CSG ADVISORS by yaofenjin

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									                                                             1720 Windward Concourse, Suite 380
                                                                      Alpharetta, Georgia 30005
                                                                     Telephone: (678) 319-1906
Atlanta • Dallas • New York • San Francisco                           Facsimile: (678) 319-1901
                                                                   E-mail: bdetjen@csgadvisors.com


                                         MEMORANDUM

TO:             THDA Bond Finance Committee

FROM:           Robert J. Detjen

SUBJECT:        Negotiated Pricing Results

RE:             Tennessee Housing Development Agency
                Housing Finance Program Bonds
                $40,000,000 Issue 2009-A1 (Non-AMT)

DATE:           December 3, 2009


THDA’s Issue 2009-A1 Bonds were priced on Wednesday, December 2, 2009 via negotiated
sale led by Morgan Keegan & Company, as senior book-running co-manager, assisted by RBC
Capital Markets and Merrill Lynch & Co, rotating senior co-managers, and by Citi, Raymond
James & Associates, Inc, M R Beale & Company, and Duncan-Williams, Inc, co-managers. The
underwriters were supported by an eight (8) member selling group, Edward D. Jones, Inc, FTN
Financial Capital Markets, Harvestons Securities, Inc. J.J.B. Hilliard W.L. Lyons, LLC, Mesirow
Financial Inc , Robert W. Baird & Co., Inc., Stephens, Inc., and Wiley Brother-Aintree Capital,
LLC, all of whom placed orders for bonds.

Bond Market Trends & Tone

Leading Up to Pricing: On Tuesday, December 1, Treasury 10-year note prices declined for the
first time in six days as stocks rose and Dubai World said it was in constructive debt
restructuring negotiations, reducing demand for the relative safety of government bonds.
Treasury yields rose from within four basis points of their lowest level in almost two months as
the ISM index of new orders improved to 60.3 from 58.5. By late Tuesday, the yield on the
benchmark 10-year Treasury note rose .07% to 3.27%. The 30-year bond was 4.26% and the 2-
year Treasury was yielding 0.66%.

Municipal & Housing Supply: The municipal bond market was firm, in spite of weekly supply
of $6.5 billion and 30-day visible supply of $11 billion for the shortened month of December.
As a result of Treasury’s New Issue Bond Program (“NIBP”) for HFAs, more housing bonds
were expected to be priced to satisfy the 40% Market Bond requirement of the program during
the first three weeks of December than in any previous month since September, 2008. Going
into the pricing, Georgia, Massachusetts and Pennsylvania HFAs were also completing their
pricings of over $172 million of single family housing bonds. In addition New York HFA also
was pricing $70.8 million of multifamily housing bonds this week.

Demand for HFA mortgage loans peaked in October and November largely attributable to the
then expiring federal homebuyer tax credit. With an expected normal slower holiday season,
home purchases are expected to increase again at least through mid-2010 in response to the
extension of the federal homebuyer tax credit. Lower mortgage rates resulting from the NIBP
are expected to keep HFA production strong through 2010.

During Retail Pricing – Wednesday, December 2nd: Treasury prices fell as the Federal Reserve
Bank of Richmond indicated that they believed the U.S. economy has bottomed and economic
conditions were improving modestly. The Fed’s Beige Book was mixed, but showing strengths
in pockets of the country and areas of the economy.

The yield on the benchmark 10-year note fell slightly to 3.28% at mid-day after having risen to
3.32% earlier and finally closed at 3.31% on Wednesday. The 30-year bond yield fell slightly to
4.25%. The 2-year note yield rose to 0.72%. The municipal market was slightly firmer.

Mortgage rates

Mortgage rates have remained low, although rates have increased since their lowest levels
following the administration’s $1.1 trillion program to purchase Fannie Mae/Freddie Mac debt
and mortgage securities. According to HSH Associates, a publisher of mortgage information,
national mortgage rates averaged 5.33% on conforming and nonconforming 30-year fixed rate
loans as of last Friday. Mortgage rates in Tennessee for a 30-year FHA loan with no points or
origination fees and without down payment assistance have interest rates averaging 5.00% and
APRs of approximately 5.60%.

Marketing Strategy

Morgan Keegan solicited price views from the co-managers on Tuesday and prepared a
recommended retail pricing scale based on those views and market conditions. Morgan Keegan
recommended offering all of the bonds, including the serial bonds maturing on 1/1/11 through
7/1/21 and both intermediate term bonds maturing in 2024 and 2027. After some discussion,
THDA agreed to the proposed retail scale.

Morgan Keegan discussed the market conditions and reported current offered yields for Georgia,
Massachusetts and Pennsylvania HFAs. THDA also confirmed the Aa2 rating on the Bonds by
Moody’s.

The retail order period commenced at 8:30 am CST and was scheduled to run until 3:30 pm CST.
By late morning, Morgan Keegan reported oversold orders in the early serial maturities and
proposed not accepting additional orders on these maturities to redirect attention on the bonds
with larger unsold balances. THDA concurred with Morgan Keegan’s recommendation.

Wrap Up
At the end of the retail order period, Morgan Keegan reported orders for over $65 million of
bonds from among all of the co-managers and selling group, with numerous maturities oversold
and balances of only $3.3 million remaining on others. Based on the strong retail order flow,
Morgan Keegan proposed ending the order period without offering the relatively small unsold
balances to institutional investors since the balances were so small there was not likely to be
much institutional interest. In addition, Morgan Keegan proposed adjusting yields downward
0.05% to 0.10% on the first six serial bonds, and downward 0.05% on the serial bonds maturing
in 2016, 2020 and 1/1/2021. The 2027 par term bonds were also slightly oversubscribed but
after some discussion of market conditions and order flow, THDA concurred along with CSG’s
recommendation, that the yields on these bonds remain unchanged. Morgan Keegan agreed on
behalf of the co-managers to underwrite the unsold balance of approximately $3.3 million with
no change in the offered yields.

NIBP Bonds

On December 1, THDA also locked the interest rate on the NIBP Bonds, including the
$60,000,000 of Issue 2009-A2 bonds being issued concurrently with Issue 2009-A1, and the
$300,000,000 of Issue 2009-B (Taxable) which will be escrowed. December 1st was the first
date these bonds could be priced and THDA was fortunate in that the yield was established based
on the constant maturity 10-year Treasury note as of the close of business on November 30,
which was 3.21%, resulting in a long term bond yield of 3.96% on all $360 million of THDA’s
NIBP Bonds. The Issue 2009B Bonds will bear money market yields equivalent to the
investment earnings on their proceeds while escrowed and will only step up to the 3.96% yield
after conversion during 2010. Since December 1, the yield on the 10-year Treasury has risen to a
high today of 3.39%, largely attributable to the improving situation in Dubai and signs the
economy is improving.

Issuance Costs and True Interest Cost (TIC)

The total proposed underwriter discount, including out-of-pocket expenses and underwriter
counsel fees for the Issue 2009-A1 Bonds is $349,326.36 ($8.73/$1,000 of bonds), which is
comprised of $257,231.25 ($6.43/$1,000 of bonds) for takedown, $60,000.00 ($1.50/$1,000 of
bonds) for management fee (including $30,000 proposed for services rendered in connection
with the NIBP bonds as Special Advisor) and $32,095.11 ($0.81/$1,000 of bonds) for out of
pocket expenses, including underwriters counsel. CSG believes that some increment to the
normal management fee is warranted given the additional services performed by the Special
Advisor in connection with assisting to establish and implement the NIBP bond portion of this
transaction.

The overall gross TIC (inclusive of underwriter discount) for the Issue 2009-A1 and 2009-A2
(Program) Bonds at the proposed pricing is 3.969995% (versus 4.229466% for 2009-2). The
overall gross TIC net of underwriters discount for Issue 2009-A Bonds is 3.998426% (versus
4.314055% for 2009-2). The bond yield at 100% FHA prepayments is 3.950771% (versus
4.058666% for 2009-2) and the average full spread mortgage rates are approximately 4.90%,
5.20% and 5.50%, respectively (versus 5.04%, 5.34% and 5.64% for 2009-2), assuming 40%
Great Rate, 10% Great Advantage and 50% Great Start Mortgage Loans. THDA expects to
originate mortgage loans at rates of 5.00%, 5.30%, and 5.60%, respectively, and originate
approximately $2.3 million of New Start Loans at a mortgage rate of 0%.

Given the current interest rate market, and based on comparable housing bonds priced in the last
two weeks and to date this week, THDA’s bonds are priced fairly. CSG recommends accepting
the pricing as proposed.
    THDA Issue 2009-A1
    Final Pricing Comparables (Non-AMT)

SALE DATE       December 2, 2009             December 2, 2009             December 2, 2009              December 2, 2009              December 1, 2009              November 24, 2009
ISSUER           Tennessee H.D.A.             Pennsylvania HFA               Mass Housing              New York State HFA                 Georgia HFA              Rhode Island Housing
AMOUNT             $40,000,000                  $100,000,000                 $60,000,000                   $70,795,000                   $12,000,000                   $30,000,000
SERIES                2009-A1                     2009-106                  Series 146/147                    2009D                          2009B                          1-A
PROGRAM      Single Family / Negotiated   Single Family / Negotiated   Single Family / Negotiated    Multi-Family / Negotiated     Single Family / Negotiated    Single Family / Negotiated
RATING(S)            Aa2 / - / -                 Aa2 / AA+ / -                Aa2 / AA / -                   Aa2 / - / -                   - / AAA / -                   Aa2 / - / -
TAX STATUS           Non-AMT                      Non-AMT                      Non-AMT                       Non-AMT                       Non-AMT                       Non-AMT

                             Spread                       Spread                       Spread                        Spread                        Spread                        Spread
 MATURITY      Coupon        to MMD        Coupon         to MMD        Coupon         to MMD         Coupon         to MMD         Coupon         to MMD          Coupon        to MMD
   2010                                   0.50 / 0.65       +37           0.55           +27        0.45 / 0.60        +32         0.35 / 0.50       +20            0.50           +20
   2011      0.90 / 1.10      +51         1.00 / 1.15       +56        1.00 / 1.10       +51        1.00 / 1.15*       +56         1.00 / 1.10       +49         0.90 / 1.10       +49
   2012      1.35 / 1.45      +62         1.40 / 1.50       +67        1.45 / 1.55       +72        1.40 / 1.55*       +72         1.35 / 1.45       +60         1.35 / 1.45       +60
   2013       1.85 / 1.95     +88         1.90 / 2.00       +93        1.85 / 1.95       +88        1.85 / 1.95        +88         1.80 / 1.90       +76        1.875 / 1.90       +74
   2014       2.25 / 2.35     +94         2.25 / 2.35       +94        2.25 / 2.35       +94           2.25            +84         2.25 / 2.30       +80        2.25 / 2.375       +84
   2015       2.65 / 2.75     +96         2.70 / 2.80       +101       2.70 / 2.80       +101       2.65 / 2.75        +96         2.65 / 2.75       +88        2.625 / 2.75       +82
   2016       2.95 / 3.05     +99         3.10 / 3.20       +114       3.00 / 3.10       +104          2.95            +89         2.90 / 3.00       +88         3.00 / 3.20       +103
   2017       3.35 / 3.45     +112        3.40 / 3.50       +117          3.40           +107       3.20 / 3.25        +92         3.15 / 3.25       +86        3.375 / 3.625      +121
   2018       3.60 / 3.70     +115        3.70 / 3.75       +120          3.70           +115       3.45 / 3.50        +95         3.40 / 3.50       +89            3.80           +116
   2019       3.80 / 3.85     +112           3.90           +117          3.85           +112          3.70            +97         3.60 / 3.70       +92            3.875          +107
   2020          3.95         +105           4.00           +110          4.00           +110          3.85            +95                                          3.95           +98
   2021      4.10 / 4.125     +110                                                                     3.90            +88                                          4.125          +101
   2022
   2023
   2024         4.375         +114           4.50          +126                                         4.30          +106            4.25           +94        4.375 / 4.375*    +104
   2025                                                                   4.60          +128
   2026
   2027         4.625         +115                                                                                                                                  4.625         +106
   2028                                      4.80          +123           4.80          +123
   2029                                                                                                 4.65           +99           4.625           +90
   2030
   2031
   2032
   2033
   2034
   2035                                                                                                 4.95           +85
   2036
   2037
   2038
   2039
   2040                                                                                                 5.00           +80
   2041
   2045                                                                                                 5.20          +100
   2048
                                                                                                    * Special term bonds in 2011                                Sold at a discount with a
                                                                                                    and 2012 yield 1.30% and                                    4.25% coupon to yield 4.375.
                                                                                                    1.60%, respectively.


 MKT INDEX    BBI / RBI 5.39% / 5.03%     BBI / RBI 5.39% / 5.03%      BBI / RBI 5.39% / 5.03%        BBI / RBI 5.39% / 5.03%      BBI / RBI 5.46% / 5.03%        BBI / RBI 5.50% / 5.04%
 SEN MGR          Morgan Keegan               Barclays Capital             Morgan Stanley                    JP Morgan                 Morgan Keegan                    Merrill Lynch
    THDA Issue 2009-A1
    Final Pricing Comparables (Non-AMT)

SALE DATE       December 2, 2009             November 17, 2009            November 5, 2009              November 4, 2009              November 4, 2009               October 28, 2009
ISSUER           Tennessee H.D.A.               Virginia H.D.A.             Minnesota HFA                New Mexico HFA                 Nevada Housing              New Jersey HMFA
AMOUNT             $40,000,000                  $51,750,000                  $123,790,000                  $50,000,000                   $22,500,000                   $25,000,000
SERIES                2009-A1                       2009-A                      2009DE                         2009E                         2009B                        2009GG
PROGRAM      Single Family / Negotiated   Single Family / Negotiated   Single Family / Negotiated    Single Family / Negotiated    Single Family / Negotiated    Single Family / Negotiated
RATING(S)            Aa2 / - / -                 Aaa / AAA / -                Aa1 / AA+ / -                  - / AAA / -                   - / AAA / -                  Aa2 / AA / -
TAX STATUS           Non-AMT                       Non-AMT                     Non-AMT                       Non-AMT                       Non-AMT                       Non-AMT

                             Spread                       Spread                       Spread                         Spread                       Spread                        Spread
 MATURITY      Coupon        to MMD        Coupon         to MMD        Coupon         to MMD         Coupon          to MMD        Coupon         to MMD         Coupon         to MMD
   2010                                                                                                                               0.80           +43            1.00           +63
   2011      0.90 / 1.10      +51                                      1.20 / 1.25      +55          1.25 / 1.35       +65         1.15 / 1.25       +55        1.75 / 1.875       +118
   2012      1.35 / 1.45      +62                                      1.60 / 1.75      +70          1.65 / 1.75       +70         1.70 / 1.75       +70        2.125 / 2.25       +120
   2013       1.85 / 1.95     +88                                      2.00 / 2.05      +61          2.10 / 2.15       +71         2.20 / 2.25       +81        2.625 / 2.75       +131
   2014       2.25 / 2.35     +94                                      2.50 / 2.55      +72          2.55 / 2.60       +75         2.60 / 2.65       +80        3.00 / 3.125       +127
   2015       2.65 / 2.75     +96                                      2.95 / 3.00      +79             3.05           +82            3.10           +87            3.25           +100
   2016       2.95 / 3.05     +99                                         3.375         +92             3.40           +92            3.50           +102           3.50           +99
   2017       3.35 / 3.45     +112                                        3.65          +96             3.70           +101           3.75           +106          3.625           +91
   2018       3.60 / 3.70     +115           3.65           +92           3.875         +100            3.875          +100           3.95           +107           4.00           +110
   2019       3.80 / 3.85     +112           3.80           +91           3.95          +92             3.95           +92            4.05           +102          4.125           +109
   2020          3.95         +105                                        4.05          +89             4.125          +97
   2021      4.10 / 4.125     +110                                     4.15 / 4.20      +94
   2022                                      4.30          +106
   2023                                                                                                 4.50           +110
   2024         4.375         +114           4.50          +112                                                                       4.50           +103          4.375           +93
   2025                                      4.60          +114           4.55          +100
   2026                                      4.70          +116
   2027         4.625         +115           4.75          +113
   2028                                                                                                 4.75            +99
   2029                                      4.80          +100           4.90          +108            4.80            +98           4.80           +98
   2030                                                                                                                                                            4.875          +102
   2031
   2032
   2033
   2034                                                                   5.05           +90            5.00            +85           5.00           +85
   2035                                                                                                                                                             5.00           +87
   2036
   2037
   2038
   2039                                                                                                                           PPAC 3.80*         +199           5.05*          +87
   2040                                                                   5.10           +86        PPAC 3.95*         +187          5.10            +87
   2041
   2045
   2048                                                                                                                                5.25          +102
                                                                                                    * Premium PAC yielding        * Premium PAC yielding        *Sold at Discount with 5.00%
                                                                                                    3.95%, 5.30% coupon,          3.80%, 4.50% coupon,          Coupon to yield 5.05%.
                                                                                                    $106.66 price, 5.6 yr A/L     $103.028 price, 4.9 yr A/L
                                                                                                    from 85%-400% PSA.            from 75%-400% PSA.

 MKT INDEX    BBI / RBI 5.39% / 5.03%     BBI / RBI 5.53% / 5.02%      BBI / RBI 5.44% / 5.05%        BBI / RBI 5.41% / 4.95%       BBI / RBI 5.41% / 4.95%       BBI / RBI 5.05% / 4.87%
 SEN MGR          Morgan Keegan               Barclays Capital          RBC Capital Markets               George K. Baum                   JP Morgan                    Merrill Lynch
THDA Recent Pricings:
 2008-4 through 2009-A1

SALE DATE           December 3, 2009                   August 27, 2009                       May 12, 2009                December 4, 2008
ISSUER                   THDA                              THDA                                 THDA                          THDA
SERIES                  2009-A1                            2009-2                               2009-1                        2008-4
RATING(S)               Aa2 / - / -                      Aa1 / AA+                            Aa1 / AA+                      Aa2 / AA
AMOUNT                $40,000,000                       $75,000,000                          $50,000,000                   $30,000,000
TAX STATUS             Non-AMT                           Non-AMT                              Non-AMT                       Non-AMT

                                Spread                              Spread                             Spread                          Spread
  MATURITY      Coupon          to MMD            Coupon            to MMD           Coupon            to MMD        Coupon            to MMD

    2009
    2010                                           0.90               +50           0.75 / 1.00             +32    2.50 / 3.125         +103
    2011       0.90 / 1.10        +51           1.15 / 1.30           +59           1.70 / 1.85             +77    3.20 / 3.30          +96
    2012       1.35 / 1.45        +62           1.65 / 1.75           +62           2.10 / 2.15             +87    3.60 / 3.70          +99
    2013       1.85 / 1.95        +88           2.15 / 2.20           +74           2.35 / 2.40             +89    3.80 / 4.00          +105
    2014       2.25 / 2.35        +94              2.55               +74           2.70 / 2.75             +87    4.05 / 4.10          +95
    2015       2.65 / 2.75        +96              2.95               +90           3.00 / 3.10             +91    4.25 / 4.30          +94
    2016       2.95 / 3.05        +99              3.15               +84           3.30 / 3.35             +101       4.50             +89
    2017       3.35 / 3.45        +112             3.45               +89           3.55 / 3.60             +106       4.75             +88
    2018       3.60 / 3.70        +115             3.70               +94           3.75 / 3.80             +106      4.875             +78
    2019       3.80 / 3.85        +112             3.90               +95          3.875 / 3.90             +99
    2020          3.95            +105             4.00               +90                                             5.50               +94
    2021      4.10 / 4.125        +110             4.15               +92
    2022                                                                                                              5.875             +105
    2023
    2024         4.375            +114             4.55               +100
    2025                                                                                                              6.00               +92
    2026                                                                              4.625                 +101
    2027         4.625            +115             4.70               +88
    2028                                                                                                              6.125              +87
    2029                                                                              5.00                  +88
    2030                                        PPAC 3.95*            +228
    2031
    2031
    2032
    2033
    2034
    2035
    2036
    2037
    2038
                                             * Premium PAC yielding 3.95%,
                                             5.00% coupon, $104.33 price, 4.6 yr
                                             A/L from 75%-400% PSA.


 MKT INDEX     BBI / RBI     5.39% / 5.03%       BBI / RBI        5.30% / 5.62%     BBI / RBI      5.17% / 5.57%    BBI / RBI        6.73% / 6.17%
 SEN MGR             Morgan Keegan                      Merrill Lynch                  RBC Capital Markets                 Merrill Lynch
TENNESSEE HOUSING DEVELOPMENT AGENCY
SUMMARY OF RETAIL ORDERS
2008-1 THROUGH 2009-A1

RETAIL ORDERS:                                                                                                           (in thousands)
                                          2009-A1         2009-2         2009-1        2008-4        2008-3       2008-2        2008-1
Merrill Lynch & Co.                   $     5,835 $      18,190 $        9,655 $       6,880 $       2,070 $      2,700 $        5,405
Morgan Keegan & Co., Inc.                  21,400        22,255         15,080         5,800        19,205        4,110         23,630
RBC Capital Markets                         4,250         5,210         38,100
Citigroup                                   9,430        11,570          5,170         4,195
MR Beal & Company                           1,000           500          2,000
Raymond James & Associates                  3,050         3,400          2,935
Duncan-Williams, Inc.                       3,705        14,085          3,790         2,315          4,535         530          4,085

Edward D. Jones                             3,540          1,835         1,840         2,260
FTN Financial Capital Markets               1,150          4,400         2,680             50         6,015        2,125         5,840
Harvestons Securities Inc                   3,000                        1,200           -              -            -
J.J.B Hilliard W.L. Lyons                   1,245          3,020         2,770         1,645          3,485        2,615         5,115
Mesirow Financial Inc.                      1,050
Robert W. Baird & Co., Inc.                 2,115
Stephens, Inc.                              1,175          4,350           650         1,100         2,195          160            460
Wiley Bros-Aintree Capital, LLC             3,380          8,910         8,445         5,015        10,685          505          5,840

Banc of America                                                                        2,540
Fidelity Capital Markets                                                                 100
Fifth Third Securities, Inc.                                                             -              -            -             620
SunTrust Capital Markets                                                                              2,615          -           2,850
UBS Securities LLC                                                                                                               4,150

Total Retail Orders                   $    65,325   $    97,725    $    94,315   $    31,900    $   50,805    $   12,745    $   57,995

Bonds Offered Retail:                 $    40,000 $      62,910 $       50,000 $      30,000 $      51,555 $      39,805 $      60,000
Orders as a % of Bonds Offered:            163.3%        155.3%         188.6%        106.3%         98.5%         32.0%         96.7%


ORDERS AS A PERCENTAGE OF TOTAL UNDERWRITERS
                                          2009-A1         2009-2        2009-1         2008-4        2008-3       2008-2         2008-1
Merrill Lynch & Co.                          8.9%          18.6%         10.2%          21.6%          4.1%        21.2%           9.3%
Morgan Keegan & Co., Inc.                   32.8%          22.8%         16.0%          18.2%         37.8%        32.2%          40.7%
RBC Capital Markets                          6.5%           5.3%         40.4%
Citi                                        14.4%          11.8%          5.5%         13.2%
MR Beal & Company                            1.5%           0.5%          2.1%
Raymond James & Associates                   4.7%           3.5%          3.1%
Duncan-Williams, Inc.                        5.7%         14.4%           4.0%           7.3%          8.9%         4.2%          7.0%

Edward D. Jones                              5.4%           1.9%          2.0%           7.1%
FTN Financial Capital Markets                1.8%           4.5%          2.8%           0.2%         11.8%        16.7%         10.1%
Harvestons Securities Inc                    4.6%                         1.3%           0.0%          0.0%         0.0%
J.J.B Hilliard W.L. Lyons                    1.9%           3.1%          2.9%           5.2%          6.9%        20.5%          8.8%
Mesirow Financial Inc.                       1.6%
Robert W. Baird & Co., Inc.                  3.2%
Stephens, Inc.                               1.8%           4.5%          0.7%          3.4%           4.3%         1.3%          0.8%
Wiley Bros-Aintree Capital, LLC              5.2%           9.1%          9.0%         15.7%          21.0%         4.0%         10.1%

Banc of America                                                                          8.0%
Fidelity Capital Markets                                                                 0.3%
Fifth Third Securities, Inc.                                                             0.0%          0.0%         0.0%          1.1%
SunTrust Capital Markets                                                                               5.1%         0.0%          4.9%
UBS Securities LLC                                                                                                                7.2%

                                           100.0%        100.0%         100.0%        100.0%          94.9%       100.0%         87.9%

Notes:
Co-Managers
Senior Managers
Book-Running Senior Manager
         Indicates the firm was not an Underwriter or Selling Group member for that particular bond issue.
                 A RESOLUTION OF THE BOND FINANCE COMMITTEE OF THE
                      TENNESSEE HOUSING DEVELOPMENT AGENCY
                             PROVIDING FOR THE SALE OF
                            HOUSING FINANCE PROGRAM BONDS
                               $40,000,000 ISSUE 2009-A1 (Non-AMT)
                               $60,000,000 ISSUE 2009-A2 (Non-AMT)
                                $300,000,000 ISSUE 2009-B (Taxable)
                                          December 3, 2009
       WHEREAS, the Board of Directors of the Tennessee Housing Development Agency (“THDA”)
adopted a resolution titled “General Housing Finance Resolution” on November 19, 2009 (the “2009
General Resolution”); and
        WHEREAS, the Bond Finance Committee (the “Committee”) of THDA approved a Plan of
Financing on November 18, 2009 (the “Plan of Financing”) with respect to the issuance and sale of
Housing Finance Program Bonds, Issue 2009-A and Issue 2009-B under the 2009 General Resolution (the
“Bonds”) in an aggregate principal amount not to exceed $400,000,000, with the exact amount to be
determined upon the recommendation of the Financial Advisor, Executive Director and the Secretary of
the Bond Finance Committee and approved by THDA’s Bond Counsel and the Committee; and
        WHEREAS, THDA adopted a resolution authorizing the issuance and sale of the Bonds (the
“Supplemental Resolution”) on November 19, 2009, pursuant to the Plan of Financing and based upon an
appropriate determination of the Housing Cost Index; and
        WHEREAS, the 2009 General Resolution and the Supplemental Resolution provide for the terms
of the Bonds, including certain terms to be determined or modified by the Committee prior to the sale of
the Bonds in a manner consistent with the 2009 General Resolution and the Supplemental Resolution as
may be determined to be necessary or convenient to better achieve the purposes of the Tennessee Housing
Development Agency Act or otherwise determined to be in the best interest of THDA; and
        WHEREAS, pursuant to the Plan of Financing, the Executive Director of THDA and
the Assistant Secretary of the Bond Finance Committee have prepared for a negotiated sale of the Issue
2009-A1 Bonds and a private placement of the Issue 2009-A2 Bonds and the Issue 2009-B Bonds
pursuant to the U.S. Treasury New Issue Bond Program (“NIBP”); and
        WHEREAS, the Committee has determined to issue and sell the Issue 2009-A1 Bonds by
negotiated sale to Morgan Keegan & Company, Inc. (“Morgan Keegan”) and to issue and sell the Issue
2009-A2 Bonds and the Issue 2009-B Bonds by private placement to Federal Home Loan Mortgage
Corporation and Federal National Mortgage Association, respectively, on the terms and conditions set
forth herein and, as authorized by THDA, to modify all relevant documents accordingly; and
         WHEREAS, the Preliminary Official Statement dated November 24, 2009, was prepared and
distributed; and
        WHEREAS, all consents, proceedings and approvals necessary for the issuance, sale and delivery
of the Bonds, respectively, other than those of the Committee have been taken or received.
     NOW, THEREFORE, BE IT RESOLVED BY THE BOND FINANCE COMMITTEE OF THE
TENNESSEE HOUSING DEVELOPMENT AGENCY:
   1.    The Committee, as authorized by THDA on November 19, 2009, hereby amends and
         supplements the 2009 General Resolution and ratifies, confirms and approves the 2009 General
         Resolution, as amended and supplemented, in the form attached hereto as Exhibit A, subject to
         such additional changes necessary in the opinion of the Assistant Secretary of the Committee
         and General Counsel of THDA, with the approval of Bond Counsel, to conform the terms
         thereof to rating agency requirements.
   2.    The Committee hereby ratifies, confirms and approves the preparation, distribution and
         publication of the Preliminary Official Statement dated November 24, 2009.
3.    The Committee hereby ratifies, confirms and approves the issuance of the Issue 2009-A1 Bonds
      as long term, fixed rate bonds in the original principal amount of $40,000,000.
4.    The Committee hereby ratifies, confirms and approves the sale of the Issue 2009-A1Bonds by
      negotiated sale to Morgan Keegan, all in accordance with the Bond Purchase Agreement
      attached hereto as Exhibit B (the “Purchase Agreement”), and the Supplemental Resolution as
      modified and attached hereto as Exhibit C and in accordance with the production table showing
      maturities, initial principal amounts, prices and approximate yields attached hereto as Exhibit D
      (the “Bond Maturity Report”).
5.    The Committee hereby ratifies, confirms and approves the issuance of the Issue 2009-A2 Bonds
      as long term, fixed rate bonds in the original principal amount of $60,000,000 and the issuance
      of the Issue 2009-B Bonds as short term, variable rate, taxable bonds in the original principal
      amount of $300,000,000, which Issue 2009-B Bonds may be converted to long term, fixed rate,
      tax-exempt bonds as provided in the Supplement Resolution.
6.    The Committee hereby ratifies, confirms and approves the sale and delivery of the Issue
      2009-A2 Bonds and the Issue 2009-B Bonds by private placement to Federal Home Loan
      Mortgage Corporation and Federal National Mortgage Association, all in accordance with the
      respective Placement Agreements attached hereto as collective Exhibit E (the “Placement
      Agreements”), the respective Settlement Agreements attached hereto as collective Exhibit F
      (the “Settlement Agreements”) and the Supplemental Resolution. The Committee authorizes
      and directs the Assistant Secretary of the Committee and the General Counsel of THDA, with
      the approval of Bond Counsel, to make, prior to the delivery of the Placed Bonds, such changes
      or modifications, if any, as may be necessary in their opinion and in the opinion of Bond
      Counsel to conform the terms of the Placement Agreements and the Settlement Agreements to
      the NIBP requirements.
7.    The Chairman, Secretary or Assistant Secretary of the Committee or the Vice Chairman or
      Executive Director of THDA is hereby authorized to execute the Purchase Agreement, the
      Placement Agreements, the Settlement Agreements and all other documents necessary under
      NIBP.
8.    The Chairman, the Secretary or Assistant Secretary of the Committee and the Vice Chairman or
      Executive Director of THDA are hereby authorized to execute the final Official Statement for
      the Bonds. The Assistant Secretary of the Committee, with the approval of Bond Counsel and
      General Counsel to THDA, is hereby authorized to prepare the final Official Statement for the
      Bonds for printing and distribution in substantially the form presented at this meeting, as
      conformed to reflect the terms and conditions of the Bonds as herein authorized, and is
      authorized to correct any typographical errors and to conform the final Official Statement to the
      executed Purchase Agreement, Placement Agreements, Settlement Agreements and the Bond
      Maturity Report.
9.    The Supplemental Resolution authorizes the Committee to make such changes or modifications
      in the principal amounts, maturities and interest rates for the Bonds and in the application of the
      proceeds thereof, paying agents, terms of redemption and the schedule of prepayment amounts
      to be used for accrued principal installments in such manner as the Committee determines to be
      necessary to give effect to the terms of sale of the Bonds. Pursuant to this authority, the
      Committee hereby approves the Supplemental Resolution, a copy of which is attached hereto as
      Exhibit C, and authorizes and directs the Assistant Secretary of the Committee and the General
      Counsel of THDA to make, with the approval of Bond Counsel, prior to the delivery of the
      Bonds, such changes or modifications, if any, as may be necessary in their opinion and in the
      opinion of Bond Counsel to conform the terms thereof to the Bond Maturity Report, the
      Purchase Agreements, the Placement Agreements, the Settlement Agreements and the NIBP
      requirements.
10.   This resolution shall take effect immediately.
       EXHIBIT A

2009 GENERAL RESOLUTION
                   Tennessee Housing Development Agency




                    General Housing Finance Resolution




                                 1
4814-0375-3221.3
                                                   TABLE OF CONTENTS

                                                                                                                                              Page


                                          ARTICLE I
                        SHORT TITLE, DEFINITIONS AND INTERPRETATION
Section 1.1.         Short Title .................................................................................................................... 1
Section 1.2.         Definitions ................................................................................................................... 1
Section 1.3.         Interpretation ............................................................................................................... 7

                                                         ARTICLE II
                                                      TERMS OF BONDS
Section 2.1.         Authorization for Resolution and Bonds ..................................................................... 9
Section 2.2.         Resolution to Constitute Contract ............................................................................... 9
Section 2.3.         Obligation of Bonds .................................................................................................... 9
Section 2.4.         Authorization of Bonds ............................................................................................. 10
Section 2.5.         Issuance and Delivery of Bonds ................................................................................ 10
Section 2.6.         Conditions Precedent to Delivery of Bonds .............................................................. 10
Section 2.7.         Conditions Precedent to Delivery of Refunding Bonds ............................................ 12

                                          ARTICLE III
                             GENERAL TERMS AND PROVISIONS OF BONDS
Section 3.1.         Medium of Payment, Denomination, Maturities, Form and Date ............................. 12
Section 3.2.         Legends ..................................................................................................................... 13
Section 3.3.         Interchangeability of Bonds ...................................................................................... 13
Section 3.4.         Negotiability and Registry......................................................................................... 13
Section 3.5.         [Reserved] ................................................................................................................. 13
Section 3.6.         Transfer of Bonds ...................................................................................................... 13
Section 3.7.         Regulations With Respect to Exchanges and Transfers ............................................ 14
Section 3.8.         Central Depositary System ........................................................................................ 14
Section 3.9.         Bonds Mutilated, Destroyed, Stolen or Lost ............................................................. 15
Section 3.10.        Preparation of Definitive Bonds; Temporary Bonds ................................................. 15
Section 3.11.        Cancellation and Destruction of Bonds ..................................................................... 16
Section 3.12.        Execution and Authentication ................................................................................... 16

                                       ARTICLE IV
                    APPLICATION OF BOND PROCEEDS AND OTHER AMOUNTS
Section 4.1.         Application of Bond Proceeds, Accrued Interest and Premium ................................ 17
Section 4.2.         Description of Program Loans and Projected Cash Flow Statement......................... 17

 4814-0375-3221.3
Section 4.3.        Application of Amounts in the Loan Fund ................................................................ 17
Section 4.4.        Application of Proceeds of Refunding Bonds ........................................................... 19
Section 4.5.        Deposits ..................................................................................................................... 19
Section 4.6.        Investment of Certain Funds ..................................................................................... 20
Section 4.7.        Valuation and Sale of Investments ............................................................................ 21

                                                           ARTICLE V
                                                            FUNDS
Section 5.1.        Establishment of Funds ............................................................................................. 21
Section 5.2.        Loan Fund ................................................................................................................. 22
Section 5.3.        Revenue Fund ............................................................................................................ 23
Section 5.4.        Bond Reserve Fund ................................................................................................... 27
Section 5.5.        Escrow Fund .............................................................................................................. 27

                                                   ARTICLE VI
                                               REDEMPTION OF BONDS
Section 6.1.        Privilege of Redemption and Redemption Price ....................................................... 27
Section 6.2.        Redemption at the Election or Direction of THDA................................................... 27
Section 6.3.        Redemption Otherwise Than at THDA’s Election or Direction ............................... 28
Section 6.4.        Selection of Bonds to be Redeemed .......................................................................... 28
Section 6.5.        Notice of Redemption ............................................................................................... 28
Section 6.6.        Payment of Redeemed Bonds.................................................................................... 29

                                                   ARTICLE VII
                                             PARTICULAR COVENANTS
Section 7.1.        Performance .............................................................................................................. 29
Section 7.2.        Compliance With Conditions Precedent ................................................................... 29
Section 7.3.        Power to Issue Bonds and Pledge Revenues, Funds and Other Property .................. 29
Section 7.4.        Payment of Bonds ..................................................................................................... 30
Section 7.5.        Extension of Payment of Bonds ................................................................................ 30
Section 7.6.        Offices for Servicing Bonds ...................................................................................... 30
Section 7.7.        Further Assurance ..................................................................................................... 30
Section 7.8.        Waiver of Laws ......................................................................................................... 30
Section 7.9.        Tax Covenants ........................................................................................................... 30
Section 7.10.       Accounts and Reports................................................................................................ 31
Section 7.11.       Periodic Delivery of Projected Cash Flow Statement ............................................... 31
Section 7.12.       Budgets ...................................................................................................................... 32

 4814-0375-3221.3                                                   ii
Section 7.13.       The Program .............................................................................................................. 33
Section 7.14.       Personnel and Servicing of Programs ....................................................................... 33
Section 7.15.       Issuance of Additional Obligations ........................................................................... 35
Section 7.16.       Bond Reserve Fund ................................................................................................... 35
Section 7.17.       Assignment of Program Loans Upon Default ........................................................... 35
Section 7.18.       [Covenants with Respect to the Rating of Bonds ...................................................... 36

                                                ARTICLE VIII
                                         SUPPLEMENTAL RESOLUTIONS
Section 8.1.        Supplemental Resolutions Effective Upon Filing With the Trustee ......................... 36
Section 8.2.        Supplemental Resolutions Effective Upon Consent of Trustee ................................ 37
Section 8.3.        Supplemental Resolutions Effective Upon Consent of Bondholders ........................ 37
Section 8.4.        General Provisions .................................................................................................... 37

                                                        ARTICLE IX
                                                       AMENDMENTS
Section 9.1.        Mailing and Publication of Notice of Amendment ................................................... 38
Section 9.2.        Powers of Amendment .............................................................................................. 38
Section 9.3.        Consent of Bondholders ............................................................................................ 38
Section 9.4.        Modifications by Unanimous Consent ...................................................................... 39
Section 9.5.        Exclusion of Bonds ................................................................................................... 39
Section 9.6.        Notation on Bonds ..................................................................................................... 39

                                                  ARTICLE X
                                            DEFAULTS AND REMEDIES
Section 10.1.       Events of Default ....................................................................................................... 40
Section 10.2.       Remedies ................................................................................................................... 40
Section 10.3.       Priority of Payments After Default ........................................................................... 41
Section 10.4.       Termination of Proceedings ...................................................................................... 42
Section 10.5.       Bondholders’ Direction of Proceedings .................................................................... 42
Section 10.6.       Limitation on Rights of Bondholders ........................................................................ 42
Section 10.7.       Possession of Bonds by Trustee Not Required.......................................................... 43
Section 10.8.       Remedies Not Exclusive ........................................................................................... 43
Section 10.9.       No Waiver of Default ................................................................................................ 43
Section 10.10.      Notice of Event of Default ........................................................................................ 43




 4814-0375-3221.3                                                  iii
                                               ARTICLE XI
                                        CONCERNING THE FIDUCIARIES
Section 11.1.       Appointment and Acceptance of Duties of Trustee .................................................. 44
Section 11.2.       Appointment and Acceptance of Duties of Paying Agents ....................................... 44
Section 11.3.       Responsibility of Fiduciaries ..................................................................................... 44
Section 11.4.       Evidence on Which Fiduciaries May Act.................................................................. 45
Section 11.5.       Compensation ............................................................................................................ 45
Section 11.6.       Permitted Acts and Functions.................................................................................... 45
Section 11.7.       Resignation of Trustee............................................................................................... 45
Section 11.8.       Removal of Trustee ................................................................................................... 45
Section 11.9.       Appointment of Successor Trustee............................................................................ 46
Section 11.10.      Transfer of Rights and Property to Successor Trustee .............................................. 46
Section 11.11.      Merger or Consolidation ........................................................................................... 46
Section 11.12.      Adoption of Authentication ....................................................................................... 46
Section 11.13.      Resignation or Removal of the Paying Agents and Authenticating Agent and
                    Appointment of Successors ....................................................................................... 47
Section 11.14.      Evidence of Signatures of Bondholders and Ownership of Bonds ........................... 47
Section 11.15.      Preservation and Inspection of Documents ............................................................... 48

                                         ARTICLE XII
                             DEFEASANCE MISCELLANEOUS PROVISIONS
Section 12.1.       Defeasance ................................................................................................................ 48
Section 12.2.       No Recourse Under Resolution or on Bonds ............................................................ 49
Section 12.3.       Security Instrument ................................................................................................... 49
Section 12.4.       Effective Date ............................................................................................................ 50




 4814-0375-3221.3                                                 iv
                                           General Housing Finance

                                                Bond Resolution

                   BE IT RESOLVED by the Board of Director’s of THDA as follows:

                                               ARTICLE I

                     SHORT TITLE, DEFINITIONS AND INTERPRETATION


       Section 1.1. Short Title. This resolution may hereafter be cited by THDA and is hereinafter
sometimes referred to as the “General Housing Finance Program Bond Resolution.”


        Section 1.2. Definitions. In this Resolution, the following words and terms shall, unless the
context otherwise requires, have the following meanings:


        “Account” means one or more, as the case may be, of the Accounts established pursuant to this
Resolution.

        “Accountant” means the department of audit in the office of the Comptroller of the Treasury of
the State and such reputable and experienced independent certified public accountant or firm of
independent certified public accountants as may be selected in accordance with T.C.A. and Section
13-23-125 or other applicable laws and as may be satisfactory to the Trustee and may be the accountant or
firm of accountants who regularly audit the books and accounts of THDA.

         “Act” means the Tennessee Housing Development Agency Act, constituting Chapter 23 of
Title 13 of the Tennessee Code Annotated, Sections 13-23-01 et seq., as amended.

        “Aggregate Debt Service” means, with respect to any particular Fiscal Year and as of any
particular date of computation, the sum of the individual amounts of Debt Service for such Fiscal Year
with respect to all Series.

      “Appreciation Bond” means any Bond whose Issue Amount is less than 97.5% of the Maturity
Amount.

        “Authenticating Agent” means a bank or trust company within or outside the State which has been
appointed “Authenticating Agent” pursuant to Section 11.1(C).

        “Authorized Officer” means the Chairman and Executive Director of THDA’s and, in the case of
any act to be performed or duty to be discharged, any other member, officer or employee of THDA’s then
authorized to perform such act or discharge such duty.

        “Bond” or “Bonds” means any Housing Finance Bond authenticated and delivered under this
Resolution and issued under a Supplemental Resolution.

        “Bond Counsel’s Opinion” means an opinion signed by an attorney or firm of attorneys of
nationally recognized standing in the field of law relating to municipal, state and public agency financing,
selected by THDA.




                                                     1
4814-0375-3221.3
         “Bondholder” or “holder” or words of similar import, when used with reference to a Bond means
the registered owner of any Outstanding Bond.

         “Bond Reserve Fund” means the Bond Reserve Fund established pursuant to Section 5.1.

        “Bond Reserve Fund Requirement” means, as of any date of calculation the greater of (i) an
amount equal to the aggregate of the respective amounts for each Series of Bonds established in the
Supplemental Resolution authorizing such Series or (ii) an amount equal to 3% of the then current
balance of Program Loans plus any other amount on deposit in the Loan Fund which has not been
designated to provide for the payment of Costs of Issuance or capitalized interest.

        “Certificate” means (i) a signed document either attesting to or acknowledging the circumstances,
representations or other matters therein stated or set forth or setting forth matters to be determined
pursuant to this Resolution or (ii) the report of an accountant as to audit or other procedures called for by
this Resolution.

        “Compounded Amount” means, as of any particular date of calculation with reference to any
Appreciation Bond, either (i) the applicable Compounded Amount for such date established by THDA in
a written schedule of specific Compounded Amounts delivered to the Trustee upon delivery of such Bond
pursuant to Section 2.6, or (ii) in the event such schedule is not delivered, the Issuance Amount, plus the
amount which would have been produced as of such calculation date if the Issue Amount had been
invested at the Internal Rate of Return for such Bond on the date of delivery of such Bond pursuant to
Section 2.6. Any determination of Compounded Amount shall assume semi-annual compounding on
each January 1 and July 1, straight line amortization during interim periods and be otherwise made in
accordance with standard securities calculation methods.

         “Costs of Issuance” means all items of expense, directly or indirectly payable or reimbursable by
or to THDA" and related to the authorization, sale and issuance of Bonds, including but not limited to
discount to be paid to the underwriters upon the initial delivery of Bonds, printing costs, costs of
preparation and reproduction of documents, filing and recording fees, initial fees and charges of any
Fiduciary, legal fees and charges, fees and disbursements of consultants and professionals, costs of credit
ratings, fees and charges for preparation, execution, transportation and safekeeping of Bonds, costs and
expenses of refunding, premiums for the insurance of the payment of Bonds, initial premiums to obtain
mortgage pool insurance, accrued interest in connection with the financing of Program Loans and any
other cost, charge or fee in connection with the original issuance of Bonds.

         “Debt Service” means, with respect to any particular Fiscal Year and any particular Series of
Bonds, an amount equal to the sum of (i) all interest payable on such Bonds during such Fiscal Year, plus
(ii) any Principal Installment of such Bonds during such Fiscal Year.

        “Depositary” means the State Treasurer or any bank or trust company or national banking
association selected by THDA or the Trustee as a Depositary of moneys or securities held under the
provisions of this Resolution and may include the Trustee or any Paying Agent.

         “Escrow Fund” means the Escrow Fund established pursuant to Section 5.1.

        “Estimated Annual Program Loan Loss Amount” means, with respect to any Fiscal Year, the
aggregate of the amount, if any, established for a Series of Bonds Series at the time of delivery of such
Series pursuant to Section 2.6(6) as necessary to be accumulated in such Fiscal Year to provide an
appropriate reserve against loan losses.

         “Event of Default” means any of the events specified in Section 10.1.



                                                     2
4814-0375-3221.3
        “Fiduciary” means the Trustee, the Authenticating Agent and any Paying Agent, or any or all of
them as may be appropriate.

         “Final Compounding Date” means either the maturity date of an Appreciation Bond or such
earlier Interest Payment Date, if any, as may be specified in an Appreciation Bond upon which the
Compounded Amount shall be equal to the amount payable on such Bond at maturity, exclusive of
interest on such Bond which is payable on a semi-annual basis.

         “Fiscal Year” means a twelve-month period commencing on the first day of July of any year.

       “Fund” means one or more, as the case may be, of the special Funds created and established
pursuant to this Resolution.

       “Interest Payment Date” means any date upon which interest on the Bonds is due and payable in
accordance with their terms.

        “Internal Rate of Return” when used with respect to an Appreciation Bond, means the yield
which, when applied to Issuance Amount as of the date of delivery of a Bond pursuant to Section 2.6 and
compounded semi-annually, results in an amount, as of the Final Compounding Date, equal to the amount
payable on such Bond at maturity exclusive of interest on such Bond which is payable on a semi-annual
basis.

        “Investment Securities” means and includes any of the following obligations, to the extent the
same are at the time legal for investment of funds of THDA under the Act, including the amendments
thereto hereafter made, or under other applicable law:

(1)      Obligations of, or obligations guaranteed as to principal and interest by, the United States of
         America or any agency or instrumentality thereof when such obligations are backed by the full
         faith and credit of the United States of America, including, but are not limited to:
         -     All direct or fully guaranteed United States Treasury;
         -     Certificates of beneficial ownership issued by the Farmers Home Administration;
         -     Participation certificates issued by General Services Administration;
         -     U.S. Maritime Administration guaranteed Title XI financing;
         -     Guaranteed participation certificates and guaranteed pool certificates issued by the Small
               Business Administration;
         -     GNMA-guaranteed mortgage-backed securities and GNMA-guaranteed participation
               certificates issued by the Government National Mortgage Association (GNMA);
         -     Local authority bonds of the United States Department of Housing and Urban Development;
         -     Washington Metropolitan Area Transit Authority guaranteed transit bonds; and
         -     All fully guaranteed obligations of the United States Export-Import Bank;

(2)      Federal Housing Administration debentures;

(3)      Obligations of the following government-sponsored agencies which are not backed by the full
         faith and credit of the United States of America:
         -     Participation certificates (those which are guaranteed as to timely payment of principal) and
               Senior debt obligations of Federal Home Loan Mortgage Corp. (FHLMC)



                                                      3
4814-0375-3221.3
         -         Consolidated systemwide bonds and notes of the Farm Credit System (formerly: Federal
                   Land Banks, Federal Intermediate Credit Banks, and Banks for Co-operatives)
         -         Consolidated debt obligations of the Federal Home Loan Banks (FHL Banks)
         -         Senior debt obligations and Mortgage-backed securities (excluding interest only stripped
                   mortgage securities which are valued greater than par on the portion of unpaid principal)
                   issued by Federal National Mortgage Association (FNMA);
         -         Senior debt obligations (excluding securities that do not have a fixed par value and/or whose
                   terms do not promise a fixed dollar amount at maturity or call date) and Letter of Credit
                   (LOC)-backed issues issued by Student Loan Marketing Association (SLMA);
         -         Debt obligations issued by Financing Corp. (FICO);
         -         Debt obligations issued by Resolution Funding Corp. (REFCORP);

(4)      Federal funds, unsecured certificates of deposit, time deposits, and banker’s acceptances (having
         maturities of not more than 365 days) of any bank, the short-term obligations of which are rated
         at least “A-1” by S&P and “P-1” by Moody’s;

(5)      Deposits which are fully insured by the Federal Deposit Insurance Corp. (FDIC);

(6)      Debt obligations rated at least “AA” by S&P and “Aa” by Moody’s (excluding securities that do
         not have a fixed par value and/or whose terms do not promise a fixed dollar amount at maturity or
         call date);

(7)      Commercial paper rated at least “A-1” by S&P and “P-1” by Moody’s maturing not more than
         365 days;

(8)      Investment in money market funds rated at least “AAm” or “AAm-G” by S&P and “Aaa” by
         Moody’s;

(9)      Repurchase agreements and investment agreements with any financial institution with long-term
         unsecured debt rated at least “AA” by S&P and “Aa” by Moody’s or commercial paper rated at
         least “A-1” by S&P and “P-1” by Moody’s;

(10)     Stripped securities:
             (i)     U.S. Treasury STRIPS,
          (ii)       REFCORP STRIPS (stripped by Federal Reserve Bank of New York), and
         (iii)       Any stripped securities assessed or rated at least “AA” by S&P and “Aa” by Moody’s; and

(11)     Any other investments which would not adversely affect the then current rating assigned to the
         Bonds, as confirmed in writing by S&P and Moody’s.

         “Issuance Amount” means the price, exclusive of accrued interest (if any) which is payable on a
semi-annual basis, at which a Bond was offered for sale to the public (or the price of such Bond to the
initial purchaser if not publicly sold) at the time of issuance thereof by THDA pursuant to Section 2.6,
irrespective of underwriter’s compensation, commissions, placement agent’s fees, concessions, Agency
costs of issuance, or similar costs.

         “Loan Fund” means the Loan Fund established in Section 5.1.




                                                          4
4814-0375-3221.3
       “Maturity Amount” means the amount payable on an Appreciation Bond at maturity of such
Bond, exclusive of interest, if any, on such Bond which is payable on a semi-annual basis.

         “Non-Mortgage Receipts” means all interest earned or gain realized in excess of losses as a result
of the investment of the amount in any Fund, but shall not include Revenues.

      “Non-Mortgage Receipts Account” means the Non-Mortgage Receipts Account established in the
Revenue Fund pursuant to this Resolution.

        “Outstanding,” when used with reference to Bonds, means, as of any date, all Bonds theretofore
or thereupon being authenticated and delivered under this Resolution except:

        (1)        any Bond cancelled by the Trustee or delivered to the Trustee for cancellation at or prior
                   to such date;

        (2)        any Bond (or portion of a Bond) for the payment or redemption of which there have been
                   separately set aside and held in the Redemption Fund hereunder either:

              (a) moneys in an amount sufficient to effect payment of the principal or applicable
                  Redemption Price thereof, together with accrued interest on such Bond to the
                  Redemption Date;

              (b) Investment Securities, as described in Section 12.1(13), in such principal amounts, of
                  such maturities, bearing such interest and otherwise having such terms and qualifications
                  as shall be necessary to provide moneys in an amount sufficient to effect payment of the
                  principal or applicable Redemption Price of such Bond, together with accrued interest on
                  such Bond to the Redemption Date; or

              (c) any combination of (a) and (b) above;

        (3)        any Bond in lieu of or in substitution for which other Bonds shall have been authenticated
                   and delivered pursuant to Section 3.7, Section 6.6 or Section 9.6; and

        (4)        any Bond deemed to have been paid as provided in subsection (B) of Section 12.1.

         “Paying Agent” means any bank or trust company designated as paying agent for the Bonds, and
its successor or successors hereafter appointed in the manner herein provided.

        “Permitted Encumbrances” means (i) intervening liens of contractors, subcontractors, suppliers of
materials and equipment and laborers as to which, by a bond or letter of credit or other lawful means
acceptable to THDA, indemnity has been provided or similar steps to secure the interest of THDA have
been taken, (ii) ad valorem property taxes ratably accrued but not yet due and payable, (iii) severed
mineral estates or interests, owned by others, which are of a kind customary with respect to residential
housing in the area in which the premises are located and (iv) such other liens, encumbrances,
reservations and other clouds on title as THDA shall determine do not impair the use or value of the
premises.

         “Principal Installment” means, as of any date of calculation, (i) the aggregate principal amount of
Outstanding Bonds due on a certain future date, reduced by the aggregate principal amount of such Bonds
which would be retired by reason of the payment when due and application in accordance with this
Resolution of Sinking Fund Payments payable before such future date plus (ii) the unsatisfied balance,
determined as provided in subsection 5.3(D), of any Sinking Fund Payments due on such certain future
date, together with the aggregate amount of the premiums, if any, applicable on such future date upon the


                                                       5
4814-0375-3221.3
redemption of such Bonds by application of such Sinking Fund Payments in a principal amount equal to
said unsatisfied balance.

         “Program” means the various programs for the financing of loans for residential housing
established by THDA pursuant to the Act and Program Guidelines, as the same may be amended from
time to time consistent with this Resolution, but only to the extent that such programs are financed
through the issuance of Bonds or from amounts otherwise available out of the moneys and assets held or
pledged pursuant to this Resolution.

         “Program Expenses” means all of THDA’s expenses in carrying out and administering its duties
and corporate purposes under the Act and shall include, without limiting the generality of the foregoing,
salaries, supplies, utilities, mailing, labor, materials, office rent, maintenance, furnishings, equipment,
machinery and apparatus, telephone, insurance premiums, legal, accounting, management, consulting and
banking services and expenses, fees and expenses of the Fiduciaries, Costs of Issuance not paid from the
proceeds of Bonds, travel, payments for pension, retirement, health and hospitalization and life and
disability insurance benefits, payments for insurance against losses on the pool of Program Loans and
payments to maintain letters of credit obtained to secure the ability of THDA to pay, redeem or purchase
Bonds. Program Expenses may also include amounts for establishing and maintaining a two-month
reserve to pay operating costs and a reasonable reserve for losses and expenses estimated to be incurred
by THDA and amounts appropriate to reimburse THDA for Program Expenses paid from other sources.
Program Expenses shall include the amount of any rebate required to be calculated and set aside by
THDA pursuant to applicable federal tax law. THDA in its discretion may calculate the rebate amount
annually or at the end of such other periods that it may choose as long as the first rebate calculation and
all succeeding rebate calculations are performed no later than required by applicable federal tax law.

         “Program Guidelines” means the Program Guidelines adopted by THDA for the Program as in
effect on the date of adoption of this Resolution and as revised, amended, altered or supplemented from
time to time in accordance with the Act.

        “Program Loan” means any obligation, including a participation interest therein, acquired by
THDA by the expenditure of amounts in the Loan Fund. If authorized by a Supplemental Resolution, the
term “Program Loan” shall also include a security backed by a pool of Program Loans satisfying any
conditions as may be set forth in such Supplemental Resolution.

        “Program Loan Loss Coverage” means that portion of the principal amount of Program Loans
outstanding which must be treated as a loss for purposes of maintaining the current ratings on the Bonds.

        “Projected Cash Flow Statement” means a Certificate delivered pursuant to the provisions of
Section 7.11.

        “Rating Agency” means any nationally recognized credit rating agency then maintaining a rating
on the Bonds at the request of THDA; initially, Moody’s Investors Service.

      “Redemption Account” means the Redemption Account which is established and created in the
Revenue Fund pursuant to this Resolution.

        “Redemption Date” means the date upon which Bonds are to be called for redemption pursuant to
this Resolution.

        “Redemption Price” means, with respect to any Bonds, the principal amount thereof plus the
applicable premium, if any, payable upon redemption thereof.




                                                    6
4814-0375-3221.3
        “Refunding Bond” means any Bond authenticated and delivered on original issuance pursuant to
Section 2.7 or thereafter authenticated and delivered in lieu of or in substitution for any such Bond
pursuant to this Resolution.

         “Resolution” means this Resolution and any amendments or supplements made in accordance
with its terms.

         “Revenue Fund” means the Revenue Fund established pursuant to Section 5.1.

         “Revenues” means, upon receipt thereof by THDA, all payments proceeds, rents, charges and
other cash income received by THDA from or on account of any Program Loan (including scheduled,
delinquent and advance payments of, and any insurance proceeds with respect to, principal and interest on
any Program Loan), together with any amounts received by THDA as a result of any certification
pursuant to Section 7.16, but excludes (i) any amount retained by a servicer [(other than THDA)] of any
Program Loan as compensation for services rendered in connection with such Program Loan, (ii) any
payments for the guaranty or insurance of any Program Loan, (iii) any payments of taxes, assessments or
similar charges or premiums or other charges for fire or other hazard insurance (and any escrow payments
in connection therewith) called for by any Program Loan and (iv) payments or charges constituting
construction performance or completion reserves required pursuant to a Program Loan.

         “Series” means all of the Bonds authenticated and delivered on original issuance in a
simultaneous transaction, regardless of variations in maturity, interest rate, Sinking Fund Payments or
other provisions, and any Bonds thereafter authenticated and delivered in lieu of or in substitution for (but
not to refund) such Bonds as herein provided.

        “Sinking Fund Payment” means, as of any particular date of calculation, the amount required to
be paid at all events by THDA on a certain future date for the retirement of Outstanding Bonds which
mature after said future date, but does not include any amount payable by THDA by reason of the
maturity of a Bond or by call for redemption at the election of THDA.

         “State” means the State of Tennessee.

        “Supplemental Resolution” means any resolution supplemental to or amendatory of this
Resolution, adopted by THDA and effective in accordance with Article VIII.

        “Supplemental Revenue Amount” means, for each semi-annual period, the aggregate of the
amounts designated as such for each Series in the Projected Cash Flow Statement delivered pursuant to
subsection 2.6(6).

       “THDA” means the Tennessee Housing Development Agency, or any body, agency or
instrumentality of the State which shall hereafter succeed to the powers, duties and functions of THDA.

        “Trustee” means U.S. Bank National Association, the Trustee appointed as provided in Section
11.1 and its successor or successors and any other person at any time substituted in its place pursuant to
this Resolution.


         Section 1.3. Interpretation. (A) In this Resolution, unless the context otherwise requires:


         (1)       the terms “hereby,” “hereof,” “hereto,” “herein,” “hereunder” and any similar terms, as
                   used in this Resolution, refer to this Resolution, and the term “heretofore” means before,
                   and the term “hereafter” means after, the date of adoption of this Resolution;


                                                       7
4814-0375-3221.3
         (2)       words of the masculine gender mean and include correlative words of the feminine and
                   neuter genders and words importing the singular number mean and include the plural
                   number and vice versa;

         (3)       words importing persons shall include firms, associations, partnerships (including limited
                   partnerships), trusts, corporations and other legal entities, including public bodies, as well
                   as natural persons;

         (4)       any headings preceding the texts of the several Articles and Sections of this Resolution,
                   and any table of contents or marginal notes appended to copies hereof, shall be solely for
                   convenience of reference and shall not constitute a part of this Resolution, nor shall they
                   affect its meaning, construction or effect;

         (5)       if at any time there shall be one person who shall be the holder of all of the Outstanding
                   Bonds and the consent of the Trustee shall be required, the consent of such person shall
                   be required in lieu of the consent of the Trustee, unless such person shall have been
                   notified and shall not have consented within a reasonable period of time;

         (6)       this Resolution shall be governed by and construed in accordance with the applicable
                   laws of the State;

         (7)       words importing the redemption or redeeming of a Bond or the calling of a Bond for
                   redemption do not include or connote the payment of such Bond at its stated maturity or
                   the purchase of said Bond;

         (8)       the date upon which any Sinking Fund Payment is required to be paid pursuant to this
                   Resolution and the provisions of the Bonds of each Series shall be deemed to be the date
                   upon which such Sinking Fund Payment is payable and the Outstanding Bonds to be
                   retired by application of such Sinking Fund Payment shall be deemed to be the Bonds
                   entitled to such Sinking Fund Payment;

         (9)       the verb “finance”, when used with reference to a Program Loan, shall be construed to
                   include (i) the making or purchase of such Program Loan (ii) the participation by THDA,
                   either with itself or with others, in the making or purchase thereof or (iii) the permanent
                   financing of a Program Loan which has been temporarily financed by THDA through the
                   issuance of notes or other obligations or otherwise;

         (10)      references to the payment of the Bonds shall be deemed to include references to the
                   payment of interest thereon;

         (11)      any moneys, documents, securities, obligations or other items received by the Trustee or
                   a Depositary pursuant to the terms of this Resolution shall be deemed to have been
                   received by THDA;

         (12)      any reference in this Resolution to principal or interest on bonds which is payable on a
                   certain date or during a certain period of time is reference to an amount payable on such
                   date or during such period and does not include the obligation to pay any principal or
                   interest after such date or period;

         (13)      any reference to the principal amount of Bonds shall be the Maturity Amount or the
                   Compounded Amount thereof as of any particular date of computation in the case of
                   Appreciation Bonds and shall mean the amount, irrespective of semi-annual interest,
                   payable upon the maturity of any Bond which is not an Appreciation Bond;


                                                        8
4814-0375-3221.3
         (14)      references to “semi-annual” payments of interest or compounding of yield refer to
                   payment or compounding on January 1 and July 1 of each year; and

         (15)      the “Compounded Amount” of an Appreciation Bond represents an accrual of the
                   principal amount thereof payable at maturity and does not represent interest thereon,
                   except that, for purposes of determining the Redemption Price of a Bond, the priority of
                   payments under Section 10.3 and the required principal amount in connection with
                   approvals and consents of Bondholders pursuant to this resolution, any increase in the
                   Compounded Amount occurring since the most recent Interest Payment Date shall be
                   treated as if it were interest.

(B)      Nothing in this Resolution expressed or implied is intended or shall be construed to confer upon,
         or to give to, any person, other than THDA, the Fiduciaries and the holders of the Bonds (and of
         the coupons, if any, thereunto appertaining), any right, remedy or claim under or by reason of this
         Resolution or any covenant, condition or stipulation thereof. All the covenants, stipulations,
         promises and agreements herein contained by and on behalf of THDA, shall be for the sole and
         exclusive benefit of THDA, the Fiduciaries and the holders of the Bonds.

(C)      If any one or more of the covenants or agreements provided herein on the part of THDA or any
         Fiduciary to be performed should be contrary to law, then such covenant or covenants or
         agreement or agreements shall be deemed separable from the remaining covenants and
         agreements hereof and shall in no way affect the validity of the other provisions of this
         Resolution or of the Bonds.

