent of Freddie
Mac.  Freddie Mac may not assign its
interest in this Agreement to any entity without the prior written consent of
the Sponsor (unless a Termination Event has occurred and is continuing in which
case such consent shall not be required). 
Nothing in this Agreement shall confer any right upon the owner or
holder of any Certificate or upon any other Person other than the parties
hereto and their successors and permitted assigns.

 

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

 

Section 9.11         Limitation on Personal Liability.

 

(a)           Except
as otherwise provided in Section 9.11(b), the Sponsor shall have no
personal liability under this Agreement or any other Sponsor Document for the
payment of the payment obligations or for the performance of any other obligations
of the Sponsor under the Sponsor Documents, and Freddie Mac’s only recourse for
the satisfaction or performance of the Obligations shall be Freddie Mac’s
exercise of its rights and remedies with respect to the UCC Collateral and any
other collateral held by Freddie Mac as security for the Obligations.

 

(b)           The
Sponsor shall be personally liable to Freddie Mac for its damages, losses or
expenses, as applicable resulting from any of the following: (1) fraud or
written material misrepresentation by the Sponsor or Guarantor or any officer,
director, partner, member, manager or employee of the Sponsor, Guarantor in
connection with the application for or creation of the Obligations or any
request for any action or consent by Freddie Mac, (2) any costs and expenses
incurred by Freddie Mac in connection with the collection of any amount for
which the Sponsor is personally liable under this Section, including fees and
out of pocket expenses of attorneys and expert witnesses and the costs of
conducting any independent audit of the Sponsor’s or Guarantor’s books and
records to determine the amount for which the Sponsor has personal liability; (3) the
Sponsor’s failure to perform its obligations under Section 2.4(c) or
2.4(d); and (4) the breach of any corporate representation or warranty of
the Sponsor set forth in Section 2.2.

 

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

 

61

 

any rights against any guarantor or pursued any other rights available
to Freddie Mac under this Agreement, any other Sponsor Document or applicable
law.

 

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

 

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

 

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

 

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

 

Section 9.16         Waiver of Claims.  IN ORDER TO INDUCE FREDDIE MAC TO EXECUTE AND
DELIVER THE SERIES CERTIFICATE AGREEMENT, THE SPONSOR HEREBY REPRESENTS AND
WARRANTS THAT IT HAS NO CLAIMS, SET-OFFS OR DEFENSES AS OF THE CLOSING DATE IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR IN
CONNECTION WITH ANY OF THE OTHER SPONSOR DOCUMENTS.  TO THE EXTENT ANY SUCH CLAIMS, SET-OFFS OR
DEFENSES MAY EXIST, WHETHER KNOWN OR UNKNOWN, THEY ARE EACH HEREBY WAIVED
AND RELINQUISHED IN THEIR ENTIRETY.

 

Section 9.17         Waivers of Jury Trial.  THE SPONSOR
AND FREDDIE MAC EACH (A) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY
WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS AGREEMENT OR THE RELATIONSHIP 

 

62

 

BETWEEN THE
SPONSOR AND FREDDIE MAC AS CREDIT FACILITY PROVIDER, LIQUIDITY FACILITY
PROVIDER, PLEDGE CUSTODIAN AND ADMINISTRATOR THAT IS TRIABLE OF RIGHT BY A JURY
AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO
THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF
COMPETENT LEGAL COUNSEL.

 

[Signatures follow]

 

63

 

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

 

	
   

  	
  FEDERAL HOME LOAN MORTGAGE

  
	
   

  	
  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ W. Kimball Griffith

  
	
   

  	
   

  	
  W. Kimball Griffith

  
	
   

  	
   

  	
  Vice President, Multifamily Affordable

  
	
   

  	
   

  	
  Housing Production & Investments

  

 

 

[SIGNATURE
PAGE TO OSPREY TEBS REIMBURSEMENT, PLEDGE AND SECURITY 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

  

 

 

[COUNTERPART SIGNATURE
PAGE TO OSPREY TEBS REIMBURSEMENT, PLEDGE AND SECURITY AGREEMENT]

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