                                                ARTICLE II

                                            TERMS OF BONDS


        Section 2.1. Authorization for Resolution and Bonds. This Resolution and the issuance of
Bonds hereunder have been duly authorized by THDA and the principal amount of Bonds that may be
issued hereunder is not limited except as provided herein or by law. THDA has ascertained and it is
hereby determined and declared that the adoption of this Resolution is necessary to carry out the powers
and duties expressly provided by the Act, that each and every act, matter, thing or course of conduct as to
which provision is made herein is necessary or convenient in order to carry out and effectuate the
purposes of THDA in accordance with the Act and to carry out powers expressly given in the Act, and
that each and every covenant or agreement herein contained and made is necessary, useful or convenient
in order to better secure the Bonds and are contracts or agreements necessary, useful and convenient to
carry out and effectuate the purposes of THDA under the Act.


         Section 2.2. Resolution to Constitute Contract. Bonds by those who shall hold the same from
time to time, the provisions of this Resolution shall be a part of the contract of THDA with the holders of
Bonds and shall be deemed to be and shall constitute a contract among THDA, the Trustee and the
holders from time to time of the Bonds. The pledges and assignments made hereby and the provisions,
covenants and agreements herein set forth to be performed by or on behalf of THDA shall be for the equal
benefit, protection and security of the holders of any and all of such Bonds, each of which, regardless of
the time or times of its issue or maturity, shall be of equal rank without preference, priority or distinction
over any other thereof except as expressly provided in this Resolution.


        Section 2.3. Obligation of Bonds. (A) This Resolution creates an issue of Bonds of THDA and
creates a continuing pledge and lien to secure the full and final payment of the principal and Redemption


                                                      9
4814-0375-3221.3
Price of and interest on such Bonds, including any Sinking Fund Payments for the retirement thereof.
The Bonds shall be special, limited obligations of THDA payable from the revenues and assets pledged
therefor pursuant to this Resolution. The Bonds shall not be deemed to constitute a debt, liability, or
obligations of the State or any other political subdivision thereof, nor a pledge of the full faith and credit
of the State or any other political subdivision thereof. The Bonds shall contain on their face a statement
that neither the State nor any political subdivision thereof shall be obligated to pay the Bonds or the
interest thereon except from such revenues and assets and that neither the faith and credit nor the taxing
power of the State or any political subdivision thereof is pledged to the payment of the principal thereof
or the interest thereon.


(B)      The Revenues and Non-Mortgage Receipts, including interest earned or gain realized in excess of
         losses as a result of the investment of amounts on deposit in the Escrow Fund, and all amounts
         held in any Fund or Account other than amounts held in the Escrow Fund, including investments
         thereof, are hereby pledged to secure the payment of the Bonds (including the Sinking Fund
         Payments for the retirement thereof) in accordance with their terms and the provisions of this
         Resolution, subject only to the provisions of this Resolution permitting the application or exercise
         thereof for or to the purposes and on the terms and conditions herein set forth. In addition,
         subject to the provisions of subsection 10.2(D), THDA hereby pledges and assigns, to secure the
         payment of the Bonds, all right, title and interest of THDA in and to the Program Loans,
         including any extensions and renewals thereof. To the fullest extent provided by the Act and
         other applicable laws, the money and property hereby pledged shall immediately be subject to the
         lien of such pledge without any physical delivery thereof or further act and such lien shall be
         valid and binding against all parties having claims of any kind in tort, contract or otherwise,
         irrespective of whether such parties have notice hereof.

         Section 2.4. Authorization of Bonds. In order to provide sufficient funds for the operation of
the Program or for the refunding of Bonds, bonds of THDA are hereby authorized to be issued from time
to time hereunder in one or more Series without limitation as to amount except as may be provided by
law. No Bonds shall be issued unless they are part of an issue described in a Supplemental Resolution
and until the conditions contained in Section 2.6 or, in the case of Refunding Bonds, Section 2.7 are
satisfied.


        Section 2.5. Issuance and Delivery of Bonds. After their authorization by THDA, Bonds of a
Series may be executed by or on behalf of THDA and delivered to the Trustee or the Authenticating
Agent, as appropriate, for authentication and, upon compliance by THDA with the requirements of
Section 2.6 and, in the case of Refunding Bonds, Section 2.7, the Trustee or the Authenticating Agent, as
appropriate, shall thereupon authenticate and deliver such Bonds to or upon the order of THDA. If an
Authenticating Agent has been appointed, then the Authenticating Agent and not the Trustee shall
authenticate and deliver the Bonds. If no Authenticating Agent has been appointed, then the Trustee shall
authenticate and deliver the Bonds.


        Section 2.6. Conditions Precedent to Delivery of Bonds. The Bonds of each Series shall be
executed by THDA for issuance and delivered to the Trustee or Authenticating Agent, as appropriate, and
thereupon shall be authenticated by the Trustee or the Authenticating Agent and delivered to THDA or
upon its order, but only upon the receipt by the Trustee or the Authenticating Agent of:


(1)      a copy of the Supplemental Resolution authorizing such Series, certified by an Authorized
         Officer, which shall specify:



                                                         10
4814-0375-3221.3
         (a)       the authorized principal amount (by reference to the amount payable at maturity thereof)
                   and designation of such Bonds;

         (b)       the purposes for which such Bonds are being issued, which shall be one or more of the
                   following: (i) the making of deposits into the Loan Fund, (ii) the making of deposits in at
                   least the amounts, if any, required by this Resolution into the Revenue Fund and Bond
                   Reserve Fund, (iii) the refunding of any Bonds, or (iv) any combination of the foregoing;

         (c)       the dated dates and maturity dates of such Series of Bonds (or the manner of determining
                   such dates);

         (d)       the interest rates of such Bonds (or the manner of determining such rate or rates) and the
                   Interest Payment Dates therefor;

         (e)       the denominations of, and the manner of dating, numbering and lettering, such Bonds;

         (f)       the Paying Agents and the places of payment of such Bonds or, subject to Article XI, the
                   manner of appointing and designating the same;

         (g)       the Redemption Prices, if any, of and, subject to the provisions of Article VI, the
                   redemption terms for such Bonds or the manner of determining such Redemption Prices
                   or terms of redemption;

         (h)       the amounts and due dates of the Sinking Fund Payments, if any, for any of such Bonds
                   of like maturity or the manner of determining such amounts and dates;

         (i)       provisions for the time, place and manner of such sale of such Bonds, as provided in the
                   Act;

         (j)       provisions concerning the forms of such Bonds and of the Trustee’s or the Authenticating
                   Agent’s certificate of authentication; and

         (k)       any other provisions deemed advisable by THDA as shall not conflict with the provisions
                   hereof;

(2)      a Bond Counsel’s Opinion to the effect that (i) such Supplemental Resolution and any other
         authorization or determination necessary as a condition precedent to the delivery of such Bonds
         has been duly and lawfully adopted or made and is in full force and effect; (ii) this Resolution has
         been duly and lawfully authorized, executed and delivered by THDA and is valid and binding
         upon, and enforceable against, THDA (except to the extent that the enforceability thereof may be
         limited by the operation of bankruptcy, insolvency and similar laws affecting rights and remedies
         of creditors); (iii) this Resolution creates the valid pledge which it purports to create of the
         Revenues and of moneys and securities or deposit in any of the Funds established hereunder,
         including the investments, if any, thereof, subject to the application thereof to the purposes and on
         the conditions permitted by this Resolution; and (iv) upon the execution, authentication and
         delivery thereof, such Bonds will have been duly and validly authorized and issued in accordance
         with the constitution and statutes of the State, including the Act as amended to the date of such
         Opinion, and in accordance with this Resolution;

(3)      a written order as to the delivery of such Bonds, signed by an Authorized Officer and attaching a
         schedule of Compounded Amounts in the event THDA wishes to specify such amounts with
         respect to any Appreciation Bonds which constitute a portion of such issue;



                                                      11
4814-0375-3221.3
(4)      the amount of the proceeds of such Bonds to be deposited with the Trustee pursuant to
         Section 4.1;

(5)      except in the case of the initial Series of Bonds hereunder, a Certificate of an Authorized Officer
         stating that the conditions of Section 7.15 for the issuance of additional Bonds have been met;

(6)      except in the case of an issue consisting entirely of Refunding Bonds, a Projected Cash Flow
         Statement, as of the date of such delivery, complying with the conditions of subsection 7.11(C)
         and designating, for each semi-annual period, the amount of the Supplemental Revenue Amount
         and, for each annual period, the Estimated Annual Program Loan Loss Amount, with respect to
         such Series consistent with Section 7.9, and all other Certificates and schedules required to be
         delivered upon initial issuance of a Series of Bonds pursuant to Section 4.2; and

(7)      such further documents and moneys as are required by the provisions of Article VIII or any
         Supplemental Resolution entered into pursuant to Article VIII.

        Section 2.7. Conditions Precedent to Delivery of Refunding Bonds. (A) In addition to the
requirements of Section 2.6, Refunding Bonds of any Series shall be authenticated by the Trustee only
upon the receipt by the Trustee of:


         (1)       irrevocable instructions to the Trustee to give due notice of the payment or redemption of
                   all the Bonds to be refunded and the payment or redemption dates, if any, upon which
                   such Bonds are to be paid or redeemed;

         (2)       if the Bonds to be refunded are to be redeemed subsequent to the next succeeding ninety
                   days, irrevocable instructions to the Trustee to mail, as provided in Article VI, notice of
                   the redemption of such Bonds on a specified date prior to their redemption date; and

         (3)       either (i) moneys (which may include all or a portion of the proceeds of the Refunding
                   Bonds to be issued) in an amount sufficient to effect payment or redemption at the
                   applicable Redemption Price of the Bonds to be refunded, together with accrued interest
                   on such Bonds to the due date or redemption date, or (ii) Investment Securities as
                   described in subsection (B) of Section 12.1, the principal of and interest on which when
                   due (without reinvestment thereof), together with the moneys (which may include all or a
                   portion of the proceeds of the Refunding Bonds to be issued), if any, contemporaneously
                   deposited with the Trustee, will be sufficient to pay when due the applicable principal or
                   Redemption Price the Bonds to be refunded, together with accrued interest on such Bonds
                   to the redemption dates or dates of maturity thereof, which moneys or Investment
                   Securities shall be held by the Trustee or any one or more of the Paying Agents in the
                   Redemption Fund.

(B)      Except as provided in Section 12.1 or paragraph 10.2(A)(6), neither Investment Securities nor
         moneys deposited with the Trustee pursuant to paragraph (A)(3) of this Section or principal or
         interest payments on any such Investment Securities shall be withdrawn or used for any purpose
         other than the payment of the applicable Redemption Price of the Bonds to be refunded, together
         with accrued interest on such Bonds to the Redemption Date, and any cash received from such
         principal or interest payments, if not then needed for such purpose, shall, to the extent practicable,
         be reinvested in such Investment Securities as are described in subsection 12.1(B) maturing at
         times and in amounts sufficient to pay when due the principal or applicable Redemption Price of
         such Bonds, together with such accrued interest. Nothing in this Section, however, is intended to
         restrict the use of amounts received on account of any portion of the principal or interest on any
         Investment Securities, deposited pursuant to subsection (A) above, which are in excess of the

                                                      12
4814-0375-3221.3
         amounts required to be so deposited in order to provide moneys sufficient to pay when due the
         applicable principal or Redemption Price of the Bonds to be refunded, together with accrued
         interest on such Bonds and such amounts may be pledged by THDA and withdrawn by THDA as
         received and applied to any purpose of THDA, free and clear of the lien of this Resolution.


                                               ARTICLE III

                         GENERAL TERMS AND PROVISIONS OF BONDS


       Section 3.1. Medium of Payment, Denomination, Maturities, Form and Date. (A) The
Bonds shall be payable in any coin or currency of the United States of America which at the time of
payment is legal tender for the payment of public and private debts.


(B)      Except as may otherwise be provided in a Supplemental Resolution, all Bonds shall be in the
         denomination of $5,000 each or in denominations of any whole multiple thereof.

(C)      The date upon which any Principal Installment with respect to a Series of Bonds is payable shall
         be the first day of any January or July. Except as may otherwise be provided in a Supplemental
         Resolution, interest on each Bond shall be payable semiannually on the first day of any January
         or July commencing, with respect to any Series of Bonds, on the January 1 or July 1 set forth in
         the Supplemental Resolution adopted in connection with the issuance of such Series.

(D)      Bonds shall be issued in fully registered form, without coupons.

(E)      All Bonds shall bear interest from their date unless another date for the accrual of interest thereon
         is specified in such Bond. Interest may be made payable at a final or variable rate, based on the
         principal amount of the Bond (including the Compounded Amount from time to time), or upon
         any other amount specified in the Bond or incorporated therein by reference. Bonds issued prior
         to the first Interest Payment Date thereof shall be dated as of the date specified in the
         Supplemental Resolution with respect thereto, but Bonds issued on or subsequent to the first
         Interest Payment Date thereof shall be dated as of the date six months preceding the interest
         payment date next following the date of delivery thereof (unless such date of delivery shall be an
         Interest Payment Date, in which case they shall be dated as of such date of delivery). If, however,
         as shown by the records of the Trustee, interest on such Bonds shall be in default, the Bonds
         issued in lieu of Bonds surrendered for transfer or exchange shall be dated as of the date to which
         interest has been paid in full on the Bonds surrendered.

        Section 3.2. Legends. The Bonds of each Series may contain or have endorsed thereon such
provisions, specifications and descriptive words not inconsistent with the provisions of this Resolution as
may be necessary or desirable to comply with custom, or otherwise.


         Section 3.3. Interchangeability of Bonds. Upon surrender thereof at the principal or corporate
trust office of the Trustee with a written instrument of transfer satisfactory to the Trustee, duly executed
by the registered owner or his duly authorized attorney, Bonds may at the option of the registered owner
thereof, and upon payment by such registered owner of any charges which the Trustee may make as
provided in Section 3.7, be exchanged for an equal aggregate principal amount of Bonds of the same
Series and maturity of any of the authorized denominations.




                                                     13
4814-0375-3221.3
         Section 3.4. Negotiability and Registry. All the Bonds issued under this Resolution shall be
negotiable, subject to the provisions for registration, transfer and exchange contained in this Resolution
and in the Bonds. So long as any of the Bonds shall remain Outstanding, THDA shall maintain and keep,
at the principal or corporate trust office of the Trustee or of the Authenticating Agent, as appropriate,
books for the registration, transfer and exchange of Bonds. So long as any of the Bonds remain
Outstanding, THDA shall make all necessary provisions to permit the exchange of Bonds at the corporate
trust office of the Trustee or the Authenticating Agent, as appropriate.


         Section 3.5. [Reserved]


         Section 3.6. Transfer of Bonds. (A) Except as provided for in Section 3.8 herein, each fully
registered Bond shall be transferable only upon the books of THDA, which shall be kept for such purpose
at the corporate trust office of the Trustee or of the Authenticating Agent, as appropriate, by the registered
owner thereof in person or by his attorney duly authorized in writing, upon surrender thereof together
with a written instrument of transfer satisfactory to the Trustee or Authenticating Agent duly executed by
the registered owner or his duly authorized attorney. Upon the transfer of any such fully registered Bond,
THDA shall issue in the name of the transferee a new fully registered Bond or Bonds of the same
aggregate principal amount, Series and maturity as the surrendered Bond.


(B)      THDA and any Fiduciary may deem and treat the person in whose name any Bond shall be
         registered upon the books of THDA as the absolute owner of such Bond, whether such Bond shall
         be overdue or not, for the purpose of receiving payment of, or on account of, the principal and
         Redemption Price, if any, of and interest on such Bond and for all other purposes and all such
         payments so made to any such registered owner or upon his order shall be valid and effectual to
         satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid, and
         neither THDA nor any Fiduciary shall be affected by any notice to the contrary.


        Section 3.7. Regulations With Respect to Exchanges and Transfers. Except as provided for
in Section 3.8 herein, in all cases in which the privilege of exchanging or transferring Bonds is exercised,
THDA shall execute and the Trustee or the Authenticating Agent, as appropriate, shall authenticate and
deliver Bonds in accordance with the provisions of this Resolution. For every such exchange or transfer
of Bonds, whether temporary or definitive, THDA or the Trustee or the Authenticating Agent may make a
charge sufficient to reimburse it for any expenses of THDA or the Trustee or the Authenticating Agent in
connection therewith and for any tax, fee or other governmental charge required to be paid with respect to
such exchange or transfer, and, except with respect to the delivery of definitive Bonds in exchange for
temporary Bonds or as otherwise provided herein, may charge a sum sufficient to pay the cost of
preparing each new Bond issued upon such exchange or transfer, which sums shall be paid by the person
requesting such exchange or transfer as a condition precedent to the exercise of the privilege of making
such exchange or transfer. If the Bonds are not registered with a central depositary system as provided in
Section 3.8, THDA shall not be obliged to make any such exchange or transfer of Bonds (i) during the ten
days preceding an Interest Payment Date on such Bonds, (ii) during the ten days preceding the date of the
mailing of notice of any proposed redemption of Bonds, or (iii) with respect to any particular Bond, after
such Bond has been called for redemption. THDA may, by written notice to the Trustee or the
Authenticating Agent, as appropriate, establish a record date for the payment of interest or for the giving
of notice of any proposed redemption of Bonds, but such record date shall be not more than ten days
preceding an Interest Payment Date on such Bonds or, in the case of any proposed redemption of Bonds
next preceding the date of the first redemption of Bonds.




                                                     14
4814-0375-3221.3
         Section 3.8. Central Depositary System. (A) Notwithstanding the other provisions of this
Resolution regarding registration, ownership, transfer, Bondholder consent, payment and exchange of
Bonds, and the giving of notices of Bondholders as required by the provisions of this Resolution, a
Supplemental Resolution may provide that all or a portion of Bonds shall be issued as book-entry only
Bonds and registered in the name of the central securities depository or its nominee, in which case matters
relating to registration, ownership, transfer, consent, payment and exchange of Bonds, and relating to the
giving of notices to Bondholders as required by the provisions of this Resolution, shall be governed by
the operational arrangement of such central securities depository.



         (B) With respect to Bonds registered in the registry books kept by the Trustee in the name of the
clearing corporation, THDA and the Trustee shall have no responsibility or obligation to any participant
or to any beneficial owner. Without limiting the immediately preceding sentence, THDA and the Trustee
shall have no responsibility or obligation with respect to (i) the accuracy of the records of the clearing
corporation or any participant with respect to any ownership interest in the Bonds, (ii) the delivery to any
participant, any beneficial owner or any other person other than the clearing corporation, of any notice
with respect to the Bonds, including any notice of redemption, or (iii) the payment to any participant, any
beneficial owner or any other person, other than the clearing corporation, of any amount with respect to
the principal of or premium, if any or interest on the Bonds. THDA and the Trustee may treat as and
deem the clearing corporation to be the absolute owner of each Bond for the purpose of payment of the
principal of and premium and interest on such Bond for the purpose of giving notices of redemption and
other matters with respect to such Bond, and for all other purposes whatsoever. The Trustee shall pay all
principal of and premium, if any, and interest on the Bonds only to or upon the order of the clearing
corporation, and all such payments shall be valid and effective to fully satisfy and discharge THDA’s
obligations with respect to the principal of and premium, if any, and interest on the Bonds to the extent of
the sum or sums so paid. No person other than the clearing corporation shall receive an authenticated
Bond evidencing the obligation of THDA to make payments of principal of and premium, if any, and
interest pursuant to this Resolution. Upon delivery by the clearing corporation to the Trustee of written
notice to the effect that the clearing corporation has determined to substitute a new nominee, and subject
to the provisions herein with respect to consents, the words “clearing corporation” in this Resolution shall
refer to such new nominee of the clearing corporation.


(C)      Upon receipt by THDA and the Trustee of written notice from the clearing corporation to the
         effect that the clearing corporation is unable or unwilling to discharge its responsibilities and no
         substitute depositary willing to undertake the functions of the clearing corporation hereunder can
         be found which is willing and able to undertake such functions upon reasonable and customary
         terms, then the Bonds shall no longer be restricted to being registered in the registry books of
         THDA kept by the Trustee in the name of the clearing corporation, but may be registered in
         whatever name or names the beneficial owners transferring or exchanging Bonds shall designate,
         in accordance with the provisions of this Resolution.

(D)      In the event THDA determines that it is in the best interests of the beneficial owners that they be
         able to obtain Bond certificates, THDA may notify the clearing corporation and the Trustee,
         whereupon the clearing corporation will notify the participants, of the availability through the
         clearing corporation of Bond certificates. In such event, the Trustee shall issue, transfer and
         exchange Bond certificates as requested by the clearing corporation and any other Bondowners in
         appropriate amounts, and whenever the clearing corporation requests THDA and the Trustee to
         do so, the Trustee and THDA will cooperate with the clearing corporation in taking appropriate
         action after reasonable notice (i) to make available one or more separate certificates evidencing
         the Bond to any clearing corporation participant having Bonds credited to its clearing corporation


                                                     15
4814-0375-3221.3
         account or (ii) to arrange for another securities depositary to maintain custody of certificates
         evidencing the Bonds.

(E)      In connection with any notice of other communication to be provided to Bondholders pursuant to
         this Resolution by THDA or the Trustee with respect to any consent or other action to be taken by
         Bondholders, THDA or the Trustee, as the case may be, shall establish a record date for such
         consent or other action and give the clearing corporation notice of such record date not less than
         15 calendar days in advance of such record date to the extent possible.

(F)      Any transfer of a Bond affected in accordance with this Section 3.8 shall be subject to applicable
         laws of the State.


        Section 3.9. Bonds Mutilated, Destroyed, Stolen or Lost. In case any Bond shall become
mutilated or be destroyed, stolen or lost, THDA shall execute and the Trustee shall authenticate a new
Bond of like interest rate, maturity, principal amount and other terms as the Bond so mutilated, destroyed,
stolen or lost. In the case of a mutilated Bond, such new Bond shall be delivered only upon surrender and
cancellation of such mutilated Bond. In the case of Bonds issued in lieu of and substitution for a Bond
which have been destroyed, stolen or lost, such new Bond shall be delivered only upon filing with the
Trustee of evidence satisfactory to establish to THDA and the Trustee that such Bond have been
destroyed, stolen or lost and to prove the ownership thereof and upon furnishing THDA and the Trustee
with indemnity satisfactory to them. The person requesting the authentication and delivery of a new
Bond pursuant to this Section shall comply with such other reasonable regulations as THDA and the
Trustee may prescribe and pay such expenses as THDA and the Trustee may incur in connection
therewith. All Bonds so surrendered to the Trustee shall be cancelled by it and evidence of such
cancellation shall be given to THDA.


        Section 3.10. Preparation of Definitive Bonds; Temporary Bonds. (A) Definitive Bonds shall
be typed, lithographed or printed on steel engraved borders; provided, that Bonds which are held by a
central depository system shall be in form acceptable to such central depository. Until definitive Bonds
are prepared THDA may execute and deliver, in lieu of definitive Bonds, but subject to the same
provisions, limitations and conditions as the definitive Bonds, except as to the denominations thereof and
as to exchangeability, one or more temporary Bonds, substantially of the tenor of the definitive Bonds in
lieu of which such temporary Bonds are issued, in denominations of $5,000 or any multiple thereof, and
with such omissions, insertions and variations as may be appropriate to temporary Bonds. Upon
surrender of such temporary Bonds for exchange and cancellation, THDA at its own expense shall
prepare and execute and, without charge to the holder thereof, deliver in exchange therefor, at the
corporate trust office of the Trustee, definitive Bonds of the same aggregate principal amount, Series and
maturity as the temporary Bonds surrendered. Until so exchanged, the temporary Bonds shall in all
respects be entitled to the same benefits and security as definitive Bonds issued pursuant to this
Resolution.


(B)      All temporary Bonds surrendered in exchange for definitive Bonds shall be forthwith cancelled
         by the Trustee.

        Section 3.11. Cancellation and Destruction of Bonds. All Bonds paid or redeemed, either at or
before maturity, shall be delivered to the Trustee when such payment or redemption is made, and such
Bonds, together with all Bonds purchased by the Trustee, shall thereupon be promptly cancelled. Bonds
so cancelled may at any time be cremated or otherwise destroyed by the Trustee, who shall execute a
Certificate of cremation or destruction in duplicate by the signature of one of its authorized officers



                                                    16
4814-0375-3221.3
describing the Bonds so cremated or otherwise destroyed, and one executed Certificate shall be filed with
THDA and the other executed Certificate shall be retained by the Trustee.


         Section 3.12. Execution and Authentication. (A) After their authorization by a Supplemental
Resolution, Bonds of a Series may be executed by or on behalf of THDA and delivered to the Trustee or
the Authenticating Agent, as appropriate, for authentication. The Bonds shall be executed in the name
and on behalf of THDA by the manual or facsimile signature of the Chairman, Vice Chairman or
Executive Director of THDA and the corporate seal of THDA (or a facsimile thereof) shall be thereunto
affixed, imprinted, engraved or otherwise reproduced thereon, and attested by the manual or facsimile
signature of any other Authorized Officer, or in such other manner as may be required by law. In case
any one or more of the officers or employees who shall have signed or sealed any of the Bonds shall cease
to be such officer or employee before the Bonds so signed and sealed shall have been actually delivered,
such Bonds may, nevertheless, be delivered as herein provided, and may be issued as if the person who
signed or sealed such Bonds had not ceased to hold such office or be so employed. Any Bonds of a
Series may be signed and sealed on behalf of THDA by such persons as at the actual time of the execution
of such Bond shall be duly authorized or hold the proper office in or employment by THDA, although the
date of the Bonds of such Series such persons may not have been so authorized or have held such office
or employment.


         (B)     The Bonds of each Series shall bear thereon a certificate of authentication, in the form set
forth in the Supplemental Resolution authorizing such Bonds, executed manually by the Trustee or the
Authenticating Agent, as appropriate. No Bond shall be entitled to any right or benefit under this
Resolution or shall be valid or obligatory for any purpose until such certificate of authentication shall
have been duly executed by the Trustee or the Authenticating Agent, as appropriate. Such certificate of
the Trustee or the Authenticating Agent, as appropriate, upon any Bond executed on behalf of THDA
shall be conclusive evidence that the Bond so authenticated and delivered under this Resolution and that
the holder thereof is entitled to the benefits hereof.


                                               ARTICLE IV

                   APPLICATION OF BOND PROCEEDS AND OTHER AMOUNTS


        Section 4.1. Application of Bond Proceeds, Accrued Interest and Premium. (A) The proceeds of
sale of any Series of Bonds, other than the proceeds of Refunding Bonds, shall, as soon as practicable
upon the delivery thereof by the Trustee or the Authenticating Agent, as appropriate, pursuant to Section
2.6 be applied as follows:


         (1)       the amount, if any, necessary to cause the amount on deposit in the Bond Reserve Fund to
                   at least equal the Bond Reserve Fund Requirement immediately following the time of
                   such delivery shall be deposited in the Bond Reserve Fund, together with such additional
                   amount, if any, as may be specified in the Supplemental Resolution authorizing such
                   Series; and

         (2)       the balance remaining after such deposit has been made shall be applied as specified in
                   the Supplemental Resolution or as provided in a Certificate of an Authorized Officer.

         Section 4.2. Description of Program Loans and Projected Cash Flow Statement. (A) Upon
the issuance of a Series of Bonds and whenever amounts are to be deposited in the Loan Fund pursuant to


                                                     17
4814-0375-3221.3
the provisions of subsection 5.3 (F), THDA shall file with the Trustee a Projected Cash Flow Statement
and a general description of (i) the Program Loans expected to be financed by application of such
amounts and by application of any other amounts in the Loan Fund and (ii) the amounts, if any, to be
reserved for the purpose of paying capitalized interest and Costs of Issuance in connection with any
Series. Such Projected Cash Flow Statement shall also state the amounts estimated to be applied to the
financing of such Program Loans in each month, up to and including the month upon which it is expected
that the amount then on deposit in the Loan Fund will be fully expended and include a description of the
dates, amounts and remaining terms of any commitments pursuant to which Program Loans are expected
to be made, to the full extent that such commitments are required in order that such expected Program
Loans be included in such Projected Cash Flow Statement.


(B)      THDA may, by a similar filing with the Trustee, amend such Projected Cash Flow Statement
         from time to time in THDA’s discretion, but THDA shall amend such Projected Cash Flow
         Statement to the extent reasonably necessary to reflect the actual application of amounts therein
         or any revised estimates with respect thereto, at least annually so long as amounts remain on
         deposit in the Loan Fund. In the event that any such amended Projected Cash Flow Statement
         indicates a change in the terms of the Program Loans expected to be financed from amounts in
         the Loan Fund and does not show that the Revenues expected to be available in each Fiscal Year
         are at least equal to the expected Debt Service and Program Expenses for such Fiscal Year,
         THDA shall file with the Trustee, concurrently with such amended Projected Cash Flow
         Statement, a Certificate of an Authorized Officer stating that, in the judgment of THDA, the
         Revenues expected to be available after the payment of estimated Debt Service and Program
         Expenses in each Fiscal Year are greater than they would have been if all or a portion of such
         amounts were to be applied to the redemption of Bonds.


         Section 4.3. Application of Amounts in the Loan Fund. (A) No amount in Loan Fund shall be
expended or applied for the purpose of financing Program Loans except upon compliance with the
provisions of subsection 5.2(C). In addition, no Program Loan shall be financed unless a promissory note
shall have been executed to evidence the Program Loan and a mortgage securing such Program Loan shall
have been executed and recorded in accordance with the requirements of existing laws and (except to the
extent that a variance is required by an agency or instrumentality of the United States of America insuring
or guaranteeing the payment of a Program Loan):


          (1)      the deed of trust shall constitute and create a first lien subject only to Permitted
                   Encumbrances, on the real property or on the interest in the real property constituting a
                   part of the residential housing with respect to which the Program Loan secured thereby is
                   made and on the fixtures acquired with the proceeds of the Program Loan attached to or
                   used in connection with such residential housing;

         (2)       the borrower shall have warranted generally the title to the premises (or a leasehold estate
                   therein having a remaining term to maturity at least ten years longer than the term of the
                   Program Loan), subject to Permitted Encumbrances, and will execute such further
                   assurances as may be requisite;

         (3)       the borrower has entered into a binding agreement with or for the benefit of THDA that it
                   will pay or escrow all taxes, assessments, water rates, sewer rents and municipal and
                   other charges and fees and any prior liens now or hereafter assessed or liens on or levied
                   against the premises or any part thereof, and in the case of default in the payment thereof
                   when the same shall be due and payable, it shall be lawful for THDA without notice to or
                   demand of the borrower, to pay the same or any of them and that the moneys paid by

                                                       18
4814-0375-3221.3
                   THDA in discharge of taxes, assessments, water rates, sewer rents and municipal, other
                   charges and fees and prior liens shall be a lien on the premises added to the amount of the
                   Program Loan secured by the mortgage and payable on demand with interest (at the rate
                   applicable under the Program Loan), from the time of payment of the same;

         (4)       the borrower shall covenant and represent that the proceeds of the Program Loan will be
                   used solely to pay the reasonable and necessary costs of the residential housing to be
                   financed by such Program Loan;

         (5)       the borrower shall covenant that it will keep the buildings on the premises insured against
                   loss by fire and other hazards as required by THDA to protect its interest with losses
                   payable to THDA as its interest may appear and that the borrower will reimburse THDA
                   for any insurance premiums paid by THDA on the borrower’s default in so insuring the
                   buildings;

         (6)       the borrower shall covenant that it will maintain the premises in good condition and
                   repair, will not commit or suffer any waste of the premises, and will comply with, or
                   cause to be complied with, all statutes, ordinances and requirements of any governmental
                   authority relating to the premises;

         (7)       the borrower shall covenant to obtain and maintain in force, at its sole expense, a
                   mortgagee policy of title insurance (in standard American Land Title Association form as
                   then in effect) issued by a title insurance company qualified to do business in the State
                   and acceptable to THDA insuring THDA that the mortgage is valid and enforceable and
                   in an amount at least equal to the outstanding principal balance of the Program Loan,
                   including, when applicable, any increases in the amount thereof; and

         (8)       the Program Loan must either:

                   (a)     have been insured or guaranteed by the Federal Housing Administration, the
                           Farmers Home Administration, the Veteran’s Administration, or another agency
                           or instrumentality of the United States or the State to which the powers of any of
                           them have been transferred, or which is exercising similar powers with reference
                           to the insurance or guaranty of Program Loans; or

                   (b)     have a principal balance not exceeding 78% of the value, as determined in an
                           appraisal by or acceptable to THDA, or the purchase price of the property
                           securing the Program Loan, whichever is less; or

                   (c)     be made in an amount not exceeding the value, as determined in an appraisal by
                           or acceptable to THDA, or purchase price of the property securing the Program
                           Loan, whichever is less, but only if (i) THDA is issued a mortgage insurance
                           policy by a private mortgage insurance company, qualified to do business in the
                           State and the claims paying ability of which private mortgage insurer is rated by
                           each Rating Agency in a rating category at least as high as the then current rating
                           assigned to the Bonds, under which the insurer, upon foreclosure of the property
                           securing the Program Loan, must pay the holder of the Program Loan the
                           unrecovered balance of a claim including unpaid principal, accrued interest,
                           taxes, insurance premiums, and expenses of foreclosure, if any, or in lieu thereof
                           may permit the holder of the Program Loan to retain title and may pay an agreed
                           insured percentage of such claim; and (ii) the insured percentage of the Program
                           Loan equals the amount by which the original principal amount of the Program
                           Loan exceeds 78% of the value, as determined by an appraisal by or acceptable

                                                      19
4814-0375-3221.3
                          to THDA or purchase price of the property securing the Program Loan,
                          whichever is less; and

         (9)       the Program Loan shall have been made for residential housing for occupancy by not
                   more than four families.

       Section 4.4. Application of Proceeds of Refunding Bonds. The proceeds of the Refunding
Bonds of a Series shall be deposited in the Redemption Account or the Debt Service and Expense
Account as provided in the Supplemental Resolution authorizing such Bonds.


        Section 4.5. Deposits. (A) Except as provided in Sections 2.7 and 12.1 and subject to the right
of THDA to direct the deposit of funds, whenever such amounts are not invested in Investment Securities,
the Trustee shall, if permitted by law, deposit amounts or cause amounts to be deposited from any Fund
held by the Trustee or under its control pursuant to the terms of this Resolution in interest-bearing time
deposits or certificates of deposit, or may enter into repurchase agreements or make other similar banking
arrangements with itself or a member bank or banks of the Federal Reserve System or a bank, the deposits
of which are insured by the Federal Deposit Insurance Corporation or its successor, or a savings and loan
association, the deposits of which are insured by the Federal Savings and Loan Insurance Corporation or
its successor. Repurchase agreements and other similar arrangements may also be entered into with
government bond dealers reporting to, trading with and recognized as primary dealers by a Federal
Reserve Bank and may be entered into with any other person if 1) all amounts payable thereunder, are
fully and continuously secured by Investment Securities of the type described in clauses (1) through (6) of
the definition thereof in Section 1.2, 2) the Trustee shall receive confirmation that such securities are
being held for the benefit (and subject to the direction) of the Trustee by a national bank or member bank
of the Federal Reserve System other than the obligor under such arrangement and 3) the market value of
the Investment Securities being held shall be maintained at a level sufficient to maintain the then current
rating on the Bonds by each Rating Agency. Each such interest-bearing time deposit or certificate of
deposit or other similar banking arrangement shall permit the moneys so placed to be available at the
times at which moneys are needed by THDA to be expended and, except to the extent that any such
deposits shall be insured by the United State of America or the federal corporations enumerated above on
terms which in the judgment of THDA (as expressed in written instructions to the Trustee) provide
reasonable liquidity, all moneys in each such interest-bearing time deposit, certificate of deposit,
repurchase agreement or other similar banking arrangement shall be either a) entered into with an obligor
which is a bank, the deposits of which are insured by the Federal Deposit Insurance Corporation or its
successor or b) continuously and fully secured under the laws of THDA as determined by Board of
Directors of THDA by Investment Securities (or other obligations rated in either of the two highest rating
categories by a nationally recognized rating service) having a market value equal at all times to the
amount of the deposit, repurchase agreement, certificate or other similar banking arrangement.


(B)      In order to permit such amounts to be available for use at the time when needed, any amounts
         held under this Resolution by any Fiduciary or Depositary, as such, may, if and as directed by
         THDA, be deposited in the commercial banking department of such Fiduciary or Depositary
         which may honor checks and drafts on such deposit with the same force and effect as if it were
         not such Fiduciary or Depositary. Any such Fiduciary or Depositary shall allow and credit on
         such amounts at least such interest, if any, as it customarily allows upon similar funds of similar
         size and under similar conditions or as required by law.

(C)      All amounts deposited by any Fiduciary or Depositary pursuant to subsection (B) above shall be
         continuously and fully secured either (a) by lodging with the Trustee as custodian, as collateral
         security, Investment Securities having a market value (exclusive of accrued interest) not less than
         the amount of such deposit, or (b) in such other manner as may then be required by applicable

                                                     20
4814-0375-3221.3
         federal or state laws and regulations regarding security for the deposit of public funds. It shall not
         be necessary, unless required by applicable law, for any Fiduciary to give security under this
         Section for the deposit of any amounts to the extent that such deposit is insured by the Federal
         Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation, or their
         respective successors, or which are held in trust and set aside by them for the payment of any
         Bonds, or for the Trustee or any Depositary to give security for any moneys which shall be
         represented by obligations or certificates of deposit purchased as an investment of such moneys.

(D)      All amounts so deposited by any Fiduciary or Depositary shall be credited to the particular Fund
         from which such amounts were derived.

         Section 4.6. Investment of Certain Funds. (A) Subject to the right of THDA to direct the
investment or deposit of funds hereunder in accordance with this Section, moneys in any Fund shall be
continuously invested and reinvested or deposited and redeposited in the highest yield Investment
Securities that may be reasonably known to the Trustee, with a view toward maximizing current return
(with proper preservation of principal) and minimizing the instances of uninvested funds. THDA shall
consult with the Trustee from time to time as to the investment of amounts in the Funds established or
confirmed by this Resolution. THDA may direct the Trustee to, or in the absence of direction, the Trustee
shall, invest and reinvest the moneys in any Fund in Investment Securities in accordance with this Section
and toward the objective that the maturity date or date of redemption at the option of the holder thereof
shall coincide as nearly as practicable with the times at which moneys are needed to be so expended.


(B)      Investment Securities purchased as an investment of moneys in any Fund held by the Trustee
         under the provisions of this Resolution shall be deemed at all times to be a part of such Fund but,
         except as may be otherwise provided for amounts deposited in the Redemption Fund in
         connection with the issuance of Refunding Bonds, the income or interest earned and gains
         realized in excess of losses suffered by a Fund due to the investment thereof shall be deposited as
         Non-Mortgage Receipts in the Non-Mortgage Receipts Account or shall be credited as Non-
         Mortgage Receipts to the Non-Mortgage Receipts Account from time to time and reinvested.

(C)      The Trustee shall sell at the best price obtainable, or present for redemption or exchange, any
         Investment Security purchased by it pursuant to this Resolution whenever it shall be necessary in
         order to provide moneys to meet any payment or transfer from the Fund for which such
         investment was made or whenever, in the discretion of THDA, any such sale or presentment is
         necessary in compliance with Section 7.9. The Trustee shall advise THDA in writing, on or
         before the twentieth day of each calendar month, of all investments held for the credit of each
         Fund in its custody under the provisions of this Resolution as of the end of the preceding month.

         Section 4.7. Valuation and Sale of Investments. (A) In computing the amount in any Fund,
obligations purchased as an investment, of moneys therein shall be valued at market, except that for
purposes of determining the Bond Reserve Fund Requirement, Investment Securities shall be valued at
amortized value. Amortized value means par, if the obligation was purchased at par, or, when used with
respect to an obligation purchased at a premium above or a discount below par, means the value as of any
given time obtained by dividing the total premium or discount at which such obligation was purchased by
the number of interest payments remaining on such obligation after such purchase and deducting the
amount thus calculated for each interest payment date after such purchase from the purchase price in the
case of an obligation purchased at a premium or adding the amount thus calculated for each interest
payment date after such purchase to the purchase price in the case of an obligation purchased at a
discount. Valuation shall be made as soon as practicable prior to each Interest Payment Date and at any
other time required hereunder, and on any particular date shall not include the amount of interest then
earned or accrued to such date on any depositor investment.


                                                      21
4814-0375-3221.3
(B)      Except as otherwise provided herein, the Trustee shall sell at the best price obtainable, or present
         for redemption, any Investment Security whenever it shall be requested in writing by an
         Authorized Officer to do so or whenever it shall be necessary in order to provide moneys to meet
         any payment or transfer from any Fund held by it. An Investment Security may be credited on a
         pro-rata basis to more than one Fund and need not be sold in order to provide for the transfer of
         amounts from one Fund to another.


                                               ARTICLE V

                                                  FUNDS


         Section 5.1. Establishment of Funds. (A) THDA hereby establishes and creates the following
special trust funds:

         (1)       Loan Fund;
         (2)       Revenue Fund;
         (3)       Bond Reserve Fund; and
         (4)       Escrow Fund.

(B)      All such Funds shall be held and maintained by the Trustee, including one or more Depositaries
         in trust for the Trustee, and shall be identified by THDA and the Trustee according to the
         designations herein provided in such manner as to distinguish such Funds from the Funds
         established by THDA for any other of its obligations. All moneys or securities held by the
         Trustee or any Depositary pursuant to this Resolution shall be held in trust and applied only in
         accordance with the provisions of this Resolution and the Act.

(C)       This Resolution contemplates the establishment of Subaccounts within the Funds created
          pursuant to this Resolution. In addition to the Subaccounts established hereunder, the Trustee
          may from time to time, establish, close and reestablish such Subaccounts as may be requested by
          THDA for convenience of administration of the Program and as shall not be inconsistent with the
          provisions of this Resolution. Notwithstanding anything in this Resolution to the contrary,
          including Section 2.2 hereof, to the extent provided in a Supplemental Resolution authorizing a
          Series of Bonds, THDA may cause the Trustee to establish a Subaccount into which the net
          proceeds of such Series of Bonds shall be deposited, held, applied and invested separate and
          apart from all other funds on deposit hereunder and such Supplemental Resolution may provide
          that amounts on deposit therein are pledged solely to certain of the Bonds of such Series.


       Section 5.2. Loan Fund. (A) There shall be deposited from time to time in the Loan Fund any
amount required to be deposited therein pursuant to this Resolution and any other amounts determined to
be deposited therein from time to time.


(B)      Amounts in the Loan Fund shall be expended only (i) to finance Program Loans, in accordance
         with Section 4.3; (ii) to pay Costs of Issuance; (iii) to make deposits in the Debt Service and
         Expense Account, representative of capitalized interest, in the manner provided in subsection (D)
         of this Section; (iv) to redeem Bonds in accordance with subsection (E) of this Section; and (v) to
         provide amounts for deposit in the Debt Service and Expense Account in accordance with
         subsection (F) of this Section. All Program Loans financed by application of amounts in the
         Loan Fund shall be credited to the Loan Fund.


                                                     22
4814-0375-3221.3
(C)      The Trustee may establish a special Account within the Loan Fund for the purpose of providing
         funds to finance Program Loans, upon which checks or drafts may be written as provided in
         Subsection 4.5(B). THDA shall maintain accurate records in the office of THDA describing for
         each Program Loan the amounts applied to the financing of such Program Loan and the persons
         and dates related to such payments. Upon the deposit of any amounts in such special account an
         Authorized Officer shall certify that, as to the Program Loans expected to be financed from the
         amount so deposited (i) the terms of such Program Loans will conform to the description of the
         Program Loans to be financed from such amount as set forth in the most recent Projected Cash
         Flow Statement delivered to the Trustee, (ii) such Program Loans will comply with the provisions
         of Section 4.3, and (iii) the cost of financing such Program Loans will not exceed the principal
         amount thereof plus accrued interest thereon. Except for such special Account, the Trustee shall
         pay out and permit the withdrawal of amounts on deposit in the Loan Fund at any time for the
         purpose of making payments pursuant to this Section only upon receipt of:

         (1)       a written requisition setting forth the amount to be paid, the person or persons to whom
                   such payment is to be made (which may be or include THDA) and, in reasonable detail,
                   the purpose or purposes of such withdrawal; and

         (2)       a Certificate of an Authorized Officer identifying such requisition and stating that the
                   amount to be withdrawn from the Loan Fund pursuant to such requisition is a proper
                   charge thereon.

(D)      At least one day prior to each Interest Payment Date THDA shall deliver to the Trustee a
         Certificate of an Authorized Officer setting forth the amount necessary, in the opinion of such
         Authorized Officer, to pay interest on the Bonds of each Series from the amount on deposit in the
         Loan Fund, after giving effect to the actual and expected application of amounts therein to the
         financing of Program Loans as of the date of such Certificate. Upon receipt of such Certificate the
         Trustee shall transfer the amount so stated for each Series to the Debt Service and Expense
         Account, but only to the extent that the cumulative amount of such transfers does not exceed for
         each Series the amount stated as necessary to be reserved in the Loan Fund for the purpose of
         paying capitalized interest pursuant to the Certificate of an Authorized Officer delivered in
         connection with the delivery of such Series pursuant to subsection 4.2(A) plus the amount, if any,
         certified by an Authorized Officer as available for such purpose from amounts originally reserved
         in the Loan Fund for the payment of capitalized interest and Costs of Issuance with respect to
         other Series in excess of the amounts actually required therefor.

(E)      At any time THDA may direct the Trustee in writing to transfer amounts in the Loan Fund to the
         Redemption Account or to apply such amounts directly to the redemption, purchase or retirement
         of Bonds in accordance with their terms and the provisions of Article VI, but only if there is
         delivered to the Trustee a Projected Cash Flow Statement.

(F)      THDA may at any time direct the Trustee to transfer amounts in the Loan Fund to the Revenue
         Fund, but only if there is delivered to the Trustee a Projected Cash Flow Statement showing the
         amount to be so transferred and that, after giving effect to such transfer, such Statement complies
         with subsection 7.11(C).

(G)      [Reserved]

       Section 5.3. Revenue Fund. (A) The Trustee shall establish and create within the Revenue
Fund three Accounts into which amounts shall be deposited and from which amounts shall be transferred
as provided in this Section. These Accounts shall be designated as the Debt Service and Expense
Account, the Redemption Account and the Non-Mortgage Receipts Account. THDA shall cause all
Revenues to be deposited promptly with a Depositary and to be transmitted regularly to the Trustee (at

                                                     23
4814-0375-3221.3
least monthly) and such amounts shall be deposited in the Debt Service and Expense Account. There
shall also be deposited in the Debt Service and Expense Account any other amounts required to be
deposited therein pursuant to this Resolution.


(B)      The Trustee shall pay out of the Debt Service and Expense Account to the respective Paying
         Agents for any of the Bonds (i) on or before each Interest Payment Date, the amounts required for
         the payment of the Principal Installments, if any, and interest due on the Outstanding Bonds on
         such date and (ii) on or before the Redemption Date or date of purchase, the amounts required for
         the payment of accrued interest on Outstanding Bonds redeemed or purchased for retirement,
         unless the payment of such accrued interest shall be otherwise provided for, and in each such
         case, such amounts shall be applied by such Paying Agents to such payments. Upon receipt of
         appropriate requisitions and certificates reflecting such payment in the form prescribed by
         subsection 5.2(C), amounts on deposit in the Debt Service and Expense Account may be applied
         to the payment of accrued interest in connection with the financing of any Program Loan.

(C)      Prior to the forty-fifth day preceding the due date of each Sinking Fund Payment, any amount
         accumulated in the Debt Service and Expense Account up to the unsatisfied balance of such
         Sinking Fund Payment may, and if so directed in writing by an Authorized Officer of THDA
         shall, be applied (together with amounts accumulated in the Revenue Fund with respect to interest
         on the Bonds for which such Sinking Fund Payment was established) by the Trustee as follows:

         (1)       to the purchase of Bonds of the Series and maturity for which such Sinking Fund
                   Payment was established, at prices (including any brokerage and other charges) not
                   exceeding the Redemption Price for such Bonds when such Bonds are redeemable by
                   application of said Sinking Fund Payment plus unpaid interest accrued to the date of
                   purchase, such purchases to be made in such manner as the Trustee shall determine; or

         (2)       to the redemption, pursuant to Article VI, of such Bonds if then redeemable by their
                   terms at the Redemption Price referred to in clause (1) hereof.

(D)      Upon the purchase or redemption of any Bond pursuant to subsection (C) of this Section, an
         amount equal to the principal amount of the Bond so purchased or redeemed shall be credited
         toward the next Sinking Fund Payment thereafter to become due and the amount of any excess of
         the amounts so credited over the amount of such Sinking Fund Payment shall be credited by the
         Trustee against future Sinking Fund Payments in direct chronological order, unless otherwise
         instructed in writing by an Authorized Officer at the time of such purchase or redemption. The
         portion of any Sinking Fund Payment remaining after the crediting thereto of any such amounts
         and of any amounts to be credited thereto as provided in subsection (M) of this Section (or the
         original amount of any such Sinking Fund Payment if no such amounts shall have been credited
         toward the same) shall constitute the unsatisfied balance of such Sinking Fund Payment for the
         purpose of calculating Sinking Fund Payments due on a future date.

(E)      As soon as practicable after the forty-fifth day preceding the due date of any such Sinking Fund
         Payment, the Trustee shall proceed to call for redemption pursuant to Section 6.3, on such due
         date, Bonds of the Series and maturity for which such Sinking Fund Payment was established in
         such amount as shall be necessary to complete the retirement of a principal amount of the Bonds
         of such maturity equal to the unsatisfied balance of such Sinking Fund Payment. The Trustee
         shall so call such Bonds for redemption whether or not it then has moneys in the Debt Service and
         Expense Account sufficient to pay the applicable Redemption Price thereof on the Redemption
         Date. The Trustee shall pay out of the Debt Service and Expense Account to the appropriate
         Paying Agents on the date preceding each such Redemption Date the amount required for the



                                                    24
4814-0375-3221.3
         redemption of the Bonds so called for redemption, and such amount shall be applied by such
         Paying Agents to such redemption.

(F)      Within ninety days after the close of each Fiscal Year, THDA shall deliver to the Trustee a
         Certificate of an Authorized Officer containing a Projected Cash Flow Statement as of the first
         day of the then current Fiscal Year (but assuming the transfer of any amounts to the Loan Fund as
         provided in clause (ii) of this sentence) which states (i) the amount remaining in the Debt Service
         and Expense Account as of such first day after deducting all payments required to have been
         made pursuant to paragraph (B) of this Section and (ii) the amount required to be transferred to
         the Loan Fund in accordance with the assumptions made in such Projected Cash Flow Statement.
         Promptly upon receipt of such Certificate the Trustee shall transfer from the Debt Service and
         Expense Account an amount equal to the amount stated in (i) above as follows:

         FIRST: From the amount so available, the amount, if any, by which the amount on deposit in the
         Bond Reserve Fund is less than the Bond Reserve Fund Requirement shall be transferred to the
         Bond Reserve Fund.

         SECOND: From the amount, if any, so available after the transfer provided above has been
         made, the amount needed to be transferred to THDA to pay reasonable and necessary Program
         Expenses which are due and owing.

         THIRD: From the amount, if any, so available and remaining after the transfers provided above
         have been made, the amount, if any, stated in such Projected Cash Flow Statement as to be
         transferred to the Loan Fund shall be so transferred, and if such Projected Cash Flow Statement
         does not comply with subsection 7.11(C), the amount so available shall be transferred to the Loan
         Fund as set forth in the Certificate delivered in accordance with Section 5.3(H).

         FOURTH: From the amount, if any, so available and remaining after any transfers provided for
         above have been made, the remaining amount shall be transferred to the Redemption Account as
         directed by THDA. If, however, the amount of Program Loans (valued at par) and Investment
         Securities held by the Trustee hereunder (other than Investment Securities in the Redemption
         Account or the Escrow Fund) valued in accordance with this Resolution, is greater than 102% of
         the principal amount of all Bonds Outstanding plus the Program Loan Loss Coverage, then the
         amount remaining, up to such excess above the 102% of the principal amount of all Bonds
         Outstanding plus the Program Loan Loss Coverage, may be withdrawn from the Debt Service and
         Expense Account at any time during the then current Fiscal Year, upon receipt by the Trustee of a
         Certificate to such effect from an Authorized Officer of THDA and a Projected Cash Flow
         Statement after giving effect to such withdrawal, to be applied to any purpose of THDA
         consistent with Section 7.9, free and clear of the lien of any pledge of this Resolution. The
         Projected Cash Flow Statement for purposes of this Section 5.3(F) shall include all Program
         Loans, including any Program Loans which have been in payment default for sixty (60) or more
         consecutive days. For the purposes of this paragraph, there shall be excluded from the amount of
         Program Loans and Investment Securities any Program Loans or Investment Securities which
         were acquired with amounts deposited in the Loan Fund or the Bond Reserve Fund from sources
         other than the proceeds of Bonds or transfers from the Revenue Fund, unless, at the time such
         amounts were deposited therein, the Trustee receives a Certificate of an Authorized Officer
         stating that such amounts are not necessary to be deposited therein in order to provide Revenues
         sufficient to provide for the payment of Outstanding Bonds.

(G)      Notwithstanding any other provision of this Section, the Trustee may at any time, upon the
         written direction of an Authorized Officer, (i) make transfers from the Debt Service and Expense
         Account to the Bond Reserve Fund, or the Redemption Account or (ii) make payments to THDA
         for the purpose of paying reasonable and necessary Program Expenses for the then current Fiscal

                                                     25
4814-0375-3221.3
         Year. No such transfer or payment shall be made, however, unless (x) such withdrawal is in an
         amount less than or equal to the amount of such withdrawal as set forth in the most recent
         Projected Cash Flow Statement or (y) there is on deposit in the Debt Services and Expense
         Account and the Non-Mortgage Receipts Account in the Revenue Fund after such transfer or
         payment an amount equal to the principal and interest accrued on all Outstanding Bonds as of the
         date of such transfer or payment plus an amount equal to the cumulative amount of prepayments
         received by THDA during such Fiscal Year which are in excess of the amount of prepayments
         estimated to be applied to the payment of maturing Bonds during such Fiscal Year in the most
         recent Projected Cash Flow Statement delivered by THDA. In addition, no such transfer shall be
         made pursuant to clause (y) above unless a Projected Cash Flow Statement is delivered to the
         Trustee and no payment for Program Expenses shall be made unless the monthly revenue
         statements delivered for the preceding month pursuant to Section 7.10(B) shows that accumulated
         Revenues and Non-Mortgage Receipts exceed accrued Debt Service by an amount at least equal
         to such payment.

(H)      Whenever any amount is to be transferred from the Debt Service and Expense Account in the
         Revenue Fund to the Loan Fund or the Redemption Fund and the Projected Cash Flow Statement
         delivered to the Trustee in connection with such transfer does not comply with subsection
         7.11(C), there shall be filed with the Trustee, together with such Projected Cash Flow Statement,
         a Certificate of an Authorized Officer stating that such Projected Cash Flow Statement reflects
         the use of the amount so transferred for the financing of Program Loans, the acquisition of
         Investment Securities or the redemption of Bonds in such manner as, in the judgment of THDA,
         produces the greatest estimated availability of Revenues in relation to the amount of estimated
         Debt Service and Program Expenses in each Fiscal Year and such use does not adversely affect
         the then current ratings on the Bonds as confirmed in writing by the rating agencies rating the
         Bonds.

(I)      Notwithstanding the provisions of subsection (A) of this Section, no payments shall be required
         to be made into the Debt Service and Expense Account so long as the amount on deposit therein
         shall be sufficient to pay all Outstanding Bonds (including the Sinking Fund Payments for the
         retirement thereof) in accordance with their terms, and any Revenues thereafter received by
         THDA may be applied to any corporate purpose of THDA free and clear of the lien of the pledge
         of this Resolution.

(J)      There shall be deposited in the Redemption Account any amounts which are required to be
         deposited therein pursuant to this Resolution and any other amounts available therefor and
         determined by THDA to be deposited therein. Subject to the provisions of the respective Series of
         Bonds and to the provisions of the respective Supplemental Resolutions authorizing the issuance
         thereof and authorizing the issuance of Refunding Bonds, all amounts deposited in the
         Redemption Account shall be applied to the payment, purchase or redemption of Bonds, at the
         earliest practicable Redemption Date. Subject to the provisions of this Resolution or of any
         Supplemental Resolution authorizing the issuance of Bonds, requiring the application thereof to
         the payment, purchase or redemption of any particular Bonds, the Trustee shall apply any
         amounts deposited in the Redemption Account to the purchase or redemption of Bonds at the
         times and in the manner provided in this Section and Article VI. Any earnings derived from the
         investment of amounts deposited in the Redemption Account pursuant to Section 2.7 shall, to the
         extent required to provide amounts sufficient for the payment or redemption of Bonds in
         accordance with the conditions for issuance of Refunding Bonds set forth in said Section, be
         deposited in the Redemption Account. Amounts on deposit in the Redemption Account for the
         payment, purchase or redemption of any particular Bonds in accordance with the provisions of
         any Supplemental Resolution authorizing the issuance of Refunding Bonds, including amounts
         derived from the investment thereof as provided in this subsection, shall be segregated and shall
         be identified as such on the records of the Trustee.

                                                    26
4814-0375-3221.3
(K)      Except as may be otherwise provided in connection with the issuance of Refunding Bonds, at any
         time prior to the forty-fifth day upon which Bonds are to be paid or redeemed from such amounts,
         the Trustee may apply amounts in the Redemption Account to the purchase of any of the Bonds
         which may be paid or redeemed by application of amounts on deposit therein. THDA may,
         however, by delivery to the Trustee of written instructions to such effect signed by an Authorized
         Officer, require or prohibit such purchases in the discretion of THDA. The Trustee shall
         purchase Bonds at such times, for such prices, in such amounts and in such manner as THDA
         shall from time to time direct or, in the absence of such direction, as the Trustee may determine in
         its sole discretion and as may be possible with the amounts then available therefor. The purchase
         price paid by the Trustee (excluding accrued interest but including any brokerage and other
         charges) for any Bond purchased shall not exceed the principal amount of such Bond unless such
         Bond may be redeemed in accordance with this Resolution on any date or dates within thirteen
         months after such purchase, in which event such purchase price shall not exceed the highest
         Redemption Price payable on any such date upon the redemption of such Bond. In the event the
         Trustee is able to purchase Bonds at a price less than the Redemption Price at which such Bonds
         were to be redeemed, then, upon the payment by the Trustee of the purchase price of such Bonds,
         the Trustee shall transfer the difference between the amount of such purchase price and the
         amount of such Redemption Price, and deposit the same in the Debt Service and Expense
         Account within the Revenue Fund.

(L)      [Reserved.]

(M)      Upon the purchase or redemption of Bonds for which Sinking Fund Payments have been
         established from amounts in the Redemption Account, there shall be credited toward each such
         Sinking Fund Payment thereafter to become due an amount as nearly as may be practicable in
         multiples of $5,000 bearing the same ratio to such Sinking Fund Payment, as the total principal
         amount of such Bond so purchased or redeemed bears to the total amount of all such Sinking
         Fund Payments to be credited. If, however, there shall be filed with the Trustee written
         instructions of an Authorized Officer specifying a different method for crediting Sinking Fund
         Payments upon any such purchase or redemption of Bonds and the Trustee shall consent to such
         method, then such Sinking Fund Payments shall be credited as shall be provided in such
         instructions.

(N)      Except as otherwise specifically provided herein, the Trustee shall have no obligation to purchase
         or attempt to purchase Bonds at a price below the Redemption Price or at any other price and any
         arms length purchase by the Trustee shall conclusively be deemed fair and reasonable.

(O)      All Non-Mortgage Receipts shall be deposited, promptly upon receipt by the Trustee, in the Non-
         Mortgage Receipts Account. The Trustee shall maintain records sufficient to determine the
         average daily balance of the amounts on deposit in the Loan Fund and the Bond Reserve Fund
         and the Debt Service and Expense Account and Redemption Account in the Revenue Fund
         (referred to in this Section as the “average daily balance”). If so directed by THDA, the Trustee
         shall maintain such for each Series of Bonds separately.

(P)      Semi-annually not later than each Interest Payment Date, the Trustee shall transfer from the Non-
         Mortgage Receipts Account to the Debt Service and Expense Account an amount equal to the
         lesser of (i) the amount needed to enable the Trustee to pay Debt Service on the Bonds on such
         Interest Payment Date and (ii) the balance then on deposit in the Non-Mortgage Receipts
         Account. If at any time the amount available prior to any Interest Payment Date shall be
         insufficient for the making of the transfers provided by this Subsection, then the Trustee shall
         make transfers to the Debt Service and Expense Account from the Non-Mortgage Receipts
         Account from the first available Non-Mortgage Receipts received subsequent to such Interest


                                                     27
4814-0375-3221.3
         Payment Date and the amount so transferred shall not reduce the amount required to be
         transferred prior to the next Interest Payment Date.

(Q)      Any amount remaining in the Non-Mortgage Receipts Account after the semi-annual transfer to
         the Debt Service and Expense Account shall be transferred, at the direction of an Authorized
         Officer, to the Loan Fund, the Redemption Account, or the Escrow Fund.

       Section 5.4. Bond Reserve Fund. (A) If on any Interest Payment Date or Redemption Date for
the Bonds the amount in the Revenue Fund and the Redemption Fund, if applicable, shall be less than the
amount required for the payment of the Principal Installments and interest due on the Outstanding Bonds
on such date, the Trustee shall apply amounts from the Bond Reserve Fund to the extent necessary to
make good the deficiency.


(B)      If, concurrently with any allocation from the Revenue Fund pursuant to subsection (B), (F) or (G)
         of Section 5.3, the amount on deposit in the Bond Reserve Fund, shall be in excess of the Bond
         Reserve Fund Requirement, the Trustee may, if so directed in writing by an Authorized Officer of
         THDA, transfer the amount of such excess to the Redemption Account.

(C)      Whenever the amount in the Bond Reserve Fund, together with the amount in the Revenue Fund,
         is sufficient to fully pay all Outstanding Bonds in accordance with their terms (including the
         Sinking Fund Payments for the retirement thereof), amounts on deposit in the Revenue Fund shall
         be transferred to the Bond Reserve Fund. Prior to said transfer all investments held in the
         Revenue Fund shall be liquidated and any Bonds constituting a part of such Fund shall be deemed
         paid and cancelled.

        Section 5.5. Escrow Fund. There shall be deposited in the Escrow Fund, all amounts required
by this Resolution to be deposited therein and any other amounts available therefor and determined by
THDA to be deposited therein. Amounts in the Escrow Fund may be applied to any lawful purpose of
THDA consistent with Section 7.9.

                                              ARTICLE VI

                                      REDEMPTION OF BONDS


        Section 6.1. Privilege of Redemption and Redemption Price. Bonds subject to redemption
prior to maturity shall be redeemable, upon notice as provided in this Article, at such times, at such
Redemption Prices and upon such other terms as may be specified in this Resolution, in the Bonds and in
the respective Supplemental Resolutions authorizing the issuance of such Bonds and authorizing the
issuance of Refunding Bonds.


         Section 6.2. Redemption at the Election or Direction of THDA. In the case of any redemption
of Bonds otherwise than as provided in Section 6.3, THDA shall give written notice to the Trustee of its
election or direction so to redeem, of the Redemption Date, of the principal amounts of the Bonds of such
Series and maturities to be redeemed (which Redemption Date, Series, maturities and principal amounts
thereof to be redeemed shall be determined by THDA in its sole discretion, subject to any limitations with
respect thereto contained in or permitted by this Resolution) and of any moneys to be applied to the
payment of the Redemption Price. Such notice shall be given at least forty-five days prior to the
Redemption Date or such shorter period as shall be acceptable to the Trustee. THDA shall direct the
redemption of Bonds pursuant to this Section 6.2 pro rata among all Series and all maturities within each
Series then Outstanding hereunder unless THDA shall also deliver a Projected Cash Flow Statement


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4814-0375-3221.3
indicating a different selection of Bonds to be redeemed. In the event notice of redemption shall have
been given as provided in Section 6.5, the Trustee, if it holds the moneys to be applied to the payment of
the Redemption Price, or otherwise THDA, shall, prior to the Redemption Date, pay to the appropriate
Paying Agent or Paying Agents an amount in cash which, in addition to other moneys, if any, available
therefor held by such Paying Agent or Paying Agents, will be sufficient to redeem on the Redemption
Date at the Redemption Price thereof all the Bonds to be redeemed. THDA shall promptly notify the
Trustee in writing of all such payments made by THDA to a Paying Agent.


        Section 6.3. Redemption Otherwise Than at THDA’s Election or Direction. Whenever by
the terms of this Resolution, the Trustee is required to redeem Bonds otherwise than at the election or
direction of THDA, and subject to and in accordance with the terms of this Article and, to the extent
applicable, Article V, the Trustee shall select the Redemption Date of the Bonds to be redeemed, give the
notice of redemption and pay the Redemption Price to the appropriate Paying Agents.


         Section 6.4. Selection of Bonds to be Redeemed. In the event of redemption of less than all the
Outstanding Bonds of like Series and maturity, the Trustee or the Authenticating Agent, as appropriate,
shall assign to each such Outstanding fully registered Bond a distinctive number for each $5,000 of the
principal amount thereof so as to distinguish each such $5,000 from each other portion of the Bonds
subject to such redemption. The Trustee or the Authenticating Agent, as appropriate, shall select by lot,
using such method of selection as it shall deem proper in its sole discretion, from the numbers assigned to
such Bonds, as many numbers as, at $5,000 for each number, shall equal the principal amount of such
Bonds to be redeemed. The Bonds to be redeemed shall be the Bonds bearing the numbers so selected;
but only so much of the principal amount of each such fully registered Bond of a denomination or more
than $5,000 shall be redeemed as shall equal $5,000 for each number assigned to it and so selected. For
the purposes of this Section, Bonds which have theretofore been selected by lot for redemption shall not
be deemed Outstanding. In the case of Appreciation Bonds, in the event that the Compounded Amount of
any such Bond shall be less than $5,000, the Trustee or the Authenticating Agent, as appropriate, shall
assign a number to such Bond as if the Bond had a principal amount equal to $5,000 for purposes of this
Section. If a Supplemental Resolution provides for a minimum denomination larger than $5,000, all
references in this Section to $5,000 shall be deemed to refer to such larger minimum denomination.


         Section 6.5. Notice of Redemption. When the Trustee or the Authenticating Agent, as
appropriate, shall receive notice from THDA of its election or direction to redeem Bonds pursuant to
Section 6.2 and when redemption of Bonds is required by this Resolution pursuant to Section 6.3, the
Trustee or the Authenticating Agent shall give notice, in the name of THDA, of the redemption of such
Bonds. Such notice shall specify the complete official name, the Series (and subseries, if applicable), the
maturities, the interest rate, and the CUSIP number of the Bonds to be redeemed, the Redemption Date
and the place or places where amounts due upon such redemption will be payable (including the name,
address and telephone number of a contact person at such place(s)) and, if less than all the Bonds of any
like maturity are to be redeemed, the letters and numbers or other distinguishing marks of such Bonds to
be redeemed and, in the case of Bonds to be redeemed in part only, such notice shall also specify the
respective portions of the principal amount thereof to be redeemed. Such notice shall further state that on
such date there shall become due and payable upon each Bond to be redeemed the Redemption Price
thereof, or the Redemption Price of the specified portions of the principal thereof in the case of registered
Bonds to be redeemed in part only, together with interest accrued to the Redemption Date, and that from
and after such date interest thereon shall cease to accrue and be payable. The Trustee or the
Authenticating Agent shall mail a copy of such notice, postage prepaid, not less than twenty days (or such
shorter period as may be acceptable to the provider of the central depository system if all Bonds are
registered in a single central depository system as provided in Section 3.8 hereof) and not more than sixty
days before the Redemption Date to the registered owners of any Bonds or portions of Bonds which are to

                                                     29
4814-0375-3221.3
be redeemed, at their last addresses, if any, appearing upon the registry books, but such mailing shall not
be a condition precedent to such redemption and failure so to mail any such notice to any particular Bond
shall not affect the validity of the proceedings for the redemption of other Bonds.


         Section 6.6. Payment of Redeemed Bonds. Notice having been given in the manner provided
in Section 6.5, the Bonds or portions thereof so called for redemption shall become due and payable on
the Redemption Date so designated at the Redemption Price, plus interest accrued and unpaid to the
Redemption Date, and, upon presentation and surrender thereof at the office specified in such notice,
together with, in the case of portions of Bonds, a written instrument of exchange duly executed by the
registered owner or his duly authorized attorney. If there shall be drawn for redemption less than the
entire principal amount of a Bond, THDA shall execute and the Trustee shall authenticate and the Paying
Agent shall deliver, upon the surrender of such Bond, without charge to the owner thereof, for the
unredeemed balance of the principal amount of the Bond so surrendered at the option of the holder, Bonds
of like Series and maturity in any of the authorized denominations. If, on the Redemption Date, moneys
for the redemption of all the Bonds or portions thereof of any like Series and maturity to be redeemed,
together with interest to the Redemption Date, shall be held by the Paying Agent so as to be available
therefor on said date and if notice of redemption shall have been mailed as aforesaid, then, from and after
the Redemption Date interest on the Bonds or portions thereof of such Series and maturities so called for
redemption shall cease to accrue and become payable. If said moneys shall not be so available on the
Redemption Date, such Bonds or portions thereof shall continue to bear interest until paid at the same rate
as they would have borne had they not been called for redemption.


                                             ARTICLE VII

                                     PARTICULAR COVENANTS


         THDA covenants and agrees with the Trustee and the holders of the Bonds as follows:

         Section 7.1. Performance. THDA shall do and perform or cause to be done and performed all
acts and things required to be done or performed by or on behalf of THDA under the provisions of the Act
and this Resolution in accordance with the terms of such provisions.


        Section 7.2. Compliance With Conditions Precedent. Upon the date of issuance of any of the
Bonds, all conditions, acts and things required by law or by this Resolution to exist, to have happened or
to have been performed precedent to or in the issuance of such Bonds shall exist, have happened and have
been performed, or will have happened or been performed, and such Bonds, together with all other
indebtedness of THDA, shall be within every debt and other limit prescribed by law.


         Section 7.3. Power to Issue Bonds and Pledge Revenues, Funds and Other Property. THDA
is duly authorized under all applicable laws to authorize and issue the Bonds and to enter into, execute
and deliver this Resolution and to pledge the assets and revenues purported to be pledged hereby in the
manner and to the extent herein provided. The assets and revenues so pledged are and will be free and
clear of any pledge, lien, charge or encumbrance thereon, or with respect thereto prior to, or of equal rank
with, the pledge created hereby, and all corporate or other action on the part of THDA to that end has
been and will be duly and validly taken. The Bonds and the provisions of this Resolution are and will be
the valid and legally enforceable obligations of THDA in accordance with their terms and the terms of
this Resolution. THDA shall at all times, to the extent permitted by law, defend, preserve and protect the
pledge of the Revenues and other assets and revenues, including rights therein pledged under this


                                                    30
4814-0375-3221.3
Resolution, and all the rights of the Bondholders under this Resolution against all claims and demands of
all persons whomsoever.


        Section 7.4. Payment of Bonds. THDA shall duly and punctually pay or cause to be paid, as
herein provided, the principal or Redemption Price of every Bond and the interest thereon, at the dates
and places and in the manner stated in the Bonds, according to the true intent and meaning thereof and
shall duly and punctually pay or cause to be paid all Sinking Fund Payments, if any, becoming payable
with respect to any of the Bonds.


         Section 7.5. Extension of Payment of Bonds. THDA shall not directly or indirectly extend or
assent to the extension of the maturity of any of the Bonds or the time of payment of any interest thereon
and in the event that the maturity of any of the Bonds or the time for payment of interest thereon shall be
extended, such Bonds, shall not be entitled to the benefit of this Resolution or to any payment out of the
Funds established pursuant to this Resolution, including the investments, if any, thereof, or out of any
assets or revenues pledged hereunder prior to benefits accorded to or the payment of the principal of all
Bonds the maturity of which has not been extended and of such portion of the accrued interest on the
Bonds as shall not be represented by such extension. Nothing herein shall be deemed to limit the right of
THDA to issue Refunding Bonds and such issuance shall not be deemed to constitute an extension of
maturity of Bonds.


        Section 7.6. Offices for Servicing Bonds. THDA shall at all times maintain an office or agency
where Bonds may be presented for registration, transfer or exchange, and where notices, presentations
and demands upon THDA in respect of the Bonds or of this Resolution may be served. Unless an
Authenticating Agent has been appointed pursuant to Section 11.1(C), the Trustee shall maintain such
office or agency for the registration, transfer or exchange of Bonds and for the service of such notices,
presentations and demands upon THDA. THDA may appoint one or more additional or other Paying
Agents as its respective agents to maintain such offices or agencies for the payment of the Bonds of any
particular Series and maturity.


         Section 7.7. Further Assurance. At any and all times THDA shall, so far as it may be
authorized by law, pass, make, do, execute, acknowledge and deliver, all and every such further
resolutions, acts, deeds, conveyances, assignments, transfers and assurances as may be necessary or
desirable for the better assuring, conveying, granting, pledging, assigning and confirming all and singular
the rights, Revenues and assets hereby pledged or assigned, or intended so to be, or which THDA may
become bound to pledge or assign.


        Section 7.8. Waiver of Laws. THDA shall not at any time insist upon or plead in any manner
whatsoever, or claim or take the benefit or advantage of any stay or extension of law not or at any time
hereafter in force which may affect the covenants and agreements contained in this Resolution or in the
Bonds and all benefit or advantage of any such law or laws is hereby expressly waived by THDA.


        Section 7.9. Tax Covenants. (A) Subject to subsection (C) of this Section, THDA shall at all
times do and perform all acts and things necessary or desirable in order to assure that interest paid on the
Bonds shall, for the purposes of federal income taxation, be excludable from the gross income of the
recipients thereof and exempt from such taxation.




                                                    31
4814-0375-3221.3
(B)      THDA shall not permit at any time or times any of the proceeds of the Bonds or any other funds
         of THDA to be used directly or indirectly to acquire any securities or obligations, the acquisition
         of which would cause any Bond to be an “arbitrage bond” as defined in Section 103(c)(2) of the
         Internal Revenue Code of 1986, as amended (the “Code”).

(C)      Notwithstanding the foregoing, THDA hereby reserves right to elect to issue Bonds the interest
         on which is not exempt from federal income taxation, if such election is made prior to the
         issuance of such Bonds, and the covenants contained in this Section shall not apply to such
         Bonds.

         Section 7.10. Accounts and Reports. (A) THDA shall keep, or cause to be kept, proper books
of record and account in which complete and accurate entries shall be made of all of its transactions
relating to the Program Loans and all Funds established by this Resolution which shall at all reasonable
times be subject to the inspection of the Trustee and the holders of an aggregate of not less than 5% in
principal amount of Bonds then Outstanding or their representatives duly authorized in writing.


(B)      On or before the twenty-fifth day of each month or as soon as practicable thereafter, THDA shall
         submit to the Trustee a statement of account for the preceding month setting forth the individual
         totals of the amounts received as Revenues (including individual totals for prepayments and
         monthly mortgage loan receipts) and Non-Mortgage Receipts during such month and stating the
         cumulative amount of Revenues and Non-Mortgage Receipts which have been received since the
         date upon which the last Principal Installment on Outstanding Bonds was payable.

(C)      THDA shall annually, within ninety days after the close of each Fiscal Year, file with the Trustee
         a copy of an annual report as to the operations and accomplishments of THDA during such Fiscal
         Year, and financial statements for such Fiscal Year, setting forth in reasonable detail:

         (1)       the balance sheet for THDA and its programs, showing the assets and liabilities of the
                   Program at the end of such Fiscal Year;

         (2)       a statement of THDA’s revenues and expenses in accordance with the categories or
                   classifications established by THDA for its operating and program purposes and showing
                   the revenues and expenses of the Program during such Fiscal Year; and

         (3)       a statement of changes in financial position, including changes in financial position of the
                   Program, as of the end of such Fiscal Year.

         The financial statements shall be accompanied by the Certificate of an Accountant stating that the
         financial statements examined present fairly the financial position of THDA at the end of the
         Fiscal Year, the results of its operations and the changes in financial position for the period
         examined, in conformity with generally accepted accounting principles.

(D)      If at any time during any Fiscal Year there shall have occurred an Event of Default, then THDA
         shall file with the Trustee, within forty-five days after the close of such Fiscal Year, a special
         report accompanied by an Accountant’s Certificate as to the fair presentation of the financial
         statements contained therein, setting forth in reasonable detail the individual balances and
         receipts and disbursements for each Fund hereunder.

(E)      Any such financial statements may be presented on a consolidated or combined basis with other
         reports of THDA, but only to the extent that such basis of reporting shall be consistent with that
         required under subsection (C) of this Section and satisfactory to the Trustee.



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(F)      A copy of each annual Projected Cash Flow Statement and annual report or special report and any
         Accountant’s Certificate relating thereto shall be mailed promptly thereafter by THDA to each
         Bondholder who shall have filed his name and address with THDA for such purposes.

        Section 7.11. Periodic Delivery of Projected Cash Flow Statement. (A) THDA shall file a
Projected Cash Flow Statement with the Trustee whenever Bonds are issued pursuant to Section 2.6 and
annually as required pursuant to subsection 5.3(F). In addition, a Projected Cash Flow Statement is to be
filed with the Trustee: (i) annually and whenever else necessary to reflect revisions as provided in
Section 4.2(B), (ii) whenever transfers are made from the Loan Fund to the Revenue Fund or the
Redemption Fund in accordance with the provisions of subsections (E) and (F) of Section 5.2, (iii)
whenever transfers from the Revenue Fund are made in accordance with the provisions of subsection
5.3(G) and (iv) as provided in the case of the sale, assignment or other disposition of Program Loans in
accordance with subsection 7.13(C).


(B)      A Projected Cash Flow Statement shall consist of the Certificate of an Authorized Officer setting
         forth for the current and each succeeding annual period (ending on June 30) in which Bonds are
         scheduled to be Outstanding THDA’s estimate of:

         (1)       The Revenues, other than prepayments, expected to be received on all Program Loans
                   financed or expected to be financed with proceeds of Outstanding Bonds;

         (2)       The aggregate amount of prepayments of Program Loans which are to be applied to the
                   payment of Bonds as set forth in the Supplemental Resolution based upon the following
                   scenarios: (i) the aggregate amount of prepayments which THDA reasonably expects to
                   receive; (ii) the aggregate amount of prepayments equal to 100% of the prepayment
                   experience for thirty-year mortgage loans set forth in the most recent “Survivorship and
                   Decrement Table for HUD/FHA Home Mortgage Insurance Programs”; (iii) the
                   aggregate amount of prepayments which would result in the Bonds Outstanding having
                   an average remaining life of three years; (iv) the aggregate amount of prepayments being
                   equal to zero; and (v) the aggregate amount of prepayments being equal to the aggregate
                   amount of prepayments shown in the most recent Projected Cash Flow Statement
                   delivered to each Rating Agency in connection with obtaining a rating on the Bonds;

         (3)       All other Revenues, including the interest to be earned and other income to be derived
                   from the investment of the Funds and Accounts and the rate or rates used in estimating
                   such amounts;

         (4)       The amount, if any, expected to be withdrawn from the Bond Reserve Fund, but only if
                   the amount on deposit in the Bond Reserve Fund is expected to at least equal the Bond
                   Reserve Fund Requirement immediately after such withdrawal;

         (5)       The Aggregate Debt Service accrued on all Bonds Outstanding during such annual
                   period; and

         (6)       All Program Expenses during such annual period.

(C)      A Projected Cash Flow Statement shall be considered to comply with this subsection if such
         Statement shows that (i) the estimated Revenues for each annual period in which Bonds will be
         Outstanding, together with any amount scheduled to be withdrawn from the Bond Reserve Fund
         (and permitted to be so withdrawn pursuant to this Resolution), will be sufficient for the payment
         of the estimated Debt Service and Program Expenses for such annual period, and (ii) the total
         assets (consisting of cash and investments, valued as provided herein, and the principal balance of


                                                     33
4814-0375-3221.3
         Program Loans) held hereunder equal to or exceed the total liabilities of all Bonds Outstanding
         hereunder for each such annual period. For purposes of determining Revenues in clause (i) of
         this Section 7.11(C), Revenues shall not include any revenues from Program Loans which are
         then in payment default and have been for a period of sixty (60) or more consecutive days, and
         revenues from all other Program Loans shall be treated as being received sixty (60) days after
         payment thereon is due.


         Section 7.12. Budgets. (A) THDA shall cause THDA to adopt an annual budget covering its
fiscal operations for the succeeding Fiscal Year not later than the first day of each Fiscal Year, and file the
same with the Trustee and with such officials of THDA as may be required by the Act, as then amended.
Such budget need not necessarily be the budget prepared by THDA for Agency budgeting purposes. The
annual budget shall at least set forth for such Fiscal Year the estimated Revenues, the Principal
Installments and the amount of interest due and payable or estimated to become due and payable during
such Fiscal Year, and estimated expenses of the Program. THDA may at any time adopt and file with the
Trustee an amended annual budget for the remainder of the then current Fiscal Year in the manner
provided in this Resolution for the adoption of the annual budget. Copies of the annual budget as then
amended and in effect shall be made available by the Trustee at normal business hours in the Trustee’s
office for inspection by any Bondholder. In the event THDA shall not adopt an annual budget for the
succeeding Fiscal Year on or before the first day of such Fiscal Year, the annual budget for the preceding
Fiscal Year shall be deemed to have been adopted and be in effect for such Fiscal Year until the annual
budget for such Fiscal Year shall have been adopted as above provided.


(B)      THDA shall not incur operating expenses in any Fiscal Year in excess of the reasonable or
         necessary amount thereof, and shall not expend any amount or incur any indebtedness for
         operating expenses for such year in excess of the amount provided therefor in the annual budget
         as originally prepared or as amended. Nothing contained in this Section shall limit the total
         amount which THDA may expend for operating expenses in any Fiscal Year.

         Section 7.13. The Program. (A) THDA shall from time to time with all practical dispatch and
in a sound and economical manner consistent in all respects with the Act, the provisions of this
Resolution and sound banking practices and principles, (i) use and apply the proceeds of the Bonds, to the
extent not reasonably or otherwise required for other purposes of the Program, to finance Program Loans
pursuant to the Act and this Resolution, (ii) do all such acts and things as shall be necessary to receive and
collect Revenues (including diligent enforcement of the prompt collection of all arrears on Program Loans
and, if not inconsistent with sound banking practices and principles, consent to modification of repayment
terms of the Program Loans), sufficient to pay the expenses of the Program and (iii) diligently enforce,
and take all steps, actions and proceedings reasonably necessary in the judgment of THDA to protect its
rights with respect to or to maintain any insurance on Program Loans and to enforce all terms, covenants
and conditions of Program Loans including the collection, custody and prompt application of all escrow
payments required by the terms of a Program Loan for the purposes for which they were made.


(B)      Whenever necessary in order to protect and enforce the interests and security of the holders of the
         Bonds, THDA shall commence foreclosure or pursue other appropriate remedies with respect to
         any Program Loan which is in default. In the event that THDA shall, in its discretion, determine
         such action to be in the best interests of the holders of the Bonds, THDA may bid for and
         purchase the premises covered by any such Program Loan at any foreclosure sale thereof and may
         otherwise take possession of or acquire such premises.

(C)      THDA may at any time sell, assign or otherwise dispose of a Program Loan (or the premises to
         which such Program Loan related):

                                                      34
4814-0375-3221.3
         (1)       in the event that payment under such Program Loan is delinquent more than ninety days
                   or, at any time, in order to realize the benefits of insurance with respect to such Program
                   Loan or premises;

         (2)       in order to obtain funds to provide for the redemption or purchase of an amount of Bonds
                   the debt service on which is equivalent to the payments on the Program Loan; or

         (3)       a Projected Cash Flow Statement shall be filed with the Trustee which gives effect to the
                   proposed sale thereof and complies with the conditions set forth in subsection 7.11(C).

        Section 7.14. Personnel and Servicing of Programs. (A) THDA shall at all times appoint,
retain and employ competent personnel for the purpose of carrying out its respective programs under the
Act and shall establish and enforce reasonable rules, regulations, tests and standards governing the
employment of such personnel at reasonable compensation, salaries, fees and charges and all persons
employed by THDA shall be qualified for their respective positions.


(B)      THDA may pay to any agency, municipality, political subdivision or governmental
         instrumentality of the State such amounts as are necessary to reimburse such agency,
         municipality, political subdivision or governmental instrumentality of the State for the reasonable
         costs of any services performed for THDA.

(C)      Each Depositary other than the State Treasurer which may from time to time hold amounts in
         excess of $5,000 shall enter into a written agreement with THDA and the Trustee providing that:

         (1)       any Revenues or collateral for deposits or other arrangements entered into pursuant to
                   Section 4.5 held by such Depositary shall be set aside and held in trust for the Trustee on
                   behalf of the holders of the Bonds;

         (2)       all such amounts shall be invested or deposited, and any collateral therefor maintained, in
                   accordance with Sections 4.5 and 4.6 and as may be directed by THDA or the Trustee or,
                   failing such direction, as such Depositary may determine;

         (3)       any amounts held by such Depositary shall be transmitted to the Trustee regularly as
                   required pursuant to this Resolution and shall be transmitted to the Trustee as soon as
                   practicable upon the written demand at any time of THDA or the Trustee; and

         (4)       such Depositary shall regularly deliver a monthly accounting to THDA and the Trustee of
                   the amount held by it hereunder and the deposits and investments thereof.

         The Trustee shall obtain a written memorandum from the State Treasurer setting forth the
         procedures and policies to be applied, in the case of any amounts to be held by or placed under
         the supervision of the State Treasurer pursuant to this Resolution, with the objective of satisfying
         the purposes of this Section. Such memorandum may be amended or revised from time to time.

(D)      THDA shall duly and properly service all Program Loans and enforce the payment and collection
         of all payments of principal and interest and all Escrow Payments or shall cause such servicing to
         be done by a servicer evidencing, in the judgment of THDA, the capability and experience
         necessary to adequately service Program Loans. Each such servicer shall enter into a servicing
         agreement providing that:




                                                      35
4814-0375-3221.3
         (1)       all amounts received by such servicer, except as compensation for its services, shall be
                   deposited promptly with a Depositary (which may be such servicer) subject to and in
                   accordance with the provisions of this Resolution;

         (2)       such servicer shall at all times remain qualified to act as such pursuant to such standards
                   as THDA shall prescribe from time to time and shall determine to be reasonable to
                   maintain the security for the Bonds;

         (3)       such servicer shall agree to maintain servicing facilities that are staffed with trained
                   personnel to adequately service Program Loans in accordance with standards normally
                   employed by private institutional mortgage investors, as determined in THDA’s sole
                   discretion, and shall maintain individual files for each Program Loan serviced pursuant to
                   the servicing agreement and provide regular reports to THDA as to collections and
                   delinquencies with respect to all Program Loans serviced by such servicer.

        Section 7.15. Issuance of Additional Obligations. (A) THDA shall not hereafter create or
permit the creation of or issue any obligations or create any additional indebtedness which, except as
provided in Section 5.1(C) hereof, will be secured by a superior or equal charge and lien on the revenues
and assets pledged hereunder, except that additional Series of Bonds may be issued from time to time
subsequent to the issuance of the initial Series of Bonds under this Resolution on a parity with the Bonds
of such initial Series of Bonds and secured, except as provided in Section 5.1(C) hereof, by an equal
charge and lien on the revenues and assets pledged hereunder and payable equally therefrom for one or
more of the purposes set forth in Section 2.4.


(B)      No additional Series of Bonds shall be issued subsequent to the issuance of the initial Series of
         Bonds under this Resolution unless:

         (1)       the principal amount of the additional Bonds then to be issued, together with the principal
                   amount of the Bonds, notes and other obligations theretofore issued pursuant to the Act,
                   will not exceed in aggregate principal amount any limitation thereon imposed by law;

         (2)       upon the issuance and delivery of such additional Bonds, the amount credited to the Bond
                   Reserve Fund is at least equal to the Bond Reserve Fund Requirement;

         (3)       the provisions of Section 2.6 or, in the case of Refunding Bonds, Section 2.7 shall have
                   been complied with as of the date of delivery of such Series;

         (4)       except in the case of Refunding Bonds, at the time of issuance of such additional Bonds,
                   THDA shall not be in default in the performance of any of the covenants, conditions,
                   agreements or provisions contained in this Resolution; and

         (5)       upon the issuance of such Series and application of the proceeds thereof in accordance
                   with Article IV hereof, the amount of Program Loans and Investment Securities credited
                   to all Funds and Accounts hereunder, other than the Redemption Account and the Escrow
                   Fund, when valued in accordance with this Resolution, will be equal to the principal
                   amount of Outstanding Bonds, including the Bonds thereupon being issued.

         (6)       the Bonds of such Series which are issued to provide amounts for deposit in the Loan
                   Fund to provide payment of Costs of Issuance and capitalized interest.




                                                      36
4814-0375-3221.3
(C)      THDA hereby expressly reserves the right to enter into or adopt one or more additional
         indentures or resolutions for its purposes, including the purposes of the Program, and reserves the
         right to issue other obligations for such purposes.

         Section 7.16. Bond Reserve Fund. (A) THDA shall at all times maintain the Bond Reserve
Fund created and established by Section 5.1 and do and perform or cause to be done and performed each
and every act and thing with respect to the Bond Reserve Fund provided to be done or performed by or on
behalf of THDA or the Trustee or the Paying Agents under the terms and provisions of Article V hereof
or of the Act.


(B)      Notwithstanding any other provisions of this Resolution the Trustee shall not permit amounts to
         be withdrawn from the Bond Reserve Fund other than pursuant to subsection 5.4(A) unless there
         shall have been filed with the Trustee a Certificate of an Authorized Officer stating that such
         amounts are not required to be retained therein to provide funds for the payment of Principal
         Installments or interest on Outstanding Bonds when due.

        Section 7.17. Assignment of Program Loans Upon Default. Upon the happening of an Event
of Default specified in Section 10.2 and at the written request of the Trustee or of the holders of not less
than 25% in principal amount of the Outstanding Bonds, THDA shall deliver the Program Loans to the
Trustee and take any other steps requested by the Trustee or such Bondholders in order to further
effectuate the assignment of all of the Program Loans to the Trustee. If, however, the Trustee and the
Bondholders are restored to their positions in accordance with Section 10.4, the Trustee shall assign such
Program Loans back to THDA.


         Section 7.18. Covenants with Respect to the Rating of Bonds. For the purpose of maintaining
the ratings with respect to the Bonds by the Rating Agency, THDA agrees that (1) except to the extent
that amounts payable with respect to any Program Loan are secured by a deposit or other collateral
provided by the Borrower, THDA or any other source on terms and conditions acceptable to the Rating
Agency, THDA will require that the ability of the borrower to make payments on any Program Loan
prepared to be financed by THDA be evaluated for loan underwriting purposes on the basis of the
maximum monthly payment permissible under the terms of the Program Loan and (2) to establish and
maintain procedures with respect to primary mortgage insurance policies from private mortgage insurance
companies which assure that the rating on the Bonds will be maintained.


                                                ARTICLE VIII

                                    SUPPLEMENTAL RESOLUTIONS


       Section 8.1. Supplemental Resolutions Effective Upon Filing With the Trustee. For any one
or more of the following purposes and at any time or from time to time, a Supplemental Resolution of
THDA may be adopted, which, upon the filing with the Trustee of a copy thereof certified by an
Authorized Officer, shall be fully effective in accordance with its terms:


         (1)       to close this Resolution against, or provide limitations and restrictions in addition to the
                   limitations and restrictions contained in this Resolution on the authentication and delivery
                   of Bonds or the issuance of other evidences of indebtedness;




                                                       37
4814-0375-3221.3
         (2)       to add to the covenants and agreements of THDA in this Resolution other covenants and
                   agreements to be observed by THDA which are not contrary to or inconsistent with this
                   Resolution as theretofore in effect;

         (3)       to add to the limitations and restrictions in this Resolution other limitations and
                   restrictions to be observed by THDA which are not contrary to or inconsistent with this
                   Resolution as thereupon in effect;

         (4)       to surrender any right, power or privilege reserved to or conferred upon THDA by the
                   terms of this Resolution, but only if the surrender of such right, power or privilege is not
                   contrary to or inconsistent with the covenants and agreements of THDA contained in this
                   Resolution;

         (5)       to confirm, as further assurance, any pledge under, and the subjection to any lien or
                   pledge created or to be created by, this Resolution, of the Revenues and Non-Mortgage
                   Receipts or of any other revenues or assets;

         (6)       to modify any of the provisions of this Resolution in any respect whatever, but only if (i)
                   such modification shall be, and be expressed to be, effective only after all Bonds
                   Outstanding at the date of the adoption of such Supplemental Resolution shall cease to be
                   Outstanding, and (ii) such Supplemental Resolution shall be specifically referred to in the
                   text of all Bonds authenticated and delivered after the date of the adoption of such
                   Supplemental Resolution and of Bonds issued in exchange therefor or in place thereof; or

         (7)       to authorize the issuance of additional Series of Bonds and to prescribe the terms and
                   conditions thereof and any additional terms and conditions upon which such Bonds may
                   be issued.


        Section 8.2. Supplemental Resolutions Effective Upon Consent of Trustee. (A) For any one
or more of the following purposes and at any time or from time to time, a Supplemental Resolution may
be adopted, which, upon (i) the filing with the Trustee of a copy thereof certified by an Authorized
Officer, and (ii) the filing with the Trustee and THDA of an instrument in writing made by the Trustee
consenting thereto, shall be fully effective in accordance with its terms:


         (1)       to cure any ambiguity, supply any omission, or cure or correct any defect or inconsistent
                   provision in this Resolution; or

         (2)       to insert such provisions clarifying matters or questions arising under this Resolution as
                   are necessary or desirable and are not contrary to or inconsistent with this Resolution as
                   theretofore in effect; or

         (3)       to provide for additional duties of the Trustee in connection with the Program Loans.

(B)      Any such Supplemental Resolution may also contain one or more of the purposes specified in
         Section 8.1, and in that event, the consent of the Trustee required by this Section shall be
         applicable only to those provisions of such Supplemental Resolution as shall contain one or more
         of the purposes set forth in subsection (A) of this Section.

       Section 8.3. Supplemental Resolutions Effective Upon Consent of Bondholders. At any time
or from time to time, a Supplemental Resolution may be adopted subject to consent by Bondholders in
accordance with and subject to the provisions of Article IX. Any such Supplemental Resolution shall


                                                       38
4814-0375-3221.3
become fully effective in accordance with its terms upon the filing with the Trustee a copy thereof
certified by an Authorized Officer and upon compliance with the provisions of Article IX.


         Section 8.4. General Provisions. (A) This Resolution shall not be modified or amended in any
respect except as provided in and in accordance with and subject to the provisions of this Article and
Article IX. Nothing in this Article or Article IX contained shall affect or limit the right or obligation of
THDA to adopt, make, do, execute, acknowledge or deliver any resolution, act or other instrument
pursuant to the provisions of Section 7.7 or the right or obligation of THDA to execute and deliver to any
Fiduciary any instrument which is to be delivered to said Fiduciary pursuant to this Resolution.


(B)      Any Supplemental Resolution permitted or authorized by Section 8.1 or 8.2 may be adopted by
         THDA without the consent of any of the Bondholders, but shall become effective only on the
         conditions, to the extent and at the time provided in said Sections, respectively. The copy of
         every Supplemental Resolution filed with the Trustee shall be accompanied by a Bond Counsel’s
         Opinion stating that such Supplemental Resolution has been duly and lawfully adopted in
         accordance with the provisions of this Resolution, is authorized or permitted by this Resolution,
         and is valid and binding upon THDA.

(C)      The Trustee is hereby authorized to accept the delivery of a certified copy of any Supplemental
         Resolution referred to and permitted or authorized by Section 8.1, 8.2 or 8.3 and to make all
         further agreements and stipulations which may be therein contained, and the Trustee, in taking
         such action, shall be fully protected in relying on an opinion of counsel (which may be a Bond
         Counsel’s Opinion) that such Supplemental Resolution is authorized or permitted by the
         provisions of this Resolution.

(D)      No Supplemental Resolution shall change or modify any of the rights or obligations of any
         Fiduciary without its written assent thereto.


                                              ARTICLE IX

                                            AMENDMENTS


        Section 9.1. Mailing and Publication of Notice of Amendment. Any provision in this Article
for the mailing of a notice to Bondholders shall be fully complied with if it is mailed postage prepaid (i)
to each registered owner of Bonds then Outstanding at his address, if any, appearing upon the registry
books of THDA and (ii) to the Trustee.


         Section 9.2. Powers of Amendment. Any modification of or amendment to this Resolution and
of the rights and obligations of THDA and of the holders of the Bonds hereunder, in any particular, may
be made by a Supplemental Resolution, but only, in the event such Supplemental Resolution shall be
adopted pursuant to Section 8.3, with the written consent given as provided in Section 9.3, (i) of the
holders of at least two-thirds in principal amount of the Bonds Outstanding at the time such consent is
given, (ii) in case less than all of the several Series of Bonds then Outstanding are affected by the
modification or amendment, of the holders of at least two-thirds in principal amount of the Bonds of each
Series so affected and Outstanding at the time such consent is given, and (iii) in case the modification or
amendment changes the terms of any Sinking Fund Payment, of the holders of at least two-thirds in
principal amount of the Bonds of the particular Series and maturity entitled to such Sinking Fund
Payment and Outstanding at the time such consent is given. If any such modification or amendment will


                                                    39
4814-0375-3221.3
not take effect so long as any Bonds of any specified like Series and maturity remain Outstanding,
however, the consent of the holders of such Bonds shall not be required and such Bonds shall not be
deemed to be Outstanding for the purpose of any calculation of Outstanding Bonds under this Section.
No such modification or amendment shall permit a change in the terms of redemption or maturity of the
principal of any Outstanding Bond or of any installment of interest thereon or a reduction in the principal
amount or the Redemption Price thereof in the rate of interest thereon without the consent of the holder of
such Bond, or shall reduce the percentages or otherwise affect the classes of Bonds, the consent of the
holders of which is required to effect any such modification or amendment, or shall change or modify any
of the rights or obligations of any Fiduciary without its written assent thereto. For the purposes of this
Section, a Series shall be deemed to be affected by a modification or amendment of this Resolution if the
same adversely affects or diminishes the rights of the holders of Bonds of such Series. The Trustee may
in its sole discretion determine whether or not, in accordance with the foregoing powers of amendment,
Bonds of any particular Series or maturity would be affected by any modification or amendment hereof
and any such determination shall be binding and conclusive on THDA and all holders of Bonds.


        Section 9.3. Consent of Bondholders. (A) A copy of any Supplemental Resolution making a
modification or amendment which is not permitted by the provisions of Section 8.1 or 8.2 (or brief
summary thereof or reference thereto in form approved by the Trustee), together with a request to
Bondholders for their consent thereto in form satisfactory to the Trustee, shall be mailed, by first class
mail postage prepaid, by THDA to the holders of any registered Bond. Such Supplemental Resolution
shall not be effective unless and until there shall have been filed with the Trustee (a) the written consents
of holders of the percentages of Outstanding Bonds specified in Section 9.2 and (b) a Bond Counsel’s
Opinion stating that such Supplemental Resolution has been duly and lawfully adopted by THDA in
accordance with the provisions of this Resolution, is authorized or permitted hereby and is valid and
binding upon THDA and enforceable in accordance with its terms.


(B)      The consent of a Bondholder to any modification or amendment shall be effective only if
         accompanied by proof of the holding, at the date of such consent, of the Bonds with respect to
         which such consent is given, which proof shall be such as is permitted by Section 11.14. A
         Certificate by the Trustee filed with the Trustee that it has examined such proof and that such
         proof is sufficient in accordance with such Section 11.14 shall be conclusive that the consents
         have been given by the holders of the Bonds described in such Certificate of the Trustee. Any
         such consent shall be binding upon the holder of the Bonds giving such consent and upon any
         subsequent holder of such Bonds and of any Bonds issued in exchange therefor (whether or not
         such subsequent holder thereof has notice thereof) unless such consent is revoked in writing by
         the holder of such Bonds giving such consent or a subsequent holder thereof by filing with the
         Trustee, prior to the time when the written statement of the Trustee hereinafter provided for in
         this Section is filed, such revocation and, if such Bonds are transferable by delivery, proof that
         such Bonds are held by the signer of such revocation in the manner permitted by Section 11.14.
         The fact that a consent has not been revoked may likewise be proved by a Certificate of the
         Trustee filed with the Trustee to the effect that no revocation thereof is on file with the Trustee.

(C)      At any time after the holders of the required percentages of Bonds shall have filed their consents
         to the Supplemental Resolution, the Trustee shall make and file with THDA and the Trustee a
         written statement that the holders of such required percentages of Bonds have filed such consents.
         Such written statements shall be conclusive that such consents have been so filed. At any time
         thereafter, notice, stating in substance that the Supplemental Resolution (which may be referred
         to as a Supplemental Resolution adopted by THDA on a stated date, a copy of which is on file
         with the Trustee) has been consented to by the holders of the required percentages of Bonds and
         will be effective as provided in this Section shall be given to Bondholders by THDA by mailing
         such notice to the Bondholders, first class mail, postage prepaid, (but failure to mail such notice

                                                     40
4814-0375-3221.3
         shall not prevent such Supplemental Resolution from becoming effective and binding as provided
         in this Section). THDA shall file with the Trustee proof of the mailing of such notice. A record,
         consisting of the papers required or permitted by this Section to be filed with the Trustee, shall be
         proof of the matters therein stated. Such Supplemental Resolution making such amendment or
         modification shall be deemed conclusively binding upon THDA, the Fiduciaries and the holders
         of all Bonds at the expiration of forty days after the filing with the Trustee of the proof of the first
         mailing of the notice of such consent, except in the event of a final decree of a court of competent
         jurisdiction setting aside such Supplemental Resolution in a legal action or equitable proceeding
         for such purpose commenced within such forty day period, except that any Fiduciary and THDA
         during such forty day period and any such further period during which any such action or
         proceeding may be pending shall be entitled in their absolute discretion to take such action, or to
         refrain from taking such action, with respect to such Supplemental Resolution as they may deem
         expedient.

        Section 9.4. Modifications by Unanimous Consent. The terms and provisions of this
Resolution and the rights and obligations of THDA and of the holders of the Bonds hereunder may be
modified or amended in any respect upon the adoption and filing by THDA of a Supplemental Resolution
and the consent of the holders of all the Bonds then Outstanding, such consent to be given as provided in
Section 9.3, but no such modification or amendment shall change or modify any of the rights or
obligations of any Fiduciary without the filing with the Trustee of the written assent thereto of such
Fiduciary in addition to the consent of the Bondholders. No notice of any such modification or
amendment to Bondholders either by mailing or publication shall be required.


        Section 9.5. Exclusion of Bonds. Bonds owned or held by or for the account of THDA shall not
be deemed Outstanding for the purpose of consent or other action or any calculation of Outstanding
Bonds provided for in this Article, and THDA shall not be entitled with respect to such Bonds to give any
consent or take any other action provided for in this Article. At the time of any consent or other action
taken under this Article, THDA shall furnish the Trustee a Certificate of an Authorized Officer, upon
which the Trustee may rely, describing all Bonds so to be excluded.


         Section 9.6. Notation on Bonds. Bonds authenticated and delivered after the effective date of
any action taken as provided in Article VIII or this Article may, and if the Trustee so determines shall,
bear a notation by endorsement or otherwise in form approved by THDA and the Trustee as to such
action, and in that case upon demand of the holder of any Outstanding Bond at such effective date and
presentation of his Bond for the purpose at the principal office of the Trustee or upon any transfer or
exchange of any Bond Outstanding at such effective date, suitable notation shall be made on such Bond or
upon any Bond issued upon any such transfer or exchange by the Trustee as to any such action. If THDA
or the Trustee shall so determine, new Bonds modified to conform to such action in the opinion of the
Trustee and THDA shall be prepared, executed, authenticated and delivered, and upon demand of the
holder of any Bond then Outstanding shall be exchanged, without cost to such Bondholder, for Bonds of
the same maturity, then Outstanding, upon surrender of such Bonds. All Bonds surrendered in such an
exchange shall be cancelled by the Trustee.


                                                 ARTICLE X

                                      DEFAULTS AND REMEDIES


        Section 10.1. Events of Default. Each of the following events is hereby declared an “Event of
Default”:

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         (1)       payment of the principal of or Redemption Price, if any, on any Bond when and as the
                   same shall become due, whether at maturity or upon call for redemption or otherwise
                   shall not be made when and as the same shall become due; or

         (2)       payment of any installment of interest on any of the Bonds shall not be made within thirty
                   days after the same shall become due; or

         (3)       THDA shall fail or refuse to comply with the provisions of this Resolution, or shall
                   default in the performance or observance of any of the covenants, agreements or
                   conditions on its part contained herein or in any Supplemental Resolution or the Bonds,
                   and such failure, refusal or default shall continue for a period of forty-five days after
                   written notice thereof by the Trustee or the holders of not less than 5% in principal
                   amount of the Outstanding Bonds.

         Section 10.2. Remedies. (A) Upon the happening and continuance of any Event of Default
specified in paragraphs (1) and (2) of Section 10.1 the Trustee shall proceed, or upon the happening and
continuance of any Event of Default specified in paragraph (3) of Section 10.1 the Trustee may proceed,
and upon the written request of the holders of not less than 25% in principal amount of the Outstanding
Bonds (75% with respect to acceleration of the Bonds pursuant to clause (5) below) shall proceed, in its
own name, subject to the provisions of Section 11.3, to protect and enforce the rights of the Bondholders
by such of the following remedies as the Trustee, being advised by counsel, shall deem most effectual to
protect and enforce such rights:


         (1)       by mandamus or other suit, action or proceeding at law or in equity, to enforce all rights
                   of the Bondholders, including the right to require THDA to receive and collect Revenues
                   and Non-Mortgage Receipts adequate to carry out the covenants and agreements as to,
                   and the assignment of, the Program Loans and to require THDA to carry out any other
                   covenants or agreements with Bondholders and to perform its duties under the Act;

         (2)       by bringing suit upon the Bonds;

         (3)       by action or suit in equity, to require THDA to account as if it were the trustee of an
                   express trust for holders of the Bonds;

         (4)       by action or suit in equity, to enjoin any acts or things which may be unlawful or in
                   violation of the rights of the holders of the Bonds;

         (5)       by declaring all Bonds due and payable, and if all defaults shall be cured, then, with the
                   written consent of the holders of not less than 25% in principal amount of the
                   Outstanding Bonds, by annulling such declaration and its consequences; or

         (6)       in the event that all Bonds are declared due and payable, by selling Program Loans and
                   Investment Securities.

(B)      In the enforcement of any rights and remedies under this Resolution, the Trustee shall be entitled
         to sue for, enforce payment of and receive any and all amounts then or during any default
         becoming, and at any time remaining, due and unpaid from THDA for principal, Redemption
         Price, interest or otherwise, under any provisions of this Resolution or a Supplemental Resolution
         or of the Bonds, with interest on overdue payments at the rate of interest specified in such Bonds,
         together with any and all costs and expenses of collection and of all proceedings thereunder and
         under such Bonds, without prejudice to any other right or remedy of the Trustee or of the
         Bondholders, and to recover and enforce a judgment or decree against THDA for any portion of


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         such amounts remaining unpaid, with interest, costs and expenses (including without limitation
         pre-trial, trial and appellate attorney fees), and to collect from any moneys available for such
         purpose, in any manner provided by law, the moneys adjudged or decreed to be payable.

(C)      Upon the occurrence of any Event of Default, and upon the filing of a suit or other
         commencement of judicial proceedings to enforce the rights of the Bondholders under this
         Resolution, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver or
         receivers of the Revenues and Non-Mortgage Receipts and of the assets of THDA relating to the
         Program, pending such proceedings, with such powers as the court making such appointment
         shall confer.

(D)      Except upon the occurrence and during the continuance of an Event of Default hereunder, THDA
         hereby expressly reserves and retains the privilege to receive and, subject to the terms and
         provisions of this Resolution, to keep or dispose of, claim, bring suit upon or otherwise exercise,
         enforce or realize upon its rights and interest in and to the Program Loans and the proceeds and
         collections therefrom, and neither the Trustee nor any Bondholder shall in any manner be or be
         deemed to be an indispensable party to the exercise of any such privilege, claim or suit.

         Section 10.3. Priority of Payments After Default. (A) In the event that upon the happening
and continuance of any Event of Default the funds held by the Trustee and Paying Agents shall be
insufficient for the payment of principal or Redemption Price, if any, and interest then due on the Bonds,
such funds (other than funds held for the payment or redemption of particular Bonds which have
theretofore become due at maturity or by call for redemption) and any other amounts received or collected
by the Trustee acting pursuant to the Act and this Article, after making provision for the payment of any
expenses necessary in the opinion of the Trustee to protect the interest of the holders of the Bonds and for
the payment of the charges and expenses and liabilities incurred and advances made by the Trustee or any
Paying Agents in the performance of their respective duties under this Resolution, shall be applied,
subject to Section 10.11, hereof as follows:


         (1)       Unless the principal of all of the Bonds shall have become or have been declared due and
                   payable:

                   FIRST: To the payment to the persons entitled thereto of all installments of interest then
                   due in the order of the maturity of such installments, and, if the amount available shall
                   not be sufficient to pay in full any installment, then to the payment thereof ratably,
                   according to the amounts due on such installment, to the persons entitled thereto, without
                   any discrimination or preference; and

                   SECOND: To the payment to the persons entitled thereto of the unpaid principal or
                   Redemption Price of any Bonds which shall have become due, whether at maturity or by
                   call for redemption, in the order of their due dates and, if the amounts available shall not
                   be sufficient to pay in full all the Bonds due on any date, then to the payment thereof
                   ratably, according to the amounts of principal or Redemption Price, if any, due on such
                   date, to the persons entitled thereto, without any discrimination or preference.

         (2)       If the principal of all of the Bonds shall become or have been declared due and payable,
                   to the payment of the principal and interest then due and unpaid upon the Bonds without
                   preference or priority of principal over interest or of interest over principal, or of any
                   installment of interest over any other installment of interest, or of any Bond over any
                   other Bond, ratably, according to the amounts due respectively for principal and interest,
                   to the persons entitled thereto without any discrimination or preference except as to any
                   difference in the respective rates of interest specified in the Bonds.

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4814-0375-3221.3
(B)      Whenever moneys are to be applied by the Trustee pursuant to the provisions of this Section,
         such moneys shall be applied by the Trustee at such times, and from time to time, as the Trustee
         in its sole discretion shall determine, having due regard to the amount of such moneys available
         for application and the likelihood of additional money becoming available for such application in
         the future. The deposit of such moneys with the Paying Agents, or otherwise setting aside such
         moneys in trust for the proper purpose, shall constitute proper application by the Trustee and the
         Trustee shall incur no liability whatsoever to THDA, to any Bondholder or to any other person
         for any delay in applying any such moneys, so long as the Trustee acts with reasonable diligence,
         having due regard for the circumstances, and ultimately applies the same in accordance with such
         provisions of this Resolution as may be applicable at the time of application by the Trustee.
         Whenever the Trustee shall exercise such discretion in applying such moneys, it shall fix the date
         (which shall be an Interest Payment Date unless the Trustee shall deem another date more
         suitable) upon which such application is to be made and upon such date interest on the amounts
         of principal to be paid on such date shall cease to accrue. The Trustee shall give such notice as it
         may deem appropriate for the fixing of any such date. The Trustee shall not be required to make
         payment to the holder of any Bond unless such Bond shall be presented to the Trustee for
         appropriate endorsement or for cancellation if fully paid.

        Section 10.4. Termination of Proceedings. In case any proceedings taken by the Trustee on
account of any Event of Default shall have been discontinued or abandoned for any reason, then in every
such case THDA, the Trustee and the Bondholders shall be restored to their former positions and rights
hereunder, respectively, and all rights, remedies, powers and duties of the Trustee shall continue as
though no such proceeding had been taken.


        Section 10.5. Bondholders’ Direction of Proceedings. Anything in this Resolution to the
contrary notwithstanding, the holders of the majority in principal amount of the Bonds then Outstanding
shall have the right, by an instrument or concurrent instruments in writing executed and delivered to the
Trustee, to direct the method of conducting all remedial proceedings to be taken by the Trustee hereunder,
provided that such direction shall not be otherwise than in accordance with law or the provisions of this
Resolution, and that the Trustee shall have the right to decline to follow such direction which in the
opinion of the Trustee would be unjustly prejudicial to Bondholders not parties to such direction


         Section 10.6. Limitation on Rights of Bondholders. (A) No holder of any Bond shall have any
right to institute any suit, action, mandamus or other proceeding in equity or at law hereunder, or for the
protection or enforcement of any right under this Resolution unless such holder shall have given to the
Trustee written notice of the Event of Default or breach of duty on account of which such suit, action or
proceeding is to be taken, and unless the holders of not less than 25% in principal amount of the Bonds
then Outstanding shall have made written request of the Trustee after the right to exercise such powers or
right of action, as the case may be, shall have occurred, and shall have afforded the Trustee a reasonable
opportunity either to proceed to exercise the powers herein granted or granted under the law or to institute
such action, suit or proceeding in its name and unless, also, there shall have been offered to the Trustee
reasonable security and indemnity against the costs, expenses and liabilities to be incurred therein or
thereby, and the Trustee shall have refused or neglected to comply with such request within a reasonable
time; and such notification, request and offer of indemnity are hereby declared in every such case, at the
option of the Trustee, to be conditions precedent to the execution of the powers under this Resolution or
for any other remedy hereunder or by law. It is understood and intended that no one or more holders of
the Bonds hereby secured shall have any right in any manner whatever by his or their action to affect,
disturb or prejudice the security of this Resolution, or to enforce any right hereunder or under law with
respect to the Bonds or this Resolution, except in the manner herein provided, and that all proceedings at
law or in equity shall be instituted, had and maintained in the manner herein provided and for the benefit
of all holders of the Outstanding Bonds. Nothing contained in this Article shall affect or impair the right

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4814-0375-3221.3
of any Bondholder to enforce the payment of the principal of and interest on his Bonds, or the obligation
of THDA to pay the principal of and interest on each Bond issued hereunder to the holder thereof at the
time and place in said Bond expressed.


(B)      Anything to the contrary notwithstanding contained in this Section, or any other provision of this
         Resolution, each holder of any Bond by his acceptance thereof shall be deemed to have agreed
         that any court in its discretion may require, in any suit for the enforcement of any right or remedy
         under this Resolution or any Supplemental Resolution, or in any suit against the Trustee for any
         action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an
         undertaking to pay the reasonable costs of such suit, and that such court may in its discretion
         assess reasonable costs including reasonable pre-trial, trial and appellate attorneys’ fees, against
         any party litigant in any such suit, having due regard to the merits and good faith of the claims or
         defenses made by such party litigant; but the provisions of this paragraph shall not apply to any
         suit instituted by the Trustee, to any suit instituted by any Bondholder, or group of Bondholders,
         holding at least 25% in principal amount of the Bonds Outstanding, or to any suit instituted by
         any Bondholder for the enforcement of the payment of any Bond on or after the respective due
         date thereof expressed in such Bond.

        Section 10.7. Possession of Bonds by Trustee Not Required. All rights of action under this
Resolution or under any of the Bonds, enforceable by the Trustee, may be enforced by it without the
possession of any of the Bonds or the production thereof on the trial or other proceeding relative thereto,
and any such suit, action or proceeding instituted by the Trustee shall be brought in its name for the
benefit of all the holders of such Bonds, subject to the provisions of this Resolution.


        Section 10.8. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the
Trustee or to the holders of the Bonds is intended to be exclusive of any other remedy or remedies, and
each and every such remedy shall be cumulative and shall be in addition to any other remedy given
hereunder or now or hereafter existing at law or in equity or by statute.


         Section 10.9. No Waiver of Default. No delay or omission of the Trustee or of any holder of
the Bonds to exercise any right or power accruing upon any default shall impair any such right or power
or shall be construed to be a waiver of any such default or an acquiescence therein and every power and
remedy given by this Resolution to the Trustee and the holders of the Bonds, respectively, may be
exercised from time to time and as often as may be deemed expedient.


         Section 10.10. Notice of Event of Default. The Trustee shall give to the Bondholders notice of
each Event of Default hereunder known to the Trustee within ninety days after actual knowledge of the
occurrence thereof, unless such Event of Default shall have been remedied or cured before the giving of
such notice; provided, that, except in the case of default in the payment of the principal of or Redemption
Price, if any, or interest on any of the Bonds, or in the making of any payment required to be made into
the Loan Fund, the Trustee shall be protected in withholding such notice if and so long as the board of
directors, the executive committee, or a trust committee of directors or responsible officers of the Trustee
in good faith determines that the withholding of such notice is in the interest of the Bondholders. Each
such notice of Event of Default shall be given by the Trustee by mailing written notice thereof: (i) to all
registered holders of Bonds, as the names and addresses of such holders appear upon the books for
registration and transfer of Bonds as kept by the Trustee and, (ii) to such other persons as is required by
law.




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                                               ARTICLE XI

                                  CONCERNING THE FIDUCIARIES


        Section 11.1. Appointment and Acceptance of Duties of Trustee. (A) The Bond Finance
Committee of THDA has been delegated the responsibility for choosing the initial Trustee pursuant to this
Resolution. The Trustee shall signify its acceptance of the duties and obligations of the Trustee by
executing a written acceptance of its obligations under this Resolution.


(B)      The Trustee is hereby vested with all of the rights, powers and duties of a Trustee permitted to be
         appointed by Bondholders pursuant to the Act and the right of Bondholders to appoint a trustee
         pursuant to the Act is hereby abrogated as permitted by the Act.

(C)      The Bond Finance Committee of THDA has been delegated the responsibility to appoint from
         time to time an Authenticating Agent for the Bonds of a particular Series and maturity. An
         Authenticating Agent must be a bank or trust company within or outside the State that meets the
         eligibility requirements established by Section 11.13 for a successor Paying Agent.

        Section 11.2. Appointment and Acceptance of Duties of Paying Agents. (A) THDA shall
appoint one or more Paying Agents for the Bonds of each Series, and may at any time or from time to
time appoint one or more other Paying Agents having the qualifications set forth in Section 11.13 for a
successor Paying Agent. The Trustee is hereby appointed as a Paying Agent.


(B)      Each Paying Agent (other than the Trustee) shall signify its acceptance of the duties and
         obligations imposed upon it by this Resolution by a written instrument of acceptance executed
         and delivered to THDA and the Trustee.

(C)      The principal or corporate trust offices of the Paying Agents are hereby designated as the
         respective agencies of THDA for the payment of the Bonds.

         Section 11.3. Responsibility of Fiduciaries. The recitals of fact herein and in the Bonds
contained shall be taken as the statements of THDA and no Fiduciary assumes any responsibility for the
correctness of the same. No Fiduciary makes any representations as to the validity or sufficiency of this
Resolution or of any Bonds or coupons issued hereunder or in respect of the security afforded by this
Resolution, and no Fiduciary shall incur any responsibility in respect thereof. The Trustee shall, however,
be responsible for its representations contained in its certificate on the Bonds. No Fiduciary shall be
under any responsibility or duty with respect to the issuance of the Bonds for value or the application of
the proceeds thereof or the application of any moneys paid to THDA. No Fiduciary shall be under any
responsibility or duty with respect to the application of any moneys paid to any other Fiduciary. No
Fiduciary shall be under any obligation or duty to perform any act which would involve it in expense or
liability or to institute or defend any suit in respect hereof, or to advance any of its own moneys, unless
properly indemnified. No Fiduciary shall be liable in connection with the performance of its duties
hereunder except for its own negligence or default. Neither the Trustee nor any Paying Agent shall be
under any responsibility or duty with respect to the application of any moneys paid to any one of the
others.


        Section 11.4. Evidence on Which Fiduciaries May Act. Each Fiduciary shall be protected in
acting upon any notice, resolution, request, consent, order, certificate, report, opinion, bond or other paper
or document believed by it to be genuine, and to have been signed or presented by the proper party or


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4814-0375-3221.3
parties. Each Fiduciary may consult with counsel, who may be of counsel to THDA, and the opinion of
such counsel shall be full and complete authorization and protection in respect of any action taken or
suffered by it hereunder in good faith and in accordance therewith. Whenever any Fiduciary shall deem it
necessary or desirable that a matter be proved or established prior to taking or suffering any action
hereunder, including payment of moneys out of any Fund, such matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a
Certificate signed by an Authorized Officer, and such Certificate shall be full warrant for any action taken
or suffered in good faith under the provisions of this Resolution upon the faith thereof, but in its sole
discretion the Fiduciary may in lieu thereof accept other evidence of such fact or matter or may require
such further or additional evidence as to it may seem reasonable. Neither the Trustee nor any successor
Trustee shall be liable to THDA, the holders of any of the Bonds or any other person for any act or
omission done or omitted to be done by such Trustee in reliance upon any instruction, direction or
certification received by the Trustee pursuant to this Resolution or for any act or omission done or
omitted in good faith and without willful or reckless misconduct. Except as otherwise expressly provided
herein, any request, order, notice or other direction required or permitted to be furnished pursuant to any
provision hereof by THDA to any Fiduciary shall be sufficiently executed if executed in the name of
THDA by an Authorized Officer.


        Section 11.5. Compensation. THDA shall pay to each Fiduciary from time to time reasonable
compensation for all services rendered under this Resolution, and also all reasonable expenses, charges,
counsel fees (whether or not litigation ensued and, if so, fees on trial and any appeal therefrom) and other
disbursements, including those of their attorneys, agents and employees, incurred in and about the
performance of their powers and duties under this Resolution and each Fiduciary shall have a lien therefor
on any and all funds at any time held by it under this Resolution. THDA further agrees to indemnify and
save each Fiduciary harmless against any liabilities which it may incur in the exercise and performance of
its powers and duties hereunder, and which are not due to its negligence or default.


        Section 11.6. Permitted Acts and Functions. Any Fiduciary may become the owner of any
Bonds with the same rights it would have if it were not a Fiduciary. Any Fiduciary may act as Depositary
for, and permit any of its officers or directors to act as a member of, or in any other capacity with respect
to, any committee formed to protect the rights of Bondholders or to effect or aid in any reorganization
growing out of the enforcement of the Bonds or this Resolution, whether or not any such committee shall
represent the holders of a majority in principal amount of the Bonds then Outstanding. Any Fiduciary
may be an Approved Lender under the Program and may sell Program Loans to THDA. Any Fiduciary
may be an underwriter in connection with the sale of the Bonds or of any other securities offered or issued
by THDA or any political subdivision thereof.


         Section 11.7. Resignation of Trustee. The Trustee may at any time resign and be discharged of
the duties and obligations created by this Resolution by giving not less than sixty days’ written notice to
THDA, and such resignation shall take effect upon the day specified in such notice unless previously a
successor shall have been appointed, as provided in Section 11.9, in which event such resignation shall
take effect immediately on the appointment of such successor.


         Section 11.8. Removal of Trustee. The Trustee shall be removed by THDA if at any time so
requested by an instrument or concurrent instruments in writing, filed with the Trustee and THDA and
signed by the holders of a majority in principal amount of the Bonds then Outstanding or their attorney-
in-fact duly authorized, excluding any Bonds held by or for the account of THDA. THDA may remove
the Trustee at any time, except during the existence of an Event of Default, for such cause as shall be



                                                     47
4814-0375-3221.3
determined in the sole discretion of THDA by filing with the Trustee an instrument signed by an
Authorized Officer.


        Section 11.9. Appointment of Successor Trustee. (A) In case at any time the Trustee shall
resign or shall be removed or shall become incapable of acting, or shall be adjudged as bankrupt or
insolvent, or if a receiver, liquidator or conservator of the Trustee, or of its property, shall be appointed,
or if any public officer shall take charge or control of the Trustee, or of its property or affairs, THDA
covenants and agrees that it will thereupon appoint a successor Trustee.


(B)      If in a proper case no appointment of a successor Trustee shall be made pursuant to the foregoing
         provisions of this Section within forty-five days after the Trustee shall have given to THDA
         written notice, as provided in Section 11.7, or after a vacancy in the office of the Trustee shall
         have occurred by reason of its inability to act, the Trustee or the holder of any Bond may apply to
         any court of competent jurisdiction to appoint a successor Trustee. Said court may thereupon,
         after such notice, if any, as such court may deem proper and prescribe, appoint a successor
         Trustee.

(C)      Any Trustee appointed under the provisions of this Section in succession to the Trustee shall be a
         trust company or bank having the powers of a trust company within or outside the State, having a
         capital, surplus and undivided profits aggregating at least $25,000,000 if there be such a trust
         company or bank willing and able to accept the office on reasonable and customary terms and
         authorized by law to perform all the duties imposed upon it by this Resolution.

         Section 11.10. Transfer of Rights and Property to Successor Trustee. Any successor Trustee
appointed under this Resolution shall execute, acknowledge and deliver to its predecessor Trustee, and
also to THDA, an instrument accepting such appointment, and thereupon such successor Trustee, without
any further act, deed or conveyance, shall become fully vested with all moneys, estates, properties, rights,
powers, duties and obligations of such predecessor Trustee, with like effect as if originally named as
Trustee, but the Trustee ceasing to act shall nevertheless, on the request of THDA, or of its successor
Trustee, execute, acknowledge and deliver such instruments of conveyance and further assurance and do
such other things as may reasonably be required for more fully and certainly vesting and confirming in
such successor Trustee all the right, title and interest of the predecessor Trustee in and to any property
held by it under this Resolution, and shall pay over, assign and deliver to the successor Trustee any
money or other property subject to the trusts and conditions herein set forth. Should any deed,
conveyance or instrument in writing from THDA be required by such successor Trustee for more fully
and certainly vesting in and confirming to such successor Trustee any such estates, rights, powers and
duties, any and all such deeds, conveyances and instruments in writing shall, on request, and so far as may
be authorized by law, be executed, acknowledged and delivered by THDA. Any such successor Trustee
shall promptly notify the Paying Agents of its appointment as Trustee. Upon the effectiveness of the
resignation or removal of the Trustee, such Trustee’s authority to act pursuant to this Resolution shall
terminate and such Trustee shall have no further responsibility or liability whatsoever for performance of
this Resolution as Trustee.


        Section 11.11. Merger or Consolidation. Any company into which any Fiduciary may be
merged or converted or with which it may be consolidated or any company resulting from any merger,
conversion or consolidation to which it shall be a party or any company to which any Fiduciary may sell
or transfer all or substantially all of its corporate trust business, provided such company shall be a trust
company or bank which is qualified to be a successor to such Fiduciary under Section 11.9 or Section
11.13 and shall be authorized by law to perform all the duties imposed upon it by this Resolution, shall be



                                                     48
4814-0375-3221.3
the successor to such Fiduciary without the execution or filing of any paper or the performance of any
further act, anything herein to the contrary notwithstanding.


        Section 11.12. Adoption of Authentication. In case any of the Bonds contemplated to be
issued under this Resolution shall have been authenticated but not delivered, any successor Trustee or
successor Authenticating Agent, as appropriate, may adopt the certificate of authentication of any
predecessor Trustee or predecessor Authenticating Agent, as the case may be, so authenticating such
Bonds and deliver such Bonds so authenticated, and in case any of the said Bonds shall not have been
authenticated, any successor Trustee or successor Authenticating Agent may authenticate such Bonds in
the name of the predecessor Trustee or predecessor Authenticating Agent or in the name of the successor
Trustee or successor Authenticating Agent, and in all such cases such certificate shall have the full force
which it is anywhere in said Bonds or in this Resolution provided that the certificate of authentication of
the Trustee or Authenticating Agent shall have.


        Section 11.13. Resignation or Removal of the Paying Agents and Authenticating Agent and
Appointment of Successors. (A) Any Paying Agent or Authenticating Agent may at any time resign
and be discharged of the duties and obligations created by this Resolution by giving at least sixty days’
written notice to THDA and Trustee. Any Paying Agent or Authenticating Agent may be removed at any
time by an instrument filed with such Paying Agent, as appropriate, and the Trustee and signed by an
Authorized Officer. Any successor Paying Agent or Authenticating Agent, as appropriate, shall be
appointed by THDA and (subject to the requirements of Section 7.6) shall be a trust company or bank
having the powers of a trust company, having a capital and surplus aggregating at least $3,000,000, and
willing and able to accept the office of Paying Agent, or Authenticating Agent, as the case may be, on
reasonable and customary terms and authorized by law to perform all the duties imposed upon it by this
Resolution.


(B)      In the event of the resignation or removal of any Paying Agent, such Paying Agent shall pay over,
         assign and deliver any moneys held by it to its successor, or if there be no successor then
         appointed, to the Trustee until such successor be appointed.

         Section 11.14. Evidence of Signatures of Bondholders and Ownership of Bonds. (A) Any
request, consent or other instrument which this Resolution may require or permit to be signed and
executed by the Bondholders may be in one or more instruments of similar tenor, and shall be signed or
executed by such Bondholders in person or by their attorneys appointed in writing. Proof of (i) the
execution of any such instrument, or of an instrument appointing any such attorney, or (ii), the holding by
any person of the Bonds shall be sufficient for any purpose of this Resolution (except as otherwise herein
expressly provided) if made in the following manner, but the Trustee may nevertheless in its sole
discretion require further or other proof in cases where it deems the same desirable:


         (1)       the fact and date of the execution by any Bondholder or his attorney of such instrument
                   may be proved by the Certificate, which need not be acknowledged or verified, of an
                   officer of a bank or trust company, financial institution or other member of the National
                   Association of Securities Dealers, Inc. satisfactory to the Trustee, or of any notary public
                   or other officer authorized to take acknowledgements of deeds to be recorded in the state
                   in which he purports to act, that the person signing such request or other instrument
                   acknowledged to him the execution thereof, or by an affidavit of a witness of such
                   execution, duly sworn to before such notary public or other officer. The authority of the
                   person or persons executing any such instrument on behalf of a corporate Bondholder
                   may be established without further proof if such instrument is signed by a person

                                                       49
4814-0375-3221.3
                   purporting to be the president or vice president of such corporation with a corporate seal
                   affixed and attested by a person purporting to be its secretary or an assistant secretary;
                   and

         (2)       the amount of Bonds transferable by delivery held by any person executing such request
                   or other instrument as a Bondholder, and the numbers and other identification thereof,
                   and the date of his holding such Bonds, may be proved by a Certificate, which need not
                   be acknowledged or verified, satisfactory to the Trustee, executed by an officer of a trust
                   company, bank, financial institution or other depositary or member of the National
                   Association of Securities Dealers, Inc. wherever situated, showing that at the date therein
                   mentioned such person exhibited to such officer or had on deposit with such depositary
                   the Bonds described in such Certificate. Continued ownership after the date stated in
                   such Certificate may be proved by the presentation of such Certificate if the Certificate
                   contains a statement by such officer that the depositary held the Bonds therein referred to
                   on the date of the Certificate and that they will not be surrendered without the surrender
                   of the Certificate to the depositary, except with the consent of the Trustee, and a
                   Certificate of the Trustee, which need not be acknowledged or verified, that such consent
                   has not been given.

(B)      The ownership of Bonds and the amount, numbers and other identification, and date of holding
         the same shall be proved by the registry books.

(C)      Any request, consent or vote of the owner of any Bond shall bind all future owners of such Bond
         in respect of anything done or suffered to be done by THDA or any Fiduciary in accordance
         therewith.

         Section 11.15. Preservation and Inspection of Documents. All documents received by any
Fiduciary under the provisions of this Resolution or any Supplemental Resolution (or microfilm,
microcard or similar photographic reproduction thereof) shall be retained in its possession and shall be
subject at all reasonable times to the inspection of THDA, any other Fiduciary and any Bondholder and
their agents and their representatives, any of whom may make copies thereof.


                                                ARTICLE XII

                                          DEFEASANCE
                                    MISCELLANEOUS PROVISIONS


         Section 12.1. Defeasance. (A) If THDA shall pay or cause to be paid to the holders of the
Bonds, the principal and interest and Redemption Price, if any, to become due thereon, at the times and in
the manner stipulated therein and in this Resolution, then the pledge of any Revenues and other moneys,
securities, funds and property hereby pledged and all other rights granted hereby shall be discharged and
satisfied. In such event, the Trustee shall, upon the request of THDA, execute and deliver to THDA all
such instruments as may be desirable to evidence such discharge and satisfaction and the Fiduciaries shall
pay over or deliver to THDA all moneys or securities held by them pursuant to this Resolution which are
not required for the payment or redemption of Bonds not theretofore surrendered for such payment or
redemption. If THDA shall pay or cause to be paid, or there shall otherwise be paid, to the holders of all
Outstanding Bonds of a particular Series the principal or Redemption Price, if applicable, and interest due
or to become due thereon, at the times and in the manner stipulated therein and in this Resolution, such
Bonds shall cease to be entitled to any lien, benefit or security hereunder and all covenants, agreements
and obligations of THDA to the holders of such Bonds shall thereupon cease, terminate and become void
and be discharged and satisfied.

                                                      50
4814-0375-3221.3
(B)      Bonds and interest installments for the payment or redemption of which moneys shall have been
         set aside and shall be held in trust by the Fiduciaries (through deposit by THDA of funds for such
         payment or redemption or otherwise) shall, at the maturity or upon the date upon which such
         Bonds have been duly called for redemption thereof, be deemed to have been paid within the
         meaning and with the effect expressed in subsection (A) of this Section. All Outstanding Bonds
         of any Series shall, prior to the maturity or Redemption Date thereof, be deemed to have been
         paid within the meaning and with the effect expressed in subsection (A) of this Section if (i) in
         case any of said Bonds are to be redeemed on any date prior to their maturity, THDA shall have
         given to the Trustee in form satisfactory to it irrevocable instructions to mail as provided in
         Article VI notice of redemption on said date of such Bonds, (ii) there shall have been deposited
         with the Trustee either moneys in an amount which shall be sufficient, or Investment Securities
         the principal of and the interest on which when due will provide moneys which, together with the
         moneys, if any, deposited with the Trustee at the same time, shall be sufficient to pay when due
         the principal or Redemption Price, if any, of and interest due and to become due on said Bonds on
         and prior to the Redemption Date or maturity date thereof, as the case may be, and (iii) in the
         event said Bonds are not by their terms subject to redemption within the next succeeding sixty
         days, THDA shall have given the Trustee in form satisfactory to it irrevocable instructions to mail
         a notice to the holders of such Bonds that the deposit required by (ii) above has been made with
         the Trustee and that said Bonds are deemed to have been paid in accordance with this Section and
         stating such maturity or Redemption Date upon which moneys are to be available for the payment
         of the principal or Redemption Price, if any, on said Bonds. Neither Investment Securities or
         moneys deposited with the Trustee pursuant to this Section nor principal or interest payments on
         any such Investment Securities shall be withdrawn or used for any purpose other than, and shall
         be held in trust for, the payment of the principal or Redemption Price, if any, of and interest on
         said Bonds; but any cash received from such principal or interest payments on such Investment
         Securities deposited with the Trustee, if not then needed for such purpose, shall, to the extent
         practicable, be reinvested in Investment Securities maturing at times and in amounts sufficient to
         pay when due the principal or Redemption Price, if any, and interest to become due on said
         Bonds on and prior to such Redemption Date or maturity date thereof, as the case may be, and
         interest earned from such reinvestments shall be paid over to THDA, as received by the Trustee,
         free and clear of any trust, lien or pledge. For the purposes of this Section, Investment Securities
         mean and include only direct and general obligations of the State or obligations guaranteed by the
         State or such obligations as are described in clauses (1), (2) and (7) of the definition of
         Investment Securities herein, but time or demand deposits or other obligations shall be secured by
         direct and general obligations of the State or obligations guaranteed by the State or obligations
         described only in clause (1) of said definition.

(C)      If, through the deposit of moneys by THDA or otherwise, the Fiduciaries shall hold, pursuant to
         this Resolution, moneys sufficient to pay the principal and interest to maturity on all Outstanding
         Bonds, or in the case of Bonds in respect of which THDA shall have taken all action necessary to
         redeem prior to maturity, sufficient to pay the Redemption Price and interest to such Redemption
         Date, then at the request of THDA all moneys held by any Paying Agent shall be paid over to the
         Trustee and, together with other moneys held by it hereunder, shall be held by the Trustee for the
         payment or the redemption of Outstanding Bonds.

(D)      Anything in this Resolution to the contrary notwithstanding, any moneys held by a Fiduciary in
         trust for the payment and discharge of any of the Bonds or coupons which remain unclaimed for
         six years after the date when all of the Bonds have become due and payable, either at their stated
         maturity dates or by call for earlier redemption, if such moneys were held by the Fiduciary at
         such date, or for six years after the date of deposit of such moneys if deposited with the Fiduciary
         after the said date when all of the Bonds became due and payable, shall, at the written request of
         THDA, be repaid by the Fiduciary to THDA, as its absolute property and free from trust, and the
         Fiduciary shall thereupon be released and discharged.

                                                     51
4814-0375-3221.3
        Section 12.2. No Recourse Under Resolution or on Bonds. All covenants, stipulations,
promises, agreements and obligations of THDA contained in this Resolution shall be deemed to be the
covenants, stipulations, promises, agreements and obligations of THDA and not of any officer or
employee of THDA in his individual capacity, and no recourse shall be had for the payment of the
principal or Redemption Price of or interest on the Bonds or for any claim based thereon or on this
Resolution against any officer or employee of THDA or any natural person executing the Bonds.


        Section 12.3. Security Instrument. A certified copy of this Resolution, delivered to and
accepted by the Trustee, shall constitute a security agreement pursuant to and for all purposes of the
Uniform Commercial Code of the State of Tennessee.


         Section 12.4. Effective Date. This Resolution shall take effect immediately.




                                                   52
4814-0375-3221.3
       EXHIBIT B

BOND PURCHASE AGREEMENT
                     TENNESSEE HOUSING DEVELOPMENT AGENCY

                                      $40,000,000
                          HOUSING FINANCE PROGRAM BONDS
                               ISSUE 2009-A1 (Non-AMT)


                               BOND PURCHASE AGREEMENT


                                         December 3, 2009


Tennessee Housing Development Agency,
  acting by and through its
  Bond Finance Committee
Suite 1200
404 James Robertson Parkway
Nashville, TN 37243-0900

Ladies and Gentlemen:

        The undersigned, Morgan Keegan & Company, Inc. (the “Representative”) acting for
itself and on behalf of the other underwriters designated herein (the “Underwriters”), offers to
enter into this Bond Purchase Agreement (this “Agreement”) with you, the Tennessee Housing
Development Agency (“THDA”), acting by and through its Bond Finance Committee (the
“Committee”). This offer is made subject to the written acceptance and delivery of an executed
counterpart hereof to the Underwriters at or prior to 5:00 p.m., New York City time on the date
hereof. Upon your acceptance of this offer, this Agreement will be binding upon you and upon
the Underwriters.

       The Representative hereby represents that (a) it is duly authorized to execute this
Agreement and has full authority to take such action as it may deem advisable with respect to all
matters pertaining to this Agreement and (b) it is registered under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), as a municipal securities dealer.

        1. (a) Upon the terms and conditions and upon the basis of the representations and
warranties and agreements hereinafter set forth, the Underwriters hereby agree to purchase, and
the Committee on behalf of THDA hereby agrees to sell, and THDA hereby agrees to issue and
deliver to the Underwriters, all (but not less than all) of THDA’s $40,000,000 Housing Finance
Program Bonds, Issue 2009-A1 (Non-AMT) (the “Bonds”) maturing on the dates and in the
principal amounts, bearing interest at the rates and at the initial prices set forth in Exhibit B. The
Bonds shall be dated the date of delivery thereof. The Bonds shall be sold to the Underwriters at
the price of $40,000,000, the entire principal amount of the Bonds. As compensation in
connection herewith, the Underwriters shall receive a fee at closing in the amount of $[             ].

      (b)        The Bonds shall be subject to redemption, shall mature on the dates and in the
amounts and shall bear interest at the rate or rates per annum, payable at the times and in the


4846-2980-4036.2/1
manner, all as provided in the General Housing Finance Resolution adopted by THDA on
November 19, 2009, as amended and supplemented (the “General Resolution”) and a
Supplemental Resolution adopted by THDA on November 19, 2009, as amended and
supplemented by the Bond Finance Committee of THDA on December 3, 2009 (as so amended
and supplemented, the “Issue 2009-A1 Supplemental Resolution”). The General Resolution and
the Issue 2009-A1 Supplemental Resolution are herein collectively referred to as the
“Resolutions.” The Preliminary Official Statement and Placement Memorandum, including the
cover page, inside cover page and appendices thereto and matters incorporated by reference
thereby, of THDA dated November 23, 2009, with respect to the Bonds (the “Preliminary
Official Statement”), as amended to conform to the terms of this Agreement and to reflect the
offering terms of the Bonds and the other changes marked or otherwise indicated on Exhibit A
hereto, and which shall be completed in a manner satisfactory to the Underwriters, and which
may contain such further additions as shall be approved by the Underwriters, is hereinafter
referred to as the “Official Statement.”

        2.      It shall be a condition of the obligations of the Committee on behalf of THDA to
sell, and of THDA to deliver, the Bonds to the Underwriters and of the obligations of the
Underwriters to purchase and accept delivery of the Bonds, that the entire $40,000,000 principal
amount of the Bonds shall be sold by the Committee on behalf of THDA, delivered by THDA
and accepted and paid for by the purchasers thereof on the date described in Paragraph 5 hereof
(such payment and delivery being referred to herein as the “Closing”). The Underwriters agree
to make a bona fide offering of all the Bonds, at prices not in excess of the initial offering prices
set forth on the inside cover page of the Official Statement.

       In conjunction with its sale of the Bonds to the Underwriters, THDA plans to sell its
$60,000,000 Housing Finance Bonds, Issue 2009-A2 (Non-AMT) (the “Issue 2009-A2 Bonds”)
and its $300,000,000 Housing Finance Bonds, Issue 2009-B (Taxable) (the “Issue 2009-B
Bonds”) collectively to the Federal National Mortgage Association and the Federal Home Loan
Mortgage Corporation (together, the “Purchasers”), pursuant to a Placement Agreement by and
between THDA and the Purchasers, to be dated December 9, 2009 (the “Placement Agreement”).
The obligation of the Underwriters to purchase the Bonds is contingent upon the sale of the Issue
2009-A2 Bonds to the Purchasers, but it is not contingent upon the sale of the Issue 2009-B
Bonds.

        In the event that the Underwriters fail (other than for a reason permitted hereunder) to
purchase, accept delivery of and pay for the Bonds at the Closing as herein provided, the parties
hereby agree that the damages to THDA shall be fixed at one percent (1%) of the aggregate
principal amount of the Bonds, and, upon such failure of the Underwriters to accept and pay for
the Bonds, the Underwriters shall be obligated to pay to THDA such amount as and for full
liquidated damages for such failure and for any and all defaults hereunder on the part of the
Underwriters, and, except as set forth in Paragraph 14 hereof, no party will have any further
rights against the other hereunder. The Underwriters understand that in such event THDA’s
actual damages may be greater or may be less than such amount. Accordingly, the Underwriters
hereby waive any right to claim that THDA’s actual damages are less than such amount, and
THDA’s acceptance of this offer will constitute a waiver of any right THDA may have to
additional damages from the Underwriters.


4846-2980-4036.2/2
                                                 2
        3.     THDA has authorized the Resolutions and has delegated to the Committee the
authority to authorize, and pursuant to such delegation the Committee has authorized, the
Official Statement in the form attached as Exhibit A hereto, as the same may be supplemented or
amended as hereinafter provided, and the information therein contained to be used by the
Underwriters in connection with the public offering and the sale of the Bonds.

        THDA hereby approves the use by the Underwriters of the Preliminary Official
Statement and consents to the use by the Underwriters of the final Official Statement. THDA
agrees to deliver to the Underwriters printed, conformed copies of the Official Statement as soon
as practical but not later than the earlier to occur of (a) seven business days from the date hereof,
(b) the date required to accompany money or trade confirmations of the sale of the Bonds or
(c) the date of Closing, in such reasonable amount as may be requested by the Underwriters, not
to exceed an amount agreed to between THDA and the Underwriters.

        The form of Preliminary Official Statement delivered to the Underwriters and made
available on the Internet at “www.i-dealprospectus.com” has, in good faith, been deemed final
for purposes of Rule 15c2-12 promulgated under the Exchange Act (the “Rule”), as of the date
thereof, except for the omissions permitted by the Rule.

        Unless THDA is otherwise notified in writing by the Representative on or prior to the
date of the Closing, the “end of the underwriting period” for the Bonds for all purposes of the
Rule is the date of the Closing. In the event such notice is given in writing by the
Representative, the Representative agrees to notify THDA in writing following the occurrence of
the “end of the underwriting period” as defined in the Rule for the Bonds identified in such
notice.

         4.          As of the date hereof, THDA represents, warrants and agrees as follows:

         (a)   THDA is a body politic and corporate, and a political subdivision and
instrumentality of the State of Tennessee and, except as otherwise disclosed in the Official
Statement, has complied, and will on the date of Closing be in compliance, in all respects with
the Tennessee Housing Development Agency Act, constituting Chapter 23 of Title 13 of the
Tennessee Code Annotated (T.C.A. § 13-23-101 et seq.), as amended (the “Act”) and has, and on
the date of Closing will have, full legal right, power and authority to (i) enter into this
Agreement, (ii) adopt the Resolutions, (iii) delegate to the Committee the authority on its behalf
to sell the Bonds, and to issue and deliver the Bonds to the Underwriters and (iv) carry out and
consummate all other transactions contemplated by the Resolutions and this Agreement;

       (b)     By official action of THDA prior to or concurrently with the acceptance hereof,
THDA has duly adopted the Resolutions, has duly authorized and approved the execution and
delivery of, and the performance by THDA of the obligations contained in the Bonds and this
Agreement and has duly authorized and approved the performance by THDA of its obligations
contained in the Resolutions;

       (c)    On the date of Closing, the Resolutions shall be in full force and effect, and shall
not have been amended or modified, and the Official Statement shall not have been amended,
modified or supplemented except as may have been agreed to by the Underwriters and THDA;


4846-2980-4036.2/3
                                                     3
        (d)    To the best knowledge of the Chairman, Vice-Chairman, Executive Director,
General Counsel and Division Directors of THDA, and except as otherwise disclosed in the
Official Statement, THDA is not in breach of or default under any applicable law or
administrative regulation of the State of Tennessee or the United States or any applicable
judgment or decree or any loan agreement, note, resolution, agreement or other instrument to
which THDA is a party or is otherwise subject; and the execution and delivery of this Agreement
by THDA and the delivery of the Bonds and the adoption of the Resolutions by THDA and
compliance with the provisions of each thereof will not conflict with or constitute a breach of or
default under any law, administrative regulation, judgment, decree or any agreement or other
instrument to which THDA is a party or is otherwise subject;

        (e)     All approvals, consents and orders of any governmental authority or agency
having jurisdiction of the matter which would constitute a condition precedent to the
performance by THDA of its obligations hereunder have been obtained, except for certain
approvals, consents and orders as may be required under the Blue Sky or securities laws of any
jurisdiction in connection with the issuance and sale of the Bonds;

        (f)      At the time of THDA’s acceptance hereof, neither the Preliminary Official
Statement nor the Official Statement contains an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; and as of the date of
delivery of the Official Statement pursuant to Paragraph 3 hereof and as of the date of the
Closing, the Official Statement, as supplemented or amended in accordance with
subparagraph (l) of this Paragraph 4, will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading;

         (g)    Except as otherwise described in or contemplated by the Official Statement,
between the date of this Agreement and the Closing, THDA will not, without the prior written
consent of the Representative (i) issue any bonds, notes or other obligations for borrowed money
or (ii) incur any material liabilities, direct or contingent;

        (h)     No litigation is pending or, to the best knowledge of the Chairman,
Vice-Chairman, Executive Director, General Counsel and Division Directors of THDA,
threatened in any court affecting the corporate existence of THDA, the title of its officers to their
respective offices, or seeking to restrain or enjoin the issuance and delivery of the Bonds or the
collection of receipts or assets of THDA, in a material amount, pledged or to be pledged to pay
the principal of and interest on the Bonds or the pledge thereof, or in any way contesting or
affecting the validity or enforceability of the Bonds, the Resolutions, or this Agreement, or
contesting the powers of THDA or any authority for the Bonds, the Resolutions, or this
Agreement, or contesting in any way the completeness, accuracy or fairness of the Preliminary
Official Statement or the Official Statement;

        (i)    THDA will furnish such information, execute such instruments and take such
other action in cooperation with the Underwriters as the Underwriters may deem necessary in
order to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and
regulations of such states and other jurisdictions of the United States as the Underwriters may

4846-2980-4036.2/4
                                                 4
designate, provided that THDA shall not be required to register as a broker or dealer in any
jurisdiction or comply with any other requirements reasonably deemed by it to be unduly
burdensome;

        (j)     The financial statements of THDA incorporated by reference in the Preliminary
Official Statement or attached as an Appendix to the Official Statement fairly present the
financial position and results of operation of THDA as of the dates and for the periods therein set
forth, and such financial statements have been prepared in accordance with generally accepted
accounting principles as prescribed by the Governmental Accounting Standards Board; and,
except as otherwise disclosed in the Official Statement, THDA has no knowledge of any material
adverse change in its financial position, results of operation or financial condition from that set
forth in the Official Statement;

       (k)     The Bonds and the Resolutions conform to the descriptions thereof contained in
the Official Statement, and the Bonds, when issued, authenticated and delivered in accordance
with the Resolutions and sold to the related purchasers thereof, will be validly issued and
outstanding obligations of THDA entitled to the benefits of the Resolutions;

        (l)    If, during the period from the date hereof to and including the date which is 25
days following the “end of the underwriting period” (as determined in accordance with
Paragraph 3 hereof), any event occurs affecting THDA which is materially adverse to the
purpose for which the Official Statement (as then supplemented or amended) is to be used and is
not disclosed in the Official Statement, THDA shall notify the Underwriters, and if in the
opinion of THDA and the Underwriters such event requires a supplement or amendment to the
Official Statement, THDA will supplement or amend the Official Statement at THDA’s cost and
expense in a form and in a manner approved by the Underwriters, counsel to the Underwriters
and Bond Counsel to THDA. Copies of any such supplement or amendment shall be provided to
the Underwriters.

       (m)    On the date of the Closing all official action of THDA, the Committee and the
State Funding Board of the State of Tennessee related to the Resolutions and the issuance of the
Bonds shall be in full force and effect and shall not have been amended, modified or
supplemented;

        (n)    THDA has not failed to pay principal or interest when due on any of its
obligations; and

        (o)    THDA has not failed to comply, in any material respect, with any undertaking in a
written contract or agreement specified in paragraph (b)(5)(i) of the Rule since at least a date five
years preceding the date of this Agreement.

       5.     The Closing shall occur at 10:00 a.m., New York Time, on December 23, 2009
(the “Closing”), or on such other date as may be mutually agreed by THDA and the
Representative. Prior to the Closing, THDA will deliver to the Representative the documents
hereinafter mentioned at the offices of THDA, Suite 1200, 404 James Robertson Parkway,
Nashville, Tennessee or at such other place as we may mutually agree upon. At the Closing,
THDA shall deliver or cause to be delivered the Bonds to the Trustee as agent for The


4846-2980-4036.2/5
                                                 5
Depository Trust Company (“DTC”) pursuant to the DTC FAST delivery program in definitive
form, duly executed, registered in the name of “Cede & Co.,” and the Underwriters will accept
such delivery and pay the purchase price of the Bonds as set forth in Paragraph 1 hereof by wire
transfer payable in immediately available funds to the Trustee for the account of THDA.

        6.      The Underwriters have entered into this Agreement in reliance upon the
representations and warranties of the Committee and THDA contained herein and to be
contained in the documents and instruments to be delivered at the Closing, and upon the
performance by the Committee and THDA of their obligations hereunder, both as of the
applicable date of execution of this Agreement and as of the date of Closing. Accordingly, the
Underwriters’ obligations under this Agreement to purchase and pay for the Bonds shall be
subject to the performance by the Committee and THDA of their obligations to be performed
hereunder and under such documents and instruments at or prior to the Closing, and shall also be
subject to the following conditions:

        (a)     The representations and warranties of the Committee and THDA contained herein
shall be true, complete and correct in all material respects at the applicable effective date hereof
and on and as of the date of Closing as if made on the date of Closing;

       (b)    At the time of the Closing, the Resolutions shall be in full force and effect, and
shall not have been amended or modified, and the Official Statement shall not have been
amended, modified or supplemented, except as may have been agreed to by the Underwriters and
THDA;

        (c)     At the time of the Closing, all official action of THDA and the Committee related
to the Resolutions and all official action of THDA, the Committee and the State Funding Board
of the State of Tennessee related to and constituting a pre-requisite to the sale of the Bonds shall
be in full force and effect and shall not have been amended, modified or supplemented;

        (d)    THDA shall not have failed to pay principal or interest when due on any of its
obligations nor, except as otherwise disclosed in the Official Statement, shall there have been
any adverse change of a material nature in the financial position, results of operations or
condition, financial or otherwise, of THDA;

        (e)     The Underwriters shall have the right to terminate this Agreement by notifying
the Committee and THDA of their election to do so if, after the execution hereof and prior to the
Closing: (i) legislation shall have been introduced in or enacted by the Congress of the United
States or legislation shall have been enacted by the State of Tennessee, or legislation pending in
the Congress of the United States shall have been amended, or a decision shall have been
rendered by a court of the United States or the State of Tennessee, including the United States
Tax Court, or a ruling shall have been made or a regulation shall have been proposed or made or
a press release or other form of notice shall have been issued by the Department of the Treasury
of the United States or the Internal Revenue Service or other Federal or Tennessee authority,
with respect to Federal or Tennessee taxation upon revenues or other income of the general
character to be derived by THDA or by any similar body, or upon interest on obligations of the
general character of the Bonds, which may have the purpose or effect, directly or indirectly, of
affecting the tax status of THDA, its property or income, its securities (including the Bonds) or


4846-2980-4036.2/6
                                                 6
the interest thereon, or any tax exemption granted or authorized by the Act, or, in the opinion of
the Representative, affects materially and adversely the market for the Bonds, or the market price
generally of obligations of the general character of the Bonds; (ii) the United States shall have
become engaged in hostilities which have resulted in declaration of war or a national emergency
or other unforeseen national or international calamity (economic or otherwise) shall have
occurred or accelerated to such an extent as, in the opinion of the Representative, affects
materially and adversely the market for the Bonds, or the market price generally of obligations of
the general character of the Bonds; (iii) there shall have occurred a general suspension of trading
on the New York Stock Exchange or the declaration of a general banking moratorium by United
States, New York or Tennessee authorities; (iv) an event described in subparagraph (l) of
Paragraph 4 hereof occurs prior to the Closing which in the reasonable opinion of the
Representative has a material adverse effect on the market price for the Bonds; or (v) any rating
agency maintaining a rating on THDA's Housing Finance Program Bonds at the request of
THDA formally announces that such Housing Finance Program Bonds have been placed on
"credit watch" with negative implications or any similar formal credit alert and in the reasonable
opinion of the Representative such announcement has a material adverse impact on the market
price of the Bonds; and

       (f)    At or prior to the Closing, the Representative shall have received each of the
following documents:

               (i)    The Preliminary Official Statement of THDA and the Official Statement
of THDA together with any supplements or amendments thereto in the event either has been
supplemented or amended, the Official Statement having been executed on behalf of THDA by
its Chairman, its Executive Director or other authorized officer;

             (ii)   The Resolutions certified by the Secretary of THDA under its seal as
having been duly adopted by THDA as being in full force and effect, with such changes or
amendments as may have been agreed to by the Representative;

               (iii) The unqualified opinion, dated the date of Closing, addressed to THDA, of
Kutak Rock LLP, Bond Counsel to THDA, in substantially the form included as Appendix I to
the Official Statement, and a letter of such counsel, dated the date of Closing and addressed to
the Underwriters, to the effect that their opinion addressed to THDA may be relied upon by the
Underwriters to the same extent as if such opinion were addressed to them;

               (iv)   An opinion, dated the date of Closing, addressed to the Underwriters, of
Kutak Rock LLP, Bond Counsel to THDA, to the effect that (A) the Bonds and the Resolutions
conform to the descriptions thereof contained in the Official Statement, and the Bonds are
validly issued and outstanding obligations of THDA entitled to the benefits of the Resolutions;
(B) this Agreement has been duly authorized, executed and delivered by the Committee on
behalf of THDA and constitutes a valid and binding agreement of THDA enforceable against
THDA in accordance with its terms; (C) the Bonds are not subject to the registration
requirements of the Securities Act of 1933, as amended, and the Resolutions are exempt from
qualification pursuant to the Trust Indenture Act of 1939, as amended; and (D) the statements
contained in the Official Statement under the captions “DESCRIPTION OF ISSUE 2009
BONDS,” “SECURITY AND SOURCES OF PAYMENT OF BONDS” and “APPENDIX D—

4846-2980-4036.2/7
                                                7
SUMMARY OF CERTAIN PROVISIONS OF THE RESOLUTION,” insofar as such
statements contained under such captions purport to summarize certain provisions of the
Resolutions and describe the terms of the Bonds, present a fair summary of such provisions and
conform to the terms and provisions of the Bonds and the statements contained under the caption
“TAX MATTERS” with respect to the opinion of Bond Counsel and the law, including the
Internal Revenue Code of 1986, as amended, are accurate statements of such opinion and the
law. In addition, such counsel shall state in its letter containing the foregoing opinion, or in a
separate letter, addressed to the Underwriters and dated the date of Closing, that, based upon its
participation in the preparation of the Official Statement as Bond Counsel and without having
undertaken to determine independently the accuracy or completeness of the statements contained
in the Official Statement, nothing has come to the attention of such counsel to lead it to believe
(1) that the Official Statement, as of its date (except for any financial and statistical data included
therein, as to which no view need be expressed) contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were made, not misleading
or (2) that the Official Statement (as it may have been amended or supplemented pursuant to
subparagraph (l) of Paragraph 4 hereof), as of the date of Closing (except for any financial and
statistical data included therein, as to which no view need be expressed) contains an untrue
statement of a material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading;

                 (v)    An opinion, dated the date of Closing, addressed to the Underwriters, of
Hawkins Delafield & Wood LLP, counsel to the Underwriters, to the effect that the Bonds are
not subject to the registration requirements of the Securities Act of 1933, as amended, and that
the Resolutions are exempt from qualification pursuant to the Trust Indenture Act of 1939, as
amended; in addition, such counsel shall state in its letter containing the foregoing opinion, or in
a separate letter, addressed to the Underwriters and dated the date of Closing, that, based upon
their participation in the preparation of the Official Statement as counsel to the Underwriters and
assuming the accuracy, completeness and fairness of and without taking responsibility for, the
statements contained in the Official Statement, nothing has come to the attention of such counsel
to lead it to believe (A) that the Official Statement, as of its date (except for any financial and
statistical data included in the Official Statement, and other matters specified in such letter to the
Underwriter, as to which no view need be expressed) contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were made, not misleading
or (B) that the Official Statement (as it may have been amended or supplemented pursuant to
subparagraph (l) of Paragraph 4 hereof) as of the date of Closing (except for any financial and
statistical data included in the Official Statement, and other matters specified in such letter to the
Underwriters, as to which no view need be expressed) contains an untrue statement of a material
fact or omits to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were made, not
misleading;

              (vi)   An opinion, dated the date of Closing, addressed to the Underwriters, of
the General Counsel to THDA, to the effect that the performance of THDA’s obligations under
the Resolutions has been duly authorized and has not and will not violate, to the best of such

4846-2980-4036.2/8
                                                  8
counsel’s knowledge, any applicable judgment, order or regulation of any court or any public or
governmental agency or authority of the State or any rule or regulation of THDA, or any statute,
order, rule or regulation applicable to THDA and, to the best of such counsel’s knowledge, will
not conflict with or result in the breach of the provisions of or constitute a default under any
agreement or instrument to which THDA is a party or by which THDA or any of its properties is
or may be bound; in addition, such counsel shall state in the foregoing opinions, or in a separate
letter addressed to the Underwriters and dated the date of Closing, that based upon such
counsel’s participation in the preparation of the Official Statement as General Counsel to THDA
and without having undertaken to determine independently the accuracy or completeness of the
statements contained in the Official Statement, such counsel has no reason to believe (A) that the
Official Statement, as of its date (except for the financial and statistical data included therein, as
to which no view need be expressed) contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading or (B) that the
Official Statement (as it may have been amended or supplemented pursuant to subparagraph (l)
of Paragraph 4 hereof) as of the date of Closing (except for the financial and statistical data
included therein, as to which no view need be expressed) contains an untrue statement of a
material fact or omits to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were made, not
misleading;

                (vii) A certificate, dated the date of Closing, signed by the Chairman,
Vice-Chairman or other authorized officer of THDA and the Executive Director of THDA, to the
effect that (A) the representations and warranties of THDA contained herein are true and correct
in all material respects on and as of the date of Closing as if made on the date of Closing; (B) no
litigation is pending or, to the knowledge of either the Chairman or other authorized officer of
THDA or Executive Director, threatened in any court to restrain or enjoin the issuance or
delivery of the Bonds, or the collection of revenues and assets of THDA, in a material amount,
pledged or to be pledged to pay the principal of and interest on the Bonds, or the pledge thereof,
or in any way contesting or affecting the validity of the Bonds, the Resolutions or this
Agreement, or contesting the powers of THDA or any authority for the Bonds or the Resolutions,
or contesting in any way the accuracy, completeness or fairness of the Preliminary Official
Statement, the Official Statement, or the Official Statement as the same may be supplemented or
amended (but in lieu of or in conjunction with such certificate the Representative may, in its sole
discretion, accept certificates or opinions of the General Counsel of THDA, that in such
counsel’s opinion no such litigation, in any one case or in the aggregate, materially adversely
affects the finances, operations, properties or business of THDA, the Bonds or the ability of
THDA to perform its obligations under the Bonds, the Resolutions, or this Agreement); (C) to
the best of either of such officer’s knowledge, no event affecting THDA has occurred since the
date of the Official Statement which should be disclosed in the Official Statement, as the same
may be supplemented or amended, in order that the Official Statement not contain an untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading; (D) THDA has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the Closing; (E) they believe that
the procedures and documentation requirements established for the purpose of fulfilling THDA’s
tax covenant in the General Resolution are sufficient to assure that the proceeds of the Bonds

4846-2980-4036.2/9
                                                  9
will be applied in accordance with the requirements of the Internal Revenue Code of 1986, as
amended, so as to assure that interest on the Bonds will be excludable from gross income for
purposes of Federal income taxation; and (F) as of its date and as of the date of Closing (1) the
information and statements of or pertaining to THDA and its programs contained in the Official
Statement were and are correct in all material respects; and (2) insofar as THDA and its affairs
are concerned, the Official Statement did not and as of the date of Closing does not contain an
untrue statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that no separate certificate need be rendered as to the
audited financial statements of THDA attached as an exhibit to the Official Statement, and,
provided further, that insofar as the descriptions and statements, including financial data, of or
pertaining to other governmental bodies, nongovernmental bodies, and their respective activities
contained in the Official Statement are concerned, THDA may state in such Certification that
such descriptions, statements, and data have been obtained from sources believed by THDA to
be reliable, and THDA has no reason to believe that they are untrue or incomplete in any
material respect;

               (viii) A letter from the Director, Division of State Audit of the Comptroller of
the Treasury of the State of Tennessee, dated the date of the Closing (or dated a date not more
than five days prior to the Closing) and addressed to the Underwriters, setting forth, as of the
date of such letter (or, with respect to matters involving changes or developments since the date
as of which specified financial information is given in the Official Statement, as of a date not
more than five days prior to the date of such letter), certain agreed upon procedures in
connection with the financial information included in the Official Statement;

               (ix)   Two copies of a transcript of all proceedings relating to the authorization
and issuance of the Bonds;

               (x)    Evidence satisfactory to the Representative that the Bonds have been rated
not less than “Aa2” by Moody’s Investors Service, Inc.;

               (xi)    An arbitrage certificate, dated as of the date of Closing, in form and
substance satisfactory to the Representative, Bond Counsel and counsel to the Underwriters;

                (xii) A certificate, dated the date of Closing, signed by the Attorney General of
the State of Tennessee to the effect that no litigation or other judicial proceedings have been
served upon the State, or are pending against THDA or to the best of his knowledge, threatened
(either in State or Federal Courts in the State of Tennessee) (A) restraining or enjoining or
seeking to restrain or enjoin the issuance of the Bonds, or (B) in any way questioning or affecting
(1) the validity of any provision of the Resolutions authorizing the Bonds and approving the
form, terms and provisions of this Agreement, or (2) the pledge or application of any moneys or
securities provided for the payment of the Bonds, or (C) in any way questioning or affecting the
validity of the proceedings or authority for the issuance of the Bonds, or the security provided for
the payment of the Bonds, or (D) in any way questioning or affecting the organization or
existence of THDA or its powers, or the title of the present officers or members of THDA, or any
of them, to their respective offices; and



4846-2980-4036.2/10
                                                 10
                 (xiii) Such additional legal opinions, certificates, instruments and other
documents as the Representative may reasonably request to evidence the truth and accuracy, as
of the date hereof and as of the date of Closing, of THDA’s representations and warranties
contained herein and of the statements and information contained in the Official Statement, as
the same may be supplemented or amended, and the due performance and satisfaction by THDA
at or prior to the date of Closing of all agreements then to be performed and all conditions then to
be satisfied by THDA.

         All the opinions, letters, certificates, instruments and other documents mentioned above
or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof
if, but only if, they are in form and substance satisfactory to the Representative.

        If the Committee and THDA shall be unable to satisfy the conditions to the obligations of
the Underwriters contained in this Agreement, or if the obligations of the Underwriters shall be
terminated for any reason permitted by this Agreement, this Agreement shall terminate and
neither the Underwriters, the Committee nor THDA shall be under further obligation hereunder,
except that the respective obligations of the Committee, THDA and the Underwriters set forth in
Paragraph 14 hereof shall continue in full force and effect.

        7.      The Underwriters shall not be liable or responsible in any respect for any
(a) error, omission, interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with this Agreement in which the Underwriters have
exercised reasonable care, or (b) action, inaction or omission which it may take in good faith
after the exercise of reasonable care in connection with this Agreement.

        8.       The Underwriters, may in good faith, buy, sell, own, hold and deal in any of the
Bonds offered and sold by such Underwriters pursuant to this Agreement, and may join in any
action which any Bondholder may be entitled to take with like effect as if it did not act in any
capacity hereunder. The Underwriters, either as principal or agent, may also engage in or be
interested in any financial or other transaction with THDA, and may act as depository, trustee, or
agent for any committee or body of owners of Bonds sold hereby or other obligations of THDA
as freely as if it did not act in any capacity hereunder.

       9.     It is the express intention of the parties hereto that any purchase, sale or transfer
of any Bonds, as herein provided, shall not constitute or be construed to be the extinguishment of
any Bonds or the indebtedness represented thereby or a reissuance of the Bonds.

       10.     THDA and the Underwriters agree to perform the duties and covenants set forth
for each of them in the Supplemental Resolution insofar as they apply to the issuance and sale of
the Bonds.

       11.     THDA and the Underwriters agree that this Agreement may be amended,
changed, supplemented, waived, discharged or terminated only with the prior written consent of
each party hereto.

         12.          This Agreement shall be governed by the laws of the State of Tennessee.



4846-2980-4036.2/11
                                                     11
        13.    (a)    Except as otherwise specifically provided in this Agreement, all notices,
demands and formal actions under this Agreement shall be in writing and mailed, telecopied or
delivered to the Underwriters, THDA and the Committee as follows:

         If to the Underwriters:      Morgan Keegan & Company, Inc.
                                      50 Front Street
                                      16th Floor
                                      Memphis, TN 38103
                                      Attention: Mr. Donald E. Peterson
                                      Telephone: (901) 529-5489
                                      Facsimile: (901) 579-4363

         If to THDA:                  Tennessee Housing Development Agency
                                      Suite 1200
                                      404 James Robertson Parkway
                                      Nashville, TN 37243-0900
                                      Attention: Ms. Lynn E. Miller, Esq.,
                                                  General Counsel
                                      Telephone: (615) 815-2025
                                      Facsimile: (615) 741-9634

         If to the Committee:         Tennessee Housing Development Agency
                                      Bond Finance Committee
                                      Suite 1600
                                      James K. Polk Building
                                      505 Deaderick Street
                                      Nashville, TN 37243-0273
                                      Attention: Ms. Mary Margaret Collier
                                      Telephone: (615) 747-5370
                                      Facsimile: (615) 741-5986

      The Representative, THDA and the Committee may, by notice given under this
Agreement, designate other addresses to which subsequent notices, requests, reports or other
communications shall be directed.

        (b)      If any provision of this Agreement shall be held, deemed to be or shall, in fact, be
invalid, inoperative or unenforceable as applied in any particular case in any jurisdiction or
jurisdictions, or in all jurisdictions because it conflicts with any provisions of any constitution,
statute, rule of public policy, or any other reason, such circumstances shall not have the effect of
rendering the provision in question invalid, inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions of this Agreement invalid,
inoperative or unenforceable to any extent whatever.

       14.     (a)     The Underwriters shall be under no obligation to pay, and THDA shall
pay, any expenses incident to the performance of THDA’s obligations hereunder, including but
not limited to: (i) the cost of the preparation, printing and distributing of the Resolutions, the
Preliminary Official Statement, the Official Statement (including any supplements or


4846-2980-4036.2/12
                                                 12
amendments thereto) and this Agreement; (ii) the cost of the preparation and printing of the
Bonds; (iii) the fees and disbursements of Kutak Rock LLP, Bond Counsel to THDA; (iv) the
fees and disbursements of THDA’s accountants, advisers, local counsel and of any other experts
or consultants retained by THDA; and (v) fees for bond ratings.

         (b)    The Underwriters shall pay: (i) the cost of preparation and printing of Blue Sky
Memoranda; (ii) all advertising expenses in connection with the public offering of the Bonds;
(iii) the fees charged by The Depository Trust Company and the CUSIP Service Bureau; and
(iv) all other expenses incurred by it in connection with their public offering and distribution of
the Bonds, including the fees and disbursements of counsel retained by the Underwriters.

        15.     This Agreement is made solely for the benefit of THDA and the Underwriters
(including the successors or assigns thereof) and no other person shall acquire or have any right
hereunder or by virtue hereof. The Committee’s and THDA’s representations, warranties and
agreements contained in this Agreement shall remain operative and in full force and effect,
regardless of (a) any investigations made by or on behalf of the Underwriters; (b) delivery of and
payment for the Bonds hereunder; and (iii) any termination of this Agreement.

        16.    This Agreement may be executed in multiple counterparts, each of which shall
constitute an original and which together shall constitute one and the same Agreement.

       17.    This Agreement shall become effective upon the execution of the acceptance
hereof by the Chairman, Vice-Chairman, Secretary or Assistant Secretary of the Committee or
the Executive Director of THDA and shall be valid and enforceable as of the time of such
acceptance.



                           [Remainder of page intentionally left blank]




4846-2980-4036.2/13
                                                13
                      [Issue 2009-A1 Bond Purchase Agreement Execution Page]

Dated: December 3, 2009

                                                Very truly yours,

                                                MORGAN KEEGAN & COMPANY, INC.
                                                MERRILL LYNCH, PIERCE, FENNER &
                                                SMITH INCORPORATED
                                                RBC CAPITAL MARKETS CORPORATION
                                                CITIGROUP GLOBAL MARKETS INC.
                                                RAYMOND JAMES & ASSOCIATES
                                                M R BEAL & COMPANY
                                                DUNCAN-WILLIAMS, INC.



                                                By: MORGAN KEEGAN & COMPANY, INC.
                                                as representative on behalf of the Underwriters,
                                                including themselves

                                                By:
                                                      Authorized Officer




ACCEPTED at [_______][a.m./p.m.]
Central Daylight Savings Time this 3rd day of December, 2009:

TENNESSEE HOUSING DEVELOPMENT
AGENCY, acting by and through its
Bond Finance Committee


By
     Authorized Officer




4846-2980-4036.2/14
                                               14
                          EXHIBIT A

                      OFFICIAL STATEMENT

                           SEE TAB 8




4846-2980-4036.2/15
                                                          EXHIBIT B

                                                   MATURITY SCHEDULE

                                                   Issue 2009-A1 (Non-AMT)

                                                   $24,335,000 Serial Bonds

   Maturity                        Principal           Interest        Maturity            Principal   Interest
    Date                           Amount                Rate           Date               Amount       Rate

January 1, 2011                $     965,000           0.900%     July 1, 2016            $1,095,000   3.050%
July 1, 2011                         970,000           1.100      January 1, 2017          1,110,000   3.350
January 1, 2012                      980,000           1.350      July 1, 2017             1,130,000   3.450
July 1, 2012                         985,000           1.450      January 1, 2018          1,150,000   3.600
January 1, 2013                      995,000           1.850      July 1, 2018             1,175,000   3.700
July 1, 2013                       1,005,000           1.950      January 1, 2019          1,200,000   3.800
January 1, 2014                    1,015,000           2.250      July 1, 2019             1,220,000   3.850
July 1, 2014                       1,030,000           2.350      January 1, 2020          1,245,000   3.950
January 1, 2015                    1,040,000           2.650      July 1, 2020             1,270,000   3.950
July 1, 2015                       1,060,000           2.750      January 1, 2021          1,295,000   4.100
January 1, 2016                    1,075,000           2.950      July 1, 2021             1,325,000   4.125


                                                   $15,665,000 Term Bonds

                                   Maturity                Principal                Interest
                                    Date                   Amount                     Rate

                              July 1, 2024                $8,570,000                4.375%
                              January 1, 2027              7,095,000                4.625



                                               Price of Issue 2009-A1 Bonds: 100%




        4846-2980-4036.2/16
       EXHIBIT C

SUPPLEMENTAL RESOLUTION
                   TENNESSEE HOUSING DEVELOPMENT AGENCY




                                    A Resolution

                               Authorizing the Sale of

                                    $400,000,000

                          Housing Finance Program Bonds,

                        $40,000,000 Issue 2009-A1 (Non-AMT)

                        $60,000,000 Issue 2009-A2 (Non-AMT)

                         $300,000,000 Issue 2009-B (Taxable)




                             Adopted November 19, 2009
                            as amended and supplemented
                           by the Bond Finance Committee
                           of THDA on December 3, 2009




4847-6195-0469.3
                                              ARTICLE I
                                     DEFINITIONS AND AUTHORITY
Section 1.01.      Short Title ........................................................................................................ 8
Section 1.02.      Definitions........................................................................................................ 8
Section 1.03.      Authority for this Resolution ......................................................................... 10

                                                ARTICLE II
                                            TERMS AND ISSUANCE
Section 2.01.      Issue Amount and Designation; Effect of Appendix I and Appendix II........ 10
Section 2.02.      Purposes ......................................................................................................... 11
Section 2.03.      Amounts, Maturities and Interest Rates ......................................................... 11
Section 2.04.      Denominations, Numbers and Letters............................................................ 13
Section 2.05.      Paying Agent.................................................................................................. 13
Section 2.06.      Execution of Bonds ........................................................................................ 13
Section 2.07.      Place of Payment; Record Date ..................................................................... 13
Section 2.08.      Sinking Fund Redemption Provisions ........................................................... 14
Section 2.09.      Optional Redemption ..................................................................................... 15
Section 2.10.      Special Optional Redemption ........................................................................ 15
Section 2.11.      Special Mandatory Redemptions ................................................................... 16
Section 2.12.      Selection by Lot ............................................................................................. 17
Section 2.13.      Purchase of Bonds by THDA or Trustee ....................................................... 17

                                                 ARTICLE III
                                             SALE AND DELIVERY
Section 3.01.      Sale ................................................................................................................. 17

                                    ARTICLE IV
                   DISPOSITION OF PROCEEDS AND OTHER MONEYS
Section 4.01.      Loan Fund; Bond Reserve Fund Requirement............................................... 18
Section 4.02.      Deposit and Disposition of Issue 2009-B Bond Proceeds; Bond
                   Reserve Fund ................................................................................................. 19

                                ARTICLE V
        FORM OF BONDS, AND TRUSTEE’S CERTIFICATE OF AUTHENTICATION
Section 5.01.      Form of Bonds ............................................................................................... 20
Section 5.02.      Form of Trustee’s and Authenticating Agent’s Certificate of
                   Authentication ................................................................................................ 20

                                                   ARTICLE VI
                                                 MISCELLANEOUS
Section 6.01.      No Recourse Against Members or Other Persons ......................................... 20




4847-6195-0469.3
Section 6.02.      Bonds not Debt, Liability or Obligation of the State or the United
                   States of America ........................................................................................... 21
Section 6.03.      Delivery of Projected Cash Flow Statements ................................................ 21
Section 6.04.      Authorized Officers ....................................................................................... 21
Section 6.05.      Authorized Trustee......................................................................................... 21
Section 6.06.      Covenant to Comply with Federal Tax Law Requirements........................... 21
Section 6.07.      Continuing Disclosure Undertaking .............................................................. 21
Section 6.08.      Confirmation and Adjustment of Terms by Committee ................................ 23
Section 6.09.      Effective Date ................................................................................................ 24

EXHIBIT A          BOND PURCHASE AGREEMENT
EXHIBIT B          PLACEMENT AGREEMENTS
EXHIBIT C          SETTLEMENT AGREEMENTS

APPENDIX I         SUPPLEMENTAL PROVISIONS RELATING TO ISSUE 2009-A2 BONDS
APPENDIX II        SUPPLEMENTAL PROVISIONS RELATING TO ISSUE 2009-B BONDS




                                                             ii
4847-6195-0469.3
                        A RESOLUTION AUTHORIZING THE SALE OF
                                         $400,000,000
                           HOUSING FINANCE PROGRAM BONDS
                            $40,000,000 ISSUE 2009-A1 (Non-AMT)
                            $60,000,000 ISSUE 2009-A2 (Non-AMT)
                             $300,000,000 ISSUE 2009-B (Taxable)

    BE IT RESOLVED by the Board of Directors of the TENNESSEE HOUSING
DEVELOPMENT AGENCY (“THDA”) as follows:

                                            ARTICLE I

                                DEFINITIONS AND AUTHORITY

      Section 1.01. Short Title. This resolution may hereafter be cited by THDA as the Issue
2009-A/B Supplemental Housing Finance Program Bond Resolution.

         Section 1.02. Definitions.

                (a)    All terms which are defined in Section 1.2 of the resolution of THDA
         adopted November 19, 2009, as amended and supplemented, and entitled “General
         Housing Finance Program Bond Resolution” (the “General Resolution”) have the same
         meanings in this Resolution as such terms are given in Section 1.2 of the General
         Resolution. Certain capitalized terms used herein with respect to the Issue 2009-A2
         Bonds and the Issue 2009-B Bonds shall have the meanings ascribed thereto in Appendix
         I or Appendix II, as applicable.

                (b)      In addition, as used in this Resolution, unless the context otherwise
         requires, the following terms have the following respective meanings:

                          “Bond Purchase Agreement” means the contract for the purchase of the
                   Issue 2009-A1 Bonds between THDA and the Underwriters.

                           “Business Day” shall mean any day except for a Saturday, Sunday or any
                   day on which banks in Tennessee or New York are required or authorized to be
                   closed.

                          “Co-Managers” means Citigroup Capital Markets, Raymond James &
                   Associates, Inc., M.R. Beal & Company and Duncan-Williams, Inc.

                          “Code” shall mean the Internal Revenue Code of 1986, as amended.

                           “DTC” means The Depository Trust Company, New York, New York, a
                   limited-purpose trust company organized under the laws of the State of New
                   York, and its successors and assigns.




4847-6195-0469.3                               3
                           “Issue 2009-A Bonds” means, collectively, the Issue 2009-A1 Bonds and
                   the Issue 2009-A2 Bonds.

                           “Issue 2009-A Prepayments” means prepayments of principal with respect
                   to the Program Loans, or portions thereof, allocated to the Issue 2009-A Bonds.

                          “Issue 2009-A Repayments” means regularly scheduled payments of
                   principal with respect to the Program Loans, or portions thereof, allocated to the
                   Issue 2009-A Bonds.

                          “Issue 2009-A1 Bonds” means the Issue 2009-A1 Bonds of THDA
                   authorized by this Resolution pursuant to the Plan of Financing.

                          “Issue 2009-A2 Bonds” means the Issue 2009-A2 Bonds of THDA
                   authorized by this Resolution pursuant to the Plan of Financing.

                           “Issue 2009-A/B Bonds” means, collectively, the Issue 2009-A Bonds and
                   the Issue 2009-B Bonds.

                          “Issue 2009-B Bonds” means the Issue 2009-B Bonds of THDA
                   authorized by this Resolution pursuant to the Plan of Financing.

                           “MSRB” means the Municipal Securities Rulemaking Board by operation
                   of its Electronic Municipal Market Access System.

                         “Official Statement” means the Official Statement and Placement
                   Memorandum dated December 3, 2009 used in connection with the sale and
                   placement of the Issue 2009-A/B Bonds.

                         “Placement Agreements” means the agreements for purchase of the Issue
                   2009-A2 Bonds and the Issue 2009-B Bonds between THDA and the Purchasers.

                          “Preliminary Official Statement” means the Preliminary Official
                   Statement and Placement Memorandum dated November 24, 2009 used in
                   connection with the sale and placement of the Issue 2009-A/B Bonds.

                          “Purchasers” means, collectively, the Federal Home Loan Mortgage
                   Corporation and the Federal National Mortgage Association as purchasers of the
                   Issue 2009-A2 Bonds and the Issue 2009-B Bonds.

                           “Rating Agency” shall mean Moody’s Investors Service (or any successor
                   thereto).

                        “Resolution” means this Supplemental Resolution adopted by THDA on
                   November 19, 2009, as amended and supplemented by the Bond Finance
                   Committee on December 3, 2009.



4847-6195-0469.3                                   4
                            “Serial Bonds” means the Issue 2009-A1 Bonds which are not Term
                   Bonds.

                          “Settlement Agreements” means the agreements which establish the
                   settlement procedures for the Issue 2009-A2 Bonds and the Issue 2009-B Bonds.

                           “Subseries” shall mean any subseries of the Issue 2009-A/B Bonds
                   established pursuant to this Resolution and references to the Issue 2009-A/B
                   Bonds of any Subseries shall include all the Issue 2009-A/B Bonds at any
                   particular point in time designated as the Issue 2009-A/B Bonds of such Subseries
                   in accordance with the provisions of this Resolution.

                           “Term Bonds” means, collectively, the Issue 2009-A1 Bonds maturing
                   July 1, 2024 and January 1, 2027, the Issue 2009-A2 Bonds and the Issue 2009-B
                   Bonds.

                          “Underwriters” means, collectively, Morgan Keegan & Company, Inc.,
                   Merrill Lynch, Pierce, Fenner & Smith, Incorporated, RBC Capital Markets and
                   the Co-Managers, as purchasers of the Issue 2009-A1 Bonds.

                 (c)     Unless the context otherwise indicates, words of the masculine gender will
         be deemed and construed to include correlative words of feminine and neuter genders,
         words importing the singular number include the plural number and vice versa, and
         words importing persons include firms, associations, partnerships (including limited
         partnerships), trusts, corporations and other legal entities, including public bodies, as well
         as natural persons.

                 (d)    The terms “hereby,” “hereof,” “hereto,” “herein,” “hereunder” and any
         similar terms as used in this Resolution refer to this Resolution and such terms used in the
         form of registered bond herein refer to such bonds.

       Section 1.03. Authority for this Resolution. This Resolution is adopted pursuant to the
provisions of the Act and the General Resolution.

                                             ARTICLE II

                                      TERMS AND ISSUANCE

        Section 2.01. Issue Amount and Designation; Effect of Appendix I and Appendix II.
In order to provide funds necessary for the Housing Finance Program in accordance with and
subject to the terms, conditions and limitations established herein and in the General Resolution,
Housing Finance Program Bonds, Issue 2009-A1 are hereby authorized to be issued in the
aggregate principal amount of $40,000,000, Housing Finance Program Bonds, Issue 2009-A2 are
hereby authorized to be issued in the aggregate principal amount of $60,000,000 and Housing
Finance Program Bonds, Issue 2009-B are hereby authorized to be issued in the aggregate
principal amount of $300,000,000. The Issue 2009-A Bonds shall be issued under one single tax
plan for federal tax purposes. The Issue 2009-B Bonds shall be issued as taxable bonds separate


4847-6195-0469.3                                   5
and apart from the tax plan for the Issue 2009-A Bonds. The Issue 2009-B Bonds initially shall
be issued as escrow bonds and the interest rate on all or any portion of the Issue 2009-B Bonds is
subject to Conversion as described in Appendix II. Upon Conversion, such Converted Issue
2009-B Bonds may be deemed to be reissued under a separate tax plan for federal tax purposes.
In addition to the title “Housing Finance Program Bond,” the Issue 2009-A/B Bonds will bear
the additional designation “Issue 2009-A1 (Non-AMT)”, “Issue 2009-A2 (Non-AMT)” and
“Issue 2009-B (Taxable)”, as appropriate. Upon the Conversion of all or a portion of the Issue
2009-B Bonds, such Converted Issue 2009-B Bonds may be designated and redesignated as may
be provided in the Supplemental Resolution executed in connection with such Conversion. The
Issue 2009-A1 Bonds may be issued only in fully registered form and will consist of
$24,335,000 principal amount of Serial Bonds and $15,665,000 principal amount of Term
Bonds. The Issue 2009-A2 Bonds may be issued only in fully registered form and will consist of
$60,000,000 principal amount of Term Bonds. The Issue 2009-B Bonds may be issued only in
fully registered form and prior to Conversion will consist of $300,000,000 principal amount of
Term Bonds.

        Notwithstanding anything in the General Resolution or this Resolution to the contrary,
certain terms and conditions applicable to the Issue 2009-A2 Bonds and the Issue 2009-B Bonds
shall be governed by Appendix I and Appendix II hereto, respectively. To the extent of any
inconsistency between the General Resolution or this Resolution and such Appendix I or
Appendix II, the provisions of Appendix I or Appendix II, as applicable, shall control.

        Section 2.02. Purposes. The Issue 2009-A/B Bonds are being issued (a) to finance
Program Loans on single family residences located within the State, (b) if required, to pay
capitalized interest on the Issue 2009-A/B Bonds, (c) if required, to make a deposit in the Bond
Reserve Fund and (d) if required, to pay certain costs of issuance relating to the Issue 2009-A/B
Bonds; provided, however, that prior to Conversion, the proceeds of the Issue 2009-B Bonds
shall be deposited in the Issue 2009-B Escrow Subaccount of the Loan Fund and no Program
Loans shall be financed with proceeds of the Issue 2009-B Bonds.

          The proceeds of the Issue 2009-A/B Bonds shall be applied in accordance with Article IV
hereof.

          Section 2.03. Amounts, Maturities and Interest Rates.

                 (a)     The Issue 2009-A1 Bonds will mature on the dates, in the principal
          amounts and bear interest from their date of initial issuance and delivery, calculated on
          the basis of a 360-day year of twelve 30-day months, payable semi-annually on each
          January 1 and July 1, commencing July 1, 2010, at the rate set opposite such date in the
          following table:




4847-6195-0469.3                                  6
                                            Serial Bonds


     Maturity            Principal        Interest          Maturity         Principal       Interest
      Date               Amount             Rate             Date            Amount            Rate

January 1, 2011             $965,000       0.090%        July 1, 2016           $1,095,000   3.050%
July 1, 2011                 970,000       1.100         January 1, 2017         1,110,000   3.350
January 1, 2012              980,000       1.350         July 1, 2017            1,130,000   3.450
July 1, 2012                 985,000       1.450         January 1, 2018         1,150,000   3.600
January 1, 2013              995,000       1.850         July 1, 2018            1,175,000   3.700
July 1, 2013               1,005,000       1.950         January 1, 2019         1,200,000   3.800
January 1, 2014            1,015,000       2.250         July 1, 2019            1,220,000   3.850
July 1, 2014               1,030,000       2.350         January 1, 2020         1,245,000   3.950
January 1, 2015            1,040,000       2.650         July 1, 2020            1,270,000   3.950
July 1, 2015               1,060,000       2.750         January 1, 2021         1,295,000   4.100
January 1, 2016            1,075,000       2.950         July 1, 2021            1,325,000   4.125


                                            Term Bonds


                         Maturity               Principal               Interest
                          Date                  Amount                   Rate

                   July 1, 2024                $8,570,000              4.375%
                   January 1, 2027              7,095,000              4.625


                 (b)    The Issue 2009-A2 Bonds will mature on January 1, 2040 and bear
         interest from their date of initial issuance and delivery, payable semi-annually on each
         January 1 and July 1, commencing July 1, 2010, at the rate of 3.96% per annum.

                 (c)    (i)     The Issue 2009-B Bonds will mature on July 1, 2041 and shall bear
         interest calculated in accordance with Appendix II, payable in accordance with such
         Appendix II.

                           (ii)   The Issue 2009-B Bonds shall be subject to redemption and the
                   interest rate on all or a portion of the Issue 2009-B Bonds shall be subject to
                   Conversion as described in Appendix II.

                (d)     Whenever the due date for payment of interest on or principal of the Issue
         2009-A/B Bonds or the date fixed for redemption of any Issue 2009-A/B Bond shall be a
         day which is not a Business Day, then payment of such interest, principal or Redemption
         Price need not be made on such date, but may be made on the next succeeding Business
         Day, with the same force and effect as if made on the due date for payment of principal,



4847-6195-0469.3                                     7
         interest or Redemption Price and no additional interest shall be payable on such Business
         Day which, merely by operation of this paragraph, may have accrued after the original
         due date.

         Section 2.04. Denominations, Numbers and Letters.

                (a)    The Issue 2009-A1 Bonds maturing in each year are to be issued in
         denominations of $5,000 or any integral multiple thereof not exceeding the aggregate
         principal amount of Issue 2009-A1 Bonds maturing in such year. The Issue 2009-A2
         Bonds and the Issue 2009-B Bonds are to be issued in Authorized Denominations as
         provided in Appendix I and Appendix II, respectively. The Issue 2009-A1 Bonds and the
         Issue 2009-A2 Bonds are to be lettered “RA1” or “RA2” as applicable, and numbered
         separately from 1 consecutively upwards in such order as the Trustee in its discretion
         may determine. The Issue 2009-B Bonds are to be lettered “RB” and numbered
         separately from 1 consecutively upwards in such order as the Trustee in its discretion
         may determine.

                (b)     The Issue 2009-A/B Bonds, when issued, will be registered in the name of
         Cede & Co., as nominee of DTC. Only one Issue 2009-A/B Bond will be outstanding for
         each maturity and interest rate of each Series in the aggregate principal amount of such
         maturity and interest rate. Subject to the provisions of the General Resolution, purchases
         of ownership interests in the Issue 2009-A/B Bonds will be made in book-entry form only
         in authorized denominations set forth in Section 2.04(a). Beneficial owners of the Issue
         2009-A/B Bonds will not receive certificates representing their interest in the Issue 2009-
         A/B Bonds. So long as Cede & Co. shall be the registered owner of the Issue 2009-A/B
         Bonds, THDA will deem and treat Cede & Co. as the sole and exclusive owner of the
         Issue 2009-A/B Bonds and THDA will have no responsibility to any DTC participant or
         beneficial owner thereof.

       Section 2.05. Paying Agent. The Trustee is hereby appointed as paying agent for the
Issue 2009-A/B Bonds pursuant to Section 11.2 of the General Resolution. The Trustee may
appoint an agent for presentation of transfers in New York, New York and DTC may act as such
agent.

        Section 2.06. Execution of Bonds. The Issue 2009-A/B Bonds shall be executed by the
manual or facsimile signature of the Chairperson or Vice Chairperson and the seal of THDA or a
facsimile thereof shall be imprinted, impressed or otherwise reproduced on the Issue 2009-A/B
Bonds and attested by the manual or facsimile signature of the Executive Director or Secretary of
THDA. The Issue 2009-A/B Bonds shall be delivered to the Trustee for proper authentication
and delivered to DTC pursuant to the DTC FAST delivery program, as the registered owner of
the Issue 2009-A/B Bonds upon instructions from THDA to that effect.

        Section 2.07. Place of Payment; Record Date. While the Issue 2009-A/B Bonds are
registered in book-entry only form in the name of Cede & Co. as nominee of DTC, payments of
principal, Redemption Price and interest on the Issue 2009-A/B Bonds shall be made in
accordance with the procedures of DTC. In the event the Issue 2009-A/B Bonds are no longer


4847-6195-0469.3                                  8
held in book-entry only form, the principal and Redemption Price of all Issue 2009-A/B Bonds
shall be payable at the designated corporate trust office of the Trustee. Interest on the Issue
2009-A/B Bonds will be paid by check mailed by the Trustee to the registered owner thereof.
Any registered owner of the Issue 2009-A/B Bonds in a principal amount equal to or exceeding
$1,000,000 may receive payments of interest by wire transfer if written notice is given to the
Trustee at least ten Business Days before an applicable Interest Payment Date. The Record Date
for payment of interest on the Issue 2009-A/B Bonds shall be the 15th day of the month next
preceding an Interest Payment Date.

         Section 2.08. Sinking Fund Redemption Provisions.

                 (a)     The Issue 2009-A1 Bonds that are Term Bonds are subject to redemption
         in part by lot on the dates set forth below for such maturity of Issue 2009-A1 Bonds at a
         Redemption Price equal to 100% of the principal amount thereof from mandatory Sinking
         Fund Payments in the principal amounts for each of the dates set forth below:


                               Issue 2009-A1 Term Bonds due July 1, 2024

                                         Amount                              Amount
                        Date              Due                  Date           Due

                   January 1, 2022       $1,350,00       July 1, 2023       $1,445,000
                                                 0
                   July 1, 2022          1,380,000       January 1, 2024     1,475,000
                   January 1, 2023       1,410,000       July 1, 2024*       1,510,000

                   *Maturity


                          Issue 2009-A1 Term Bonds due January 1, 2027

                                         Amount                              Amount
                        Date              Due                  Date           Due
                   January 1, 2025       $1,545,00       July 1, 2026       $1,655,000
                                                 0
                   July 1, 2025          1,580,000       January 1, 2027*     695,000
                   January 1, 2026       1,620,000

                   *Maturity


                (b)    The Issue 2009-A2 Bonds are subject to redemption from mandatory
         Sinking Fund Payments in accordance with Appendix I.




4847-6195-0469.3                                     9
                (c)     Upon the purchase or redemption of Issue 2009-A Bonds of any Series
         and maturity for which Sinking Fund Payments have been established other than by
         application of Sinking Fund Payments, each future Sinking Fund Payment for such Issue
         2009-A Bonds of such Series and maturity will be credited by an amount bearing the
         same ratio to such Sinking Fund Payment as the total principal amount of such Issue
         2009-A Bonds of such Series and maturity to be purchased or redeemed bears to the total
         amount of all Sinking Fund Payments for such Issue 2009-A Bonds of such Series.

        Section 2.09. Optional Redemption. The Issue 2009-A1 Bonds maturing on and after
January 1, 2020, are subject to redemption at the option of THDA prior to their respective
maturities, either as a whole or in part at any time, on or after July 1, 2019 (any such date to be
determined by THDA or selected by the Trustee subject to the provisions of and in accordance
with the General Resolution, and when so determined or selected will be deemed and is hereby
set forth as the redemption date), upon notice as provided in Article V of the General Resolution,
at a Redemption Price equal to 100% of the principal amount thereof, plus accrued interest to the
date of redemption.

       The Issue 2009-A2 Bonds are subject to redemption at the option of THDA prior to their
maturity as provided in Appendix I.

        Section 2.10. Special Optional Redemption. (a) Except as otherwise provided herein,
the Issue 2009-A Bonds are subject to redemption, at the option of THDA, as a whole or in part
at any time prior to maturity, in accordance with the provisions of the General Resolution in an
amount equal to (i) proceeds of the Issue 2009-A Bonds not expected to be applied to the
financing of Program Loans, (ii) Issue 2009-A Repayments and Issue 2009-A Prepayments in
excess of regularly scheduled Debt Service on the Issue 2009-A Bonds, (iii) repayments and
prepayments of Program Loans made with the proceeds of any other Bonds issued under the
General Resolution, subject to limitations contained in the Code, or (iv) other amounts on deposit
in the Revenue Fund in excess of the amounts required for the payment of Debt Service and
Program Expenses.

                 (b)    The date of redemption pursuant to this Section 2.10 shall be determined
         by the Trustee upon the direction of THDA subject to the provisions of and in accordance
         with the General Resolution (and when so determined such date will be deemed and is
         hereby set forth as the redemption date). The Issue 2009-A Bonds to be so redeemed
         shall be redeemed at a Redemption Price of 100% of the principal amount thereof, plus
         interest accrued to the redemption date, if applicable.

                (c)    Except as otherwise provided in this paragraph (c), the Issue 2009-A
         Bonds to be redeemed pursuant to this Section 2.10 shall be redeemed on a pro rata basis
         among all maturities of Issue 2009-A Bonds then Outstanding based on the principal
         amounts of such maturities then Outstanding unless THDA shall deliver a Projected Cash
         Flow Statement indicating a different selection of Issue 2009-A Bonds to be so redeemed.
         Notwithstanding the foregoing:




4847-6195-0469.3                                10
                           (i)     So long as any Issue 2009-A2 Bonds are Outstanding, Issue
                   2009-A Bonds to be redeemed with amounts described in clause (i) of paragraph
                   (a) shall be redeemed on a pro rata basis between the Issue 2009-A1 Bonds and
                   the Issue 2009-A2 Bonds based on the principal amounts of Issue 2009-A1 Bonds
                   and Issue 2009-A2 Bonds then Outstanding.

                           (ii)   So long as any Issue 2009-A2 Bonds are Outstanding, Issue 2009-
                   A Bonds shall be redeemed with amounts described in clause (ii) of paragraph (a)
                   at least once during each semiannual period commencing July 1, 2010 and Issue
                   2009-A Bonds to be redeemed shall be selected on a pro rata basis between the
                   Issue 2009-A1 Bonds and the Issue 2009-A2 Bonds based upon the then
                   Outstanding principal amount of such Bonds; provided that so long as the
                   redemption is pro rata between the Issue 2009-A1 Bonds and the Issue 2009-A2
                   Bonds, THDA may select among the maturities of the Issue 2009-A1 Bonds to be
                   redeemed on a disproportionate basis.

         Section 2.11. Special Mandatory Redemptions.

                (a)    Unexpended Proceeds. The Issue 2009-A Bonds are subject to mandatory
         redemption in the event and to the extent that there are unexpended proceeds of the Issue
         2009-A Bonds on deposit in the Issue 2009-A Bonds Subaccount of the Loan Fund, as
         follows:

                         (i)    On April 1, 2010, from moneys in the Issue 2009-A Bonds
                   Subaccount of the Loan Fund to the extent the balance therein exceeds
                   $10,099,009.90 on March 10, 2010; and

                          (ii)   On July 1, 2010, from remaining moneys in the Issue 2009-A
                   Bonds Subaccount of the Loan Fund which have not been expended on or before
                   June 10, 2010 for the purchase of Program Loans;

provided that the redemption set forth in clause (ii) may occur prior to July 1, 2010 (but not
before May 1, 2010), and provided further that the dates set forth in clauses (i) and (ii) may be
extended, in each case at the option of THDA, and in each case subject to the satisfaction of the
conditions set forth in Section 4.01(a) hereof; provided, however, that in no event may the date
for such redemption be extended beyond December 23, 2010 except as provided in such Section
4.01(a).

       The redemption price of the Issue 2009-A Bonds to be so redeemed shall be 100% of the
principal amount thereof plus interest accrued to the date of redemption, if applicable. While the
Issue 2009-A2 Bonds remain Outstanding, THDA shall direct the redemption of the Issue 2009-
A Bonds on a pro-rata basis between the Issue 2009-A1 Bonds and the Issue 2009-A2 Bonds
based on the principal amount of such Issue 2009-A1 Bonds and Issue 2009-A2 Bonds then
Outstanding provided that so long as the redemption is pro rata between the Issue 2009-A1
Bonds and the Issue 2009-A2 Bonds, THDA may select among the maturities of the Issue 2009-
A1 Bonds to be redeemed on a disproportionate basis. Upon the payment in full of the Issue



4847-6195-0469.3                                  11
2009-A2 Bonds, THDA shall direct the redemption of the Issue 2009-A1 Bonds pro rata among
all maturities of such Issue 2009-A1 Bonds then Outstanding and eligible for redemption unless
THDA shall deliver a Projected Cash Flow Statement indicating a different selection of the Issue
2009-A1 Bonds to be so redeemed.

                   (b)    Repayments (including Prepayments) of Program Loans.

                           (i)     To the extent not required to make regularly scheduled principal
                   payments on the Issue 2009-A Bonds, the prepayments and repayments of
                   principal of the Program Loans, or portions thereof, financed with the proceeds of
                   the Issue 2009-A Bonds shall be applied to redeem the Issue 2009-A Bonds on or
                   before the next Interest Payment Date with respect to the Issue 2009-A Bonds,
                   which Interest Payment Date is at least six months from the date of receipt of such
                   Program Loan principal payments, in such principal amounts as required to satisfy
                   requirements of the Code. The Redemption Price of Issue 2009-A Bonds so
                   redeemed shall be 100% of the principal amount thereof, plus interest accrued to
                   the redemption date, if applicable.

                           (ii)    THDA shall advise the Trustee of the appropriate Redemption
                   Date for any redemption pursuant to this Section 2.11(b). While the Issue 2009-
                   A2 Bonds remain Outstanding, THDA shall direct the redemption of the Issue
                   2009-A Bonds on a pro-rata basis between the Issue 2009-A1 Bonds and the Issue
                   2009-A2 Bonds based on the principal amount of such Issue 2009-A1 Bonds and
                   Issue 2009-A2 Bonds then Outstanding provided that so long as the redemption is
                   pro rata between the Issue 2009-A1 Bonds and the Issue 2009-A2 Bonds, THDA
                   may select among the maturities of the Issue 2009-A1 Bonds to be redeemed on a
                   disproportionate basis. Upon the payment in full of the Issue 2009-A2 Bonds,
                   THDA shall direct the redemption of the Issue 2009-A1 Bonds pro rata among all
                   maturities of such Issue 2009-A1 Bonds then Outstanding and eligible for
                   redemption unless THDA shall deliver a Projected Cash Flow Statement
                   indicating a different selection of the Issue 2009-A1 Bonds to be so redeemed.

       Section 2.12. Selection by Lot. If less than all of the Issue 2009-A/B Bonds of like
Series and maturity are to be redeemed, the particular bonds of such Series and maturity to be
redeemed shall be selected by lot in accordance with Section 6.4 of the General Resolution.

       Section 2.13. Purchase of Bonds by THDA or Trustee. Whenever moneys are
available for redemption of Issue 2009-A/B Bonds under Sections 2.08, 2.09, 2.10 or 2.11 above,
THDA or Trustee is authorized to purchase Issue 2009-A/B Bonds at a price not to exceed the
applicable Redemption Price.




4847-6195-0469.3                                   12
                                          ARTICLE III

                                     SALE AND DELIVERY

         Section 3.01. Sale.

                (a)     The Issue 2009-A1 Bonds are hereby authorized to be sold to the
         Underwriters at a price equal to 100% of the principal amount thereof, on the terms and
         conditions set forth in the Bond Purchase Agreement and upon the basis of the
         representations, warranties and agreements therein set forth. The Chairman, Secretary or
         Assistant Secretary of the Bond Finance Committee and the Executive Director of THDA
         are hereby authorized to execute the Bond Purchase Agreement in substantially the form
         attached hereto as Exhibit A. The Board of Directors of THDA hereby authorizes the
         Committee to adopt a resolution approving the purchase price of the Issue 2009-A1
         Bonds.

                 (b)     The Issue 2009-A2 Bonds and the Issue 2009-B Bonds are hereby
         authorized to be sold to the Purchasers at a price equal to 100% of the principal amount
         thereof, on the terms and conditions set forth in the Placement Agreements and upon the
         basis of the representations, warranties and agreements therein set forth. The Chairman,
         Secretary or Assistant Secretary of the Bond Finance Committee and the Executive
         Director of THDA are hereby authorized to execute each of the Placement Agreements in
         substantially the forms attached hereto as Exhibit B. The Board of Directors of THDA
         hereby authorizes the Committee to adopt a resolution approving the purchase price of
         the Issue 2009-A2 Bonds and the Issue 2009-B Bonds.

                 (c)    The Secretary of the Bond Finance Committee of THDA is hereby
         authorized to make public and to authorize distribution of the Official Statement relating
         to the Issue 2009-A/B Bonds in substantially the form presented to THDA with such
         changes, omissions, insertions and revisions as such officer shall deem advisable. The
         Chairman, Vice Chairman, Executive Director and Secretary of the Bond Finance
         Committee are hereby authorized to sign and deliver such Official Statement to the
         Underwriters. The distribution of the Preliminary Official Statement relating to the Issue
         2009-A/B Bonds is hereby authorized and approved.

                 (d)    The Issue 2009-A1 Bonds shall be delivered to the Underwriters in
         accordance with the terms of the Bond Purchase Agreement and this Resolution. The
         Issue 2009-A2 Bonds and the Issue 2009-B Bonds shall be delivered to the Purchasers in
         accordance with this Resolution and the terms and conditions of the applicable Settlement
         Agreement. The Chairman, Secretary or Assistant Secretary of the Bond Finance
         Committee and the Executive Director of THDA are hereby authorized to execute each of
         the Settlement Agreements in substantially the forms attached hereto as Exhibit C.




4847-6195-0469.3                                13
                                         ARTICLE IV

                   DISPOSITION OF PROCEEDS AND OTHER MONEYS

        Section 4.01. Loan Fund; Bond Reserve Fund Requirement. (a) Upon receipt of the
proceeds of the sale of the Issue 2009-A Bonds, proceeds of the Issue 2009-A Bonds shall be
deposited in the Issue 2009-A Bond Subaccount of the Loan Fund and the Bond Reserve Fund as
shall be set forth in a certificate of THDA delivered on or prior to the date of issuance of the
Issue 2009-A Bonds. Amounts on deposit in the Issue 2009-A Bond Subaccount of the Loan
Fund shall be applied to the financing of Program Loans in accordance with the provisions of the
General Resolution, payment of Costs of Issuance and payment of capitalized interest to the
extent, if any, specified by written instructions of an Authorized Officer. The amount of funds
on deposit in the Issue 2009-A Bond Subaccount of the Loan Fund allocable to the Issue 2009-A
Bonds to be used to pay Costs of Issuance with respect to the Issue 2009-A/B Bonds shall not
exceed 2% of the proceeds of the Issue 2009-A Bonds. Amounts on deposit in the Issue 2009-A
Bond Subaccount of the Loan Fund shall be withdrawn therefrom and applied to the mandatory
redemption of Issue 2009-A Bonds at the times and in the amounts described in Section 2.11
hereof. The dates of such redemptions provided in Section 2.11 may be extended upon receipt of
written confirmation from the Rating Agency that such extension will not adversely impact the
then existing rating on the Issue 2009-A Bonds; provided further that the date of such
redemption shall not be extended beyond December 23, 2010 unless THDA is in receipt of an
opinion of Bond Counsel to the effect that such extension will not adversely affect the exclusion
of interest on the Issue 2009-A Bonds from the income of the owners thereof for federal income
tax purposes. Notwithstanding the foregoing, THDA hereby covenants that either proceeds of
the Issue 2009-A Bonds or other available funds of THDA in an amount equal to 20% of the
lendable proceeds of the Issue 2009-A Bonds will be made available for owner financing of
“targeted area residences” (as defined in Section 143(j) of the Code) until December 23, 2010.

                (b)     the Bond Reserve Fund Requirement with respect to the Issue 2009-A
         Bonds shall be an amount equal to 3% of the then current balance of Program Loans
         allocable to the Issue 2009-A Bonds plus the amount on deposit in the Issue 2009-A
         Bonds Subaccount of the Loan Fund which has not been designated to provide for the
         payment of Costs of Issuance or capitalized interest. On the Issue Date, THDA shall
         deposit an amount in the Bond Reserve Fund to satisfy the Bond Reserve Fund
         Requirement.

        Section 4.02. Deposit and Disposition of Issue 2009-B Bond Proceeds; Bond Reserve
Fund. Upon receipt of the proceeds of the sale of the Issue 2009-B Bonds, proceeds of the Issue
2009-B Bonds in the aggregate principal amount of $300,000,000 shall be deposited in the Issue
2009-B Escrow Subaccount of the Loan Fund, which subaccount is hereby created. Such
amounts deposited in the Issue 2009-B Escrow Subaccount of the Loan Fund shall be retained
therein until the interest rate on all or a portion of the Issue 2009-B Bonds is Converted as
provided in Appendix II hereto. Upon such Conversion, an amount of moneys on deposit in the
Issue 2009-B Escrow Subaccount of the Loan Fund equal to the principal amount of Issue
2009-B Bonds being Converted shall be transferred to such funds or accounts as shall be
specified by written instructions of an Authorized Officer. Any amounts remaining on deposit in


4847-6195-0469.3                               14
the Issue 2009-B Escrow Subaccount of the Loan Fund on January 1, 2010 shall be applied to the
redemption of Issue 2009-B Bonds on February 1, 2011 as provided in Appendix II.

       Notwithstanding anything in the General Resolution or any Supplemental Resolution to
the contrary:

                          (i)    To the extent Issue 2009-B Bonds have not been Converted as
                   provided in Appendix II, and as such unconverted Issue 2009-B Bonds are fully
                   secured by amounts on deposit in the Issue 2009-B Escrow Subaccount of the
                   Loan Fund, such unconverted Issue 2009-B Bonds shall not be deemed to be
                   Outstanding for purposes of calculating the Bond Reserve Fund Requirement and
                   such Bond Reserve Fund Requirement will be established upon the Conversion of
                   such Issue 2009-B Bonds or any portion thereof; and

                          (ii)  amounts on deposit in the Issue 2009-B Escrow Subaccount of the
                   Loan Fund shall be pledged solely to the payment of unconverted Issue 2009-B
                   Bonds.

                                            ARTICLE V

                                 FORM OF BONDS, AND
                      TRUSTEE’S CERTIFICATE OF AUTHENTICATION

        Section 5.01. Form of Bonds. Subject to the provisions of the General Resolution, the
Issue 2009-A/B Bonds shall be in substantially the form of THDA’s Homeownership Program
Bonds issued pursuant to the resolution of THDA adopted June 6, 1985, as amended and
supplemented, and entitled “General Homeownership Program Bond Resolution”, with such
variations as shall be appropriate in order to conform to the terms and provisions the General
Resolution and this Resolution.

       Section 5.02. Form of Trustee’s and Authenticating Agent’s Certificate of
Authentication. The Issue 2009-A/B Bonds shall not be valid or become obligatory for any
purpose unless there shall have been endorsed thereon a certificate of authentication in
substantially the following form:




4847-6195-0469.3                                 15
                   (FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION)

       This bond is one of the bonds described in the within-mentioned Resolutions and is one
of the Housing Finance Program Bonds, Issue 2009-[A1 (Non-AMT)], [-A2 (Non-AMT)], [-B
(Taxable)] of the Tennessee Housing Development Agency.

                                                 U.S. BANK NATIONAL ASSOCIATION, as
                                                 Trustee



                                                 By
                                                      Authorized Officer


                                          ARTICLE VI

                                      MISCELLANEOUS

       Section 6.01. No Recourse Against Members or Other Persons. No recourse may be
had for the payment of principal of or premium or interest on the Issue 2009-A/B Bonds or for
any claim based thereon or on this Resolution against any member of THDA or any person
executing the Issue 2009-A/B Bonds and neither the members of THDA nor any person
executing the Issue 2009-A/B Bonds may be liable personally on the Issue 2009-A/B Bonds or
be subject to any personal liability or accountability by reason of the execution thereof.

         Section 6.02. Bonds not Debt, Liability or Obligation of the State or the United
States of America. The Issue 2009-A/B Bonds are not a debt, liability or the obligation of the
State or any other political subdivision thereof. Neither the full faith and credit nor the taxing
power of the State, or of any other political subdivision thereof, is pledged for the payment of the
principal of or interest on the Issue 2009-A/B Bonds. The Issue 2009-A/B Bonds are not a debt,
liability or obligation of the United States of America or any agency thereof. Neither the full
faith and credit nor the taxing power of the United States of America is pledged for payment of
the principal of or interest on the Issue 2009-A/B Bonds.

       Section 6.03. Delivery of Projected Cash Flow Statements. THDA shall deliver such
Projected Cash Flow Statements at the times and on the occasions set forth in the General
Resolution or this Resolution.

        Section 6.04. Authorized Officers. The Chairman, Vice Chairman, Executive Director,
General Counsel, Deputy Executive Director and Secretary of THDA and the Secretary and any
Assistant Secretary of the Bond Finance Committee and any other proper officer of THDA, be,
and each of them hereby is, authorized and directed to execute and deliver any and all documents
and instruments and to do and cause to be done any and all acts and things necessary or proper
for carrying out the transactions contemplated by this Resolution, the General Resolution and the
Official Statement.



4847-6195-0469.3                                16
       Section 6.05. Authorized Trustee. THDA authorizes and directs the Trustee to perform
any and all acts contemplated to be performed by the Trustee pursuant to the terms and
provisions of this Resolution.

       Section 6.06. Covenant to Comply with Federal Tax Law Requirements. THDA
hereby covenants to comply with all applicable requirements of the Code so that interest on the
Issue 2009-A Bonds will be excluded from gross income of the holders thereof for federal
income tax purposes, including the rebate requirement of Section 148(f) of the Code. THDA
also covenants to pay any interest or penalty imposed by the United States for failure to comply
with said rebate requirements. In accordance with the rebate requirement, THDA agrees that
there will be paid from time to time all amounts required to be rebated to the United States
pursuant to Section 148(f) of the Code and any temporary, proposed or final Treasury
Regulations as may be applicable to the Issue 2009-A Bonds from time to time.

         Section 6.07. Continuing Disclosure Undertaking.

                 (a)      THDA shall deliver to the MSRB, within 210 days after the end of each
         Fiscal Year:

                          (i)   a copy of the annual financial statements of THDA prepared in
                   accordance with generally accepted accounting principles as prescribed by the
                   Governmental Accounting Standards Board; and

                          (ii)   an update of the type of information in the Official Statement
                   contained in Appendices E and F; and

                          (iii) information with respect to the Program Loans of the type set forth
                   in Schedule A of each of Appendix I and Appendix II.

                The information described in this clause (ii) may be provided by specific
         reference to documents (including, without limitation, official statements) previously
         provided to the MSRB, or filed with the Securities and Exchange Commission (the
         “SEC”).

                 If unaudited financial statements are provided as part of the information required
         to be delivered under this subsection (a) within the time period specified above, THDA
         shall provide, when and if available, a copy of THDA’s audited financial statements to
         the MSRB.

                 (b)    In a timely manner, THDA shall deliver to the MSRB and the Trustee
         notice of the occurrence of any of the following events (if applicable) with respect to the
         Issue 2009-A/B Bonds, if material:

                          (i)    principal and interest payments delinquencies;

                          (ii)   non-payment related defaults;



4847-6195-0469.3                                  17
                          (iii) unscheduled draws on the Debt Service Reserve Fund reflecting
                   financial difficulties;

                           (iv)    unscheduled draws on any credit enhancement reflecting financial
                   difficulties;

                          (v)      substitution of any credit or liquidity provider, or their failure to
                   perform;

                           (vi)   adverse tax opinions or events affecting the tax-exempt status of
                   the Issue 2009-A Bonds;

                         (vii)     modifications to rights of the beneficial owners of the Issue 2009-
                   A/B Bonds;

                           (viii) bond calls;

                           (ix)    defeasances;

                          (x)    release, substitution or sale of property securing repayment of the
                   Issue 2009-A/B Bonds; and

                           (xi)    rating changes.

                (c)     In a timely manner, THDA shall give to the Trustee and the MSRB notice
         of any failure by THDA to provide any information required pursuant to subsection (a)
         above within the time limit specified therein.

                 (d)    All notices, documents and information provided to the MSRB shall be
         provided in an electronic format at prescribed by the MSRB and shall be accompanied by
         identifying information as prescribed by the MSRB.

                 (e)     THDA agrees that the provisions of this Section 6.07 shall be for the
         benefit of the beneficial owners of the Issue 2009-A/B Bonds.

                 (f)      THDA may amend this Resolution with respect to the above agreements,
         without the consent of the beneficial owners of the Issue 2009-A/B Bonds (except to the
         extent required under clause (iv)(B) below), if all of the following conditions are
         satisfied: (i) such amendment is made in connection with a change in circumstances that
         arises from a change in legal (including regulatory) requirements, a change in law
         (including rules or regulations) or in interpretations thereof, or a change in the identity,
         nature or status of THDA or the type of business conducted thereby; (ii) these agreements
         as so amended would have complied with the requirements of Rule 15c2-12 (the “Rule”)
         as of the date of this Resolution, after taking into account any amendments or
         interpretations of the Rule, as well as any change in circumstances; (iii) THDA shall have
         delivered to the Trustee an opinion of counsel, addressed to THDA and the Trustee, to
         the same effect as set forth in clause (ii) above; (iv) either (A) THDA shall deliver to the


4847-6195-0469.3                                     18
         Trustee an opinion of or determination by a person unaffiliated with THDA (which may
         include the Trustee or bond counsel), acceptable to THDA and the Trustee, addressed to
         THDA and the Trustee, to the effect that the amendment does not materially impair the
         interests of the beneficial owners of the Issue 2009-A/B Bonds or (B) the beneficial
         owners of the Issue 2009-A/B Bonds consent to the amendment pursuant to the same
         procedures as are required for amendments to the General Resolution with consent of the
         holders of Bonds pursuant to the General Resolution as in effect on the date of this
         Resolution; and (v) THDA shall have delivered copies of such opinion(s) and the
         amendment to the MSRB.

                 (g)    THDA’s obligations with respect to the beneficial owners of the Issue
         2009-A/B Bonds under these agreements as set forth above terminate upon a legal
         defeasance pursuant to the General Resolution, prior redemption or payment in full of all
         of the Issue 2009-A/B Bonds. THDA shall give notice of any such termination to the
         MSRB.

                 (h)    Failure by THDA to comply with this Section 6.07 shall not constitute an
         Event of Default under the General Resolution but the undertaking in this Section 6.07
         may be enforced by any beneficial owner of the Issue 2009-A/B Bonds exclusively by an
         action for specific performance.

        Section 6.08. Confirmation and Adjustment of Terms by Committee. The terms of
the Issue 2009-A/B Bonds are herein established subject to confirmation by the Committee upon
the sale of the Issue 2009-A/B Bonds by the Committee. The Committee is hereby authorized to
make such changes or modifications in the principal amounts, maturities and interest rates for the
Issue 2009-A/B Bonds and in the application of the proceeds thereof, paying agents, terms of
redemption and the schedule of prepayment amounts to be used for accrued principal
installments in such manner as the Committee determines to be necessary or convenient to better
achieve the purposes of the Act and in the best interests of THDA.

         Section 6.09. Effective Date. This Resolution will take effect immediately.




4847-6195-0469.3                                19
                           EXHIBIT A

                   BOND PURCHASE AGREEMENTS




4847-6195-0469.3
                         EXHIBIT B

                   PLACEMENT AGREEMENTS




4847-6195-0469.3
                         EXHIBIT C

                   SETTLEMENT AGREEMENTS




4847-6195-0469.3
                                    APPENDIX I
                           TO SUPPLEMENTAL RESOLUTION

                   Supplemental Provisions relating to Issue 2009-A2 Bonds




4820-6822-8101.1
                                            TABLE OF CONTENTS

                                                                                                                                 Page

                                          ARTICLE I
                              DEFINITIONS AND INTERPRETATIONS
Section 1.1        Appendix Definitions ....................................................................................... 1
Section 1.2        Inconsistent Defined Terms ............................................................................. 4
Section 1.3        Other Defined Terms ....................................................................................... 4
                                             ARTICLE II
                                      TERMS OF PROGRAM BONDS
Section 2.1        Date, Maturities and Denominations ............................................................... 5
Section 2.2        Interest Rates .................................................................................................... 5
Section 2.3        [Reserved.] ....................................................................................................... 5
Section 2.4        [Reserved] ........................................................................................................ 5
Section 2.5        Tax-Exempt Bond Representation ................................................................... 5
Section 2.6        Special Redemptions ........................................................................................ 5
Section 2.7        Redemption Restrictions and Recycling Prohibition ....................................... 5
Section 2.8        Mandatory Sinking Fund Redemption ............................................................. 6
Section 2.9        Optional Redemption ....................................................................................... 6
Section 2.10       [Reserved.] ....................................................................................................... 7
Section 2.11       Redemption Notice Requirements ................................................................... 7
Section 2.12       DTC Provisions................................................................................................ 7
Section 2.13       Market Bond Requirements ............................................................................. 7
                                          ARTICLE III
                                  PROCEEDS OF PROGRAM BONDS
Section 3.1        Escrow of Proceeds of Program Bonds ........................................................... 8
Section 3.2        Use of Proceeds of Program Bonds ................................................................. 8
                                                 ARTICLE IV
                                             SPECIAL GSE RIGHTS
Section 4.1        Removal of Trustee .......................................................................................... 9
Section 4.2        GSEs as Third-Party Beneficiaries .................................................................. 9
                                                     ARTICLE V
                                                    COVENANTS
Section 5.1        Special THDA Covenants ................................................................................ 9



4820-6822-8101.1
Section 5.2        Covenants Regarding Administration of General Resolution and
                   Program Bonds............................................................................................... 11
Section 5.3        Reporting Requirements ................................................................................ 11
Section 5.4        Covenant Enforcement by GSEs ................................................................... 14
Section 5.5        Special Notices............................................................................................... 14
                                                  ARTICLE VI
                                                MISCELLANEOUS
Section 6.1        Notices ........................................................................................................... 14
Section 6.2        Appendix to Control ...................................................................................... 15
Section 6.3        Termination .................................................................................................... 15
SCHEDULE A—QUARTERLY PORTFOLIO PERFORMANCE INFORMATION
SCHEDULE B—PREMIUM AMORTIZATION SCHEDULE




4820-6822-8101.1                                               ii
                                    APPENDIX I
                            TO SUPPLEMENTAL INDENTURE


                                          ARTICLE I

                         DEFINITIONS AND INTERPRETATIONS

      Section 1.1 Appendix Definitions. The following terms shall, with respect to the
Program Bonds, have the following meanings in this Appendix I, the General Resolution and the
Supplemental Resolution for so long as the Program Bonds remain Outstanding:

        “Administrator” means U.S. Bank National Association, as administrator pursuant to that
certain Administration Agreement by and among U.S. Bank National Association, Fannie Mae
and Freddie Mac and concerning the administration of the Program, together with its successors
and assigns in such capacity.

       “Annual Filing” means the annual financial information required to be provided by
THDA pursuant to a continuing disclosure undertaking of THDA pursuant to Rule 15c2-12,
which information shall be provided to the GSEs pursuant to Section 5.3 hereof as and when
required by Rule 15c2-12, whether or not Rule 15c2-12 applies to the Program Bonds.

       “Authorized Denominations” means $5,000 and integral multiples thereof and, for
purposes of initial issuance and redemption of Program Bonds, $10,000 or any integral multiple
of $10,000 in excess thereof.

         “Bond Counsel” means nationally recognized bond counsel selected by THDA.

        “Bond Rating” means the long-term credit rating (without regard to any bond insurance
or any other form of credit enhancement on the Bonds) assigned to the Program Bonds or Parity
Debt by each Rating Agency then providing its long-term rating therefor. If more than one
rating agency provides a rating, the “Bond Rating” is the lowest such rating.

       “Certificate Withdrawal Notice” means a written notice from or on behalf of the GSEs or
THDA stating that one or more of the certificates or opinions required to be delivered by THDA
pursuant to the Placement Agreement has been revised or withdrawn prior to the receipt by
THDA of proceeds of the Program Bonds on the Settlement Date.

         “Code” means the Internal Revenue Code of 1986, as amended.

       “Debt” of any Person means at any date, without duplication, (a) all obligations of such
Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (c) all obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable arising in the ordinary course of
business, (d) all obligations of such Person as lessee under capital leases, (e) all debt of others
secured by a lien on any asset of such Person, whether or not such debt is assumed by such
Person, and (f) all Guarantees by such Person of debt of other Persons.



4820-6822-8101.1                                1
        “Escrow Fund” means the fund, which is created hereby as a separate, noncommingled
fund in which the Trustee will hold the Program Bond proceeds until the applicable Release Date
or until such Program Bonds are redeemed.

       “Escrowed Proceeds” means the proceeds of the Program Bonds which, together with the
Shortfall Amount, must be set aside in the Escrow Fund pending the Release Date.

       “Fannie Mae” means the Federal National Mortgage Association, a federally-chartered
and stockholder-owned corporation organized and existing under the Federal National Mortgage
Association Charter Act, 12 U.S.C. §1716 et seq.

         “FHA” means the Federal Housing Administration or its successors.

       “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.

      “GNMA”      means     the    Government       National    Mortgage      Association,          a
government-sponsored enterprise organized and existing under the laws of the United States.

        “GSE” means either Fannie Mae or Freddie Mac or both, collectively, as the context may
require.

        “Guarantee” by any Person means any obligation, contingent or otherwise, of such
Person directly or indirectly guaranteeing any Debt or other obligation of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or
otherwise, of such Person (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement condition or otherwise) or (b) entered into for the
purpose of assuring in any other manner the obligee of such Debt or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in whole or in part).

        “Hedge” means any interest rate swap, interest rate cap, interest rate collar or other
arrangement, contractual or otherwise, which has the effect of an interest rate swap, interest rate
collar or interest rate cap or which otherwise (directly or indirectly, derivatively or synthetically)
hedges interest rate risk associated with being a debtor of variable rate debt, or any agreement or
other arrangement to enter into any of the above on a future date or after the occurrence of one or
more events in the future.

         “HUD” means the United States Department of Housing and Urban Development.

         “Interest Payment Date” means each January 1, and July 1 commencing July 1, 2010.

      “Market Bond Ratio Requirement” means the requirement that THDA issue and deliver
Market Bonds in conjunction with the issuance of the Program Bonds, the principal amount of
such Market Bonds being not less than 2/3rds of the principal amount of the Program Bonds.



4820-6822-8101.1                                  2
       “Market Bonds” means serial bonds and/or term bonds sold by THDA to public or private
investors in accordance with standard bond underwriting practices and that are issued under the
General Resolution in order to satisfy the conditions to the release of proceeds of the Program
Bonds.

       “Material Event Notices” means material event notices required to be provided by THDA
pursuant to a continuing disclosure undertaking of THDA pursuant to Rule 15c2-12, which
material event notices shall be provided to the GSEs pursuant to Section 5.3 hereof as and when
required by Rule 15c2-12, whether or not Rule 15c2-12 applies to the Program Bonds.

    “MBS” means a mortgage-backed security or securities issued by either GSE or by
GNMA.

       “Notice Parties” means the Administrator, Fannie Mae, Freddie Mac and Treasury’s
Financial Agent.

       “Notice Parties’ Addresses” means the addresses of the Notice Parties set forth in
Section 6.1 hereof as modified from time to time pursuant to Section 6.1 hereof.

       “Official Statement” means the Official Statement and Placement Memorandum of
THDA, dated as of December 3, 2009, with respect to either the Program Bonds and the Market
Bonds.

       “Parity Debt” means, at any given time, Debt, including the Program Bonds, that is now
or hereafter Outstanding under the terms of the General Resolution; provided, that such Debt is
secured and is otherwise payable on a parity with the Program Bonds pursuant to the General
Resolution.

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

       “Placement Agreement” means the Placement Agreement among THDA and the GSEs,
concerning the acquisition of the Program Bonds from THDA.

      “Premium” means any initial issue premium received by THDA pursuant to the
Placement Agreement.

         “Pre-Settlement Date” means December 21, 2009.

        “Primarily Single Family Indenture” means an existing indenture having underlying
single family mortgage loans and MBS constituting at least 70% of the underlying portfolio of
mortgage loans held under the Indenture; said calculation to include underlying mortgage loans
originated and anticipated to be originated in connection with the Program Bonds and to be
calculated on the relevant calculation date.

      “Program” means the Housing Finance Agency Initiative announced by Treasury on
October 19, 2009.


4820-6822-8101.1                                3
       “Program Bonds” means the Issue 2009-A2 Bonds authorized to be issued pursuant to
Section 2.01 of the Supplemental Resolution and Section 2.1 of this Appendix I.

       “RDA” means the Rural Development Agency of the United States Department of
Agriculture or its successors.

        “Related Documents” means this Appendix I, the Program Bonds, the General
Resolution, the Supplemental Resolution, any investment agreement or repurchase agreement
relating to security for Parity Debt, any surety bond or other credit or liquidity support relative to
Parity Debt, and any Hedge entered into with respect to Parity Debt and payable on a parity
therewith, as the same may be amended or modified from time to time in accordance with their
respective terms.

       “Release Date” means the Settlement Date unless a Certificate Withdrawal Notice is
delivered to the Trustee, in which case “Release Date” means the date on which the Trustee
receives the written waiver of the GSEs referenced in Section 2.6(a).

     “Rule 15c2-12” means Rule 15c2-12 promulgated by the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended.

         “Settlement Date” means December 23, 2009.

        “Shortfall Amount” means the difference, as of the Settlement Date, between the proceeds
of the Program Bonds to be received on such Settlement Date and the initial principal amount of
such Program Bonds.

        “Single Family Program Bond Limit” means the amount of $360,000,000 that has been
allocated to THDA with respect to the Program Bonds.

         “Treasury” means the United States Department of the Treasury.
        “Treasury’s Financial Agent” means JPMorgan Chase Bank, N.A., as Treasury’s
financial agent, or such other party as Treasury may appoint for such purpose from time to time.

         “VA” means the United States Department of Veterans Administration or its successors.

         “Volume Cap” means tax-exempt bond volume cap as described in Section 146 of the
Code.
       Section 1.2 Inconsistent Defined Terms. To the extent that any defined terms
contained in Section 1.1 hereof are inconsistent with any terms in the General Resolution or the
Supplemental Resolution, the defined terms contained herein shall control with respect to the
Program Bonds.

       Section 1.3 Other Defined Terms. Other capitalized terms contained in this Appendix I
and not otherwise defined herein, shall have the same meanings ascribed thereto in the General
Resolution or the Supplemental Resolution.



4820-6822-8101.1                                  4
                                          ARTICLE II

                                TERMS OF PROGRAM BONDS

         Section 2.1 Date, Maturities and Denominations.

                (a)     Program Bonds. The Program Bonds shall be dated December 23, 2009,
         shall bear interest from the Settlement Date and shall mature on the dates and in the
         principal amounts set forth below, except as otherwise provided herein:

                                                                     Principal
                     Maturity                                        Amount

                   January 1, 2040                                  $60,000,000
              (b)     Denominations. The Program Bonds shall be issued only in Authorized
         Denominations.

        Section 2.2 Interest Rates. The Program Bonds shall bear interest at the rate of 3.96%
per annum. Interest shall be payable on each Interest Payment Date. The Program Bonds shall
bear interest on the basis of a 360-day year of twelve 30-day months.

         Section 2.3 [Reserved.]

         Section 2.4 [Reserved]

         Section 2.5 Tax-Exempt Bond Representation. THDA hereby represents and warrants
that it is the intent of THDA that interest on the Program Bonds will be excludable from gross
income for purposes of federal income taxation. THDA further represents and warrants that it is
the intent of THDA that all tax-exempt Program Bonds issued hereunder will be qualified
mortgage bonds within the meaning of Section 143 of the Internal Revenue Code of 1986.

         Section 2.6 Special Redemptions.

                 (a)    Withdrawal of Closing Certificates. The Program Bonds are subject to
         mandatory redemption in whole, at a redemption price equal to 100% of the principal
         amount thereof, plus accrued interest, plus Premium, if any, on the first Business Day at
         least thirty (30) days after the Settlement Date, if there is delivered by mail or by
         electronic means to the Trustee on or prior to the Settlement Date a Certificate
         Withdrawal Notice and the GSEs have not, prior to the date 20 days following the
         Settlement Date, provided the Trustee a written waiver.

                 (b)     Available Moneys for Redemptions. With respect to the redemptions set
         forth in (a) above, moneys still on deposit in the Escrow Fund shall be used for any such
         redemption; if Escrow Fund moneys are not sufficient, then any available moneys under
         the Indenture shall also be used for any such redemption.

       Section 2.7 Redemption Restrictions and Recycling Prohibition. Except as limited
by tax law requirements, THDA shall apply the following exclusively to the redemption of


4820-6822-8101.1                                 5
Program Bonds: (i) all proceeds of the Program Bonds, to the extent not used to acquire
mortgage loans or MBS, refund outstanding bond issues as herein provided, pay Program Bond
issuance expenses fund downpayment assistance loans (from and to the extent of Premium) or
fund related reserve accounts and (ii) a pro rata portion (calculated based on the outstanding
principal amount of the Program Bonds divided by the sum of the outstanding principal amount
of the Program Bonds and the outstanding principal amount of the Market Bonds) of all principal
payments, principal prepayments and recoveries of principal received with respect to the
mortgage loans or MBS acquired or financed with the proceeds of the Program Bonds and the
Market Bonds, to the extent not used to pay scheduled principal, interest or sinking fund
redemptions on Program Bonds, Market Bonds or other bonds issued and secured by the Trust
Estate on a parity with the Program Bonds. Amounts set forth in clause (ii) are required to be
applied to the redemption of Program Bonds promptly and as provided above shall not be
recycled into new mortgage loans or MBS.

       Section 2.8 Mandatory Sinking Fund Redemption. Program Bonds are subject to
mandatory sinking fund redemption in the following amounts and on the following dates. Each
such redemption shall be at a price of par, plus accrued interest to the redemption date. The
schedules set forth below take into account anticipated underlying mortgage loan amortization,
and standard and customary practices of THDA in connection with combined serial bond and
term bond issuances.

                                          Amount Due                       Amount Due
                   Year                    January 1                         July 1

                   2027                  $1,000,000                        $1,740,000
                   2028                   1,770,000                         1,810,000
                   2029                   1,850,000                         1,880,000
                   2030                   1,920,000                         1,960,000
                   2031                   2,000,000                         2,040,000
                   2032                   2,090,000                         2,130,000
                   2033                   2,170,000                         2,220,000
                   2034                   2,270,000                         2,310,000
                   2035                   2,360,000                         2,410,000
                   2036                   2,460,000                         2,510,000
                   2037                   2,560,000                         2,620,000
                   2038                   2,670,000                         2,730,000
                   2039                   2,780,000                         2,840,000
                   2040                   2,900,000 (maturity)

       Section 2.9 Optional Redemption. Program Bonds are subject to redemption at the
option of THDA, in whole or in part, from any source of funds, on the first Business Day of any
month, at a redemption price equal to 100% of the principal amount thereof, without premium,
plus accrued interest, if any, to the redemption date. Notwithstanding the foregoing, any optional
redemption of Program Bonds from sources of funds other than prepayments or recoveries of
principal with respect to mortgage loans or MBS shall include an additional payment equal to
unamortized Premium, if any, based on the amounts specified in Schedule B hereto.



4820-6822-8101.1                                6
         Section 2.10 [Reserved.]

        Section 2.11 Redemption Notice Requirements. In addition to any other required
notices under the General Resolution, written notice of each redemption of Program Bonds shall
be provided by the Trustee to the Notice Parties, such notice to be provided by facsimile
transmission to the Notice Parties’ Addresses. Redemption of Program Bonds shall not be
conditioned on or delayed for the giving of such notice, which shall be provided to the Notice
Parties at the Notice Parties’ Addresses at least ten (10) days in advance of the date of such
redemption (or such lesser period as is required under the General Resolution). All redemptions
of Program Bonds shall be only in Authorized Denominations.

         Section 2.12 DTC Provisions.

                (a)    The Trustee shall take all actions reasonably required by THDA, in
         accordance with the policies and procedures of the Depository Trust Company, New
         York, New York (“DTC”) to assist THDA in the DTC aspects of the settlement process
         in connection with the Pre-Settlement Date, the Settlement Date and the Release Date.

               (b)     The Program Bonds shall initially be issued to Cede & Co., as nominee for
         DTC, as one fully registered Bond in the aggregate principal amount of each series of the
         Program Bonds.

                 In the event DTC determines to discontinue providing its services and a successor
         securities depository for all the Program Bonds is not designated, THDA and the Trustee
         shall arrange for the delivery of a single certificate for each series of the Program Bonds
         as fully registered bonds. Each such fully registered Program Bond shall be identified by
         a legend consisting of the letter “R” followed by the number of the Bond. The Program
         Bonds shall be numbered consecutively from 1 upwards.

         Section 2.13 Market Bond Requirements.

                 (a)   General. THDA hereby represents and warrants that it has, prior to the
         Settlement Date, issued Market Bonds in a principal amount of at least $40,000,000,
         which Market Bonds will satisfy the Market Bond Ratio Requirement. THDA further
         represents and warrants that it reasonably expects to meet all other requirements
         contained herein relative to the release of Escrowed Proceeds of all Program Bonds
         issued hereunder.

                 (b)    Amortization. The Market Bonds were not issued with ‘super sinkers,’
         planned amortization classes or other priority allocation class rights unless such
         provisions retained for application to the redemption of the Program Bonds at least a pro
         rata portion of any prepayments or other recoveries of principal relative to mortgage
         loans funded or MBS purchased with proceeds of the Program Bonds.

                (c)     Mortgage Loan Prepayments. Prepayments received on the underlying
         mortgage loans financing with proceeds of the Program Bonds and the related Market
         Bonds shall be applied at least on a pro rata basis to redemption of such Program Bonds
         pursuant to Section 2.7 hereof.


4820-6822-8101.1                                  7
                                           ARTICLE III

                              PROCEEDS OF PROGRAM BONDS

        Section 3.1 Escrow of Proceeds of Program Bonds. The proceeds of the Program
Bonds and the Shortfall Amount shall be retained in the Escrow Fund for application as set forth
herein.

        If the Trustee has received a Certificate Withdrawal Notice, all the proceeds of the
Program Bonds, together with the Shortfall Amount, shall be retained in the Escrow Fund until
either the written waiver referenced in Section 2.6(a) is delivered or the Program Bonds are
redeemed as provided in such Section.

        Section 3.2 Use of Proceeds of Program Bonds. The proceeds received from the
release of Escrowed Proceeds in connection with Program Bonds shall be used only to redeem
Program Bonds or as follows:

                 (a)     to acquire and finance the holding of single family loans or single-family
         MBS which are either newly originated or refinanced, so long as all such loans are
         eligible to be financed on a tax-exempt basis under applicable federal income tax law
         (“eligible loans”);

                  (b)    to refund, as fixed rate bonds, any of THDA’s variable rate debt
         (including, but not limited to, auction rate securities issued and outstanding on or prior to
         October 19, 2009) or refund an issue that did so, so long as such debt was, in turn, issued
         to acquire and finance the holding of eligible loans; the use of proceeds for such a
         refunding purpose shall be limited to 30% of the net proceeds of the Program Bonds,
         provided, however, that the restrictions on refundings herein shall not apply to either
         (i) the repayment of ‘warehouse credit lines’ used to acquire mortgage loans and MBS or
         (ii) ‘replacement refundings’ where proceeds of Program Bonds are exchanged
         dollar-for-dollar for unexpended tax-exempt bond proceeds and/or mortgage loan
         prepayments so long as all proceeds of related Market Bonds are exchanged first for such
         purpose;

                (c)   to fund reasonably required reserves and pay costs of issuance of the
         Program Bonds in accordance with the requirements and limitations of applicable federal
         tax law; and

                (d)    Premium, if any, may be used only to make supplemental loans to
         underlying borrowers for downpayment assistance.

                The proceeds of the Program Bonds shall not be used for essential governmental
         functions within the meaning of Section 115 of the Code or qualified veterans mortgage
         bonds under Section 143 of the Code, or by Section 501(c)(3) organizations.




4820-6822-8101.1                                  8
                                           ARTICLE IV

                                     SPECIAL GSE RIGHTS

        Section 4.1 Removal of Trustee. No successor Trustee under the General Resolution
shall be appointed under the General Resolution without written notice to the Notice Parties at
the Notice Parties’ Addresses and without the prior written consent of the GSEs, which consent
shall not be unreasonably withheld.

        Section 4.2 GSEs as Third-Party Beneficiaries. Each GSE is intended to be and shall
be a third-party beneficiary of this Appendix I and the General Resolution, and each GSE shall
have the right (but not the obligation) to enforce, separately or jointly with the Trustee or cause
the Trustee to enforce, the provisions of this Appendix I.

                                            ARTICLE V

                                           COVENANTS

      Section 5.1 Special THDA Covenants. THDA hereby covenants that, so long as the
Program Bonds are Outstanding, it shall:

                (a)     not permit the aggregate principal amount of the Program Bonds issued
         hereunder to exceed the Single Family Program Bond Limit;

               (b)    not allow the aggregate principal amount of Market Bonds and Program
         Bonds to exceed the reasonable expectations requirement applicable to tax-exempt
         mortgage revenue bonds;

                (c)    not issue new Bonds under the General Resolution in a variable rate
         demand, adjustable rate or auction rate mode other than Program Bonds during the period
         such Program Bonds bear interest at the Short-Term Rate;

                (d)     take all steps necessary to assure that all assets and revenues of any
         description pledged to the payment of the Program Bonds and all other Bonds issued
         under the General Resolution shall be applied strictly in accordance with, and solely for
         the purposes and in the amounts specified and permitted by, the terms of the General
         Resolution;

                (e)    not exercise any rights it may have to make voluntary withdrawals of cash
         or other assets from the lien of the General Resolution except under the following
         circumstances and within the following limits:

                          (i)    no withdrawals whatsoever shall be made during any period when
                   the Bond Ratings are below a level of ‘Baa3’ or ‘BBB-’,

                          (ii)   no withdrawals whatsoever shall be made to the extent that such
                   withdrawal would adversely affect any of the Bond Ratings that are effective
                   immediately prior to such withdrawal,


4820-6822-8101.1                                 9
                           (iii) withdrawals shall be made only to fund programs sponsored by, or
                   other ordinary and customary administrative expenses (including expenses of
                   related Hedges) of, THDA which have been historically funded with the proceeds
                   of withdrawals from the General Resolution, and the annual amount of such
                   withdrawals shall be consistent with the annual amount of past withdrawals for
                   such purpose,

                            (iv)    withdrawals for purposes other than the purposes specified in (iii)
                   may only be made (A) if used for internal purposes of THDA, including, but not
                   limited to, funding a program sponsored by THDA and paying administrative
                   expenses of THDA and (B) if immediately after the proposed withdrawal the
                   rating on the Program Bonds will not be less than “Aa2”, with a rating outlook
                   that is either “stable” or “positive” or the equivalent, and

                            (v)    prior to and as a condition to each withdrawal, THDA shall
                   (A) except for withdrawals for ordinary and customary administrative fees
                   contemplated in the original cash flows and taken into account by rating agencies
                   initially rating the Program Bonds and for withdrawals contemplated in the
                   original cash flows and taken into account by rating agencies initially rating the
                   Program Bonds to fund programs sponsored by THDA which have been
                   historically funded with proceeds of withdrawals, obtain and furnish to the GSEs
                   and to Treasury’s Financial Agent a confirmation from each of the rating agencies
                   maintaining Bond Ratings that the proposed withdrawal will not adversely affect
                   such Bond Ratings and (B) provide a written certification to the GSEs and to
                   Treasury’s Financial Agent specifying the amount and purpose of the withdrawal
                   and that all requirements of this subsection (e) have been met with respect to such
                   withdrawal.

               (f)     with respect to the purchase, origination, enforcement and servicing of
         mortgage loans and MBS, THDA shall:

                           (i)    originate or cause to be originated, and, if applicable, purchased,
                   mortgage loans and purchase, or cause to be purchased, MBS in a manner
                   consistent with applicable state law, the General Resolution and any supplements
                   thereto, and such other related documents by which THDA is bound,

                          (ii)  cause all mortgage loans to be serviced pursuant to the servicing
                   requirements of THDA, GNMA, FHA, Fannie Mae and Freddie Mac, as
                   applicable,

                           (iii) except as otherwise permitted by Treasury or the GSEs, diligently
                   take all steps necessary or desirable to enforce all terms of the mortgage loans,
                   MBS, loan program documents and all such other documents evidencing
                   obligations to THDA, and

                           (iv)   diligently take all actions consistent with sound mortgage loan
                   origination, purchase and servicing practices and principles as may be necessary



4820-6822-8101.1                                    10
                   to receive and collect sufficient revenues to pay debt service when due on the
                   Program Bonds.

                (g)     not issue any bonds senior in priority to the Program Bonds and THDA
         represents and warrants that the Program Bonds are at least equal in priority with respect
         to payment and security to the most senior Outstanding Bonds under the General
         Resolution.

         Section 5.2 Covenants Regarding Administration of General Resolution and
Program Bonds. THDA hereby covenants, so long as the Program Bonds remain Outstanding,
that it shall:

                 (a)    not amend, supplement or otherwise modify in any material respect the
         General Resolution, this Appendix I or any other Related Document without the prior
         written consent of the GSEs; provided, however, that the consent of the GSEs shall not be
         required with respect to supplements entered into solely for the purpose of providing for
         the issuance of a series of Bonds pursuant to the General Resolution, except as provided
         in Section 5.1(c) hereof. With respect to General Resolution amendments, the
         determination of the GSEs as to the materiality of an amendment shall be controlling;

                 (b)     not permit any funds invested under the General Resolution to be invested
         in obligations, securities or other investments of a type not included within the categories
         permitted for such purposes in the General Resolution;

                (c)     not enter into any Hedge relating to bonds issued under, or secured by
         revenues or other assets pledged under, the General Resolution without the prior written
         consent of the GSEs;

                (d)     not permit any swap termination fees to be payable on a basis senior to or
         on a parity with the Program Bonds;

                (e)    not permit any principal payment, principal prepayments and other
         recoveries of principal received with respect to that portion of any mortgage loans
         financed with the proceeds of Program Bonds to be recycled into new mortgage loans;
         and

                (f)    not permit the General Resolution to fail to meet the definition of a
         “Primarily Single Family Indenture.”

        Section 5.3 Reporting Requirements. THDA covenants to keep proper books of
record and account in which full, true and correct entries will be made of all dealings and
transactions of or in relation to affairs, operations, transactions and activities of THDA in
accordance with generally accepted accounting principles applicable to governmental entities,
consistently applied, and will furnish to each GSE a copy of each of the following:

                (a)      on the date that is the earlier of (i) ninety (90) days after the end of each
         quarter of each fiscal year of THDA and (ii) the day such information is first made
         available to the general public, THDA shall provide to each GSE the financial statements


4820-6822-8101.1                                  11
         of THDA consisting of a balance sheet of THDA as at the end of such period, a statement
         of operations and a statement of cash flows of THDA for such period and, with respect to
         the report provided after the end of each fiscal year, there shall also be included a
         statement of the changes in net assets of THDA for such period. The financial statements
         referred to above shall be set forth in reasonable detail and shall be accompanied by, in
         the case of the annual statements, an audit report of THDA’s auditor or nationally
         recognized independent certified public accountants stating that they have (except as
         noted therein) been prepared in accordance with generally accepted accounting principles
         consistently applied (provided that such audit report need not be submitted until one
         hundred eighty (180) days after the end of the relevant fiscal year);

                 (b)     on the date that is the earlier of (i) ninety (90) days after the end of each
         quarter of each fiscal year of THDA and (ii) the day such information is first made
         available to the general public, THDA shall provide to each GSE financial statements of
         THDA specific to the General Resolution pursuant to which Program Bonds are
         outstanding consisting of a statement of operations and a statement of cash flows under
         the General Resolution for such period and, with respect to the report provided after the
         end of each fiscal year, there shall also be included a statement of the changes in net
         assets under the General Resolution for such period. The financial statements referred to
         above shall be set forth in reasonable detail and shall be accompanied by, in the case of
         the annual statements, an audit report of THDA’s auditor or nationally recognized
         independent certified public accountants stating that they have (except as noted therein)
         been prepared in accordance with generally accepted accounting principles consistently
         applied (provided that such audit report need not be submitted until one hundred eighty
         (180) days after the end of the relevant fiscal year);

                 (c)     immediately after any officer of THDA obtains knowledge thereof, a
         certificate of THDA setting forth the occurrence of any default or Event of Default under
         the General Resolution, the details thereof and the action which THDA is taking or
         proposes to take with respect thereto;

                 (d)     quarterly, at the time each of the financial statements referenced in (a)
         above is provided, and otherwise at the request of a GSE, the information set forth in
         Schedule A hereto and a certificate of THDA (i) stating whether there exists on the date
         of such certificate any default or Event of Default under the General Resolution and, if
         so, the details thereof and the action which THDA is taking or proposes to take with
         respect thereto and (ii) setting forth a description in reasonable detail of the amounts held
         in the Revenue Fund and other accounts in the General Resolution;

                (e)     simultaneously with their release to the general public, disclosure
         statements of any kind prepared by THDA which disclose such matters as quarterly or
         other interim financial statements relating to the General Resolution, portfolio
         composition information regarding the General Resolution such as the percentage of
         loans insured under FHA, HUD, RDA and VA programs and any pooled mortgage
         insurance program or securitization by GNMA or a GSE, or portfolio performance
         information detailing such matters as delinquencies, foreclosures and real estate-owned
         properties;


4820-6822-8101.1                                  12
                (f)     promptly upon receipt of notice by THDA of any such default, the
         occurrence of any material event of default by any counterparty to a Related Document;

                (g)     at the request of a GSE, copies of any information or request for
         information concerning this Appendix I or any of the Related Documents as and when
         provided to the Trustee;

                (h)     promptly after the receipt or giving thereof, copies of all notices of
         resignation by or removal of the Trustee, which are received or given by THDA;

                (i)    promptly after the adoption thereof, copies of any amendments to the
         General Resolution, any of the other Related Documents (including replacement of or
         any new Related Document) and the Official Statement relative to the Program Bonds;

                (j)     within thirty (30) days of the issuance of any public issuance of
         indebtedness of THDA payable from the Revenues under the General Resolution, copies
         of any disclosure documents distributed in connection therewith;

                (k)     any Annual Filing or Material Event Filing shall be delivered to the GSEs
         on the day it becomes available to the general public or the owners of the Market Bonds
         or would be required to become available if Rule 15c2-12 were applicable to the Program
         Bonds;


                 (l)    simultaneously with the delivery of each set of the financial statements
         and the annual filing referred to in clauses (a) and (k) above and otherwise at the request
         of the GSEs, or with respect to (iii) whenever prepared and available, (i) a copy of the
         most recent rating letter received relating to the Bond Rating and/or the General
         Resolution rating, (ii) a certificate of THDA stating that THDA is in compliance with all
         financial covenants set forth in the General Resolution; and (iii) a copy of the most recent
         cash flow certificates, financial reports and statements, and annual budget (including
         portfolio performance reports detailing delinquencies and foreclosure rates, and
         percentage of loans insured under FHA, HUD, RDA and VA programs and any pooled
         mortgage insurance program, and the percentage of uninsured loans);

                 (m)     immediately upon receipt by THDA, any rating report or other rating
         action relative to THDA, the Program Bonds or any other bonds issued under the General
         Resolution;

                 (n)     immediately upon any such transfer, notice of any extraordinary payment
         or transfer of funds from the General Resolution;

                 (o)    in a timely manner, at the request of a GSE, any data or information
         required by a GSE for use in calculating performance under the Federal Housing Finance
         Agency’s housing goal regulations or for use in complying with any other regulatory or
         legal requirement; and




4820-6822-8101.1                                 13
                (p)     such other information, whether such information is published or
         unpublished, respecting the affairs, condition and/or operations, financial or otherwise, of
         THDA as a GSE may from time to time reasonably request (including, without limitation,
         data, including loan level data, required by the GSEs with respect to any asset
         management surveillance and/or disclosure requirement).

       Section 5.4 Covenant Enforcement by GSEs. Only the GSEs may enforce, or cause
the Trustee to enforce, the provisions of Section 5.1, 5.2 and 5.3 hereof.

         Section 5.5 Special Notices.

                (a)   Request to Withdraw General Resolution Funds. The Trustee shall
         immediately deliver to the Notice Parties at the Notice Parties’ Addresses notice of any
         request by THDA to withdraw funds from the General Resolution.

                 (b)    Events of Default. The Trustee shall immediately deliver to the Notice
         Parties at the Notice Parties’ Addresses notice of any default or Event of Default under
         the General Resolution of which the Trustee has knowledge.

                (c)     Exercise of Remedies. The Trustee shall immediately deliver to the
         Notice Parties at the Notice Parties’ Addresses notice of the exercise of any remedies
         under the General Resolution.

                                           ARTICLE VI

                                        MISCELLANEOUS

       Section 6.1 Notices. Unless otherwise specified in this Appendix I, all notices, requests
or other communications to or upon the Notice Parties or referred to in this Appendix I shall be
deemed to have been given (i) in the case of notice by letter, when delivered by hand or four (4)
days after the same is deposited in the mails, first class postage prepaid, and (ii) in the case of
notice by telecopier or e-mail, when sent, receipt confirmed, addressed to the Notice Parties as
follows or at such other address as any of the Notice Parties may designate by written notice to
THDA and the Trustee:

         To Administrator:     U.S. Bank National Association
                               One Federal Street, 3rd Floor
                               Boston, Massachusetts 02110
                               Attention: Structured Finance/HFA Program
                               E-mail:    Julie.Kirby@usbank.com

         To Fannie Mae:        Fannie Mae
                               3900 Wisconsin Avenue, N.W.
                               Washington, D.C. 20016
                               Attention: Carl W. Riedy, Jr.
                                          Vice President for Public Entities
                                          Channel, Housing and Community



4820-6822-8101.1                                 14
                                          Development
                              E-mail:     Carl_W_Riedy@fanniemae.com

                                                and

                              Attention: Barbara Ann Frouman
                                         Vice President and Deputy General
                                         Counsel, Housing and Community
                                         Development
                              E-mail:    Barbara_Ann_Frouman@fanniemae.com

         To Freddie Mac:      Freddie Mac
                              1551 Park Run Drive
                              Mail Stop D4F
                              McLean, Virginia 22102
                              Attention: Mark D. Hanson
                                         Vice President Mortgage Funding
                              E-mail:    Mark_Hanson@freddiemac.com

                                                      and

                              Attention: Joshua L. Schonfeld
                                         Associate General Counsel
                              Email:     Joshua_Schonfeld@freddiemac.com

         To Treasury’s        JPMorgan Chase Bank, N.A.
         Financial Agent:     1 Chase Manhattan Plaza, Floor 19
                              Attention: Lillian G. White
                              Phone - 212-552-2392
                              Fax - 212-552-0551
                              E-mail: Lillian.G.White@jpmorgan.com


       Section 6.2 Appendix to Control. To the extent that any provisions of this Appendix I
are inconsistent with any provisions of the General Resolution or the Supplemental Resolution
under which the Program Bonds are issued, this Appendix I shall control with respect to the
Program Bonds.

       Section 6.3 Termination. This Appendix I shall continue in full force and effect so long
as the Program Bonds remain Outstanding and shall terminate when Program Bonds are no
longer Outstanding.

                            [remainder of page intentionally left blank]




4820-6822-8101.1                                15
                                                                            Schedule A

                                            Quarterly Portfolio Performance Information


The information set forth in the table below should be delivered via email in Microsoft Excel.
Overall Population Unpaid Principal Balance ($

Current Loans (Loans with No Delinquency Status This Month)                              Delinquent Loans (Any Loan Past Due This Month)

Current Loans Unpaid Principal Balance ($m):                                             Delinquent Loans Unpaid Principal Balanc

                                                                                                                                             % With
                                          Share of     % With Primary                                                      Share of         Primary
                                          Current        Mortgage     % With FHA                                          Delinquent       Mortgage      % With FHA
Vintage (Year Originated)                  Book*        Insurance**    or VA***          Vintage (Year Originated)          Book           Insurance       or VA
Pre-2000                                                                                 Pre-2000
2001                                                                                     2001
2002                                                                                     2002
2003                                                                                     2003
2004                                                                                     2004
2005                                                                                     2005
2006                                                                                     2006
2007                                                                                     2007
2008                                                                                     2008
2009                    g                                g                  g            2009                    g       q                           g
sums to 100%                                                                             vintage. Column sums to 100%
** Percent of loans within the vintage that has Primary Mortgage Insurance.              ** Percent of loans within the vintage that has Primary Mortgage Insurance.
*** % of loans in each vintage that has Government Insurance.                            *** % of loans in each vintage that has Government Insurance.

                                          Share of                                                                         Share of
Count of Missed Payments in               Current                                                                         Delinquent
Past 12 Month*                             Book**                                        Delinquency Status                 Book*
None                                                                                     30
1                                                                                        60
2                                                                                        90
3                                                                                        120
>3                                                                                       > 120
* In the past 12 months, any missed payment is counted once                                Foreclosure
regardless if they are continuously missed or sporadically missed.                         Bankruptcuy
** % of Outstanding Balance of Current Loans. Sums to 100%.                                REO
                                                                                         * % of Outstanding Balance of Delinquent Loans. Sums to 100%.

                                                                                         Cumulative Losses


                                      Share of                                                                          Share of
                                      Current                                                                          Delinquent
Representative FICO Score               Book                                             Representative FICO Score        Book
0-580                                                                                    0-580
580-620                                                                                  580-620
620-660                                                                                  620-660
660-700                                                                                  660-700
700-740                                                                                  700-740
740+                                                                                     740+
* The minumum across borrowers, the median score for each borrower across bureaus.       * The minumum across borrowers, the median score for each borrower across bureaus.
** % of Outstanding Balance of Current Loans. Sums to 100%.                              ** % of Outstanding Balance of Delinquent Loans. Sums to 100%.




4820-6822-8101.1/1
                              Schedule B

                     Premium Amortization Schedule




4820-6822-8101.1/1
                                    APPENDIX II
                           TO SUPPLEMENTAL RESOLUTION




                   Supplemental Resolution relating to Issue 2009-B Bonds




4852-0589-5173.1
                                            TABLE OF CONTENTS

                                                                                                                                 Page

                                          ARTICLE I
                              DEFINITIONS AND INTERPRETATIONS
Section 1.1        Appendix Definitions ....................................................................................... 1
Section 1.2        Inconsistent Defined Terms ............................................................................. 6
Section 1.3        Other Defined Terms ....................................................................................... 6
                                             ARTICLE II
                                      TERMS OF PROGRAM BONDS
Section 2.1        Date, Maturities and Denominations ............................................................... 6
Section 2.2        Interest Rates .................................................................................................... 6
Section 2.3        Interest Rate Conversion .................................................................................. 7
Section 2.4        [Reserved] ........................................................................................................ 9
Section 2.5        Taxable Bond Representation .......................................................................... 9
Section 2.6        Special Redemptions ........................................................................................ 9
Section 2.7        Redemption Restrictions and Recycling Prohibition ....................................... 9
Section 2.8        Mandatory Sinking Fund Redemption ........................................................... 10
Section 2.9        Optional Redemption ..................................................................................... 10
Section 2.10       Changes Permitted Upon Conversion ............................................................ 10
Section 2.11       Redemption Notice Requirements ................................................................. 10
Section 2.12       DTC Provisions.............................................................................................. 10
Section 2.13       Market Bond Requirements ........................................................................... 11
                                          ARTICLE III
                                  PROCEEDS OF PROGRAM BONDS
Section 3.1        Escrow of Proceeds of Program Bonds ......................................................... 12
Section 3.2        Use of Proceeds of Program Bonds ............................................................... 12
                                                 ARTICLE IV
                                             SPECIAL GSE RIGHTS
Section 4.1        Removal of Trustee ........................................................................................ 13
Section 4.2        GSEs as Third-Party Beneficiaries ................................................................ 13
                                                     ARTICLE V
                                                    COVENANTS
Section 5.1        Special THDA Covenants .............................................................................. 13



4852-0589-5173.1
Section 5.2        Covenants Regarding Administration of General Resolution and
                   Program Bonds............................................................................................... 15
Section 5.3        Reporting Requirements ................................................................................ 16
Section 5.4        Covenant Enforcement by GSEs ................................................................... 18
Section 5.5        Special Notices............................................................................................... 18
                                                  ARTICLE VI
                                                MISCELLANEOUS
Section 6.1        Notices ........................................................................................................... 19
Section 6.2        Appendix to Control ...................................................................................... 20
Section 6.3        Termination .................................................................................................... 20
EXHIBIT A—NOTIFICATION OF INTEREST RATE CONVERSION
EXHIBIT B—MARKET BOND RATIO REQUIREMENT COMPLIANCE CERTIFICATE
EXHIBIT C—INTEREST RATE CONVERSION CERTIFICATE
SCHEDULE A—QUARTERLY PORTFOLIO PERFORMANCE INFORMATION




4852-0589-5173.1                                               ii
                                    APPENDIX II
                           TO SUPPLEMENTAL RESOLUTION


                                         ARTICLE I

                         DEFINITIONS AND INTERPRETATIONS

       Section 1.1 Appendix Definitions. The following terms shall, with respect to the
Program Bonds, have the following meanings in this Appendix II, the General Resolution and
the Supplemental Resolution for so long as the Program Bonds remain Outstanding:

        “Administrator” means U.S. Bank National Association, as administrator pursuant to that
certain Administration Agreement by and among U.S. Bank National Association, Fannie Mae
and Freddie Mac and concerning the administration of the Program, together with its successors
and assigns in such capacity.

       “Annual Filing” means the annual financial information required to be provided by
THDA pursuant to a continuing disclosure undertaking of THDA pursuant to Rule 15c2-12,
which information shall be provided to the GSEs pursuant to Section 5.3 hereof as and when
required by Rule 15c2-12, whether or not Rule 15c2-12 applies to the Program Bonds.

       “Authorized Denominations” means $5,000 and integral multiples thereof and, for
purposes of initial issuance and redemption of Program Bonds, $10,000 or any integral multiple
of $10,000 in excess thereof.

         “Bond Counsel” means nationally recognized bond counsel selected by THDA.

        “Bond Rating” means the long-term credit rating (without regard to any bond insurance
or any other form of credit enhancement on the Bonds) assigned to the Program Bonds or Parity
Debt by each Rating Agency then providing its long-term rating therefor. If more than one
rating agency provides a rating, the “Bond Rating” is the lowest such rating.

       “Certificate Withdrawal Notice” means a written notice from or on behalf of the GSEs or
THDA stating that one or more of the certificates or opinions required to be delivered by THDA
pursuant to the Placement Agreement has been revised or withdrawn prior to the receipt by
THDA of proceeds of the Program Bonds on the Settlement Date.

         “Code” means the Internal Revenue Code of 1986, as amended.

        “Conversion” or “Converting” or “Converted” means the conversion or the converting of
the interest rate on all or a portion of the Pre-Conversion Bonds from a Short-Term Rate to a
Permanent Rate as provided herein.

       “Conversion Date” means, with respect to all or a portion of Pre-Conversion Bonds that
are converting to a Permanent Rate, the date two (2) months after the related Release Date;
provided that there shall be no more than three (3) Conversion Dates.



4852-0589-5173.1
      “Converted Bonds” means Program Bonds that have been through the process of
Conversion.

       “Debt” of any Person means at any date, without duplication, (a) all obligations of such
Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (c) all obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable arising in the ordinary course of
business, (d) all obligations of such Person as lessee under capital leases, (e) all debt of others
secured by a lien on any asset of such Person, whether or not such debt is assumed by such
Person, and (f) all Guarantees by such Person of debt of other Persons.

        “Escrow Fund” means the Issue 2009-B Escrow Subaccount of the Loan Fund, which is
created under the Supplemental Resolution as a separate, noncommingled subaccount in which
the Trustee will hold the Pre-Conversion Bond proceeds until the applicable Release Date or
until such Pre-Conversion Bonds are redeemed.

        “Escrowed Proceeds” means the portion of the proceeds of the Pre-Conversion Bonds
that, together with the Shortfall Amount, must be set aside in the Escrow Fund pending the
related Release Date.

       “Fannie Mae” means the Federal National Mortgage Association, a federally-chartered
and stockholder-owned corporation organized and existing under the Federal National Mortgage
Association Charter Act, 12 U.S.C. §1716 et seq.

         “FHA” means the Federal Housing Administration or its successors.

        “Four Week T-Bill Rate” means the interest rate for Four Week Treasury Bills (secondary
market) as reported by the Federal Reserve on its website at the following internet address
-http://www.federalreserve.gov/releases/h15/update/h15upd.htm.

       “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.

      “GNMA”      means     the    Government       National    Mortgage      Association,       a
government-sponsored enterprise organized and existing under the laws of the United States.

        “GSE” means either Fannie Mae or Freddie Mac or both, collectively, as the context may
require.

        “Guarantee” by any Person means any obligation, contingent or otherwise, of such
Person directly or indirectly guaranteeing any Debt or other obligation of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or
otherwise, of such Person (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement condition or otherwise) or (b) entered into for the



4852-0589-5173.1                                2
purpose of assuring in any other manner the obligee of such Debt or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in whole or in part).

        “Hedge” means any interest rate swap, interest rate cap, interest rate collar or other
arrangement, contractual or otherwise, which has the effect of an interest rate swap, interest rate
collar or interest rate cap or which otherwise (directly or indirectly, derivatively or synthetically)
hedges interest rate risk associated with being a debtor of variable rate debt, or any agreement or
other arrangement to enter into any of the above on a future date or after the occurrence of one or
more events in the future.

         “HUD” means the United States Department of Housing and Urban Development.

        “Interest Payment Date” means, with respect to Pre-Conversion Bonds, each Release
Date (but such Release Date shall be an Interest Payment Date only for that portion of
Pre-Conversion Bonds with respect to which Escrowed Proceeds are subject to release on such
date), each Conversion Date (but such Conversion Date shall be an Interest Payment Date only
with respect to those Pre-Conversion Bonds which are to become, as of such date, Converted
Bonds), and each redemption date. Interest Payment Dates for each Converted Bond shall be
each January 1 and July 1 commencing on the January 1 or July 1 immediately succeeding the
Conversion Date.

       “Market Bond Ratio Requirement” means the requirement that THDA issue and deliver
Market Bonds in conjunction with and as a condition to each Release Date, the principal amount
of such Market Bonds being not less than 2/3rds of the principal amount of Pre-Conversion
Bonds the proceeds of which are proposed to be released on such Release Date.

       “Market Bonds” means serial bonds and/or term bonds sold by THDA to public or private
investors in accordance with standard bond underwriting practices and that are issued under the
General Resolution in order to satisfy the conditions to the release of proceeds of some or all of
the Program Bonds.

       “Material Event Notices” means material event notices required to be provided by THDA
pursuant to a continuing disclosure undertaking of THDA pursuant to Rule 15c2-12, which
material event notices shall be provided to the GSEs pursuant to Section 5.3 hereof as and when
required by Rule 15c2-12, whether or not Rule 15c2-12 applies to the Program Bonds.

    “MBS” means a mortgage-backed security or securities issued by either GSE or by
GNMA.

       “Notice Parties” means the Administrator, Fannie Mae, Freddie Mac and Treasury’s
Financial Agent.

       “Notice Parties’ Addresses” means the addresses of the Notice Parties set forth in
Section 6.1 hereof as modified from time to time pursuant to Section 6.1 hereof.

       “Official Statement” means Official Statement and Placement Memorandum of THDA,
dated as of December 3, 2009 with respect to either the Program Bonds or the Market Bonds.



4852-0589-5173.1                                  3
       “Official Statement Supplement” means the supplement or amendment to the official
statement of THDA relative to the Conversion of Program Bonds to Converted Bonds.

       “Parity Debt” means, at any given time, Debt, including the Program Bonds, that is now
or hereafter Outstanding under the terms of the General Resolution; provided, that such Debt is
secured and is otherwise payable on a parity with the Program Bonds pursuant to the General
Resolution.

         “Permanent Rate” means an interest rate per annum certified to the Trustee by the
Special Permanent Rate Advisor on or prior to the Release Date, which shall be equal to the sum
of (i) 3.21% plus (ii) the Spread.

        “Permanent Rate Calculation Date” means the date on which the Permanent Rate is
calculated with respect to all or a portion of the Program Bonds, which shall be, with respect to
each applicable portion of the Pre-Conversion Bonds, a date acceptable to the GSEs selected by
THDA on or prior to December 31, 2010 on which Market Bonds are priced, provided that a
bond purchase agreement must be executed with respect to the Market Bonds on such date for
such Permanent Rate to be effective.

         “Permitted Escrow Investments” means [to be provided].

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

       “Placement Agreement” means the Placement Agreement among THDA and the GSEs,
concerning the acquisition of the Program Bonds from THDA.

       “Pre-Conversion Bonds” means Program Bonds for which the interest rate has not been
the subject of a conversion.

         “Pre-Settlement Date” means December 21, 2009.

        “Primarily Single Family Indenture” means an existing indenture having underlying
single family mortgage loans and MBS constituting at least 70% of the underlying portfolio of
mortgage loans held under the Indenture; said calculation to include underlying mortgage loans
originated and anticipated to be originated in connection with the Program Bonds and to be
calculated on the relevant calculation date.

      “Program” means the Housing Finance Agency Initiative announced by Treasury on
October 19, 2009.

       “Program Bonds” means the Issue 2009-B Bonds authorized to be issued pursuant to
Section 2.01 of the Supplemental Resolution and Section 2.1 of this Appendix II, and includes
Pre-Conversion Bonds and Converted Bonds.

       “RDA” means the Rural Development Agency of the United States Department of
Agriculture or its successors.


4852-0589-5173.1                                4
        “Related Documents” means this Appendix II, the Program Bonds, the General
Resolution, the Supplemental Resolution, any investment agreement or repurchase agreement
relating to security for Parity Debt, any surety bond or other credit or liquidity support relative to
Parity Debt, and any Hedge entered into with respect to Parity Debt and payable on a parity
therewith, as the same may be amended or modified from time to time in accordance with their
respective terms.

        “Release Date” means such date or dates (not to exceed three (3) dates) on or prior to
December 31, 2010 and which dates are acceptable to the GSEs, on which dates the proceeds of
the related Market Bonds are delivered to the Trustee and the other requirements hereunder are
satisfied, including, without limitation, delivery of the Market Bond Ratio Requirement
Compliance Certificate attached hereto as Exhibit B.

     “Rule 15c2-12” means Rule 15c2-12 promulgated by the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended.

         “Settlement Date” means December 23, 2009.

        “Shortfall Amount” means the difference, as of the Settlement Date, between the proceeds
of the Program Bonds to be received on such Settlement Date and the initial principal amount of
such Program Bonds.

        [“Short-Term Rate” means, (i) for the period from the Settlement Date to the applicable
Release Date, the interest rate which produces an interest payment on such Release Date relative
to the Program Bonds with respect to which Escrowed Proceeds are subject to release on such
Release Date equal to Investment Earnings and (ii) from the Release Date to the Conversion
Date, an interest rate equal to the sum of the Spread plus the Four Week T-Bill Rate as of the
Business Day prior to the Release Date. For purposes of this provision, “Investment Earnings”
means total investment earnings on the portion of the Escrow Fund related to Program Bonds
with respect to which a Release Date is occurring.]

        “Single Family Program Bond Limit” means the amount of $360,000,000 that has been
allocated to THDA with respect to the Program Bonds.

       “Special Permanent Rate Advisor” means State Street Bank and Trust Company, and any
successor or assign designated by Treasury.

       “Spread” means additional per annum interest on the Program Bonds based upon the
lowest Bond Rating effective as of the Permanent Rate Calculation Date to the Program Bonds
under the Indenture by the rating agencies rating the Program Bonds, as follows:




4852-0589-5173.1                                  5
                                  Rating              Additional Spread

                            ‘Aaa’/‘AAA’                     60 bps
                              ‘Aa’/‘AA’                     75 bps
                                   ‘A’                     110 bps
                             ‘Baa’/‘BBB’                   225 bps


         “Treasury” means the United States Department of the Treasury.
        “Treasury’s Financial Agent” means JPMorgan Chase Bank, N.A., as Treasury’s
financial agent, or such other party as Treasury may appoint for such purpose from time to time.

         “VA” means the United States Department of Veterans Administration or its successors.

         “Volume Cap” means tax-exempt bond volume cap as described in Section 146 of the
Code.
       Section 1.2 Inconsistent Defined Terms. To the extent that any defined terms
contained in Section 1.1 hereof are inconsistent with any terms in the General Resolution or the
Supplemental Resolution, the defined terms contained herein shall control with respect to the
Program Bonds.

        Section 1.3 Other Defined Terms. Other capitalized terms contained in this Appendix
II and not otherwise defined herein, shall have the same meanings ascribed thereto in the General
Resolution or the Supplemental Resolution.

                                           ARTICLE II

                                TERMS OF PROGRAM BONDS

         Section 2.1 Date, Maturities and Denominations.

                (a)     Program Bonds. The Program Bonds shall be dated December 23, 2009,
         shall bear interest from the Settlement Date and shall mature on the dates and in the
         principal amounts set forth below, except as otherwise provided herein:

                                                                     Principal
                     Maturity                                        Amount

                   July 1, 2041                                   $300,000,000
              (b)     Denominations. The Program Bonds shall be issued only in Authorized
         Denominations and each Release Date shall apply to Program Bonds in Authorized
         Denominations.

       Section 2.2 Interest Rates. Each Pre-Conversion Bond shall bear interest at the
Short-Term Rate from the Settlement Date to the related Conversion Date. The interest rate on


4852-0589-5173.1                                6
some or all of the Pre-Conversion Bonds may be Converted on a Conversion Date to a
Permanent Rate in accordance with the provisions hereof. Interest shall be payable on each
Interest Payment Date. From and after the Release Date, the Program Bonds shall bear interest
on the basis of a 360-day year consisting of twelve 30-day months.

         Section 2.3 Interest Rate Conversion.

                 (a)     General. A Conversion may involve all or only a portion of the
         Pre-Conversion Bonds, provided that such Pre-Conversion Bonds may only be Converted
         in integral multiples of $10,000. Any particular Pre-Conversion Bond may be Converted
         to a Permanent Rate only once. THDA may exercise its right of Conversion on no more
         than three (3) occasions and must cause each related Release Date to occur on or prior to
         December 31, 2010. If Pre-Conversion Bonds are Converted to Permanent Rates in part
         on different dates, each portion of such Program Bond may bear interest at different
         Permanent Rates based on their respective Conversion Dates.

                   (b)    Conversion Requirements.

                   (i)    On or Prior to a Permanent Rate Calculation Date.

                                  (A)     On or prior to the date which is thirty (30) days prior to a
                          proposed Permanent Rate Calculation Date, THDA shall notify the
                          Trustee, the Notice Parties (at the Notice Parties’ Addresses) and the
                          Rating Agencies, pursuant to Exhibit A hereto, of (I) the proposed Release
                          Date, (II) the proposed Conversion Date, (III) the principal amount of
                          Pre-Conversion Bonds to be Converted on such Conversion Date, (IV) the
                          proposed Permanent Rate Calculation Date and (V) the Bond Rating
                          anticipated to be in effect on the Release Date.

                                  (B)      On the Permanent Rate Calculation Date, THDA shall
                          deliver to the Trustee, with copies to the Notice Parties, (I) a copy of the
                          executed bond purchase agreement delivered with respect to the Market
                          Bonds, and (II) the Preliminary Official Statement with respect to the
                          Market Bonds (with the final Official Statement to be provided as soon as
                          it’s available).

                          (ii)    On or Prior to a Release Date. THDA shall deliver or cause to be
                   delivered to the Trustee on or prior to any Release Date, the following:

                                 (A)     the certification of the Special Permanent Rate Advisor
                          specifying the Permanent Rate Calculation Date and the Four Week T-Bill
                          Rate, Spread and Permanent Rate applicable to the relevant Conversion;

                                  (B)   the Official Statement for the Market Bonds and the
                          Official Statement or Official Statement Supplement relative to the
                          Program Bonds;




4852-0589-5173.1                                   7
                               (C)     (I) an opinion or opinions of counsel and a certificate of an
                       authorized officer of THDA to the effect that nothing has come to their
                       attention that the Official Statement Supplement or Official Statement
                       relating to the Program Bonds contains any untrue statement of a material
                       fact or omits to state a material fact necessary to make the statements
                       therein, in light of the circumstances in which there were made, not
                       misleading and (II) a letter or letters from the counsel referenced in the
                       foregoing clause (I) addressed to the GSEs stating that the GSEs may rely
                       on such opinion as though it was addressed to them;

                               (D)    confirmation by the Rating Agencies of the Bond Rating on
                       the applicable Program Bonds after giving effect to the Release Date and
                       related Conversion;

                               (E)     an opinion of Bond Counsel dated as of the Release Date to
                       the effect that the applicable Program Bonds have been duly and validly
                       issued and are enforceable obligations of THDA and that interest payable
                       on such Program Bonds is exempt from federal income taxation under
                       Section 103 of the Code;

                              (F)     net proceeds of the Market Bonds, which proceeds
                       (together with any amounts deducted from proceeds for underwriting fees
                       and expenses) shall be in an amount not less than two-thirds (2/3) of the
                       applicable portion of the principal amount of the Program Bonds being
                       Converted;

                               (G)     a certificate of THDA, attached as Exhibit B hereto,
                       specifying (I) the principal amount of the related Program Bonds to be
                       Converted, (II) the related Market Bonds and their maturity dates, interest
                       rates and principal amounts, (III) the amount of the proceeds of the Market
                       Bonds, and the amounts to be released from the Escrow Fund in
                       connection with such Conversion, (IV) the applicable Conversion Date,
                       (V) the Release Date and (VI) the principal amount of the Pre-Conversion
                       Bonds which will not be Converted as part of the related Conversion; and

                               (H)     a certificate of the GSEs, evidencing (I) their consent to the
                       Release Date and (II) that THDA has paid or made arrangements to pay
                       the fees of the GSEs’ counsel in connection with the Release Date.

The Trustee shall provide via e-mail and delivery by overnight mail (x) to the Notice Parties at
the Notice Parties’ Addresses copies of items (ii) (A) through (H) above and (y) to THDA and
the Notice Parties at the Notice Parties’ Addresses, confirmation, as set forth in Exhibit C hereto,
that the interest rate of the related Program Bonds shall be Converted to the specified Permanent
Rate as of the specified Conversion Date and that the related bond proceeds shall be released to
THDA on the specified Release Date in accordance with the provisions of this Appendix II. The
foregoing are in addition to, and not in lieu of, the requirements relating to the issuance of
additional Bonds under the General Resolution with respect to the Market Bonds.


4852-0589-5173.1                                 8
         Section 2.4 [Reserved]

         Section 2.5 Taxable Bond Representation. THDA hereby represents and warrants that
(i) it reasonably expects to have Volume Cap, to the extent necessary for the Program Bonds to
be tax-exempt, on a timely basis and in a manner which shall permit the Conversion of all
Program Bonds to a Permanent Rate and the release of all Escrowed Proceeds by December 31,
2010 and (ii) THDA shall use its best efforts to obtain such Volume Cap, if necessary. THDA
further represents and warrants that it is the intent of THDA that all tax-exempt Program Bonds
issued hereunder shall be qualified mortgage bonds within the meaning of Section 143 of the
Internal Revenue Code of 1986. THDA agrees and acknowledges that the adjustment of interest
on Program Bonds from taxable status to tax-exempt status may not be accomplished through a
refunding and remarketing of the Program Bonds, and THDA represents and warrants that the
conversion of such Program Bonds to tax-exempt status will not be accomplished by such
means.

         Section 2.6 Special Redemptions.

                   (a)    Pre-Conversion Bonds.

                          (i)     Failure to Convert. Any Pre-Conversion Bonds with respect to
                   which a Release Date has not occurred prior to January 1, 2011 are subject to
                   mandatory redemption on February 1, 2011 (or an earlier date selected by
                   THDA), at a redemption price equal to 100% of the principal amount thereof plus
                   accrued interest to the redemption date.

                           (ii)    Withdrawal of Closing Certificates. The Program Bonds are
                   subject to mandatory redemption in whole, at a redemption price equal to 100% of
                   the principal amount thereof, plus accrued interest, on the first Business Day at
                   least thirty (30) days after the Settlement Date, if there is delivered by mail or by
                   electronic means to the Trustee on or prior to the Settlement Date a Certificate
                   Withdrawal Notice and the GSEs have not, prior to the date 20 days following the
                   Settlement Date, provided the Trustee a written waiver.

                 (b)      Pre-Conversion Bonds Not Meeting Minimum Rating Thresholds.
         Within ten (10) Business Days of receipt by the Trustee of notice that the Bond Rating
         has been withdrawn or fallen below ‘Baa3’ or ‘BBB-, all proceeds that are held in the
         Escrow Fund shall be used to mandatorily redeem a corresponding amount of Program
         Bonds, at a redemption price equal to 100% of the principal amount thereof, plus accrued
         interest, to the redemption date. THDA hereby covenants to provide such notice to the
         Trustee promptly upon receipt by THDA of notice of any such withdrawal or downgrade.

                 (c)     Available Moneys for Redemptions. With respect to the redemptions set
         forth in (a) and (b) above, moneys still on deposit in the Escrow Fund shall be used for
         any such redemption; if Escrow Fund moneys are not sufficient, then any available
         moneys under the Indenture shall also be used for any such redemption.

       Section 2.7 Redemption Restrictions and Recycling Prohibition. Except as limited
by tax law requirements, THDA shall apply the following exclusively to the redemption of


4852-0589-5173.1                                     9
Program Bonds: (i) all proceeds of the Program Bonds, to the extent not used to acquire
mortgage loans or MBS, refund outstanding bond issues as herein provided, pay Program Bond
issuance expenses or fund related reserve accounts and (ii) a pro rata portion (calculated based
on the outstanding principal amount of the Program Bonds divided by the sum of the outstanding
principal amount of the Program Bonds and the outstanding principal amount of the Market
Bonds), of all principal payments, principal prepayments and recoveries of principal received
with respect to the mortgage loans or MBS, acquired or financed with the proceeds of the
Program Bonds and the Market Bonds, to the extent not used to pay scheduled principal, interest
or sinking fund redemptions on Program Bonds, Market Bonds or other bonds issued and
secured by the Trust Estate on a parity with the Program Bonds. Amounts set forth in clause (ii)
are required to be applied to the redemption of Program Bonds promptly and as provided above
shall not be recycled into new mortgage loans or MBS.

        Section 2.8 Mandatory Sinking Fund Redemption. Program Bonds are subject to
mandatory sinking fund redemption in the amounts and on the dates to be established by THDA
not later than the final Release Date. THDA hereby covenants to establish such sinking fund
schedules as herein provided. Each such redemption shall be at a price of par, plus accrued
interest to the redemption date. The schedules described above shall take into account
anticipated underlying mortgage loan amortization, and standard and customary practices of
THDA in connection with combined serial bond and term bond issuances.

       Section 2.9 Optional Redemption. Program Bonds are subject to redemption at the
option of THDA, in whole or in part, from any source of funds, on the first Business Day of any
month, at a redemption price equal to 100% of the principal amount thereof, without premium,
plus accrued interest, if any, to the redemption date.

       Section 2.10 Changes Permitted Upon Conversion.               In conjunction with the
Conversion of Pre-Conversion Bonds, on or prior to the Release Date, THDA may add
mandatory sinking fund redemption requirements to such Program Bonds, may agree to pay the
principal of such Program Bonds prior to their stated maturity and may issue additional Market
Bonds (whether or not as part of the same federal tax financing plan), which Market Bonds may
mature before or after the Program Bonds or be redeemed before or after the Program Bonds.

        Section 2.11 Redemption Notice Requirements. In addition to any other required
notices under the General Resolution, written notice of each redemption of Program Bonds shall
be provided by the Trustee to the Notice Parties, such notice to be provided by facsimile
transmission to the Notice Parties’ Addresses. Redemption of Program Bonds shall not be
conditioned on or delayed for the giving of such notice, which shall be provided to the Notice
Parties at the Notice Parties’ Addresses at least ten (10) days in advance of the date of such
redemption (or such lesser period as is required under the General Resolution). All redemptions
of Program Bonds shall be only in Authorized Denominations.

         Section 2.12 DTC Provisions.

                (a)   The Trustee shall take all actions reasonably required by THDA, in
         accordance with the policies and procedures of the Depository Trust Company, New
         York, New York (“DTC”) to assist THDA in the DTC aspects of the settlement process


4852-0589-5173.1                              10
         in connection with the Pre-Settlement Date, the Settlement Date, the Release Date and
         the Conversion Date.

                 (b)    The Program Bonds shall initially be issued to Cede & Co., as nominee for
         DTC, as one fully registered Bond in the aggregate principal amount of each series of the
         Program Bonds. Upon the Conversion of any of the Program Bonds, the Trustee may
         either accept a replacement bond certificate or make an appropriate notation thereon of
         the principal amount of such Program Bond certificate and the Permanent Rate to which
         such Bonds have been Converted and the Conversion Date applicable thereto.

                 If less than all of the Pre-Conversion Bonds are Converted on a particular
         Conversion Date, THDA and the Trustee may arrange for the delivery of a new Program
         Bond certificate in an aggregate principal amount equal to the principal amount of
         Program Bonds for which a Permanent Rate was determined, as well as either a notation
         of a reduction of the principal amount of the Program Bond bearing a Short-Term Rate or
         the delivery of a new Bond in such reduced principal amount bearing a Short-Term Rate.
         If a new Program Bond at such a reduced principal amount with a Short-Term Rate is so
         delivered, it shall be exchanged for the existing Program Bond with a Short-Term Rate.
         THDA shall arrange for a CUSIP number applicable to each Conversion of
         Pre-Conversion Bonds, which CUSIP number the Trustee shall also note on the Program
         Bond certificate.

                 In the event DTC determines to discontinue providing its services and a successor
         securities depository for all the Program Bonds is not designated, THDA and the Trustee
         shall arrange for the delivery of a single certificate for each series of the Program Bonds
         as fully registered bonds. Each such fully registered Program Bond shall be identified by
         a legend consisting of the letter “R” followed by the number of the Bond. The Program
         Bonds shall be numbered consecutively from 1 upwards.

         Section 2.13 Market Bond Requirements.

                 (a)      General. THDA is required to issue Market Bonds under the General
         Resolution in connection with the Program Bonds in order to cause the release of
         Escrowed Proceeds of Program Bonds as described herein. All Market Bonds must be
         issued by December 31, 2010. THDA hereby represents and warrants that it reasonably
         expects to issue Market Bonds on or before December 31, 2010 in a principal amount
         which will satisfy the Market Bond Ratio Requirement. THDA further represents and
         warrants that it reasonably expects to meet all other requirements contained herein
         relative to the release of Escrowed Proceeds of all Program Bonds issued hereunder.

                 (b)    Amortization. THDA shall not issue Market Bonds with ‘super sinkers,’
         planned amortization classes or other priority allocation class rights unless such
         provisions retain for application to the redemption of the Program Bonds at least a pro
         rata portion of any prepayments or other recoveries of principal relative to mortgage
         loans funded or MBS purchased with proceeds of the Program Bonds.




4852-0589-5173.1                                 11
                (c)     Mortgage Loan Prepayments. Prepayments received on the underlying
         mortgage loans financed with proceeds of the Program Bonds and the related Market
         Bonds, if any, shall be applied at least on a pro rata basis to redemption of such Program
         Bonds pursuant to Section 2.7 hereof.

                                             ARTICLE III

                                PROCEEDS OF PROGRAM BONDS

         Section 3.1 Escrow of Proceeds of Program Bonds.

                (a)    Escrowed Proceeds. The proceeds of the Program Bonds and the
         Shortfall Amount shall be retained in the Escrow Fund for application as set forth herein.

                  If the Trustee has received a Certificate Withdrawal Notice, all the proceeds of the
         Program Bonds, together with the Shortfall Amount, shall be retained in the Escrow Fund
         until either the written waiver referenced in Section 2.6(a)(ii) is delivered or the Program
         Bonds are redeemed as provided in such Section.

                 In addition, the proceeds of the Program Bonds and the Shortfall Amount shall be
         retained in the Escrow Fund until the requirements of Section 2.3 hereof are satisfied or
         until applied to the redemption of the Program Bonds pursuant hereto. The Escrowed
         Proceeds held in the Escrow Fund shall be pledged exclusively to the repayment of the
         Program Bonds. While such proceeds are held in the Escrow Fund, such proceeds may
         only be invested in Permitted Escrow Investments.

                (b)     Conversion and Release of Escrowed Proceeds. Upon the satisfaction of
         the requirements of Section 2.3 and to the extent provided therein, the released Escrowed
         Proceeds shall be transferred to such fund or account as THDA may direct the Trustee.

         Section 3.2 Use of Proceeds of Program Bonds.

                 (a)    Use of Proceeds. The proceeds received from the release of Escrowed
         Proceeds in connection with Program Bonds shall be used only to redeem Program Bonds
         or as follows:

                           (i)   to acquire and finance the holding of single family loans or
                   single-family MBS which are either newly originated or refinanced, so long as all
                   such loans are eligible to be financed on a tax-exempt basis under applicable
                   federal income tax law (“eligible loans”);

                           (ii)   to refund, as fixed rate bonds, any of THDA’s variable rate debt
                   (including, but not limited to, auction rate securities issued and outstanding on or
                   prior to October 19, 2009 or refund an issue that did so, so long as such debt was,
                   in turn, issued to acquire and finance the holding of eligible loans; the use of
                   proceeds for such a refunding purpose shall be limited to 30% of the net proceeds
                   of the Program Bonds); the restrictions on refundings herein shall not apply to
                   either (A) the use of proceeds to repay ‘warehouse credit lines’ used to acquire


4852-0589-5173.1                                    12
                   mortgage loans and MBS or (B) ‘replacement refundings’ where proceeds of
                   Program Bonds are exchanged dollar-for-dollar for unexpended tax-exempt bond
                   proceeds and/or mortgage loan prepayments so long as all proceeds of related
                   Market Bonds are exchanged first for such purpose; and

                          (iii) to fund reasonably required reserves and pay costs of issuance of
                   the Program Bonds in accordance with the requirements and limitations of
                   applicable federal tax law.

                The proceeds of the Program Bonds shall not be used for essential governmental
         functions within the meaning of Section 115 of the Code or qualified veterans mortgage
         bonds under Section 143 of the Code, or by Section 501(c)(3) organizations.

                (b)     Taxable Bonds. Proceeds of Program Bonds issued as taxable bonds
         hereunder may not be released from the Escrow Fund unless and until there is delivered
         to the Trustee and the GSEs the opinion of Bond Counsel required pursuant to
         Section 2.3(b) hereof.

                                           ARTICLE IV

                                      SPECIAL GSE RIGHTS

        Section 4.1 Removal of Trustee. No successor Trustee under the General Resolution
shall be appointed under the General Resolution without written notice to the Notice Parties at
the Notice Parties’ Addresses and without the prior written consent of the GSEs, which consent
shall not be unreasonably withheld.

        Section 4.2 GSEs as Third-Party Beneficiaries. Each GSE is intended to be and shall
be a third-party beneficiary of this Appendix II and the General Resolution, and each GSE shall
have the right (but not the obligation) to enforce, separately or jointly with the Trustee or cause
the Trustee to enforce, the provisions of this Appendix II.

                                            ARTICLE V

                                           COVENANTS

      Section 5.1 Special THDA Covenants. THDA hereby covenants that, so long as the
Program Bonds are Outstanding, it shall:

                (a)    if any Program Bonds are not issued on a tax-exempt basis, use its
         reasonable best efforts to obtain Volume Cap allocations as needed for such Program
         Bonds in 2010;

                (b)     not permit the aggregate principal amount of the Program Bonds issued
         hereunder to exceed the Single Family Program Bond Limit;




4852-0589-5173.1                                 13
               (c)    not allow the aggregate principal amount of Market Bonds and Program
         Bonds to exceed the reasonable expectations requirement applicable to tax-exempt
         mortgage revenue bonds;

                (d)    not issue new Bonds under the General Resolution in a variable rate
         demand, adjustable rate or auction rate mode other than Program Bonds during the period
         such Program Bonds bear interest at the Short-Term Rate;

                (e)     take all steps necessary to assure that all assets and revenues of any
         description pledged to the payment of the Program Bonds and all other Bonds issued
         under the General Resolution shall be applied strictly in accordance with, and solely for
         the purposes and in the amounts specified and permitted by, the terms of the General
         Resolution;

                (f)    not exercise any rights it may have to make voluntary withdrawals of cash
         or other assets from the lien of the General Resolution except under the following
         circumstances and within the following limits:

                          (i)    no withdrawals whatsoever shall be made during any period when
                   the Bond Ratings are below a level of ‘Baa3’ or ‘BBB-’,

                          (ii)   no withdrawals whatsoever shall be made to the extent that such
                   withdrawal would adversely affect any of the Bond Ratings that are effective
                   immediately prior to such withdrawal,

                           (iii) withdrawals shall be made only to fund programs sponsored by, or
                   other ordinary and customary administrative expenses (including expenses of
                   related Hedges) of, THDA which have been historically funded with the proceeds
                   of withdrawals from the General Resolution, and the annual amount of such
                   withdrawals shall be consistent with the annual amount of past withdrawals for
                   such purpose,

                            (iv)    withdrawals for purposes other than the purposes specified in (iii)
                   may only be made (A) if used for internal purposes of THDA, including, but not
                   limited to, funding a program sponsored by THDA and paying administrative
                   expenses of THDA and (B) if immediately after the proposed withdrawal the
                   rating on the Program Bonds will not be less than “Aa2”, with a rating outlook
                   that is either “stable” or “positive” or the equivalent, and

                            (v)    prior to and as a condition to each withdrawal, THDA shall
                   (A) except for withdrawals for ordinary and customary administrative fees
                   contemplated in the original cash flows and taken into account by rating agencies
                   initially rating the Program Bonds and for withdrawals contemplated in the
                   original cash flows and taken into account by rating agencies initially rating the
                   Program Bonds to fund programs sponsored by THDA which have been
                   historically funded with proceeds of withdrawals, obtain and furnish to the GSEs
                   and to Treasury’s Financial Agent a confirmation from each of the rating agencies
                   maintaining Bond Ratings that the proposed withdrawal will not adversely affect


4852-0589-5173.1                                    14
                   such Bond Ratings and (B) provide a written certification to the GSEs and to
                   Treasury’s Financial Agent specifying the amount and purpose of the withdrawal
                   and that all requirements of this subsection (f) have been met with respect to such
                   withdrawal.

               (g)     with respect to the purchase, origination, enforcement and servicing of
         mortgage loans and MBS, THDA shall:

                           (i)    originate or cause to be originated, and, if applicable, purchased,
                   mortgage loans and purchase, or cause to be purchased, MBS in a manner
                   consistent with applicable state law, the General Resolution and any supplements
                   thereto, and such other related documents by which THDA is bound,

                          (ii)  cause all mortgage loans to be serviced pursuant to the servicing
                   requirements of THDA, GNMA, FHA, Fannie Mae and Freddie Mac, as
                   applicable,

                           (iii) except as otherwise permitted by Treasury or the GSEs, diligently
                   take all steps necessary or desirable to enforce all terms of the mortgage loans,
                   MBS, loan program documents and all such other documents evidencing
                   obligations to THDA, and

                           (iv)   diligently take all actions consistent with sound mortgage loan
                   origination, purchase and servicing practices and principles as may be necessary
                   to receive and collect sufficient revenues to pay debt service when due on the
                   Program Bonds.

                (h)     not issue any bonds senior in priority to the Program Bonds and THDA
         represents and warrants that the Program Bonds are at least equal in priority with respect
         to payment and security to the most senior Outstanding Bonds under the General
         Resolution.

         Section 5.2 Covenants Regarding Administration of General Resolution and
Program Bonds. THDA hereby covenants, so long as the Program Bonds remain Outstanding,
that it shall:

                 (a)    not amend, supplement or otherwise modify in any material respect the
         General Resolution, this Appendix II or any other Related Document without the prior
         written consent of the GSEs; provided, however, that the consent of the GSEs shall not be
         required with respect to supplements entered into solely for the purpose of providing for
         the issuance of a series of Bonds pursuant to the General Resolution, except as provided
         in Section 5.1(d) hereof. With respect to General Resolution amendments, the
         determination of the GSEs as to the materiality of an amendment shall be controlling;

                 (b)     not permit any funds invested under the General Resolution to be invested
         in obligations, securities or other investments of a type not included within the categories
         permitted for such purposes in the General Resolution;



4852-0589-5173.1                                   15
                (c)     not enter into any Hedge relating to bonds issued under, or secured by
         revenues or other assets pledged under, the General Resolution without the prior written
         consent of the GSEs;

                (d)     not permit any swap termination fees to be payable on a basis senior to or
         on a parity with the Program Bonds;

                (e)    not permit any principal payment, principal prepayments and other
         recoveries of principal received with respect to that portion of any mortgage loans
         financed with the proceeds of Program Bonds to be recycled into new mortgage loans;
         and

                (f)    not permit the General Resolution to fail to meet the definition of a
         “Primarily Single Family Indenture.”

        Section 5.3 Reporting Requirements. THDA covenants to keep proper books of
record and account in which full, true and correct entries will be made of all dealings and
transactions of or in relation to affairs, operations, transactions and activities of THDA in
accordance with generally accepted accounting principles applicable to governmental entities,
consistently applied, and will furnish to each GSE a copy of each of the following:

                 (a)     on the date that is the earlier of (i) ninety (90) days after the end of each
         quarter of each fiscal year of THDA and (ii) the day such information is first made
         available to the general public, THDA shall provide to each GSE the financial statements
         of THDA consisting of a balance sheet of THDA as at the end of such period, a statement
         of operations and a statement of cash flows of THDA for such period and, with respect to
         the report provided after the end of each fiscal year, there shall also be included a
         statement of the changes in net assets of THDA for such period. The financial statements
         referred to above shall be set forth in reasonable detail and shall be accompanied by, in
         the case of the annual statements, an audit report of THDA’s auditor or nationally
         recognized independent certified public accountants stating that they have (except as
         noted therein) been prepared in accordance with generally accepted accounting principles
         consistently applied (provided that such audit report need not be submitted until one
         hundred eighty (180) days after the end of the relevant fiscal year);

                 (b)     on the date that is the earlier of (i) ninety (90) days after the end of each
         quarter of each fiscal year of THDA and (ii) the day such information is first made
         available to the general public, THDA shall provide to each GSE financial statements of
         THDA specific to the General Resolution pursuant to which Program Bonds are
         outstanding consisting of a statement of operations and a statement of cash flows under
         the General Resolution for such period and, with respect to the report provided after the
         end of each fiscal year, there shall also be included a statement of the changes in net
         assets under the General Resolution for such period. The financial statements referred to
         above shall be set forth in reasonable detail and shall be accompanied by, in the case of
         the annual statements, an audit report of THDA’s auditor or nationally recognized
         independent certified public accountants stating that they have (except as noted therein)
         been prepared in accordance with generally accepted accounting principles consistently


4852-0589-5173.1                                  16
         applied (provided that such audit report need not be submitted until one hundred eighty
         (180) days after the end of the relevant fiscal year);

                 (c)     immediately after any officer of THDA obtains knowledge thereof, a
         certificate of THDA setting forth the occurrence of any default or Event of Default under
         the General Resolution, the details thereof and the action which THDA is taking or
         proposes to take with respect thereto;

                 (d)     quarterly, at the time each of the financial statements referenced in (a)
         above is provided, and otherwise at the request of a GSE, the information set forth in
         Schedule A hereto and a certificate of THDA (i) stating whether there exists on the date
         of such certificate any default or Event of Default under the General Resolution and, if
         so, the details thereof and the action which THDA is taking or proposes to take with
         respect thereto and (ii) setting forth a description in reasonable detail of the amounts held
         in the Revenue Fund and other accounts in the General Resolution;

                (e)     simultaneously with their release to the general public, disclosure
         statements of any kind prepared by THDA which disclose such matters as quarterly or
         other interim financial statements relating to the General Resolution, portfolio
         composition information regarding the General Resolution such as the percentage of
         loans insured under FHA, HUD, RDA and VA programs and any pooled mortgage
         insurance program or securitization by GNMA or a GSE, or portfolio performance
         information detailing such matters as delinquencies, foreclosures and real estate-owned
         properties;

                (f)     promptly upon receipt of notice by THDA of any such default, the
         occurrence of any material event of default by any counterparty to a Related Document;

                (g)     at the request of a GSE, copies of any information or request for
         information concerning this Appendix II or any of the Related Documents as and when
         provided to the Trustee;

                (h)     promptly after the receipt or giving thereof, copies of all notices of
         resignation by or removal of the Trustee, which are received or given by THDA;

                (i)      promptly after the adoption thereof, copies of any amendments to the
         General Resolution, any of the other Related Documents (including replacement of or
         any new Related Document), the Official Statement relative to the Program Bonds and
         the Official Statement Supplement;

                (j)     within thirty (30) days of the issuance of any public issuance of
         indebtedness of THDA payable from the Revenues under the General Resolution, copies
         of any disclosure documents distributed in connection therewith;

                (k)     any Annual Filing or Material Event Filing shall be delivered to the GSEs
         on the day it becomes available to the general public or owners of the Market Bonds or
         would be required to become available if Rule 15c2-12 were applicable to the Program
         Bonds;


4852-0589-5173.1                                  17
                 (l)    simultaneously with the delivery of each set of the financial statements
         and the annual filing referred to in clauses (a) and (k) above and otherwise at the request
         of the GSEs, or with respect to (iii) whenever prepared and available, (i) a copy of the
         most recent rating letter received relating to the Bond Rating and/or the General
         Resolution rating, (ii) a certificate of THDA stating that THDA is in compliance with all
         financial covenants set forth in the General Resolution; and (iii) a copy of the most recent
         cash flow certificates, financial reports and statements, and annual budget (including
         portfolio performance reports detailing delinquencies and foreclosure rates, and
         percentage of loans insured under FHA, HUD, RDA and VA programs and any pooled
         mortgage insurance program, and the percentage of uninsured loans);

                 (m)     immediately upon receipt by THDA, any rating report or other rating
         action relative to THDA, the Program Bonds or any other bonds issued under the General
         Resolution;

                 (n)     immediately upon any such transfer, notice of any extraordinary payment
         or transfer of funds from the General Resolution;

                 (o)    in a timely manner, at the request of a GSE, any data or information
         required by a GSE for use in calculating performance under the Federal Housing Finance
         Agency’s housing goal regulations or for use in complying with any other regulatory or
         legal requirement; and

                (p)     such other information, whether such information is published or
         unpublished, respecting the affairs, condition and/or operations, financial or otherwise, of
         THDA as a GSE may from time to time reasonably request (including, without limitation,
         data, including loan level data, required by the GSEs with respect to any asset
         management surveillance and/or disclosure requirement).

       Section 5.4 Covenant Enforcement by GSEs. Only the GSEs may enforce, or cause
the Trustee to enforce, the provisions of Section 5.1, 5.2 and 5.3 hereof.

         Section 5.5 Special Notices.

                (a)   Request to Withdraw General Resolution Funds. The Trustee shall
         immediately deliver to the Notice Parties at the Notice Parties’ Addresses notice of any
         request by THDA to withdraw funds from the General Resolution.

                 (b)    Events of Default. The Trustee shall immediately deliver to the Notice
         Parties at the Notice Parties’ Addresses notice of any default or Event of Default under
         the General Resolution, of which the Trustee has knowledge.

                (c)     Exercise of Remedies. The Trustee shall immediately deliver to the
         Notice Parties at the Notice Parties’ Addresses notice of the exercise of any remedies
         under the General Resolution.




4852-0589-5173.1                                 18
                                         ARTICLE VI

                                      MISCELLANEOUS

       Section 6.1 Notices. Unless otherwise specified in this Appendix II, all notices, requests
or other communications to or upon the Notice Parties or referred to in this Appendix II shall be
deemed to have been given (i) in the case of notice by letter, when delivered by hand or four (4)
days after the same is deposited in the mails, first class postage prepaid, and (ii) in the case of
notice by telecopier or e-mail, when sent, receipt confirmed, addressed to the Notice Parties as
follows or at such other address as any of the Notice Parties may designate by written notice to
THDA and the Trustee:

         To Administrator:    U.S. Bank National Association
                              One Federal Street, 3rd Floor
                              Boston, Massachusetts 02110
                              Attention: Structured Finance/HFA Program
                              E-mail:    Julie.Kirby@usbank.com

         To Fannie Mae:       Fannie Mae
                              3900 Wisconsin Avenue, N.W.
                              Washington, D.C. 20016
                              Attention: Carl W. Riedy, Jr.
                                         Vice President for Public Entities
                                         Channel, Housing and Community
                                         Development
                              E-mail:    Carl_W_Riedy@fanniemae.com

                                               and

                              Attention: Barbara Ann Frouman
                                         Vice President and Deputy General
                                         Counsel, Housing and Community
                                         Development
                              E-mail:    Barbara_Ann_Frouman@fanniemae.com

         To Freddie Mac:      Freddie Mac
                              1551 Park Run Drive
                              Mail Stop D4F
                              McLean, Virginia 22102
                              Attention: Mark D. Hanson
                                         Vice President Mortgage Funding
                              E-mail:    Mark_Hanson@freddiemac.com

                                                     and

                              Attention: Joshua L. Schonfeld
                                         Associate General Counsel
                              Email:     Joshua_Schonfeld@freddiemac.com


4852-0589-5173.1                                19
         To Treasury’s        JPMorgan Chase Bank, N.A.
         Financial Agent:     1 Chase Manhattan Plaza, Floor 19
                              Attention: Lillian G. White
                              Phone - 212-552-2392
                              Fax - 212-552-0551
                              E-mail: Lillian.G.White@jpmorgan.com


       Section 6.2 Appendix to Control. To the extent that any provisions of this Appendix II
are inconsistent with any provisions of the General Resolution or the Supplemental Resolution
under which the Program Bonds are issued, this Appendix II shall control with respect to the
Program Bonds.

       Section 6.3 Termination. This Appendix II shall continue in full force and effect so
long as the Program Bonds remain Outstanding and shall terminate when Program Bonds are no
longer Outstanding.

                            [remainder of page intentionally left blank]




4852-0589-5173.1                                20
                                               EXHIBIT A

                                       NOTIFICATION OF
                                  INTEREST RATE CONVERSION


        Reference is made to the General Resolution, dated as of November 19, 2009, of the
Tennessee Housing Development Agency (“THDA”), as subsequently amended and modified, in
particular by Appendix II to Supplemental Resolution (the “Appendix”), dated as November 19,
2009 (collectively, the “Resolution”). All capitalized terms not otherwise defined herein shall
have the same meanings ascribed thereto in the Resolution.


       I, _______________, an authorized officer of THDA, in connection with Program Bonds
to be Converted to a Permanent Rate pursuant to Section 2.3 of the Appendix II, hereby notify
the Trustee and the Notice Parties as follows:

         (i)       the proposed Release Date is __________________, 2010,

         (ii)      the proposed Conversion Date is _____________________, 201[1],

         (iii)     the principal amount of Program Bonds to be Converted to a Permanent Rate on
                   the proposed Conversion Date set forth in clause (ii) above is $___________,

         (iv)      the proposed Permanent Rate Calculation Date is __________________, 2010,
                   and

         (v)       on the Release Date, it is anticipated that the Bond Rating will be ‘__’/‘__’.

         IN WITNESS WHEREOF, I have set forth my hand this _______ day of __________,
2010.

                                                     TENNESSEE HOUSING DEVELOPMENT
                                                     AGENCY


                                                     By:
                                                     Name:
                                                     Title:




4852-0589-5173.1
                                             EXHIBIT B

                            MARKET BOND RATIO REQUIREMENT
                               COMPLIANCE CERTIFICATE


        Reference is made to the General Resolution, dated as of November 19, 2009, of the
Tennessee Housing Development Agency (“THDA”), as subsequently amended and modified, in
particular by Appendix II to the Supplemental Resolution (the “Appendix”), dated as November
19, 2009 (collectively, the “Resolution”). All capitalized terms not otherwise defined herein
shall have the same meanings ascribed thereto in the Resolution.

        I, __________________, an authorized officer of THDA, in connection with the issuance
of certain Market Bonds, hereby certify and direct as follows:

          (i)      $_________ principal amount of Market Bonds are to be issued on
                   _____________, 2010, net proceeds of which will be deposited with the
                   Trustee on [date] in the amount of $______ (attached hereto are the bond
                   purchase agreement and Official Statement relative to such Market
                   Bonds),

         (ii)      the above-referenced Market Bonds have the maturity dates, interest rates
                   and principal amounts set forth in the attached Official Statement,

         (iii)      the release amount pursuant to the Market Bond Ratio Requirement is
                   $_________,

         (iv)      the principal amount of the related Program Bonds to be Converted is
                   $________,

         (v)       the Release Date for the related Program Bonds is _________,

         (vi)      including this Release Date, THDA has not established more than three (3)
                   Release Dates in 2010,

         (vii)     the Conversion Date for the related Program Bonds is _________,

         (viii)    the principal amount of the remaining Pre-Conversion Bonds is
                   _________, and

         (ix)      the released Escrowed Proceeds shall be transferred to the __________
                   [insert name of applicable fund or account].




4852-0589-5173.1
      IN WITNESS WHEREOF, I have herewith set forth my hand to this Certificate this
_______ day of ______________, 2010.

                                         TENNESSEE HOUSING DEVELOPMENT
                                         AGENCY


                                         By:
                                         Name:
                                         Title:




4852-0589-5173.1                        B-2
                                             EXHIBIT C

                                      INTEREST RATE
                                  CONVERSION CERTIFICATE


        Reference is made to the General Resolution, dated as of November 19, 2009, of the
Tennessee Housing Development Agency (“THDA”), as subsequently amended and modified, in
particular by Appendix II to the Supplemental Resolution (the “Appendix”), dated as November
19, 2009 (collectively, the “Indenture”). All capitalized terms not otherwise defined herein shall
have the same meanings ascribed thereto in the Indenture.

       I, __________________, an authorized officer of U.S. Bank National Association (the
“Trustee”), in connection with Program Bonds Converted to a Permanent Rate pursuant to
Section 2.3 of the Appendix, hereby confirm as follows:

         (i)       attached are the items required to be delivered pursuant to Section 2.3 of the
                   Appendix,

         (ii)      the Short-Term Rate applicable from the Release Date to the Conversion Date,
                   will be the total of (a) the Four Week T-Bill Rate (____%) plus (b) the Spread
                   applicable to the referenced Program Bonds as of the Release Date (____%), will
                   be ___%;

         (iii)     the Permanent Rate with respect to the referenced Program Bonds will be __% as
                   of the specified Conversion Date of __________, 2010,

         (iv)      the CUSIP number for the referenced Program Bonds is __________, and

         (v)       related Program Bond proceeds will be released on the specified Release Date of
                   _________, 2010.

      IN WITNESS WHEREOF, I have herewith set forth my hand this _______ day of
_____________, 2010.

                                                   U.S. BANK NATIONAL ASSOCIATION


                                                   By:
                                                   Name:
                                                   Title:




4852-0589-5173.1
                                                                            Schedule A

                                            Quarterly Portfolio Performance Information


The information set forth in the table below should be delivered via email in Microsoft Excel.
Overall Population Unpaid Principal Balance ($

Current Loans (Loans with No Delinquency Status This Month)                              Delinquent Loans (Any Loan Past Due This Month)

Current Loans Unpaid Principal Balance ($m):                                             Delinquent Loans Unpaid Principal Balanc

                                                                                                                                             % With
                                          Share of     % With Primary                                                      Share of         Primary
                                          Current        Mortgage     % With FHA                                          Delinquent       Mortgage      % With FHA
Vintage (Year Originated)                  Book*        Insurance**    or VA***          Vintage (Year Originated)          Book           Insurance       or VA
Pre-2000                                                                                 Pre-2000
2001                                                                                     2001
2002                                                                                     2002
2003                                                                                     2003
2004                                                                                     2004
2005                                                                                     2005
2006                                                                                     2006
2007                                                                                     2007
2008                                                                                     2008
2009                    g                                g                  g            2009                    g       q                           g
sums to 100%                                                                             vintage. Column sums to 100%
** Percent of loans within the vintage that has Primary Mortgage Insurance.              ** Percent of loans within the vintage that has Primary Mortgage Insurance.
*** % of loans in each vintage that has Government Insurance.                            *** % of loans in each vintage that has Government Insurance.

                                          Share of                                                                         Share of
Count of Missed Payments in               Current                                                                         Delinquent
Past 12 Month*                             Book**                                        Delinquency Status                 Book*
None                                                                                     30
1                                                                                        60
2                                                                                        90
3                                                                                        120
>3                                                                                       > 120
* In the past 12 months, any missed payment is counted once                                Foreclosure
regardless if they are continuously missed or sporadically missed.                         Bankruptcuy
** % of Outstanding Balance of Current Loans. Sums to 100%.                                REO
                                                                                         * % of Outstanding Balance of Delinquent Loans. Sums to 100%.

                                                                                         Cumulative Losses


                                      Share of                                                                          Share of
                                      Current                                                                          Delinquent
Representative FICO Score               Book                                             Representative FICO Score        Book
0-580                                                                                    0-580
580-620                                                                                  580-620
620-660                                                                                  620-660
660-700                                                                                  660-700
700-740                                                                                  700-740
740+                                                                                     740+
* The minumum across borrowers, the median score for each borrower across bureaus.       * The minumum across borrowers, the median score for each borrower across bureaus.
** % of Outstanding Balance of Current Loans. Sums to 100%.                              ** % of Outstanding Balance of Delinquent Loans. Sums to 100%.




4852-0589-5173.1
     EXHIBIT D

BOND MATURITY REPORT
Dec 2, 2009 5:00 pm Prepared by CSG Advisors Incorporated                                                                                             (8.5.008 THDA_2009:2009_A-FINAL01) Page 1


                                                                              SCHEDULED BOND MATURITY REPORT

                                                                          TENNESSEE HOUSING DEVELOPMENT AGENCY
                                                                                 Housing Finance Program Bonds
                                                                                       Issue 2009-A Bonds
                                                                                     Final Maturity Schedule

                                      2009-A1 Serials NAMT 2009-A1 2024 Tm NA 2009-A1 2027 Tm NA 2009-A2 2040 Prg Bnd                      Bond Debt Service
                                         Maturing            Maturing           Maturing            Maturing                   Maturing          Interest             Total
                            Date         Principal      Rate Principal    Rate  Principal    Rate    Principal    Rate         Principal            Paid          Debt Serv

                      Jul   1, 2010             -         -           -         -           -         -           -        -           -      1,981,063        1,981,063.06
                      Jan   1, 2011       965,000   0.900%            -         -           -         -           -        -     965,000      1,896,763        2,861,762.53
                      Jul   1, 2011       970,000   1.100%            -         -           -         -           -        -     970,000      1,892,420        2,862,420.03
                      Jan   1, 2012       980,000   1.350%            -         -           -         -           -        -     980,000      1,887,085        2,867,085.03
                      Jul   1, 2012       985,000   1.450%            -         -           -         -           -        -     985,000      1,880,470        2,865,470.03
                      Jan   1, 2013       995,000   1.850%            -         -           -         -           -        -     995,000      1,873,329        2,868,328.78
                      Jul   1, 2013     1,005,000   1.950%            -         -           -         -           -        -   1,005,000      1,864,125        2,869,125.03
                      Jan   1, 2014     1,015,000   2.250%            -         -           -         -           -        -   1,015,000      1,854,326        2,869,326.28
                      Jul   1, 2014     1,030,000   2.350%            -         -           -         -           -        -   1,030,000      1,842,908        2,872,907.53
                      Jan   1, 2015     1,040,000   2.650%            -         -           -         -           -        -   1,040,000      1,830,805        2,870,805.03
                      Jul   1, 2015     1,060,000   2.750%            -         -           -         -           -        -   1,060,000      1,817,025        2,877,025.03
                      Jan   1, 2016     1,075,000   2.950%            -         -           -         -           -        -   1,075,000      1,802,450        2,877,450.03
                      Jul   1, 2016     1,095,000   3.050%            -         -           -         -           -        -   1,095,000      1,786,594        2,881,593.78
                      Jan   1, 2017     1,110,000   3.350%            -         -           -         -           -        -   1,110,000      1,769,895        2,879,895.03
                      Jul   1, 2017     1,130,000   3.450%            -         -           -         -           -        -   1,130,000      1,751,303        2,881,302.53
                      Jan   1, 2018     1,150,000   3.600%            -         -           -         -           -        -   1,150,000      1,731,810        2,881,810.03
                      Jul   1, 2018     1,175,000   3.700%            -         -           -         -           -        -   1,175,000      1,711,110        2,886,110.03
                      Jan   1, 2019     1,200,000   3.800%            -         -           -         -           -        -   1,200,000      1,689,373        2,889,372.53
                      Jul   1, 2019     1,220,000   3.850%            -         -           -         -           -        -   1,220,000      1,666,573        2,886,572.53
                      Jan   1, 2020     1,245,000   3.950%            -         -           -         -           -        -   1,245,000      1,643,088        2,888,087.53
                      Jul   1, 2020     1,270,000   3.950%            -         -           -         -           -        -   1,270,000      1,618,499        2,888,498.78
                      Jan   1, 2021     1,295,000   4.100%            -         -           -         -           -        -   1,295,000      1,593,416        2,888,416.28
                      Jul   1, 2021     1,325,000   4.125%            -         -           -         -           -        -   1,325,000      1,566,869        2,891,868.78
                      Jan   1, 2022             -         -   1,350,000   4.375%            -         -           -        -   1,350,000      1,539,541        2,889,540.65
                      Jul   1, 2022             -         -   1,380,000   4.375%            -         -           -        -   1,380,000      1,510,009        2,890,009.40
                      Jan   1, 2023             -         -   1,410,000   4.375%            -         -           -        -   1,410,000      1,479,822        2,889,821.90
                      Jul   1, 2023             -         -   1,445,000   4.375%            -         -           -        -   1,445,000      1,448,978        2,893,978.15
                      Jan   1, 2024             -         -   1,475,000   4.375%            -         -           -        -   1,475,000      1,417,369        2,892,368.77
                      Jul   1, 2024             -         -   1,510,000   4.375%            -         -           -        -   1,510,000      1,385,103        2,895,103.14
                      Jan   1, 2025             -         -           -         -   1,545,000   4.625%            -        -   1,545,000      1,352,072        2,897,071.89
                      Jul   1, 2025             -         -           -         -   1,580,000   4.625%            -        -   1,580,000      1,316,344        2,896,343.76
                      Jan   1, 2026             -         -           -         -   1,620,000   4.625%            -        -   1,620,000      1,279,806        2,899,806.26
                      Jul   1, 2026             -         -           -         -   1,655,000   4.625%            -        -   1,655,000      1,242,344        2,897,343.76
                      Jan   1, 2027             -         -           -         -     695,000   4.625%    1,000,000   3.96%    1,695,000      1,204,072        2,899,071.88
                      Jul   1, 2027             -         -           -         -           -         -   1,740,000   3.96%    1,740,000      1,168,200        2,908,200.00
                      Jan   1, 2028             -         -           -         -           -         -   1,770,000   3.96%    1,770,000      1,133,748        2,903,748.00
                      Jul   1, 2028             -         -           -         -           -         -   1,810,000   3.96%    1,810,000      1,098,702        2,908,702.00
                      Jan   1, 2029             -         -           -         -           -         -   1,850,000   3.96%    1,850,000      1,062,864        2,912,864.00
                      Jul   1, 2029             -         -           -         -           -         -   1,880,000   3.96%    1,880,000      1,026,234        2,906,234.00
                      Jan   1, 2030             -         -           -         -           -         -   1,920,000   3.96%    1,920,000        989,010        2,909,010.00
                      Jul   1, 2030             -         -           -         -           -         -   1,960,000   3.96%    1,960,000        950,994        2,910,994.00
                      Jan   1, 2031             -         -           -         -           -         -   2,000,000   3.96%    2,000,000        912,186        2,912,186.00
                      Jul   1, 2031             -         -           -         -           -         -   2,040,000   3.96%    2,040,000        872,586        2,912,586.00
                      Jan   1, 2032             -         -           -         -           -         -   2,090,000   3.96%    2,090,000        832,194        2,922,194.00
                      Jul   1, 2032             -         -           -         -           -         -   2,130,000   3.96%    2,130,000        790,812        2,920,812.00
Dec 2, 2009 5:00 pm Prepared by CSG Advisors Incorporated                                                                                          (8.5.008 THDA_2009:2009_A-FINAL01) Page 2


                                                                               SCHEDULED BOND MATURITY REPORT

                                                                            TENNESSEE HOUSING DEVELOPMENT AGENCY
                                                                                   Housing Finance Program Bonds
                                                                                         Issue 2009-A Bonds
                                                                                       Final Maturity Schedule

                                      2009-A1 Serials NAMT 2009-A1 2024 Tm NA 2009-A1 2027 Tm NA 2009-A2 2040 Prg Bnd                   Bond Debt Service
                                         Maturing            Maturing           Maturing            Maturing                Maturing          Interest             Total
                            Date         Principal      Rate Principal    Rate  Principal    Rate    Principal    Rate      Principal            Paid          Debt Serv

                      Jan   1, 2033             -           -           -       -           -    -    2,170,000   3.96%     2,170,000        748,638        2,918,638.00
                      Jul   1, 2033             -           -           -       -           -    -    2,220,000   3.96%     2,220,000        705,672        2,925,672.00
                      Jan   1, 2034             -           -           -       -           -    -    2,270,000   3.96%     2,270,000        661,716        2,931,716.00
                      Jul   1, 2034             -           -           -       -           -    -    2,310,000   3.96%     2,310,000        616,770        2,926,770.00
                      Jan   1, 2035             -           -           -       -           -    -    2,360,000   3.96%     2,360,000        571,032        2,931,032.00
                      Jul   1, 2035             -           -           -       -           -    -    2,410,000   3.96%     2,410,000        524,304        2,934,304.00
                      Jan   1, 2036             -           -           -       -           -    -    2,460,000   3.96%     2,460,000        476,586        2,936,586.00
                      Jul   1, 2036             -           -           -       -           -    -    2,510,000   3.96%     2,510,000        427,878        2,937,878.00
                      Jan   1, 2037             -           -           -       -           -    -    2,560,000   3.96%     2,560,000        378,180        2,938,180.00
                      Jul   1, 2037             -           -           -       -           -    -    2,620,000   3.96%     2,620,000        327,492        2,947,492.00
                      Jan   1, 2038             -           -           -       -           -    -    2,670,000   3.96%     2,670,000        275,616        2,945,616.00
                      Jul   1, 2038             -           -           -       -           -    -    2,730,000   3.96%     2,730,000        222,750        2,952,750.00
                      Jan   1, 2039             -           -           -       -           -    -    2,780,000   3.96%     2,780,000        168,696        2,948,696.00
                      Jul   1, 2039             -           -           -       -           -    -    2,840,000   3.96%     2,840,000        113,652        2,953,652.00
                      Jan   1, 2040             -           -           -       -           -    -    2,900,000   3.96%     2,900,000         57,420        2,957,420.00

                                       24,335,000               8,570,000           7,095,000        60,000,000           100,000,000     73,240,688    173,240,687.78
Dec 2, 2009 5:00 pm Prepared by CSG Advisors Incorporated                                                                                          (8.5.008 THDA_2009:2009_A-FINAL01) Page 3


                                                                                        BOND STATISTICS

                                                                            TENNESSEE HOUSING DEVELOPMENT AGENCY
                                                                                   Housing Finance Program Bonds
                                                                                         Issue 2009-A Bonds
                                                                                       Final Maturity Schedule


                                                                                           Bond Statistics

                                                   2009-A1 Serials NAMT     2009-A1 2024 Tm NAMT    2009-A1 2027 Tm NAMT    2009-A2 2040 Prg Bnd               Total


                      Par Amount                            24,335,000.00            8,570,000.00            7,095,000.00          60,000,000.00      100,000,000.00

                      Accrued Int.                                      -                       -                       -                      -                   -

                      Issue Discount                                    -                       -                       -                      -                   -

                      Proceeds                              24,335,000.00            8,570,000.00            7,095,000.00          60,000,000.00      100,000,000.00

                      Bond Year                              160,268,278              114,022,944             112,865,167          1,453,503,333       1,840,659,722

                      Avg. Price                                 100.000                 100.000                 100.000                 100.000            100.000

                      Avg. Coupon                                 2.936%                  4.375%                  4.625%                 3.960%              3.794%

                      Avg. Rate                                   3.415%                  4.375%                  4.625%                 3.960%              3.979%

                      Avg. Life (Dated)                            6.586                  13.305                  15.908                  24.225             18.407

                      Avg. Life (Delivery)                         6.586                  13.305                  15.908                  24.225             18.407

                      Avg. Mat. Date                         Jul 23, 2016            Apr 12, 2023            Nov 19, 2025           Mar 14, 2034       May 19, 2028

                      Weighted Avg Maturity                        6.586                  13.305                  15.908                  24.225             18.407

                      Gross Bond NIC                          3.415172%                4.375000%               4.625000%              3.960000%          3.979045%

                      Net Bond NIC                                      -                       -                       -                      -         4.000845%

                      Gross Bond TIC                          3.382472%                4.374892%               4.624893%              3.959942%          3.969995%

                      Net Bond TIC                                      -                       -                       -                      -         4.002665%

                      Duration                                     5.875                  10.216                  11.429                  15.680             12.563
      EXHIBIT E

PLACEMENT AGREEMENTS
                              PLACEMENT AGREEMENT

                            (a/k/a the Securitization Agreement)

                                          among

                      FEDERAL NATIONAL MORTGAGE ASSOCIATION,

                  FEDERAL HOME LOAN MORTGAGE CORPORATION and

                      TENNESSEE HOUSING DEVELOPMENT AGENCY

                                 Dated December 9, 2009

                                            ***

                             NEW ISSUE BOND PROGRAM




DMEAST #12018558 v2
                                                 TABLE OF CONTENTS

                                                                                                                            PAGE

ARTICLE 1 DEFINITIONS ............................................................................................................2
ARTICLE 2 AGREEMENT TO ISSUE AND EXCHANGE THE PROGRAM BONDS FOR
     GSE SECURITIES ..............................................................................................................4
ARTICLE 3 CERTAIN TERMS .....................................................................................................5
ARTICLE 4 SETTLEMENT REQUIREMENTS ...........................................................................5
ARTICLE 5 SETTLEMENT ...........................................................................................................6
ARTICLE 6 EXPENSES .................................................................................................................7
ARTICLE 7 REPRESENTATIONS AND WARRANTIES ...........................................................7
ARTICLE 8 COVENANTS OF THE HFA.....................................................................................9
ARTICLE 9 REMITTING AND REPORTING............................................................................10
ARTICLE 10 THE HFA’S SPECIAL ADVISOR ........................................................................10
ARTICLE 11 INDEMNIFICATION .............................................................................................11
ARTICLE 12 MISCELLANEOUS ...............................................................................................11


Schedules:
Schedule A                 Summary Information, GSE Fees, GSE Special Closing Counsel Delivery
                           Instructions and Notices
Schedule B-1               Program Bonds (Single-Family)
Schedule C                 Settlement Deliverables
Schedule D-2               Description of Program Bonds (Single Family – Immediate Funding)
Schedule E                 Reporting
Schedule E-1               Quarterly Portfolio Performance Information




DMEAST #12018558 v2                                               i
       This PLACEMENT AGREEMENT (a/k/a the Securitization Agreement) (this
“Agreement”), dated December 9, 2009, is among the Federal National Mortgage Association, a
United States Government-sponsored enterprise (“Fannie Mae”), the Federal Home Loan
Mortgage Corporation, a United States Government-sponsored enterprise (“Freddie Mac”, and
Fannie Mae, each a “GSE,” and together, the “GSEs”), and the Tennessee Housing Development
Agency (the “HFA”).

                                     W I T N E S S E T H:

        WHEREAS, the disruptions in housing markets, housing finance and capital markets
over the past several years have constricted the general availability of credit to many different
credit markets, particularly those related to housing;

        WHEREAS, the United States Congress, in enacting the Housing and Economic
Recovery Act of 2008, the Emergency and Economic Stabilization Act of 2008, the American
Recovery and Reinvestment Act of 2009 and other legislation, provided the United States
Department of the Treasury (“Treasury”) and other agencies of government with the authority,
funding, and direction to undertake credit support programs, with many of these programs
directed specifically at supporting housing markets and housing finance;

       WHEREAS, state and local housing finance agencies (“State and Local HFAs”) have a
core mission of providing (i) affordable mortgage financing for low and moderate income
households, especially first-time homebuyers, and (ii) financing for affordable multifamily rental
properties;

        WHEREAS, the National Council of State Housing Finance Agencies and the National
Association of Local Housing Finance Agencies requested assistance from Treasury to meet their
funding needs to continue support of their affordable housing mission during this period of
disruption in housing finance and that request has been supported by market developments;

       WHEREAS, Treasury, the Federal Housing Finance Agency, Fannie Mae and Freddie
Mac entered into a Memorandum of Understanding, dated October 19, 2009, that sets forth the
mutual understandings and intentions of such parties with respect to the establishment of a
program pursuant to which (i) State and Local HFAs will issue single-family and multifamily
Program Bonds (as defined in this Agreement), (ii) the GSEs will securitize such Program Bonds
and issue GSE Securities (as defined in this Agreement) evidencing beneficial ownership of such
Program Bonds and (iii) Treasury will purchase the GSE Securities (the “New Issue Bond
Program”);

      WHEREAS, pursuant to this Agreement, the HFA will transfer the Program Bonds to the
GSEs in exchange for the GSE Securities (as defined in this Agreement); and

      WHEREAS, pursuant to the terms of the Settlement Agreement (as defined in this
Agreement), Treasury will purchase the GSE Securities.

      NOW, THEREFORE, in consideration of the mutual agreements set forth in this
Agreement, and other good and valuable consideration, the receipt and adequacy of which are



DMEAST #12018558 v2
hereby acknowledged, the parties to this Agreement, intending to be legally bound, hereby agree
as follows:

                                         ARTICLE 1

                                        DEFINITIONS

       Terms used in this Agreement, including in the schedules to this Agreement, are used as
defined below.

        “Administration Agreement” means the Administration Agreement among Fannie Mae,
Freddie Mac and the Administrator relating to certain administrative functions involving the
securitized Program Bonds and the HFA Initiative.

        “Administrator” means U.S. Bank National Association, in its capacity as custodian,
collection agent, paying agent and administrator under the Administration Agreement.

      “Agreement” has the meaning given to such term in the introductory section of this
Agreement.

      “Allocation Amount” has the meaning given to such term in Schedule B of this
Agreement.

       “Closing Agent” means U.S. Bank National Association, in its capacity as escrow and
closing agent under the Settlement Agreement.

      “Complete Indenture” has the meaning given to such term in Section 2.2 of this
Agreement.

       “Continuing Disclosure Agreement” has the meaning given to such term in Section 1.12
of Schedule C of this Agreement.

        “DTC” has the meaning given to such term in Section 5.1(b) of this Agreement.

        “Eligible Bonds” means Program Bonds that satisfy the eligibility requirements for
acquisition under the New Issue Bond Program set forth on Schedule D of this Agreement.

      “Fannie Mae” has the meaning given to such term in the introductory section of this
Agreement.

       “Fannie Mae Trust” means the Trust, established by Fannie Mae as a pass-through entity,
which holds an undivided 50% beneficial ownership interest in the Program Bonds.

      “Freddie Mac” has the meaning given to such term in the introductory section of this
Agreement.

        “Freddie Mac Trust” means the Trust established by Freddie Mac as a pass-through
entity, which holds an undivided 50% beneficial ownership interest in the Program Bonds.



DMEAST #12018558 v2                            2
       “GSE” and “GSEs” have the meanings given to such terms in the introductory section of
this Agreement.

      “GSE Expenses” has the meaning given to such term in Article 6 of this Agreement, the
amount of which is set forth on Schedule A of this Agreement.

       “GSE Securities” means the securities issued by each GSE, each of which evidences an
undivided 50% beneficial ownership interest in the Program Bonds.

      “GSE Special Closing Counsel” means the counsel set forth on Schedule A of this
Agreement, as special counsel to the GSEs.

        “GSE Trusts” means, collectively, the Fannie Mae Trust and the Freddie Mac Trust.

        “HFA” has the meaning given to such term in the introductory section of this Agreement.

        “HFA Initiative” has the meaning given to such term in the Settlement Agreement.

        “HFA State” has the meaning given to such term in Schedule B of this Agreement.

      “HFA Trustee” means the bond indenture trustee of the Program Bonds as set forth in
Schedule B of this Agreement and any Market Bonds.

        “Indenture” has the meaning given to such term in Section 2.2 of this Agreement.

          “Initial Securitization Fee” means an amount calculated in each instance in (i), (ii) and
(iii), as applicable, based on the aggregate original principal amount of all Program Bonds issued
by the HFA under the New Issue Bond Program as follows:

                (i)     where the aggregate original principal amount of all the Program Bonds is
        less than or equal to $25,000,000, a fee equal to $25,000 per GSE;

                (ii)   where the aggregate original principal amount of all the Program Bonds is
        greater than $25,000,000 and less than or equal to $50,000,000, a fee for each GSE equal
        to the product of 0.1% (10 basis points) and the aggregate original principal amount of all
        the Program Bonds; and

                (iii) where the aggregate original principal amount of all the Program Bonds is
        greater than $50,000,000, a fee for each GSE equal to the greater of (a) $50,000 or (b) the
        product of 0.05% (or 5 basis points) and the aggregate original principal amount of all the
        Program Bonds.

       “Market Bonds” has the meaning given to such term in Section 4 of Schedule D-1 and
Section 5 of Schedule D-2, as applicable.

        “Mortgage Loans” has the meaning given to such term in Section 2.2 of this Agreement.

      “New Issue Bond Program” has the meaning given to such term in the recitals to this
Agreement.


DMEAST #12018558 v2                              3
      “Official Statement” has the meaning given to such term in Section 5.1(a)(iv) of this
Agreement.

      “Outstanding Bonds” has the meaning given to such term in Section 7.1(h) of this
Agreement.

       “Program Bonds” means those certain single-family or multifamily mortgage revenue
bonds issued by the HFA and identified in Schedule B of this Agreement.

        “Schedule B” means Schedule B-1 or Schedule B-2 of this Agreement, as applicable.

      “Schedule D” means Schedule D-1, Schedule D-2, Schedule D-3, Schedule D-4 or
Schedule D-5 of this Agreement, as set forth in Schedule B of this Agreement.

        “Settlement” has the meaning given to such term in Section 2.3 of this Agreement.

        “Settlement Agreement” means the Settlement Agreement to be entered into on
December 9, 2009 among the HFA, the GSEs, Treasury and the Closing Agent with respect to
the Settlement.

        “Settlement Date” means December 23, 2009.

        “Settlement Statement” has the meaning given to such term in the Settlement Agreement.

      “State and Local HFAs” has the meaning given to such term in the recitals to this
Agreement.

        “Supplemental Indenture” means the supplemental indenture, resolution and/or appendix
to the Complete Indenture entered into in connection with the issuance of the Program Bonds.

       “Transaction Documents” means this Agreement, the Settlement Agreement, the Program
Bonds, the Complete Indenture (including the Supplemental Indenture) and the Continuing
Disclosure Agreement.

        “Treasury” has the meaning given to such term in the recitals to this Agreement.

       “Treasury’s Financial Agent” means JPMorgan Chase Bank, N.A., as Treasury’s
financial agent or such other party as Treasury may appoint for such purpose from time to time.

                                          ARTICLE 2

                        AGREEMENT TO ISSUE AND EXCHANGE
                      THE PROGRAM BONDS FOR GSE SECURITIES

        2.1     Issue and Exchange. In accordance with, and subject to, the provisions of this
Agreement and the Settlement Agreement, the HFA hereby agrees to issue to the GSEs, free and
clear of any liens, security interests or other encumbrances, the Program Bonds, together with all




DMEAST #12018558 v2                             4
payments of principal and interest from the Program Bonds due on and after the Settlement Date,
in exchange for the issuance by each GSE of the related GSE Securities.

        2.2    Program Bonds. The Program Bonds are to be issued pursuant to the terms of that
certain indenture or resolution identified in Schedule B of this Agreement (the “Indenture”, and
together with the Supplemental Indenture and any other supplements thereto, the “Complete
Indenture”). The Program Bonds are (or will be) secured by single-family or multifamily
mortgage loans or mortgage-backed securities backed by single-family or multifamily mortgage
loans (the “Mortgage Loans”) and such reserves, insurance, permitted investments and other
similar items as are provided in the Complete Indenture.

        2.3     Settlement. The consummation of the issuance and exchange of the GSE
Securities for the Program Bonds, the purchase of the GSE Securities by Treasury, the payment
of the net purchase proceeds to the HFA, the payment of the Initial Securitization Fees and the
GSE Expenses to the GSEs and the other transactions contemplated by this Agreement and the
Settlement Agreement shall occur in accordance with the provisions of the Settlement
Agreement and shall be referred to in this Agreement as the “Settlement.”

       2.4   HFA Acknowledgement. The HFA acknowledges that each GSE undertakes to
perform only those obligations that are set forth in this Agreement and the Settlement
Agreement.

                                         ARTICLE 3

                                      CERTAIN TERMS

      3.1       Initial Securitization Fee and Other Fees. In accordance with the Settlement
Agreement:

               (a)    The HFA shall pay the Initial Securitization Fee to each GSE in an amount
equal to the amount set forth on Schedule A of this Agreement; and

                (b)     The HFA shall pay the GSE Expenses and such other expenses as set forth
in Article 6 of this Agreement.

      3.2     Several and Not Joint Obligations. The respective obligations under this
Agreement of each GSE to the HFA are several and not joint in nature.

                                         ARTICLE 4

                              SETTLEMENT REQUIREMENTS

        The respective obligations of each GSE under this Agreement are subject, in the
discretion of such GSE, to the following settlement requirements:

        4.1   Representations and Warranties. The accuracy of the representations, warranties
and statements of the HFA contained in this Agreement and in the other Transaction Documents.



DMEAST #12018558 v2                            5
       4.2      Performance of Obligations. The HFA shall have obtained all necessary
governmental approvals and performed all of its obligations that are required under this
Agreement (including, without limitation, under Article 5 of this Agreement), the Settlement
Agreement, any authorizing resolution or the other Transaction Documents or that are described
in the Official Statement, and that are to be performed at or prior to the times provided in this
Agreement, the Settlement Agreement or such other documents, as applicable.

       4.3    Pre-Settlement Conditions. The Pre-Settlement Conditions (as defined in the
Settlement Agreement), other than those Pre-Settlement Conditions that are to be satisfied by the
applicable GSE, shall have been met in accordance with the Settlement Agreement.

                                           ARTICLE 5

                                         SETTLEMENT

       The parties hereby agree and acknowledge that, in accordance with and subject to the
provisions of this Agreement and the Settlement Agreement, Settlement will occur as follows:

        5.1     Pre-Settlement Deadlines and Deliverables.

               (a)   December 9, 2009. On or prior to 10:00 AM, local time of the office of
the GSE Special Closing Counsel, on December 9, 2009, the HFA shall deliver or cause to be
delivered to the GSE Special Closing Counsel, in accordance with the instructions set forth on
Schedule A of this Agreement, the following:

               (i)     an original or pdf copy of this Agreement duly executed by the HFA,
        together with a completed Schedule B and Schedule D of this Agreement;

              (ii)    one electronic copy of a completed Schedule B of this Agreement in
        Microsoft Excel format;

              (iii)    an original or pdf copy of the Settlement Agreement, duly executed by the
        HFA; and

                (iv)    one electronic copy (with a hard copy to follow by overnight delivery) of
        the final Official Statement pertaining to the Program Bonds (together with the cover
        page, any supplement thereto and the schedules attached to the Official Statement,
        referred to in this Agreement as the “Official Statement”).

               (b)     December 11, 2009. On or prior to 5:00 PM, New York time, on
December 11, 2009, the HFA (or its special advisor) shall do all things necessary to register the
Program Bonds with the Depository Trust Company (“DTC”) and make the Program Bonds
DTC FAST-eligible, including without limitation: (i) the paying of all required fees, and (ii) the
presenting of all required information into the DTC system, including without limitation,
delivering of the DTC Eligibility Questionnaire, the Letter of Representation by the HFA (or its
special advisor), information related to redemption rights, ratings, or any other data requested by
DTC in the form of a questionnaire or any other form.



DMEAST #12018558 v2                             6
               (c)   December 14, 2009. On or prior to 10:00 AM, local time of the office of
the GSE Special Closing Counsel, on December 14, 2009, the HFA shall deliver or cause to be
delivered to the GSE Special Closing Counsel, in accordance with instructions set forth on
Schedule A of this Agreement, original or pdf copies of each of the items described in Schedule
C of this Agreement.

              (d)    December 21, 2009. On or prior to 1:00 PM, New York time, on
December 21, 2009, the HFA shall settle and release the Program Bonds to the Closing Agent in
accordance with the Settlement Agreement.

        5.2    Settlement. On the Settlement Date, the Settlement shall occur and the
transactions that constitute the Settlement shall be deemed to have occurred concurrently. The
HFA hereby acknowledges and agrees that the occurrence of the Settlement in accordance with
this Agreement and the Settlement Agreement shall constitute conclusive evidence, and the HFA
shall be deemed to have certified, that the requirements set forth in Article 4 have been satisfied
by the HFA.

                                           ARTICLE 6

                                           EXPENSES

        The HFA shall bear its own expenses in connection with the issuance of the Program
Bonds, preparation and execution of this Agreement and all costs associated with the sharing of
information under this Agreement. Subject to the following sentence, on the Settlement Date
and in accordance with the Settlement Agreement, the HFA shall pay each GSE for certain out-
of-pocket costs and expenses incurred by the GSEs in connection with the preparation and
execution of this Agreement and any other documents or agreements relating to the Program
Bonds and in connection with the Settlement, including, without limitation, the fees and
expenses of outside counsel to such GSE (the “GSE Expenses”). In addition, the HFA shall pay
all fees payable to DTC to set up the Program Bonds through the DTC system and as set forth in
more detail on the Settlement Statement to the Settlement Agreement, and all fees associated
with post-Settlement election of the HFA to convert an escrowed Program Bond. Each GSE
shall bear its own expenses in connection with the securitization of the Program Bonds and the
corresponding issuance of the GSE Securities, including, without limitation, the fees and
expenses of outside securitization counsel to such GSE.

                                           ARTICLE 7

                          REPRESENTATIONS AND WARRANTIES

        7.1    Representations and Warranties of the HFA. The HFA makes the following
representations and warranties to each GSE and Treasury as of the date of this Agreement and as
of the Settlement Date:

             (a)    Title. On the Settlement Date, pursuant to and in accordance with this
Agreement and the Settlement Agreement, the Administrator, on behalf of the GSEs, will acquire




DMEAST #12018558 v2                             7
good, unencumbered and marketable title to the Program Bonds. No other party has or will have
any claim to or interest in the Program Bonds.

                (b)     Program Bonds. The Program Bonds have been duly and validly
authorized, and, when executed, issued and authenticated in accordance with the terms of the
Complete Indenture and transferred to the DTC account established by the Administrator on
behalf of the GSEs in accordance with the Settlement Agreement, will be validly issued and
entitled to the benefits of the Complete Indenture. On the Settlement Date, the Program Bonds
will (i) constitute Eligible Bonds, (ii) conform to the description of the Program Bonds in the
Official Statement, and (iii) are in an amount which does not exceed the Allocation Amount
assigned to the HFA by Treasury. The information set forth on Schedule D of this Agreement
with respect to the Program Bonds is true and correct in all respects.

               (c)     Program Bond Information. The HFA acknowledges that the information
set forth on Schedule B of this Agreement with respect to the Program Bonds will be used in the
preparation of the private placement memoranda delivered by the GSEs to Treasury in
connection with the GSE Securities. The information set forth on Schedule B of this Agreement
with respect to the Program Bonds is true and correct in all respects.

                (d)     Official Statement. The information in the Official Statement is true and
correct in all material respects, does not contain any untrue statement of a material fact and does
not fail to state any material fact necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.

                (e)      Organization and Qualification. The HFA is body corporate and politic,
governmental agency, authority or department of the HFA State, duly established and validly
existing under the laws of the HFA State and has, in all material respects, full right, power and
authority to (i) execute this Agreement and any other Transaction Documents to which it is a
party and (ii) deliver, and perform its obligations under, each of the Transaction Documents.

                (f)    Power, Authorization and Enforceability. The (i) execution of this
Agreement and the other Transaction Documents to which it is a party and (ii) delivery of, and
consummation of the transactions contemplated in, each of the Transaction Documents, have
been duly authorized by the HFA, and this Agreement and the other Transaction Documents are
the legal, valid, binding and enforceable obligations of the HFA. All authorizations, consents,
orders, approvals or other actions of any person or of any governmental body or official required
in connection with (i) the execution of this Agreement and the other Transaction Documents to
which the HFA is a party and (ii) the delivery of, and the performance of the transactions
contemplated in, each of the Transaction Documents, have been obtained.

                (g)      No Conflicts and No Violation. The (i) execution of this Agreement and
the other Transaction Documents to which the HFA is a party, and (ii) delivery of, and
performance of the transactions contemplated in, each of the Transaction Documents, will not
conflict with, result in or constitute a breach of or default under any agreement to which the HFA
is a party or by which it or its properties are bound or violate any law or any order, rule or
regulation applicable to the HFA or its assets.




DMEAST #12018558 v2                             8
                (h)     No Proceedings. No litigation or other proceeding of any nature is now
pending or, to the best of its knowledge, threatened against or adversely affecting the HFA
seeking to restrain or enjoin the sale, issuance, execution or delivery of the Program Bonds, or in
any way contesting or affecting the validity or enforceability of the Program Bonds, the
Complete Indenture or the Transaction Documents or any proceedings of the HFA taken with
respect to the sale or issuance of the Program Bonds, or the pledge, collection or application of
any monies or securities provided for the payment of any outstanding bonds issued pursuant to
the Complete Indenture (the “Outstanding Bonds”) and the Program Bonds, or the existence,
powers or operations of the HFA, or contesting the completeness or accuracy of the Official
Statement or any supplement or amendment to the Official Statement, if any.

                (i)   Compliance with the Law. The HFA has complied and will at the
Settlement Date be in compliance in all material respects with all applicable laws, rules and
regulations, as amended from time to time, and the HFA’s By-Laws.

       7.2     All representations and warranties made by the HFA in this Agreement shall
survive the Settlement.

                                           ARTICLE 8

                                  COVENANTS OF THE HFA

       8.1     The HFA hereby covenants to each GSE and Treasury’s Financial Agent that,
from and after the date of this Agreement and for so long as Treasury owns the GSE Securities, it
shall:

                (a)     Advise each such GSE and Treasury’s Financial Agent promptly in
writing (i) prior to the Settlement Date, if any event shall occur, or if the occurrence of an event
becomes known, which would lead the HFA to amend or supplement the Official Statement or
any part of the Official Statement prior to the Settlement Date, and (ii) following the Settlement
Date, if any event shall occur, or if the occurrence of an event becomes known, which would
lead the HFA to amend or supplement the Official Statement or any part of the Official
Statement or to file any notice required under the Continuing Disclosure Agreement following
the Settlement Date;

                (b)     Advise each such GSE and Treasury’s Financial Agent promptly in
writing (i) prior to the Settlement Date, if any event shall occur, or if the occurrence of an event
becomes known, that has caused or will cause the HFA and/or the Program Bonds to fail to
comply in all respects with Schedule D of this Agreement or the Supplemental Indenture prior to
the Settlement Date, and (ii) following the Settlement Date, if any event shall occur, or if the
occurrence of an event becomes known, that has caused or will cause the HFA and/or the
Program Bonds to fail to comply in all respects with Schedule D of this Agreement or the
Supplemental Indenture following the Settlement Date;

             (c)   Cooperate with each GSE, the Administrator and Treasury’s Financial
Agent and provide each GSE, the Administrator and Treasury’s Financial Agent with any




DMEAST #12018558 v2                              9
information reasonably requested by such party regarding the Mortgage Loans, the Complete
Indenture or the Program Bonds; and

             (d)    Advise each GSE, the Administrator and Treasury’s Financial Agent
promptly in writing upon an “event of default” as such term is defined in the Complete
Indenture.

                                           ARTICLE 9

                                REMITTING AND REPORTING

        9.1     Remittances of Payments from Program Bonds. The HFA hereby covenants that,
from and after the date of this Agreement and for so long as Treasury owns the GSE Securities, it
shall cause the HFA Trustee or its paying agent, as applicable, to make all payments of principal
and interest required to be made in respect of the Program Bonds, to be made when due through
the payment systems of DTC.

       9.2      Reporting. The HFA hereby covenants that, from and after the date of this
Agreement and for so long as the Program Bonds are outstanding, it shall cause the HFA Trustee
to provide to the Administrator all reports and disclosure required to be delivered at any time and
from time to time pursuant to the Supplemental Indenture, the Complete Indenture and the other
Transaction Documents, including such reports and disclosure set forth in Schedule E and
Schedule E-1 of this Agreement; provided that the monthly statement with respect to the Escrow
Fund set forth in Section I (Monthly) of Schedule E shall also be provided to Treasury’s
Financial Agent.

                                          ARTICLE 10

                               THE HFA’S SPECIAL ADVISOR

        The HFA agrees to engage, at its sole cost and expense, a dealer or financial advisor as a
special advisor to assist with the transactions contemplated by this Agreement. Subject to the
last sentence of this Article 10, the special advisor shall perform such functions as are
traditionally performed by a dealer or financial advisor in connection with the issuance of the
Program Bonds by the HFA and in a manner so as to assure the timely delivery of the Program
Bonds to the Closing Agent in accordance with the Settlement Agreement, and in connection
with the issuance of any Market Bonds by the applicable Market Bond settlement dates,
including without limitation: (a) assisting in the preparation of the Official Statement, (b) acting
on behalf of the HFA in the execution of procedural matters related to the issuance of the
Program Bonds and any Market Bonds, including, without limitation, facilitating the registration
of the Program Bonds and Market Bonds with DTC, making the Program Bonds DTC FAST-
eligible, the presenting of all requisite information on the DTC system, and assisting in the
standard DTC FAST closing activities, (c) applying for and obtaining CUSIP numbers for the
Program Bonds, and any Market Bonds and the presenting of all requisite information on the
CUSIP system, (d) arranging the book entry delivery to the Closing Agent of the Program Bonds
no later than December 21, 2009, and (e) assisting in the Settlement on the Settlement Date. The




DMEAST #12018558 v2                             10
HFA further agrees that the HFA Trustee shall be a DTC FAST participant. The parties hereto
agree that the HFA’s special advisor will not purchase or otherwise acquire the Program Bonds.

                                           ARTICLE 11

                                      INDEMNIFICATION

        To the extent not otherwise prohibited by the laws of the HFA State, the HFA shall
indemnify and hold Fannie Mae, Freddie Mac, each GSE Trust, Treasury and their respective
officers, directors, employees, agents, successors and assigns harmless from and against any and
all losses, damages, claims, liabilities, judgments and costs, including, without limitation, legal
fees, arising out of or based upon (or actions in respect thereof) (a) any untrue statement or
alleged untrue statement of a material fact in the Official Statement or in any written or oral
information regarding the Program Bonds or the Mortgage Loans obtained by any indemnitee
from the HFA or any of its agents, (b) failure or alleged failure to state any material fact
necessary to make the statements contained in the Official Statement or in any written or oral
information regarding the Program Bonds or the Mortgage Loans obtained by any indemnitee
from the HFA or any of its agents not misleading, (c) any breach by the HFA of any of its
representations or warranties in this Agreement or in any other Transaction Document, (d) any
breach by the HFA of its covenants in this Agreement or in any other Transaction Document,
subject to any applicable cure rights set forth in any Agreement or such Transaction Document,
or (e) the failure by the HFA to consummate the Settlement other than as a result of the breach
by the GSEs and/or Treasury (or Treasury’s Financial Agent) of their respective covenants under
this Agreement and/or the Settlement Agreement. This indemnification shall survive Settlement.

                                           ARTICLE 12

                                       MISCELLANEOUS

        12.1    Reserved.

         12.2 Governing Law. This Agreement shall be governed by, and interpreted in
accordance with, the laws of the United States, not the law of any state or locality, except that the
authority and powers of the HFA shall be governed by and construed in accordance with the laws
of its state. To the extent that a court looks to the laws of any state to determine or define the
laws of the United States, it is the intention of the parties to this Agreement that such court shall
look only to the laws of the State of New York without regard to the rules of conflicts of laws.

        12.3 Notices. All notices, reports, directions, certificates or other communications
under this Agreement shall be sent by e-mail (as a first preference), certified or registered mail,
return receipt requested, or by overnight courier addressed to the appropriate notice address set
forth on Schedule A of this Agreement. Any such notice, direction, certificate or communication
shall be deemed to have been given as of the date of actual delivery or the date of failure to
deliver by reason of refusal to accept delivery or changed address of which no notice was given
pursuant to this Section 12.3. Any of the parties to this Agreement may, by such notice
described above, designate any further or different address to which subsequent notices,
certificates or other communications shall be sent without any requirement of execution of any


DMEAST #12018558 v2                              11
amendment to this Agreement. The notice addresses are set forth on Schedule A of this
Agreement or at such other address or e-mail as the addressee may hereafter specify for the
purpose in a notice to the other parties specifically captioned “Notice of Change of Address.”

       12.4 Severability. Any provision of this Agreement that is determined to be prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions of this
Agreement, and no such prohibition or unenforceability in any jurisdiction shall invalidate such
provision in any other jurisdiction.

        12.5 Third Party Rights. Except as to Treasury and the Administrator, this Agreement
does not confer any rights, benefits, remedies or claims, either at law or in equity, on any person
not a party to this Agreement. Treasury shall be a beneficiary, and entitled to enforce the
provisions, of Article 2, Article 7, Article 8 and Article 11 of this Agreement. The Administrator
shall be a beneficiary, and entitled to enforce the provisions, of Article 9 of this Agreement.

        12.6 Entire Agreement. This Agreement constitutes the entire agreement among the
parties pertaining to the subject matter of this Agreement and supersedes all prior agreements
and understandings pertaining to the subject matter of this Agreement.

        12.7 Successors and Assigns. Neither this Agreement nor any of the rights and
obligations of the HFA under this Agreement may be assigned by the HFA without the prior
written consent of each GSE. The rights of the GSEs under this Agreement shall inure to the
benefit of their respective successors and assigns.

         12.8 No Joint Venture. The execution of this Agreement is not intended to be, nor
shall it be construed to be, the formation of a joint venture or partnership between the parties; nor
shall it be deemed to create any relationship between the parties other than as expressly stated in
this Agreement.

       12.9 Counterparts. This Agreement may be executed in counterparts by the parties;
each counterpart shall be considered an original; and all counterparts shall constitute one and the
same instrument.

        12.10 Amendment. The parties to this Agreement may from time to time amend this
Agreement in writing, and such amendments, when executed by all parties, shall then become a
part of this Agreement.

       12.11 Further Assurances; No Circumvention of Agreement. Each of the parties to this
Agreement agrees to use commercially reasonable efforts to take, or cause to be taken, all actions
and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all
things necessary, proper or advisable to give effect to the transactions contemplated by this
Agreement, and not to take, or cause to be taken, any actions to circumvent its obligations under
this Agreement.

                                          *      *       *




DMEAST #12018558 v2                              12
        IN WITNESS WHEREOF, the parties to this Agreement have executed this Agreement
as of the date first written above.


                                          FEDERAL NATIONAL MORTGAGE
                                          ASSOCIATION


                                          By:
                                          Name:
                                          Title:




                        Fannie Mae Placement Agreement Signature Page
                                             S-1
DMEAST #12018558 v2
        IN WITNESS WHEREOF, the parties to this Agreement have executed this Agreement
as of the date first written above.


                                          FEDERAL HOME LOAN MORTGAGE
                                          CORPORATION


                                          By:
                                          Name:
                                          Title:




                        Freddie Mac Placement Agreement Signature Page
                                             S-2
DMEAST #12018558 v2
        IN WITNESS WHEREOF, the parties to this Agreement have executed this Agreement
as of the date first written above.


                                          TENNESSEE HOUSING DEVELOPMENT
                                          AGENCY


                                          By:
                                          Name:
                                          Title:




                           HFA Placement Agreement Signature Page
                                            S-3
DMEAST #12018558 v2
                                      SCHEDULE A

      SUMMARY INFORMATION, GSE FEES AND EXPENSES, SPECIAL CLOSING
             COUNSEL DELIVERY INSTRUCTIONS AND NOTICES

Summary Information

Name of HFA:                                    Tennessee Housing Development Agency

Name of Program Bonds:                          Tennessee Housing Development Agency
                                                Housing Finance Program Bonds, Issue 2009-
                                                A1 (Non-AMT), Issue 2009-A2 (Non-AMT)
                                                and Issue 2009-B (Taxable)


GSE Fees and GSE Expenses

                                 Fannie Mae                    Freddie Mac
Initial Securitization Fee:      $                             $
GSE Expenses


GSE Special Closing Counsel Delivery Instructions per Section 5.1 of this Agreement

To Ballard Spahr LLP as GSE Special Closing Counsel:

1735 Market Street, 51st Floor
Philadelphia, PA 19103
Attention: Jere G. Thompson

Email: thompson@ballardspahr.com




DMEAST #12018558 v2                           A-1
Instructions for Notices per Section 12.3 of this Agreement

To the HFA:

Tennessee Housing Development Agency
404 James Robertson Parkway
Suite 1200
Nashville, TN 37243-0900
Attention: Ted R. Fellman, Executive Director

Email: tfellman@thda.org

To Fannie Mae:

Fannie Mae
3900 Wisconsin Avenue, N.W.
Washington, D.C. 20016

For all notices, reports, directions, certificates or other communications under this Agreement,
including pursuant to Schedule E:

                Attention:    Paul Van Hook
                              Vice President and
                              Deputy General Counsel
                Email:        paul_vanhook@fanniemae.com

For all notices, reports and other communications pursuant to Article 8 of this Agreement:

                Attention:    Richard Sorkin
                              Vice President, Structured Transactions
                Email:        richard_sorkin@fanniemae.com

For all Required Notices (as defined in Schedule E) pursuant to Schedule E of this Agreement:

                Attention:    Michael A. Shaw
                              Executive Vice President, Enterprise Risk Management
                Email:        michael_a_shaw@fanniemae.com
and
                Attention:    Carl W. Riedy, Jr.
                              Vice President, Public Entities Channel
                Email:        carl_w_riedy@fanniemae.com




DMEAST #12018558 v2                            A-2
For all notices, reports and other communications regarding the release of Escrowed Proceeds
pursuant to Schedule E of this Agreement:

                Attention:    Robert Wright
                              Director Mortgage Operations - Bond Administration
                Email:        robert_wright@fanniemae.com and
                              bond_admin@fanniemae.com
and
                Attention:    Carl W. Riedy, Jr.
                              Vice President, Public Entities Channel
                Email:        carl_w_riedy@fanniemae.com

To Freddie Mac:

Freddie Mac
1551 Park Run Drive
Mail Stop D4F
McLean, Virginia 22102

For all notices, reports, directions, certificates or other communications under this Agreement,
including pursuant to Schedule E:

                Attention:    Mark D. Hanson
                              Vice President Mortgage Funding
                Email:        mark_hanson@freddiemac.com
and
                Attention:    Melinda Reingold
                              Managing Associate General Counsel
                Email:        melinda_reingold@freddiemac.com

For all notices, reports and other communications with respect to Credit Reporting pursuant to
Schedule E of this Agreement:

                Email:        HFA_Credit_Reporting@freddiemac.com

To the Administrator:

For all notices, reports and other communications pursuant to Schedule E of this Agreement:

U.S. Bank National Association
One Federal Street, 3rd Floor
Boston, MA 02110

                Attention:    Structured Finance/HFA Program
                E-mail:       usbhfa@usbank.com




DMEAST #12018558 v2                            A-3
To Treasury’s Financial Agent:

For all notices, reports and other communications with respect to the Escrow Fund pursuant to
Section I (Monthly) of Schedule E of this Agreement:

Care of:
JPMorgan Chase Bank, N.A.
1 Chase Manhattan Plaza, Floor 19

                  Attention:    Lillian G. White
                  Phone - 212-552-2392
                  Fax - 212-552-0551
                  E-mail:       jpm.hfa@jpmorgan.com

with a copy to:

                  E-mail:     Lillian.G.White@jpmorgan.com




DMEAST #12018558 v2                           A-4
                                           SCHEDULE B

                                      PROGRAM BONDS

                                          (SINGLE-FAMILY)

Issuer                                            Tennessee Housing Development Agency
HFA State (“HFA State”)                           Tennessee
Issue/Settlement Date                             December 23, 2009
HFA Total Program Bond Issuance Amount            $360,000,000
HFA Allocation Amount (“Allocation                $360,000,000
Amount”)
HFA Program Bond Name                             Tennessee Housing Development Agency
                                                  Housing Finance Program Bonds, Issue 2009-
                                                  A2 (Non-AMT)
HFA Indenture Name                                General Housing Finance Bond Resolution
HFA Underlying Series
HFA Special Advisor
HFA Trustee (“HFA Trustee”)                       U.S. Bank National Association
HFA Bond Counsel                                  Kutak Rock LLP

                                                      Original     Original           Initial
                                                        Issue      Issue Par       Escrow Bond
                                                      Premium        Bond
                                                        Bond
CUSIP Number
Principal Balance at Issue Date
Initial Index Rate
Initial Interest Rate Spread (“Spread”)
Initial Interest Rate
Tax Status (Taxable, Tax-exempt)
Payment Dates
1st Payment Date
Payment Frequency
Final Maturity Date
Sinking Fund (Yes/No)
HFA Program Bond Rating
Rating Agency                                     Moody’s
Applicable Schedule D                             Schedule D-2




DMEAST #12018558 v2                             B-1
                                         SCHEDULE C

                                SETTLEMENT DELIVERABLES

       Enumerated below are the documents to be delivered pursuant to Section 5.1(c) of this
Agreement, in form and substance acceptable to the GSE Special Closing Counsel. Such
documents must be delivered no later than 10:00 am (local time of the office of the GSE Special
Closing Counsel), December 14, 2009.

      1.1    Program Bonds. A copy of the fully authorized, executed and authenticated
Program Bond, dated on or before December 21, 2009.

        1.2     Indenture.

               (a)     A certified copy of the Complete Indenture, dated on or before December
        21, 2009, pursuant to which the Program Bonds are to be issued.

               (b)     A certificate of an authorized officer of the HFA, dated December 23,
        2009, that the Complete Indenture has not been amended, modified, supplemented or
        repealed and is in full force and effect, except with respect to any supplemental
        indentures relating to prior bonds issued under the Complete Indenture.

        1.3    Rating Letters. A letter or letters evidencing a minimum long-term credit rating
on the Outstanding Bonds and the Program Bonds from Fitch, Inc., Moody’s Investors Service,
Inc. and/or Standard & Poor’s Ratings Services as set forth on Schedule D of this Agreement.

        1.4     Supplemental Opinion.

                (a)     A supplemental opinion of counsel to the HFA, dated December 23, 2009,
        to the effect that:

                       (i)     the HFA has the full legal right, power and authority to (1) execute
                               this Agreement and the other Transaction Documents to which it is
                               a party, and (2) deliver, and perform the terms of the transactions
                               contemplated by, each of the Transaction Documents;

                       (ii)    this Agreement and the other Transaction Documents to which it is
                               a party have been duly executed by the HFA, each of the
                               Transaction Documents have been duly authorized and delivered
                               by the HFA, and each of the Transaction Documents constitutes
                               the legal, valid and binding obligation of the HFA enforceable
                               against the HFA in accordance with their terms;

                       (iii)   the HFA has duly approved the Official Statement with respect to
                               the Program Bonds;

                       (iv)    nothing has come to the attention of counsel that causes them to
                               believe that the Official Statement (except with respect to (i) the


DMEAST #12018558 v2                            C-1
                              financial statements, (ii) any financial, statistical or economic data
                              or forecasts, and projections, assumptions and expressions of
                              opinion, (iii) information as to DTC and its book-entry system and
                              (iv) the information typically covered by any other opinion of
                              counsel delivered in connection with this Schedule C) contains any
                              untrue statement of a material fact or omits to state any material
                              fact necessary to make the statements therein, in light of the
                              circumstances in which they were made, not misleading;

                      (v)     the Program Bonds are not subject to the registration requirements
                              of the Securities Act of 1933, as amended; and

                      (vi)    the Complete Indenture is exempt from qualification under the
                              Trust Indenture Act of 1939, as amended.

              (b)     A letter from counsel to the HFA, dated December 23, 2009, addressed to
        the GSEs stating that the GSEs may rely on such opinion as though it was addressed to
        them.

        1.5     HFA Counsel’s Opinion.

                (a)   An opinion of counsel to the HFA, dated December 23, 2009, to the effect
        that:

                      (i)     the HFA is a body corporate and politic or governmental agency of
                              the HFA State, duly organized and validly existing under the laws
                              of the HFA State with full legal right, power and authority to adopt
                              the Complete Indenture, to issue the Program Bonds, to carry out
                              the transactions as contemplated by the Official Statement and the
                              program documents relating to the Program Bonds and the
                              Outstanding Bonds including, but not limited to, acquiring
                              mortgage loans pursuant to the relevant origination agreements, to
                              pledge the trust estate under the Complete Indenture, and to enter
                              into this Agreement and the other Transaction Documents;

                      (ii)    the (1) execution of this Agreement and the other Transaction
                              Documents to which the HFA is a party, and (2) delivery, and
                              compliance with the provisions, of each of the Transaction
                              Documents, under the circumstances contemplated thereby, do not
                              and will not, in any material respect, conflict or constitute on the
                              part of the HFA a breach or default under any agreement or other
                              instrument to which the HFA is a party or by which it is bound, or
                              by law, regulation, rule, order or decree to which the HFA is
                              subject, or any by-laws, rules or regulations of the HFA;

                      (iii)   all consents, approvals and authorizations required for the
                              authorization, execution, issuance and delivery of the Program
                              Bonds and to carry out the transactions contemplated by the


DMEAST #12018558 v2                            C-2
                              Official Statement and the Transaction Documents have been
                              obtained; and

                       (iv)   no litigation or other proceeding of any nature is now pending or,
                              to the best of its knowledge, threatened against or adversely
                              affecting the HFA seeking to restrain or enjoin the sale, issuance,
                              execution or delivery of the Program Bonds, or in any way
                              contesting or affecting the validity or enforceability of the Program
                              Bonds, the Complete Indenture or the other Transaction
                              Documents or any proceedings of the HFA taken with respect to
                              the sale or issuance of the Program Bonds, or the pledge, collection
                              or application of any monies or securities provided for the payment
                              of the Outstanding Bonds pursuant to the Complete Indenture, the
                              Supplemental Indenture and/or the Program Bonds, or the
                              existence, powers or operations of the HFA, or contesting the
                              completeness or accuracy of the Official Statement or any
                              supplement or amendment thereto, if any.

              (b)     A letter from the HFA’s counsel, dated December 23, 2009, addressed to
        the GSEs stating that the GSEs may rely on such opinion as though it was addressed to
        them.

        1.6    Bond Counsel’s Opinion. The approving opinion of bond counsel, dated
December 23, 2009, with respect to the Program Bonds substantially in the form attached to the
Official Statement as an appendix, and a letter addressed to the GSEs stating that the GSEs may
rely on such opinion as though it was addressed to them.

     1.7     HFA Certificate. A certificate of an authorized officer of the HFA, dated
December 23, 2009, to the effect that:

               (a)    the representations and warranties of the HFA contained in Section 7.1 of
        this Agreement are true and correct;

               (b)    the HFA has complied with all the agreements and satisfied all the
        conditions on its part to be performed or satisfied in connection with the sale and
        issuance of the Program Bonds and the transactions contemplated by the Official
        Statement and the Transaction Documents;

                (c)    there have been no material adverse changes in the financial position,
        results of operations or financial condition of the HFA, other than as described in the
        Official Statement, since the last day of the fiscal year covered by the audited financial
        statements included in the Official Statement; and

                (d)    since the date of the Official Statement, no event has occurred which is
        necessary to be disclosed in the Official Statement and no event contemplated by the
        Official Statement has failed to occur that should be disclosed in the Official Statement
        for the purpose for which it is to be used, in order to make the statements and information
        therein not misleading in any material respect.


DMEAST #12018558 v2                            C-3
       1.8     HFA Incumbency and Signature Certificate. A certificate of the secretary and an
authorized officer of the HFA, dated December 23, 2009, certifying as to the incumbency of the
HFA officer executing the Transaction Documents and any other applicable documents and as to
the genuineness of such officer’s signature.

        1.9     HFA Trustee Opinion/Certificate.

                (a)     An opinion of counsel to the HFA Trustee or a certificate of an authorized
        officer of the HFA Trustee, dated December 23, 2009, to the effect that:

                       (i)     the HFA Trustee has full legal right, power and authority to
                               execute, deliver and perform the terms of the Continuing
                               Disclosure Agreement (as applicable) and the other Transaction
                               Documents to which it is a party or by which it is bound;

                       (ii)    the Continuing Disclosure Agreement (as applicable) and the other
                               Transaction Documents to which it is a party or by which it is
                               bound have been duly authorized, executed and delivered by the
                               HFA Trustee, and constitute legal, valid and binding obligations of
                               the HFA Trustee enforceable against the HFA Trustee in
                               accordance with their terms;

                       (iii)   the HFA Trustee has duly authenticated the Program Bonds; and

                       (iv)    the HFA Trustee is authorized and qualified to accept the trusts
                               imposed by the Complete Indenture, and to accept the duties and
                               obligations conferred on the HFA Trustee by the Complete
                               Indenture.

               (b)     A letter from counsel to the HFA Trustee, dated December 23, 2009, if
        applicable, addressed to the GSEs stating that the GSEs may rely on such opinion as
        though it was addressed to them.

        1.10 HFA Trustee Incumbency and Signature Certificate. A certificate of the secretary
or assistant secretary and an authorized officer of the HFA Trustee, dated December 23, 2009,
certifying as to the incumbency of the HFA Trustee officer executing the Complete Indenture (as
applicable), the Continuing Disclosure Agreement (as applicable) and any other applicable
documents and as to the genuineness of such officer’s signature.

      1.11 Consent/Procedures Letter. A consent letter and/or a procedures letter from the
HFA’s certified public accountants, dated as of the date of the Official Statement, but only if
customarily received by the HFA in connection with a new issue of bonds.

       1.12 Continuing Disclosure Agreement. An executed copy of the continuing
disclosure agreement (the “Continuing Disclosure Agreement”), dated on or before December
23, 2009, between the HFA and the HFA Trustee (as applicable) delivered in connection with
Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended.



DMEAST #12018558 v2                            C-4
        1.13 Additional Documentation. Such additional legal opinions, certificates and other
documents as the GSE Special Closing Counsel may reasonably request in connection with the
transactions contemplated by this Agreement.




DMEAST #12018558 v2                         C-5
                                        SCHEDULE D-2

                            DESCRIPTION OF PROGRAM BONDS
                         (SINGLE FAMILY-IMMEDIATE FUNDING)

       Terms capitalized in this Schedule D-2 and not defined in Article 1 of this Agreement
will have the meaning assigned to such terms in the Complete Indenture.

       In order to qualify as Eligible Bonds under the New Issue Bond Program, the Program
Bonds, the related Complete Indenture and the HFA must satisfy the following requirements:

        1.    Tax-exempt Status: The HFA hereby covenants that, at issuance, the Program
Bonds will be tax-exempt qualified mortgage bonds within the meaning of Section 143 of the
Internal Revenue Code of 1986.

       2.      [Premium Bonds. The amount to be paid by Treasury for the GSE Securities
backed by the Program Bonds and which is allocable to the Program Bonds (before the netting
out of any fees or expenses) is equal to the stated principal of the Program Bonds; that is, no
portion of the Program Bonds were issued at a premium.. If the Program Bonds do not satisfy
the requirements of the following sentence (i.e., a portion of the Program Bonds are Premium
Bonds), then the Premium Bonds must satisfy the following criteria:

        (a)   The aggregate original stated principal amount of the Premium Bonds is
$____________ (“Premium Bond Amount”). The aggregate original stated principal amount of
all Program Bonds is $_______________ (“Total Amount”). The Premium Bond Amount does
not exceed twenty percent (20%) of the Total Amount.

         (b)    The premium is no greater than 103%.

       (c)     The premium and the related interest rate were certified to the HFA by Treasury’s
Agent, State Street Global Advisors.

        (d)     The Complete Indenture provides that use of the proceeds of the premium are
restricted to making supplemental loans to borrowers for down payment assistance.]

         3.     Term: The Program Bonds are stated to mature on a maturity date that is:

         (a)    not less than ten (10) years after the date of issuance of the Program Bonds; and

         (b)    not more than thirty-two (32) years from the date of issuance of the Program
Bonds.

      4.      Sinking Fund: The Program Bonds are subject to mandatory sinking fund
redemptions. The sinking fund redemption schedule is contained in the Complete Indenture.
The HFA hereby certifies that such schedule takes into account anticipated underlying mortgage
loan amortization, and standard and customary practices of the HFA in connection with
combined serial bond and term bond issuances.



DMEAST #12018558 v2                            D-2-1
        5.     Market Bond Ratio Requirement: At issuance, the HFA must reasonably
expect to issue and sell to persons other than Treasury, in conjunction with the issuance and
subsequent conversion to a permanent rate of the Program Bonds, bonds that are not Program
Bonds but which are issued out of the same indenture and the proceeds of which are intended to
be used in the HFA’s single-family loan program (“Market Bonds”). The HFA intends to issue
Market Bonds after the Settlement Date and before January 1, 2011 so that after such issuances,
the principal amount of the Market Bonds will be not more than two-thirds (2/3) of the principal
amount of the Program Bonds (“Market Bond Ratio Requirement”).

        6.     Certain Terms Applicable to Market Bonds: The HFA hereby certifies that the
Market Bonds were not sold with “super sinker”, planned amortization classes or other priority
allocation class rights unless such provisions retained for application to the redemption of the
Program Bonds at least a pro rata portion of any prepayments or other recoveries of principal
relative to mortgage loans funded or mortgage-backed securities purchased with proceeds of the
Program Bonds.

       7.    Minimum Rating: The Program Bonds have a long-term rating of not less than
‘Baa3’/ ‘BBB-’.

        8.      Interest Rate: The Complete Indenture provides that the Program Bonds will
bear interest at ______ percent (__%) per annum. The rate is made up of the sum of (i) _____
percent (__%) per annum, the index rate certified to the HFA by Treasury’s agent, State Street
Global Advisors, and (ii) a Spread of ___ bps based on the long-term rating described in Section
7 above. Interest shall be payable on each Interest Payment Date.

        9.      Use of Proceeds:

        (a)    The Complete Indenture provides that, except as set forth in (b) and (c) below, the
proceeds of the Program Bonds must be used only (i) to acquire and finance the holding of
single-family loans or single-family mortgage-backed securities which are either newly
originated or refinanced, so long as all such loans are eligible to be financed on a tax-exempt
basis under applicable federal income tax law (“eligible loans”) or (ii) to fund reasonably
required reserves and pay costs of issuance of the Program Bonds in accordance with the
requirements and limitations of applicable federal tax law.

        (b)     Proceeds of the Program Bonds may be used to refund, as fixed rate bonds,
certain of the HFA’s variable rate debt (including auction rate securities) issued and outstanding
prior to October 19, 2009 or refund an issue that did so, so long as such debt was, in turn, issued
to acquire and finance the holding of eligible loans. The use of Program Bond proceeds for such
a purpose is limited to thirty percent (30%) of the net proceeds of the Program Bonds, provided,
however, that the restrictions on refundings in this subparagraph (b) shall not apply to either (i)
the repayment of “warehouse credit lines” used to acquire mortgage loans and mortgage backed
securities or (ii) “replacement refundings” where proceeds of Program Bonds are exchanged
dollar-for-dollar for unexpended tax exempt bond proceeds and/or mortgage loan prepayments
so long as all proceeds of related Market Bonds are exchanged first for such purpose.




DMEAST #12018558 v2                           D-2-2
      (c)     Proceeds of the Program Bonds representing original issuance premium, if any
(“Premium Bonds”), may be used to make supplemental loans to underlying borrowers for down
payment assistance.

        10.     Issuance Limitation: The HFA hereby certifies that the sum of:

        (a)     the face amount of the Program Bonds; and

      (b)   the face amount of the Market Bonds issued at the time of issuance of the
Program Bonds;

      does not exceed the reasonable expectations requirement applicable to tax-exempt
mortgage revenue bonds.

     The principal amount of the Program Bonds does not exceed the amount allocated to the
HFA under the Single-Family New Issue Bond Program.

        11.     Redemption: The Complete Indenture provides that:

        (a)   The Program Bonds are redeemable in whole or in part (in minimum
denominations of $10,000 and integral multiples of $10,000 in excess thereof). Redemptions of
Program Bonds may be made without premium or penalty; provided, however, that with respect
to the Premium Bonds:

                        (i)     the redemption price for the Premium Bonds has been adjusted for
                any unamortized premium as set forth in a fixed redemption price schedule
                affixed to the Complete Indenture; and

                       (ii)    special redemptions related to prepayments and recoveries of
                principal on underlying mortgage loans may be made at par.

        (b)    Except as limited by tax law requirements, all proceeds of the Program Bonds, to
the extent not used to acquire mortgage loans or mortgage backed securities, refund outstanding
bond issues as permitted by the Complete Indenture, pay Program Bond issuance expenses, fund
downpayment assistance loans (from and to the extent of the premium) or fund related reserve
accounts, must be applied exclusively to the redemption of Program Bonds.

        (c)     Except as limited by tax law requirements, a pro rata portion of all principal
payments, principal prepayments and other recoveries of principal received with respect to the
mortgage loans or mortgage backed securities financed with the proceeds of the Program Bonds
must be applied to the redemption of the Program Bonds, to the extent not used to pay scheduled
principal, interest, or sinking fund redemptions on Program Bonds, Market Bonds or other bonds
issued and secured by the Trust Estate on a parity with the Program Bonds.




DMEAST #12018558 v2                          D-2-3
        12.    No Recycling: The Complete Indenture provides that all principal payments,
principal prepayments and other recoveries of principal received with respect to the mortgage
loans financed with the proceeds of the Program Bonds may not be recycled into new mortgage
loans or MBS.

       13.    Selected Covenants: The Complete Indenture includes, without limitation, the
following covenants:

        (a)    The HFA shall take all steps necessary to assure that all assets and revenues of
any description pledged to the payment of the Program Bonds and all other bonds issued under
the Complete Indenture shall be applied strictly in accordance with, and solely for the purposes
and in the amounts specified and permitted by, the terms of the Complete Indenture.

       (b)     The HFA shall not issue new bonds under the Complete Indenture in a variable
rate demand, adjustable rate or auction rate mode, other than Program Bonds with Escrowed
Proceeds at the Variable Rate and Construction Program Bonds.

       (c)    With respect to the purchase, origination, enforcement and servicing of mortgage
loans and mortgage backed securities (“MBS”), the HFA shall:

                        (i)    originate or cause to be originated, and, if applicable, purchased,
                mortgage loans and purchase, or cause to be purchased, MBS in a manner
                consistent with applicable state law, the Complete Indenture and any supplements
                thereto, and such other related documents by which the HFA is bound;

                       (ii)  cause all mortgage loans to be serviced pursuant to the servicing
                requirements of the HFA, GNMA, FHA, Fannie Mae and Freddie Mac, as
                applicable;

                        (iii) except as otherwise permitted by Treasury or the GSEs, diligently
                take all steps necessary or desirable to enforce all terms of the mortgage loans,
                MBS, loan program documents and all such other documents evidencing
                obligations to the HFA; and

                        (iv)   diligently take all actions consistent with sound mortgage loan
                origination, purchase and servicing practices and principles as may be necessary
                to receive and collect sufficient revenues to pay debt service when due on the
                Program Bonds.

       (d)     The HFA shall not issue any bonds senior in priority to the Program Bonds and
the HFA hereby represents and warrants that the Program Bonds are at least equal in priority
with respect to payment and security to the most senior Outstanding Bonds under the Complete
Indenture.




DMEAST #12018558 v2                           D-2-4
                                                          SCHEDULE E
                                                            REPORTING

Terms capitalized in this Schedule E will have the meanings assigned to such terms in Section VI
of this Schedule E.
Remittance Reports

The information set forth in the table below should be delivered via email in Microsoft Excel.
HFA TRUSTEE SETUP DATA FILE FOR (DUE NO LATER THAN 2 DAYS AFTER SIGNING THE PLACEMENT AGREEMENT/
2 DAYS AFTER A CONVERSION OF ESCROWED PROCEEDS)

FIELD NAME                    DATATYPE        NOTE
CUSIP                         TEXT            CUSIP
HFA NAME                      TEXT            NAME OF HFA
HFA STATE                     TEXT            STATE HFA LOCATED IN
HFA LOCAL                     TEXT            NAME OF MUNICIPALITY
HFA TRUSTEE                   TEXT            NAME OF HFA TRUSTEE
DATE ENTERED PRGM             DATE            FORMAT: MM/DD/YYYY
SERIES                        TEXT            SERIES NAME
CLASS                         TEXT            CLASS CODE FOR SECURITY
DISTRIBUTION DATE             NUMBER          DAY OF THE MONTH BOND PAYS
ORIGINAL BALANCE              NUMBER          ORIGINAL BALANCE OF BOND
ORIGINAL COUPON               NUMBER <= 1     BONDS ORIGINAL INTEREST RATE AT ISSUANCE (OR RELEASE DATE IF ESCROW CONVERSION)
ORIGINAL RESET COUPON         NUMBER <= 1     BONDS ORIGINAL INTEREST RATE ON RESET DATE
SPREAD                        NUMBER <= 1     BONDS COUPON SPREAD
RATING                        TEXT            S&P and Moody's rating - (eg AAA / Aaa)
RESET DATE                    DATE            FOR ESCROWED PROCEEDS CONVERSION, THE RESET DATE
FIRST PAYMENT DATE            DATE            BONDS FIRST PAYMENT DATE
FINAL PAYMENT DATE            DATE            BONDS FINAL OR MATURITY DATE
PAYMENT FREQUENCY             NUMBER          FREQUENCY OF BOND PAYMENTS - SEE CODES BELOW
COLLATERAL TYPE               TEXT            VALUES: MF / SF
MF COLLATERAL TYPE            TEXT            IF MF, THEN CONSTRUCTION OR NON-CONSTRUCTION
ORIGINAL CUSIP                TEXT            RELATES BOND TO CONVERSION BONDS ESCROWED PROCEEDS CUSIP (N/A OTHERWISE)
SECURITY STATUS               NUMBER          TYPE OF BOND - SEE CODES BELOW


HFA TRUSTEE MONTHLY DATA FILE FOR NIBP (DUE NO LATER THAN THE PAYMENT DATE FOR THE HFA BOND EACH MONTH)

FIELD NAME                    DATATYPE        NOTE
CUSIP                         TEXT            CUSIP
PAYMENT DATE                  DATE            SCHEDULED (not actual) PAYMENT DATE
PERIOD BEGINNING BALANCE      NUMBER          AMOUNT OUTSTANDING AT START OF PERIOD
PERIOD ENDING BALANCE         NUMBER          AMOUNT OUTSTANDING AT END OF PERIOD
SCHEDULED PRINCIPAL           NUMBER          AMOUNT OF SCHEDULED PAYMENT OF PRINCIPAL MADE DURING MONTH (IE SINKING FUND PMT)
UNSCHEDULED PRINCIPAL         NUMBER          AMOUNT OF UNSCHEDULED PAYMENT OF PRINCIPAL MADE DURING MONTH (IE OPTIONAL REDEMPTIONS)
LOSSES                        NUMBER          AMOUNT OF SCHEDULED PAYMENT OF PRINCIPAL OWED BUT NOT MADE DURING MONTH
INTEREST PAID                 NUMBER          AMOUNT OF INTEREST PAYMENT
CURRENT COUPON                NUMBER <= 1     INTEREST RATE ON THE BOND FOR CURRENT PAYMENT
CONVERTED AMOUNT              NUMBER          IF ESCROWED BOND, AMOUNT CONVERTED DURING PERIOD
ORIGINAL CUSIP                TEXT            RELATES BOND TO CONVERSION BONDS ESCROWED PROCEEDS CUSIP
NEXT COUPON                   NUMBER <= 1     INTEREST RATE ON THE BOND FOR NEXT PAYMENT

PAYMENT FREQUENCY
INTEGER CODE                  MEANING
                            0 UNKNOWN
                            1 DAILY
                            2 WEEKLY
                            3 MONTHLY
                            4 SEMI-MONTHLY
                            5 BI-MONTHLY
                            6 QUARTERLY
                            7 SEMI-ANNUALLY
                            8 ANNUALLY
                            9 AT MATURITY

SECURITY STATUS
INTEGER CODE                  MEANING
                           13 PREMIUM BOND
                           14 PAR BOND
                           15 ESCROW BOND




DMEAST #12018558 v2                                                   E-1
Credit Reports

The information summarized below shall be delivered in accordance with the Complete
Indenture.

I. Monthly:

For Escrow Fund:

Beginning on the date that is within 2 Business Days of the Settlement Date and thereafter on a
monthly basis, a statement setting forth:

- The amount of the Escrow Fund
- All Permitted Escrow Investments and each of the amounts thereof
- All income and gain realized from each of the Permitted Escrow Investments

Required for Multifamily Only:

-   Loan level delinquency reports
-   List of loans in special servicing including loss severity estimates
-   HFA loan level Watchlist
-   Written confirmation that all the loans are in compliance with all material terms and
    conditions of the loan documents

II. Quarterly:

- In accordance with Schedule E-1 attached hereto

- In accordance with the Complete Indenture, the most recent unaudited HFA financial
  statements, which shall include: a balance sheet; a statement of operations; a statement of
  cash flows; a statement of the changes in net assets of the HFA; and a certificate of the HFA
  setting forth a description in reasonable detail of the amounts held in the revenue fund and
  other accounts under the Complete Indenture

- As applicable, in accordance with the Complete Indenture:
  o Most recent unaudited Complete Indenture financial statements
  o Most recent quarterly or other periodic HFA disclosure statements
  o Notice of any changes in financial or investment policies*
  o Notice of any changes in counterparty exposures including derivative contracts and
     investment agreements*
  o Notice of any counterparty changes; derivative, investment agreement and letter of credit
     providers*
  o Notice of any changes to the Complete Indenture*
  o List of liquidity providers (names, amount of facility, term of facility and maturity date)


* This is a Required Notice.


DMEAST #12018558 v2                            E-2
    o A certificate of the HFA stating that the HFA is in compliance with all financial
      covenants in the Complete Indenture
    o A certificate of the HFA listing all known defaults/remedies under the Complete
      Indenture, the details thereof and the action the HFA is taking or proposes to take

Required for Multifamily Only:

-   Property level operating statements
-   List of all post purchase borrower requests and HFA’s decisions
-   List of all assumptions including HFA’s credit approval
-   Remarketing schedule for bonds

III. Annually:

- As applicable, in accordance with the Complete Indenture:
  o Most recent audited HFA financial statements
  o Most recent audited Complete Indenture financial statements
  o Most recent HFA annual budget
  o A copy of the most recent rating letter received relating to the HFA Program Bond rating
  o A certificate of the HFA stating that the HFA is in compliance with all financial
     covenants set forth in the Complete Indenture
  o Copies of cash-flow certificates per Complete Indenture when available
  o Copies of any annual filing that would be required to be filed if Rule 15c2-12 were
     applicable to the Program Bonds or any other bonds under the Complete Indenture

- Certificate of the HFA setting forth a description in reasonable detail of the amounts held in
  the revenue fund and other accounts under the Complete Indenture

Required for Multifamily Only:

- Property level inspection reports
- Property level annual budgets and rent rolls

IV. Immediately upon occurrence:

- Notice of any issuance of Market Bonds that will require Escrowed Proceeds (as defined
  below) to be released from Escrow (as defined below) (can occur up to 3 times in 2010).
  Such notice must include:
  o Release Date (as defined below) for Escrowed Proceeds
  o Permanent Rate Calculation Date (as defined below) for Escrowed Proceeds
  o Amount of Market Bonds issued
  o Amount of Escrowed Proceeds released from Escrow
  o New CUSIP for released Escrowed Proceeds
  o Interest rate as of the Release Date
  o Interest rate as of the Permanent Rate Calculation Date
- Copies of cash-flow certificates



DMEAST #12018558 v2                            E-3
- Notice of any extraordinary payment or transfer of funds from the Complete Indenture*
- Any rating report or other rating action which are received by the HFA relative to the HFA,
  the Program Bonds or any other bonds issued under the Complete Indenture*
- Notice of any conversion of Program Bonds from taxable to tax-exempt
- A certificate of the HFA setting forth the occurrence of any default or event of default under
  the Complete Indenture, the details thereof and the action which the HFA is taking or
  proposing to take*
- Notice by the HFA of the occurrence of any material event of default by any counterparty to
  a related document under the Complete Indenture*
- Copies of all notices of resignation by or removal of the HFA Trustee, the remarketing agent
  or the tender agent which are received or given by the HFA*
- Copies of any amendments to the Complete Indenture, any of the other related documents
  (including replacement of or any new related document) and the Official Statement
- Notice of any extraordinary payment or transfer of funds from the Complete Indenture
- Any material event filing that would be required to be immediately filed if Rule 15c2-12
  were applicable to the Program Bonds or any other bonds under the Complete Indenture*
- Copies of any information or request for information concerning this Agreement or any of
  the related documents as and when provided to the HFA Trustee
- Copies of any disclosure documents distributed in connection with any public issuance of
  indebtedness of the HFA payable from the revenues under the Complete Indenture
- Certificate of the HFA setting forth a description in reasonable detail of the amounts held in
  the revenue fund and other accounts under the Complete Indenture
- Notice of any variable rate bonds failed remarketing*
- Notice of any delinquencies relating to payment due under the Complete Indenture*
- Notice of any unscheduled draws on debt service reserves
- Notice of any unscheduled draws on credit enhancements
- Notice of any modification to rights of security holders*
- Notice of any bond calls*
- Notice of any defeasances*
- Notice of any release, substitution or sale of property securing repayment of the securities*
- Hedge information for variable rate bonds including expiration date and replacement hedge
  information
- Upon each new bond issuance, provide a rating confirmation of the Outstanding Bonds,
  including the Program Bonds

Required for Multifamily Only:

- Notice of any loan monetary or non-monetary defaults*

V. At the request of a GSE:

- The HFA shall provide to the GSE, in a timely manner, any data or information for use by a
  GSE in calculating performance under the Federal Housing Finance Agency’s housing goal
  regulations or for use in complying with any other regulatory or legal requirement
- Such other information as a GSE may from time to time reasonably request

* This is a Required Notice.


DMEAST #12018558 v2                           E-4
VI. Definitions

Terms used in this Schedule E and not defined below will have the meanings assigned to such
terms in Article 1 of this Agreement.

- “Escrow” means the escrow in which the Escrowed Proceeds are set aside pending the
  delayed issuance of Market Bonds in connection with the Market Bond Ratio Requirement
  (as defined below), all in accordance with the Supplemental Indenture.
- “Escrowed Proceeds” means the portion of the proceeds of the Pre-Conversion Bonds that,
  together with a short-fall amount, must be set aside pending the related Release Date.
- “Market Bond Ratio Requirement” means the requirement under the Supplemental Indenture,
  other than for “small issue” Program Bonds and multifamily Program Bonds, that the HFA
  issue and deliver Market Bonds in conjunction with the Settlement Date and as a condition to
  each Release Date, the principal amount of such Market Bonds being not less than two-thirds
  (2/3) of the principal amount of the Pre-Conversion Bonds the proceeds of which are
  proposed to be released on such Release Date.
- “Permanent Rate Calculation Date” means any date on which the permanent rate is
  calculated with respect to all or a portion of the Program Bonds on a date selected by the
  HFA and acceptable to the GSEs, all in accordance with the Supplemental Indenture.
- “Pre-Conversion Bonds” means Program Bonds for which the interest rate has not been the
  subject of a conversion.
- “Release Date” means the date or dates which are acceptable to the GSEs, on which dates the
  proceeds of the related Market Bonds are delivered to the HFA Trustee, all in accordance
  with the Supplemental Indenture.
- “Required Notices” means each of the following:

    Quarterly:

    o Notice of any changes in financial or investment policies
    o Notice of any changes in counterparty exposures including derivative contracts and
      investment agreements
    o Notice of any counterparty changes; derivative, investment agreement and letter of credit
      providers
    o Notice of any changes to the Complete Indenture

    Immediately upon occurrence:

    o Notice of any extraordinary payment or transfer of funds from the Complete Indenture
    o Any rating report or other rating action which are received by the HFA relative to the
      HFA, the Program Bonds or any other bonds issued under the Complete Indenture
    o A certificate of the HFA setting forth the occurrence of any default or event of default
      under the Complete Indenture, the details thereof and the action which the HFA is taking
      or proposing to take
    o Notice by the HFA of the occurrence of any material event of default by any counterparty
      to a related document under the Complete Indenture



DMEAST #12018558 v2                           E-5
    o Copies of all notices of resignation by or removal of the HFA Trustee, the remarketing
      agent or the tender agent which are received or given by the HFA
    o Any material event filing that would be required to be immediately filed if Rule 15c2-12
      were applicable to the Program Bonds or any other bonds under the Complete Indenture
    o Notice of any variable rate bonds failed remarketing
    o Notice of any delinquencies relating to payment due under the Complete Indenture
    o Notice of any modification to rights of security holders
    o Notice of any bond calls
    o Notice of any defeasances
    o Notice of any release, substitution or sale of property securing repayment of the securities
    o Notice of any loan monetary or non-monetary defaults (Required for Multifamily Only)




DMEAST #12018558 v2                            E-6
                                                                       SCHEDULE E-1

                           QUARTERLY PORTFOLIO PERFORMANCE INFORMATION

The information set forth in the table below should be delivered via email in Microsoft Excel.


Overall Population Unpaid Principal Balance ($

Current Loans (Loans with No Delinquency Status This Month)                             Delinquent Loans (Any Loan Past Due This Month)

Current Loans Unpaid Principal Balance ($m):                                            Delinquent Loans Unpaid Principal Balanc

                                                                                                                                            % With
                                          Share of     % With Primary                                                     Share of         Primary
                                          Current        Mortgage     % With FHA                                         Delinquent       Mortgage      % With FHA
Vintage (Year Originated)                  Book*        Insurance**    or VA***         Vintage (Year Originated)          Book           Insurance       or VA
Pre-2000                                                                                Pre-2000
2001                                                                                    2001
2002                                                                                    2002
2003                                                                                    2003
2004                                                                                    2004
2005                                                                                    2005
2006                                                                                    2006
2007                                                                                    2007
2008                                                                                    2008
2009                    g                                g                  g           2009                    g       q                           g
sums to 100%                                                                            vintage. Column sums to 100%
** Percent of loans within the vintage that has Primary Mortgage Insurance.             ** Percent of loans within the vintage that has Primary Mortgage Insurance.
*** % of loans in each vintage that has Government Insurance.                           *** % of loans in each vintage that has Government Insurance.

                                          Share of                                                                     Share of
Count of Missed Payments in               Current                                                                     Delinquent
Past 12 Month*                             Book**                                       Delinquency Status              Book*
None                                                                                    30
1                                                                                       60
2                                                                                       90
3                                                                                       120
>3                                                                                      > 120
* In the past 12 months, any missed payment is counted once                               Foreclosure
regardless if they are continuously missed or sporadically missed.                        Bankruptcuy
** % of Outstanding Balance of Current Loans. Sums to 100%.                               REO
                                                                                        * % of Outstanding Balance of Delinquent Loans. Sums to 100%.

                                                                                        Cumulative Losses


                                          Share of                                                                        Share of
                                          Current                                                                        Delinquent
Representative FICO Score                  Book                                         Representative FICO Score          Book
0-580                                                                                   0-580
580-620                                                                                 580-620
620-660                                                                                 620-660
660-700                                                                                 660-700
700-740                                                                                 700-740
740+                                                                                    740+
* The minumum across borrowers, the median score for each borrower across bureaus.      * The minumum across borrowers, the median score for each borrower across bureaus.
** % of Outstanding Balance of Current Loans. Sums to 100%.                             ** % of Outstanding Balance of Delinquent Loans. Sums to 100%.




DMEAST #12018558 v2                                                             E-1-1
      EXHIBIT F

SETTLEMENT AGREEMENTS
=====================================================================



                               SETTLEMENT AGREEMENT


                                         among

                      FEDERAL NATIONAL MORTGAGE ASSOCIATION

                                           and

                      FEDERAL HOME LOAN MORTGAGE CORPORATION

                                           and

                      UNITED STATES DEPARTMENT OF THE TREASURY

                                           and

                       TENNESSEE HOUSING DEVELOPMENT AGENCY

                                           and

                           U.S. BANK NATIONAL ASSOCIATION

                               Dated as of December 9, 2009




=====================================================================




DMEAST #12018630 v2
              This SETTLEMENT AGREEMENT is dated as of December 9, 2009 (as the
same may be amended, supplemented or otherwise modified from time to time, this
“Agreement”), among the FEDERAL NATIONAL MORTGAGE ASSOCIATION, a United
States government sponsored enterprise (“Fannie Mae”), the FEDERAL HOME LOAN
MORTGAGE CORPORATION, a United States government sponsored enterprise (“Freddie
Mac”) (Fannie Mae and Freddie Mac are herein referred to as the “GSEs” and, each, a “GSE”),
the UNITED STATES DEPARTMENT OF THE TREASURY (“Treasury”), the TENNESSEE
HOUSING DEVELOPMENT AGENCY (the “HFA”) and U.S. BANK NATIONAL
ASSOCIATION, a national banking association, not in its individual capacity, but solely as
escrow and closing agent (the “Closing Agent”) under this Agreement. Capitalized terms used in
this Agreement that are not otherwise defined in Section 1 of this Agreement or in the recitals of
this Agreement have the meaning assigned to them in Article 1 of the Placement Agreement.

                                        WITNESSETH:

               WHEREAS, pursuant to that certain Memorandum of Understanding, dated
October 19, 2009 (the “MOU”), among Treasury, the Federal Housing Finance Agency
(“FHFA”), Fannie Mae and Freddie Mac, the parties to the MOU have agreed, among other
things, to facilitate financing for various state and local housing finance agencies to serve
homebuyers and low and moderate income renters (the “HFA Initiative”);

               WHEREAS, Treasury requested that FHFA and the GSEs help Treasury design
and implement the programs set forth in the MOU in order to facilitate financing for the state and
local housing finance agencies, and to implement the HFA Initiative, including implementing the
New Issue Bond Program contemplated in the MOU;

               WHEREAS, the HFA, in accordance with the terms of the Placement Agreement,
will exchange the Program Bonds with the GSEs for GSE Securities;

               WHEREAS, the Program Bonds will be held by, and in the name of, the
Administrator, pursuant to the Administration Agreement;

                WHEREAS, the Administrator will deliver to each GSE a Custodial Receipt
representing an undivided 50% beneficial ownership interest of such GSE (each, a “GSE
Interest”) in the Program Bonds;

               WHEREAS, each GSE will enter into a trust agreement (each, a “Trust
Agreement”) pursuant to which it, in its corporate capacity, will deliver its related Custodial
Receipt to itself as trustee of a trust (each, a “Trust”) established by the GSE under a Trust
Agreement;

              WHEREAS, each GSE will issue and deliver on behalf and at the direction of the
HFA to Treasury’s Financial Agent, a series of GSE Securities that evidence each GSE’s Trust’s
50% beneficial ownership interest in the Program Bonds;

              WHEREAS, Treasury will purchase the GSE Securities and cause the Purchase
Price for the GSE Securities to be remitted to the Closing Agent in payment for the GSE
Securities;


DMEAST #12018630 v2
              WHEREAS, the Closing Agent will remit the Purchase Price (less the GSE Fees)
to the HFA Trustee;

              WHEREAS, in accordance with the terms of the Placement Agreement and the
New Issue Bond Program Agreement, the parties to this Agreement desire that certain of the
above referenced actions occur concurrently;

               WHEREAS, the GSEs, Treasury and the HFA desire to appoint the Closing Agent
to perform various functions to facilitate the Settlement; and

                WHEREAS, the Closing Agent has the capacity to provide the respective services
required hereby and is willing to perform such services for the GSEs, Treasury and the HFA on
the terms set forth in this Agreement.

             NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:

               Section 1.    Definitions and Rules of Construction.

              Whenever used in this Agreement (including in the Exhibits attached to this
Agreement), the following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Section.

             “Administration Agreement” means the Administration Agreement, dated as of
December 1, 2009, among Fannie Mae, Freddie Mac and the Administrator.

               “Administrator” means U.S. Bank National Association, in its capacity as
custodian, collection agent, paying agent and administrator under the Administration Agreement.

               “Authorized Person” means a person whose name, title and signature appear on
Exhibit B attached to this Agreement.

               “Business Day” means any day other than (i) a Saturday, (ii) a Sunday, (iii) a day
on which the Federal Reserve Bank of New York is authorized or obligated by law or executive
order to remain closed, (iv) a day on which the permanent home office of Fannie Mae or Freddie
Mac is closed or (v) a day on which (a) banking institutions in the City of New York or in the
city in which the Corporate Trust Office of the Closing Agent or the permanent home office of
Fannie Mae or Freddie Mac is located are closed or (b) the New York Stock Exchange is closed.

                “Certificate Withdrawal Notice” means a written notice from or on behalf of the
HFA forwarded prior to Settlement to GSE Special Closing Counsel and the HFA Trustee stating
that any or all of Closing Documents dated the Settlement Date may not be relied upon as of the
Settlement Date.

              “Closing Documents” means each of the items delivered to the Closing Agent
under Section 3(a) and Section 3(b) of this Agreement.



DMEAST #12018630 v2                            -2-
              “Complete Indenture” means the Indenture, together with the Supplemental
Indenture and any other supplements thereto.

               “Corporate Trust Office” means the corporate trust office of the Closing Agent at
which at any particular time its corporate trust business in connection with this Agreement shall
be administered, which office at the date of the execution of this Agreement is located at 1
Federal Street, 3rd Floor, Boston, Massachusetts 02110, or at such other address as the Closing
Agent may designate from time to time by notice to the GSEs, the HFA, Treasury and Treasury’s
Financial Agent.

              “Custodial Receipt” means any of the custodial receipts relating to the Program
Bonds executed and delivered by the Administrator to the GSEs pursuant to the Administration
Agreement in the form attached as Exhibit A to the Administration Agreement.

               “DTC” means The Depository Trust Company or its successor in interest.

               “Escrow Account” has the meaning given to such term in Section 3(a)(v) of this
Agreement.

               “Exception” has the meaning given to such term in Section 3(f) of this
Agreement.

               “Failed Settlement” has the meaning given to such term in Section 3(f) of this
Agreement.

                “GSE Fees” mean, with respect to each GSE, the sum of (a) the Initial
Securitization Fee owed to such GSE and (b) the other fees and expenses due to such GSE on the
Settlement Date (which includes any fees owed to the GSE Special Closing Counsel) with
respect to all of the GSE Securities being issued to the HFA on the Settlement Date.

            “GSE Securities” means the securities issued by each GSE in exchange for the
Program Bonds.

             “GSE Special Closing Counsel” means the special counsel to the GSEs identified
on Schedule A of the Placement Agreement.

               “HFA Trustee” means the bond indenture trustee of the Program Bonds identified
in the Settlement Statement.

             “Indenture” means the indenture or resolution identified on Schedule B to the
Placement Agreement pursuant to which the Program Bonds were issued.

             “Initial Securitization Fee” means the Initial Securitization Fee payable by the
HFA to each GSE, which such amount is set forth on Schedule A to the Placement Agreement.

                “Legal Deposit” means the legal deposit in the amount of $25,000 wired by the
HFA to the Closing Agent pursuant to the Participation Letter, evidencing the intent of the HFA
to participate in the New Issue Bond Program.


DMEAST #12018630 v2                            -3-
             “New Issue Bond Program” means the program pursuant to which Treasury will
purchase GSE Securities pursuant to the MOU.

             “New Issue Bond Program Agreement” means the New Issue Bond Program
Agreement, dated as of December 9, 2009, among Treasury, Fannie Mae and Freddie Mac.

               “Official Statement” means the Official Statement of the HFA delivered pursuant
to Section 5.1(a)(iv) of the Placement Agreement pertaining to the Program Bonds being
delivered to the GSEs in exchange for the GSE Securities.

               “Opinion of Counsel” means a written opinion of counsel, who may be outside or
salaried counsel of the party causing the opinion to be delivered, acceptable in any event to (a)
each of the parties to which such opinion is addressed and (b) each of the parties entitled to rely
on such opinion.

             “Participation Letter” means the participation letter from the HFA to Fannie Mae
and Freddie Mac acknowledging the HFA’s intent to participate in the HFA Initiative.

              “Placement Agreement” means the Placement Agreement, dated December 9,
2009, by and among Fannie Mae, Freddie Mac and the HFA, which provides for the exchange of
the Program Bonds for the GSE Securities.

                “Pre-Settlement Conditions” has the meaning given to such term in Section
3(d)(v) of this Agreement.

               “Private Placement Memorandum” means a private placement memorandum of a
GSE relating to the GSE Securities.

              “Program Bonds” means, collectively, the single-family mortgage revenue bonds
and/or multifamily mortgage revenue bonds issued by the HFA and identified in Schedule B to
the Placement Agreement.

              “Purchase Price” means the aggregate purchase price paid by Treasury for the
GSE Securities, which is specified in the Settlement Statement.

              “Rating Agencies” mean any of Fitch, Inc., Moody’s Investors Service, Inc.
and/or Standard & Poor’s Ratings Services.

             “Revised Settlement Date” has the meaning given to such term in Section 3(g) of
this Agreement.

              “Settlement” means the consummation of the issuance and exchange of the
Program Bonds for the GSE Securities, the purchase of the GSE Securities by Treasury, the
payment of the net purchase proceeds to the HFA Trustee, the payment of the GSE Fees to the
GSEs and the other transactions contemplated by the Placement Agreement and this Agreement.

               “Settlement Date” means December 23, 2009.



DMEAST #12018630 v2                             -4-
             “Settlement Statement” means the statement in the form of Schedule I attached to
this Agreement.

               “Supplemental Indenture” means the supplemental indenture, resolution and/or
appendix to the Indenture entered into in connection with the issuance of the Program Bonds.

               “Treasury’s Financial Agent” means JPMorgan Chase Bank, N.A., as Treasury’s
financial agent or such other party as Treasury may appoint for such purpose from time to time.

               Section 2.    Appointment.

                The GSEs, Treasury and the HFA hereby appoint the Closing Agent to act as
escrow agent and closing agent under this Agreement and to provide the other services for the
period described in this Agreement and on the terms set forth in this Agreement. The Closing
Agent hereby accepts such appointment and agrees during such period to provide the services set
forth in this Agreement for the compensation provided for in this Agreement.

               Section 3.    Delivery of Closing Documents; Duties of the Parties.

                      (a)    In accordance with the Placement Agreement, the HFA shall:

                             (i)     on or prior to 10:00 AM, local time of the office of the GSE
                                     Special Closing Counsel, on December 9, 2009, deliver or
                                     cause to be delivered to the GSE Special Closing Counsel
                                     the Placement Agreement (an original or pdf copy), this
                                     Agreement (an original or pdf copy), the Settlement
                                     Statement with all information completed therein (an
                                     original or pdf copy) and one electronic copy (with a hard
                                     copy to follow) of the Official Statement (along with their
                                     respective executed signature pages if the applicable
                                     document requires execution), a copy of each of which will
                                     be delivered by the GSE Special Closing Counsel to
                                     Treasury’s Financial Agent prior to noon, New York time,
                                     on December 9, 2009;

                             (ii)    on or prior to 5:00 PM, New York time, on December 11,
                                     2009, deliver or cause to be delivered to the Closing Agent
                                     copies of the DTC Eligibility Questionnaire and the Letter
                                     of Representation of the HFA to the extent required
                                     pursuant to Section 5.1(b) of the Placement Agreement;

                             (iii)   on or prior to 10:00 AM, local time of the office of the GSE
                                     Special Closing Counsel, on December 14, 2009, deliver or
                                     cause to be delivered to the GSE Special Closing Counsel
                                     the documents (originals or pdf copies) specified in
                                     Schedule C (Settlement Deliverables) of the Placement
                                     Agreement (along with their respective executed signature
                                     pages if the applicable document requires execution);


DMEAST #12018630 v2                           -5-
                              (iv)    on or prior to 5:00 PM, New York time, on December 18,
                                      2009, deliver or cause to be delivered to the Closing Agent
                                      a certificate of the HFA Trustee in the form of Exhibit D
                                      attached to this Agreement; and

                              (v)     on or prior to 1:00 PM, New York time, on December 21,
                                      2009, cause the Program Bonds to be settled, released and
                                      credited to the Closing Agent’s participant account at DTC
                                      for further credit by the Closing Agent to a securities
                                      account held by the Closing Agent (the “Escrow
                                      Account”).

               In the event that the GSE Special Closing Counsel or either GSE does not agree
with the information set forth in the Settlement Statement, the HFA hereby agrees to cooperate
with such parties and revise the Settlement Statement to reflect the terms mutually agreed upon
(whereupon the revised Settlement Statement shall be the operative Settlement Statement for all
purposes of this Agreement). In the event that a revised Settlement Statement is not agreed upon
by such parties, delivery of the Settlement Statement pursuant to Section 3(a)(i) above will not
have been satisfied and a Failed Settlement will be deemed to have occurred.

                     (b)     The GSEs shall deliver, or cause to be delivered, to the Closing
Agent, the following documents along with their respective executed signature pages (if the
applicable document requires execution) all in accordance with the time frames set forth below:

                              (i)     on or prior to noon, New York time, on December 17,
                                      2009, a certification from the GSEs substantially in the
                                      form of Exhibit A attached to this Agreement; and

                              (ii)    on or prior to 5:00 PM, New York time, on December 18,
                                      2009, a copy of the Placement Agreement.

                       (c)     On or prior to noon, New York time, on December 18, 2009,
Treasury (or Treasury’s Financial Agent on Treasury’s behalf) shall do all things necessary to
register the GSE Securities with DTC and make the GSE Securities DTC FAST-eligible,
including without limitation: (i) paying all required fees and (ii) delivering the Private Placement
Memorandum and entering all other required information into the DTC system, including
without limitation, delivering the DTC Eligibility Questionnaire, or any other data requested by
DTC in the form of a questionnaire or any other form.

                       (d)    Prior to 5:00 PM, New York time, on December 21, 2009, the
Closing Agent shall:

                              (i)     examine the Closing Documents that were received by it
                                      hereunder and determine whether it has received all of the
                                      Closing Documents required to be delivered to it under
                                      Section 3(a) and Section 3(b) above;




DMEAST #12018630 v2                             -6-
                              (ii)    confirm the execution (if such document requires
                                      execution) by each of the parties to the Closing Documents;

                              (iii)   confirm that the Closing Documents appear complete and
                                      regular on their face and are in the form required by this
                                      Agreement;

                              (iv)    confirm that the Program Bonds have been credited to the
                                      Escrow Account in accordance with Section 3(a)(v) above;
                                      and

                              (v)     confirm with DTC that the GSE Securities have been set up
                                      as DTC Fast-eligible as specified in Section 3(c) above
                                      (collectively, clauses (i) through (v) are the “Pre-Settlement
                                      Conditions”).

The Closing Agent shall not be bound to make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, other paper or document that it reviews under this Section 3(d), but may make
such further inquiry or investigation into such facts or matters as it may deem necessary.

                        (e)    If the Closing Agent has determined that all the required Pre-
Settlement Conditions have been met hereunder, the Closing Agent shall notify each GSE, the
HFA, Treasury and Treasury’s Financial Agent of such determination, which notification shall
(i) occur no later than 5:00 PM, New York time, on December 21, 2009 and (ii) be substantially
in the form attached to this Agreement as Exhibit C. Upon receipt of notice that all Pre-
Settlement Conditions have been met, Treasury shall cause Treasury’s Financial Agent, on or
prior to 9:00 AM, New York time, on the Settlement Date, to wire on behalf of Treasury the
aggregate Purchase Price for the GSE Securities to the Closing Agent pursuant to the Closing
Agent’s wire instructions set forth in the Settlement Statement. The Closing Agent shall hold the
Purchase Price in escrow pending release in accordance with Section 4 of this Agreement.

                       (f)    If the Closing Agent determines that any of the Pre-Settlement
Conditions have not been met, the Closing Agent shall notify the parties to this Agreement of
each exception (each such exception, an “Exception”) no later than 5:00 PM, New York time, on
December 21, 2009 and identify the nature thereof. If each Exception is not waived or cured in
all material respects by 11:00 AM, New York time, on December 22, 2009, or if the Program
Bonds have not been credited to the Escrow Account by at least 2:00 PM, New York time, on
December 22, 2009, the Closing Agent shall notify each GSE, the HFA, Treasury and Treasury’s
Financial Agent of such and the Settlement shall constitute a “Failed Settlement.” The Closing
Agent shall then proceed in accordance with Section 3(g) below.

                       (g)    Subject to the last sentence of this paragraph, if a Failed Settlement
has occurred, the Closing Agent shall within one Business Day after the scheduled Settlement
Date (except as otherwise set forth below) (i) return each Closing Document to the respective
party that delivered it to the Closing Agent by overnight mail, (ii) cause the Program Bonds
being held in the Escrow Account to be returned to the HFA (or the HFA Trustee), (iii) promptly



DMEAST #12018630 v2                             -7-
return the Purchase Price (to the extent received by the Closing Agent) to Treasury’s Financial
Agent in accordance with the wire instructions provided in the Settlement Statement and (iv)
apply the Legal Deposit in accordance with the instructions of the GSEs. In the event of a Failed
Settlement, Treasury, the GSEs and the HFA may agree and instruct the Closing Agent in
writing that such Settlement shall occur on the January 12th settlement date for the New Issue
Bond Program (the “Revised Settlement Date”), in which case the Closing Agent shall (x) hold
the Closing Documents in accordance with this Agreement until the Revised Settlement Date, (y)
re-determine prior to the Revised Settlement Date whether all of the Pre-Settlement Conditions
have been met with respect to such Settlement and (z) comply with all of the other provisions of
this Agreement with respect to such Settlement, all in accordance with the revised time line
established by reference to the Revised Settlement Date.

                       (h)    Any notifications and instructions pursuant to this Section 3 sent to
any party to this Agreement shall be in writing (which may be by facsimile or electronic mail)
with receipt confirmed by telephone at the addresses set forth below in Section 10. Any such
notifications must be from an Authorized Person.

                      (i)      If the HFA (or any person or entity providing a Closing Document
on behalf of the HFA) determines that any Closing Document delivered in advance of the
Settlement Date and dated as of the Settlement Date may not be relied upon on the Settlement
Date, the HFA shall, prior to the Settlement, provide a Certificate Withdrawal Notice to the GSE
Special Closing Counsel and the HFA Trustee. Failure to deliver a Certificate Withdrawal
Notice shall be deemed an irrevocable release by the HFA of all Closing Documents delivered
by the HFA or on the HFA’s behalf as of the Settlement Date.

               Section 4.     Disbursement of Funds and Release of Closing Documents.

                      (a)   Upon (A) satisfaction of the Pre-Settlement Conditions and (B)
receipt by the Closing Agent of the Purchase Price, the Closing Agent shall on the Settlement
Date:

                              (i)     release the Closing Documents from escrow;

                              (ii)    disburse the applicable GSE Fees and expenses out of the
                                      Purchase Price and the Legal Deposit to the related GSE
                                      and the other parties entitled thereto in accordance with the
                                      Settlement Statement;

                              (iii)   disburse the remaining Purchase Price (net of the GSE Fees
                                      and expenses paid pursuant to clause (ii) above) to the HFA
                                      Trustee in accordance with the Settlement Statement
                                      (including the wire instructions of the HFA Trustee set
                                      forth therein); and

                              (iv)    transfer the Program Bonds being held in the Escrow
                                      Account to the trust account established by the
                                      Administrator pursuant to the Administration Agreement



DMEAST #12018630 v2                             -8-
                                      (and the Administrator, upon receipt of the Program Bonds
                                      will deliver the Custodial Receipts to the GSEs).

                      (b)     Upon receipt of the Custodial Receipts, each GSE shall issue the
related GSE Securities and deliver, or cause to be delivered, the GSE Securities to Treasury by
crediting Treasury’s Financial Agent’s account at DTC.

                      (c)    Each of the parties to this Agreement hereby agrees and
acknowledges that the events described in Section 4 (a) and (b) above will be deemed to take
place concurrently. The HFA hereby acknowledges and agrees that, upon the transfer pursuant
to Section 4(a)(iv) above of the Program Bonds to the trust account established by the
Administrator in accordance with the Placement Agreement, the Administrator, on behalf of the
GSEs, will acquire good, unencumbered and marketable title to the Program Bonds and neither
the HFA nor any other party will have any claim to or interest in the Program Bonds.

                      (d)    If any of the events described in Section 4 (a) and (b) above do not
occur on the Settlement Date, the Settlement shall be deemed to be a Failed Settlement and the
Closing Agent shall follow the procedures set forth in Section 3(g) above.

               Section 5.     Resignation and Removal of the Closing Agent.

                        (a)    The Closing Agent shall not resign from the obligations and duties
imposed on it as Closing Agent under this Agreement except upon a determination that the
performance of its duties under this Agreement shall no longer be permissible under applicable
law or shall violate any final order of a court or administrative agency with jurisdiction over the
Closing Agent or its properties. Notice of any such determination permitting or requiring the
resignation of the Closing Agent shall be communicated to the GSEs, the HFA, Treasury and
Treasury’s Financial Agent at the earliest practicable time (and, if such communication is not in
writing, shall be confirmed in writing at the earliest practicable time) and any such determination
shall be evidenced by an Opinion of Counsel to such effect delivered to the GSEs, the HFA,
Treasury and Treasury’s Financial Agent concurrently with or promptly after such notice. No
such resignation shall become effective until a successor Closing Agent shall have assumed the
responsibilities and obligations of the resigning Closing Agent in accordance with Section 5(d)
below.

                        (b)     Subject to Section 5(d) of this Agreement, the GSEs and Treasury,
acting together, may remove the Closing Agent without cause by providing the Closing Agent
with at least 5 days’ prior written notice.

                      (c)    Subject to Section 5(d) of this Agreement, the GSEs and Treasury,
acting together, may remove the Closing Agent immediately upon written notice of termination
from the GSEs to the Closing Agent and the HFA if any of the following events shall occur:

                              (i)     the Closing Agent shall default in the performance of any
                                      of its duties under this Agreement and, after notice of such
                                      default, shall not cure such default within one (1) Business
                                      Day (or, if such default cannot be cured in such time, shall
                                      not give within one (1) Business Day such assurance of


DMEAST #12018630 v2                             -9-
                                      cure as shall be reasonably satisfactory to the GSEs and
                                      Treasury);

                              (ii)    a court having jurisdiction shall enter a decree or order for
                                      relief in respect of the Closing Agent in any involuntary
                                      case under any applicable bankruptcy, insolvency or other
                                      similar law now or hereafter in effect or appoint a receiver,
                                      liquidator, assignee, custodian, trustee, sequestrator or
                                      similar official for the Closing Agent or any substantial part
                                      of its property or order the winding-up or liquidation of its
                                      affairs; or

                              (iii)   the Closing Agent shall commence a voluntary case under
                                      any applicable bankruptcy, insolvency or other similar law
                                      now or hereafter in effect, shall consent to the entry of an
                                      order for relief in an involuntary case under any such law,
                                      or shall consent to the appointment of a receiver, liquidator,
                                      assignee, trustee, custodian, sequestrator or similar official
                                      for the Closing Agent or any substantial part of its property,
                                      shall consent to the taking of possession by any such
                                      official of any substantial part of its property, shall make
                                      any general assignment for the benefit of creditors or shall
                                      fail generally to pay its debts as they become due.

                      (d)     No resignation or removal of the Closing Agent pursuant to this
Section shall be effective until (i) a successor Closing Agent shall have been appointed by the
GSEs and Treasury and (ii) such successor Closing Agent shall have agreed in writing to be
bound by the terms of this Agreement in the same manner as the Closing Agent is bound
hereunder.

               Section 6.     Closing Agent Responsibilities.

                The Closing Agent executes this Agreement solely for the purpose of accepting
the escrow created by this Agreement and performing the duties set forth herein on the terms and
conditions set forth in it, and undertakes to perform the duties, but only the duties, specifically
set forth in this Agreement. The Closing Agent is not required to secure the performance of its
duties by bond or otherwise. The HFA, Treasury, Fannie Mae and Freddie Mac hereby release
the Closing Agent from all liability for any punitive, incidental, consequential, or other damages
or obligations to them for any act or omission by the Closing Agent or any of its agents or
employees in good faith in the exercise of its or their duties and in a manner reasonably believed
by it or them to be authorized or within the duties, rights, powers, privileges, or direction
conferred on the Closing Agent by this Agreement, except for willful misconduct, negligence, or
tortious conversion of any funds held hereunder. Without limiting the generality of the
foregoing, the responsibilities of the Closing Agent are further defined, limited, and qualified by
the following:




DMEAST #12018630 v2                            -10-
                      (i)     The duties and obligations of the Closing Agent will be
                              determined by the express provisions of this Agreement,
                              and this Agreement is not to be interpreted or construed to
                              impose on the Closing Agent any implied duties,
                              covenants, or obligations.

                      (ii)    The Closing Agent may execute any of its rights, powers,
                              or responsibilities under this Agreement either directly or
                              by or through its agents, partners, employees, or attorneys,
                              and it will not be liable for any error of judgment made in
                              good faith by an authorized agent, partner, employee, or
                              attorney of it, unless it is proven that the Closing Agent was
                              negligent in ascertaining the pertinent facts or in employing
                              or supervising the agent, partner, employee or attorney.

                      (iii)   The Closing Agent will not be liable to any person with
                              respect to any action taken, suffered, or omitted by it in
                              accordance with this Agreement or in accordance with
                              written instructions signed by the GSEs, Treasury,
                              Treasury’s Financial Agent and/or the HFA in accordance
                              with this Agreement, or an order issued by a court of
                              competent jurisdiction.

                      (iv)    Except as otherwise specified in this Agreement, the
                              Closing Agent shall not be responsible to the GSEs, the
                              HFA or Treasury or any other person or entity for recitals,
                              statements or warranties or representations of any other
                              person or entity contained herein, in the Closing
                              Documents or in any other documents related thereto or be
                              bound to ascertain or inquire as to the performance or
                              observance of any of the terms of this Agreement or the
                              Closing Documents on the part of the HFA.

                      (v)     The Closing Agent shall not be liable for any error of
                              judgment, or for any act done or step taken or omitted by it,
                              in good faith, or for any mistakes of fact or law, or for
                              anything which it may do or refrain from doing in
                              connection herewith, except for the Closing Agent’s
                              negligence, reckless disregard or willful misconduct.

                      (vi)    The Closing Agent shall not be required to expend or risk
                              its own funds or otherwise incur financial liability in the
                              performance of any of its duties hereunder, or in the
                              exercise of its rights or powers, if the Closing Agent
                              believes that repayment of such funds (repaid in accordance
                              with the terms of this Agreement) or adequate indemnity
                              against such risk or liability is not reasonably assured to it.


DMEAST #12018630 v2                    -11-
                               (vii)   The Closing Agent may consult with counsel, and the
                                       advice or any opinion of counsel shall be full and complete
                                       authorization and protection in respect of any action taken
                                       or omitted by it hereunder in good faith and in accordance
                                       with such advice or opinion of counsel.

                               (viii) The Closing Agent shall not be bound to make any
                                      investigation into the facts or matters stated in any
                                      resolution, certificate, statement, instrument, opinion,
                                      report, notice, request, consent, entitlement order, approval
                                      or other paper or document.

                               (ix)    The Closing Agent shall not be responsible for delays or
                                       failures in performance resulting from acts beyond its
                                       reasonable control. Such acts shall include but not be
                                       limited to acts of God, strikes, lockouts, riots, acts of war or
                                       terrorism, epidemics, nationalization, expropriation,
                                       currency      restrictions,     governmental        regulations
                                       superimposed after the fact, fire, communication line
                                       failures, power failures, earthquakes or other disasters.

               Section 7.      Compensation and Expenses of the Closing Agent.

                As compensation for the performance of the Closing Agent’s obligations under
this Agreement and as reimbursement for its expenses related thereto, the Closing Agent shall be
entitled to receive the fees set forth in the Administration Agreement.

               Section 8.      Controversy.

                If a controversy arises before, during, or after the term of this Agreement with
respect to the Closing Documents or the Settlement, the Closing Agent may do either or both of
the following: (a) withhold further performance by it under the instructions set forth in this
Agreement until all of the parties to this Agreement provide joint instructions with respect to
such controversy; or (b) commence or defend any action or proceeding for or in the nature of
interpleader. If a suit or proceeding for or in the nature of interpleader is brought by or against it,
the Closing Agent may deliver the Closing Documents and other funds and property held by it
under this Agreement into the registry of the court and thereupon will be released and discharged
from all further obligations and responsibilities under this Agreement.

               Section 9.      Term of the Agreement.

                 This Agreement shall terminate upon the earliest to occur of (i) the completion of
all of the releases, deliveries and disbursements provided for in Section 4 hereof, (ii) the return of
all Closing Documents, funds and other documents in connection with a Failed Settlement in
accordance with Section 3(g) of this Agreement or (iii) the mutual written agreement of the
parties to this Agreement that this Agreement should be terminated.




DMEAST #12018630 v2                              -12-
               Section 10.   Notices.

               All notices, directions, certificates or other communications under this Agreement
shall be sent by e-mail (as a first preference), certified or registered mail, return receipt
requested, or by overnight courier addressed to the appropriate notice address set forth below.
Any such notice, certificate or communication shall be deemed to have been given as of the date
of actual delivery or the date of failure to deliver by reason of refusal to accept delivery or
changed address of which no notice was given pursuant to this Section 10. Any of the parties to
this Agreement may, by such notice described above, designate any further or different address
to which subsequent notices, certificates or other communications shall be sent without any
requirement of execution of any amendment to this Agreement. The notice addresses are as
follows:

          To Closing         U.S. Bank National Association
          Agent:             One Federal Street, 3rd Floor
                             Boston, MA 02110
                             Attention: Structured Finance/HFA Program
                             E-mail: Julie.Kirby@usbank.com

          To Treasury:       Care of:

                             JPMorgan Chase Bank, N.A.
                             1 Chase Manhattan Plaza, Floor 19
                             Attention: Lillian G. White
                             Phone: 212-552-2392
                             Fax: 212-552-0551
                             E-mail: jpm.hfa@jpmorgan.com

                             with a copy to: Lillian.G.White@jpmorgan.com

                             Notice delivered to Treasury at the address given above shall also
                             constitute notice to Treasury’s Financial Agent.

          To Fannie Mae:     Fannie Mae
                             3900 Wisconsin Avenue, N.W.
                             Washington, D.C. 20016
                             Attention: Carl W. Riedy, Jr. Vice President for Public Entities
                             Channel, Housing and Community Development
                             E-mail: Carl_W_Riedy@fanniemae.com

                                            and

                             Attention: Barbara Ann Frouman, Vice President and Deputy
                             General Counsel, Housing and Community Development
                             E-mail: Barbara_Ann_Frouman@fanniemae.com




DMEAST #12018630 v2                           -13-
                               With copies to:

                               John Runyon, Director of Capital Markets Operations
                               E-mail: john_l_runyon@fanniemae.com

          To Freddie Mac:      Freddie Mac
                               1551 Park Run Drive
                               Mail Stop D4F
                               McLean, Virginia 22102
                               Attention: Mark D. Hanson, Vice President Mortgage Funding
                               E-mail:Mark_Hanson@freddiemac.com

                                              and

                               Freddie Mac
                               8200 Jones Branch Drive
                               McLean, Virginia 22102
                               Attention: Melinda Reingold, Managing Associate General
                               Counsel --Mortgage Securities
                               E-mail: Melinda_Reingold@freddiemac.com

                               with copies to: Arnold_Dean@freddiemac.com and
                                               Edward_Abrams@freddiemac.com

          To HFA:              Tennessee Housing Development Agency
                               404 James Robertson Parkway
                               Suite 1200
                               Nashville, TN 37243-0900
                               Attention: Ted R. Fellman, Executive Director
                               Email: tfellman@thda.org

or to any other address any party provides to the other parties in writing.

               Section 11.     Amendments.

               The parties to this Agreement may from time to time amend this Agreement in
writing, and such amendments, when executed by all parties, shall then become a part of this
Agreement.

               Section 12.     Governing Law.

                This Agreement shall be governed by, and interpreted in accordance with, the
laws of the United States, not the law of any state or locality, except that the authority and
powers of the HFA shall be governed by and construed in accordance with the laws of its state.
To the extent that a court looks to the laws of any state to determine or define the laws of the
United States, it is the intention of the parties to this Agreement that such court shall look only to
the laws of the State of New York without regard to the rules of conflicts of laws.


DMEAST #12018630 v2                              -14-
               Section 13.    Entire Agreement; Priority of Agreements.

                This Agreement, including all documents and exhibits incorporated by reference
herein, constitutes the entire agreement between the parties with respect to the matters set forth
herein. If any one or more of the covenants, agreements, provisions or terms of this Agreement
shall be held invalid for any reason whatsoever, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements, provisions or terms
of this Agreement and shall in no way affect the validity or enforceability of the other provisions
of this Agreement. In the event of any conflict or inconsistency between this Agreement and the
Placement Agreement, this Agreement shall control.

               Section 14.    Successors and Assigns.

              Neither this Agreement nor any of the rights and obligations of the HFA
under this Agreement may be assigned by the HFA without the prior written consent of each
GSE. The rights of the GSEs under this Agreement shall inure to the benefit of their respective
successors and assigns.

               Section 15.    No Third-Party Beneficiaries.

                Except as to Treasury’s Financial Agent, this Agreement does not confer any
rights, benefits, remedies or claims, either at law or in equity, on any person not a party to this
Agreement. Treasury’s Financial Agent shall be a beneficiary, and entitled to enforce the
provisions, of this Agreement.



               Section 16.    Headings.

               The section headings hereof have been inserted for convenience of reference only
and shall not be construed to affect the meaning, construction or effect of this Agreement.

               Section 17.    Counterparts.

               This Agreement may be executed in counterparts, each of which when so
executed shall together constitute but one and the same agreement.

               Section 18.    Severability.

                Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof and any such prohibition
or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction.




DMEAST #12018630 v2                            -15-
               Section 19.   Records.

              The Closing Agent shall maintain appropriate books of account and records as
required by law and relating to the Closing Agent’s services performed under this Agreement.
These books of account and records shall be accessible for inspection upon written request by the
GSEs, the HFA, Treasury or Treasury’s Financial Agent at any time during normal business
hours.

                                            * * *




DMEAST #12018630 v2                           -16-
              IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.



                                           FEDERAL NATIONAL MORTGAGE
                                           ASSOCIATION


                                           By:__________________________________
                                                 Name:
                                                 Title:




                        Fannie Mae Signature Page to Settlement Agreement

DMEAST #12018630                              S-1
              IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.



                                            FEDERAL HOME LOAN MORTGAGE
                                            CORPORATION


                                            By:__________________________________
                                                  Name:
                                                  Title:




                        Freddie Mac Signature Page to Settlement Agreement

DMEAST #12018630                               S-2
              IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.



                                           UNITED STATES DEPARTMENT OF THE
                                           TREASURY


                                           By:___________________________________
                                                 Name:
                                                 Title:




                         Treasury Signature Page to Settlement Agreement

DMEAST #12018630                              S-3
              IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.



                                          TENNESSEE HOUSING DEVELOPMENT
                                          AGENCY


                                          By:___________________________________
                                                Name:
                                                Title:




                          HFA Signature Page to Settlement Agreement

DMEAST #12018630                             S-4
              IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.



                                            U.S. BANK NATIONAL ASSOCIATION


                                            By:___________________________________
                                                  Name:
                                                  Title:




                         U.S. Bank Signature Page to Settlement Agreement

DMEAST #12018630                               S-5
                                       Schedule I
                       FORM OF SETTLEMENT STATEMENT
                          NEW ISSUE BOND PROGRAM


Name of HFA Bond(s):

Tennessee Housing Development Agency
Housing Finance Program Bonds Issue
2009-A2 (Non-AMT)

I.     CONTACTS

(A) HFA:                          Tennessee Housing Development Agency
                                  404 James Robertson Parkway, Suite 1200
                                  Nashville, TN 37243-0900
                                  Attention: Ted R. Fellman, Executive Director
                                  Phone: (615) 815-2010
                                  Email: tfellman@thda.org

(B) HFA TRUSTEE:                  U.S. Bank National Association
                                  Corporate Trust Services
                                  150 4th Avenue North, 2nd Floor
                                  Nashville, TN 37219
                                  Attention: Jaci L. Kitch, Vice President, Relationship
                                  Manager
                                  Phone: (615) 251-0718
                                  Fax: (615) 251-0738
                                  Email: jaci.kitch@usbank.com

(C) US BANK:                      U.S. Bank National Association
                                  One Federal Street, 3rd Floor
                                  Boston, MA 02110
                                  Attention: Structured Finance/HFA Program
                                  E-mail: Julie.Kirby@usbank.com

(D) GSEs                          Freddie Mac
                                  1551 Park Run Drive
                                  McLean, Virginia 22102
                                  Attention: Mark Spates, Director, Offering Management
                                  E-mail: mark_spates@freddiemac.com




                                       Schedule I-1
DMEAST #12018630 v2
(E) JPMORGAN CHASE         JPMorgan Chase Bank, N.A.
                           1 Chase Manhattan Plaza, Floor 19
                           Attention:    Lillian G. White
                           Phone - 212-552-2392
                           Fax - 212-552-0551
                           E-mail: jpm.hfa@jpmorgan.com

(F) HFA BOND COUNSEL       Kutak Rock LLP
                           225 Peachtree Street, Suite 2100
                           Atlanta, GA 30303
                           Attention: Dave Amsden
                           Phone: (404) 222-4644
                           Email: david.amsden@kutakrock.com

(G) HFA ISSUER’S COUNSEL   Attorney General’s Office, Financial Division
                           500 Charlotte Avenue, Suite G-13
                           Nashville, TN 37243-0496
                           Attention: Phil Carnes
                           Phone: (615) 741-6432
                           Fax: (615) 532-8223
                           Email: phil.carnes@ag.tn.gov

(H) GSE SPECIAL CLOSING    Ballard Spahr LLP
COUNSEL                    1735 Market Street, 51st Floor
                           Philadelphia, PA 19103
                           Attention: Jere Thompson
                           Phone: (215) 864-8501
                           Fax: (215) 864-9843
                           Email: thompson@ballardspahr.com

(I) GSE SECURITIZATION
COUNSEL




                               Schedule I-2
DMEAST #12018630 v2
      II.       SECURITIES DETAILS


TERM BONDS

                         Principal    Trade        CUSIP           Initial Interest    Final
                        Balance at    Price        Number                Rate         Maturity
                        Issue Date                                                     Date

Single Family           $            103 00
Simultaneous Premium

Single Family           $            100 00
Simultaneous Par

Single Family Escrow    $            100 00

Multifamily Escrow      $            100 00


      III.      MARKET BONDS (if any)


Principal Balance at   CUSIP Number        Initial Interest Rate      Final Maturity Date
     Issue Date

$

Escrow Ratio:

Market Bond/ Sum of Market Bonds and Simultaneous Par Program Bonds Issued: _____%




                                        Schedule I-3
DMEAST #12018630 v2
      IV.      SOURCES AND USES


PURCHASE PRICE FROM JPMC                          $________________

GSE INITIAL SECURITIZATION FEES

                        Fannie                    ($_______________)
                        Freddie                   ($_______________)
GSE EXPENSES (SPECIAL COUNSEL LEGAL FEES)

                        Fannie                    ($_______________)
                        Freddie                   ($_______________)
LEGAL DEPOSIT                                     $_______________

DTC ISSUANCE FEES                                 ($_______________)

NET REMITTANCE TO HFA TRUSTEE                     $_______________



      V.       WIRE INSTRUCTIONS


       US BANK AS CLOSING AGENT

       FANNIE

       FREDDIE

       GSE OUTSIDE COUNSEL

       US BANK FEE ACCOUNT

       HFA TRUSTEE

       HFA

       OTHERS




                                   Schedule I-4
DMEAST #12018630 v2
                                           EXHIBIT A



U.S. Bank National Association
One Federal Street, 3rd Floor
Boston, MA 02110
Attention: Structured Finance/HFA Program

       Re:     Settlement Agreements listed on Schedule A

Ladies and Gentlemen:

                                       [___________], 2009


              Pursuant to Section 3(b)(i) of each of the Settlement Agreements listed on
Schedule A to this certificate (each, a “Settlement Agreement”), the undersigned hereby certifies
to U.S. Bank National Association that it has received and reviewed the certification (the
“Closing Counsel Certification”) provided to it by the GSE Special Closing Counsel regarding
the items to be delivered to the GSE Special Closing Counsel pursuant to Section 3(a)(i) and
Section 3(a)(iii) for each of the transactions listed on Schedule A to this certificate and that each
such Closing Counsel Certification is acceptable to the undersigned.
              This certificate may be executed in counterparts, each of which when so executed
shall together constitute but one and the same certificate. All capitalized terms used herein
unless otherwise defined shall have the meaning ascribed to them in the Settlement Agreements.


                                                  FEDERAL NATIONAL MORTGAGE
                                                    ASSOCIATION



                                                  By: ___________________________________
                                                      Name:
                                                      Title:

                                                  FEDERAL HOME LOAN MORTGAGE
                                                    CORPORATION



                                                  By: ___________________________________
                                                      Name:
                                                      Title:


                                                A-1
DMEAST #12018630 v2
                                      EXHIBIT B

                                 Authorized Persons


                                   FANNIE MAE


NAME                          TITLE                   SIGNATURE




                                  FREDDIE MAC

NAME                          TITLE                   SIGNATURE




                                      TREASURY

NAME                          TITLE                   SIGNATURE




                      TENNESSEE HOUSING DEVELOPMENT AGENCY

NAME                          TITLE                   SIGNATURE




                                         B-1
DMEAST #12018630 v2
                                         EXHIBIT C

                                            NOTICE

                                     [December 21, 2009]

 [Addressees listed on Schedule 1
 hereto]

       Re:     Settlement Agreements -- Closing Conditions

Ladies and Gentlemen:

        This notice is given to you in accordance with the provisions of the Settlement
Agreements, dated as of ______________ 2009 listed on Schedule I hereto (the “Settlement
Agreements”), by and among Federal National Mortgage Association, Federal Home Loan
Mortgage Corporation, United States Department of the Treasury, U.S. Bank National
Association, as closing agent (the “Closing Agent”), and the HFAs parties to those agreements.
All initially capitalized terms used herein shall have the meaning ascribed to them in the
Settlement Agreements. In accordance with Section [3(e)] of the Settlement Agreements, the
Closing Agent hereby notifies you that it has determined that all of the required Pre-Settlement
Conditions have been satisfied [subject to the exceptions listed on Schedule II attached hereto].

        The Closing Agent has made no independent examination of any of the documents
delivered to it in accordance with Section 3 of the Settlement Agreements beyond the review
specifically required by the Settlement Agreements.          The Closing Agent makes no
representations as to the validity, legality, enforceability or genuineness of any of such
documents or the Program Bonds to which they relate.



                                             U.S. BANK NATIONAL ASSOCIATION, as Closing
                                             Agent


                                             By:
                                             Name:
                                             Title:




                                              C-1
DMEAST #12018630 v2
                                         EXHIBIT D

                              CERTIFICATION OF RECEIPT

                                         $__________
                                        [Bond Caption]


The undersigned, an authorized representative of U.S. Bank National Association, as trustee (the
“Trustee”) under that [Indenture] dated as of December 1, 2009, between the Orange County
Housing Finance Authority (the “Issuer”) and the Trustee hereby acknowledges receipt from or
on behalf of the Issuer of the sum of $_________ for deposit under the Indenture as follows: (a)
$_________ (the “Shortfall Amount”) into the [Program Fund]; and (b) $__________ (the
“Costs of Issuance Amount”) for deposit into the [Costs of Issuance Fund].
The Trustee hereby certifies that the Shortfall Amount is equal to the difference between the
initial principal amount of the Bonds and the proceeds of the Bonds to be delivered in payment
therefor pursuant to the Indenture. The Shortfall Amount consists of:
a. GSE Initial Securitization Fee of $________;
b. GSE Special Closing Counsel Fee of $________; and
c. DTC Closing Fee of $__________.


The Costs of Issuance Amount consists of:
       a. Bond Counsel Fee of $__________

       b. Issuer’s [Financial Advisor/Special Agent] Fee of $_______

       c. [Issuer Counsel Fee] of $___________; and

       d. [other payees]

DATED: December ____, 2009


                                             U.S. BANK, NATIONAL ASSOCIATION, as
                                             Trustee



                                             By:
                                             Name:
                                             Title:




                                              D-1
DMEAST #12018630 v2

								
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