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200109053 sales taxes), assessments, impositions and other charges in respect of any portion of the Project. If any such claim for indemnification described in this Section 7 is asserted, or any such lien or charge upon payments, or any such taxes, assessments, impositions or other charges, are sought to be imposed, the affected Indemnified Party shall give prompt notice to the Borrower and the Borrower shall have the sole right and duty to assume, and will assume, the defense thereof, with full power to litigate, compromise or settle the same in its sole discretion, provided that such Indemnified Party shall have the right to review and approve or disapprove any such compromise or settlement. In addition thereto, the Borrower will pay upon demand all of the reasonable fees and expenses paid or incurred by any Indemnified Party in enforcing the provisions of this Regulatory Agreement against the Borrower. Promptly after receipt by any party entitled to indemnification under this Section 7 of notice of the commencement of any suit, action or proceeding, such Indemnified Party shall, if a claim in respect thereof is to be made against the Borrower under this Section 7, notify the Borrower in writing of the commencement thereof, but the omission so to notify the Borrower shall not relieve it from any liability which it may have to any indemnified party otherwise than under this Section 7 or from any liability under this Section 7 unless the failure to provide notice prejudices in any way the defense of such suit, action or proceeding. In case any such action is brought against any Indemnified Party, and it notifies the Borrower, the Borrower shall be entitled to participate in, and to the extent that it may elect by written notice delivered to the Indemnified Party promptly after receiving the aforesaid notice from such Indemnified Party (but shall not be required), to assume, the defense thereof, with counsel reasonably satisfactory to such Indemnified Party; provided, however, if the defendants in any such action include both the Indemnified Party and the Borrower and the Indemnified Party shall have reasonably concluded that there are legal defenses available to it and/or other Indemnified Parties which are different from or additional to those available to the Borrower, the Indemnified Party or parties shall have the right to select separate counsel to assert such legal defenses and otherwise to participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the Borrower to such Indemnified Party of the Borrower's election to assume the defense of such action and approval by the Indemnified Party of counsel, the Borrower shall not be liable to such indemnified party under this Section 7 for any attorneys' fees or expenses subsequently incurred by such indemnified party in connection with defense thereof unless (i) the Indemnified Party shall have employed separate counsel in connection with the assertion of legal defenses in accordance with the proviso to the next preceding sentence, or (ii) the Borrower shall not have employed counsel reasonably satisfactory to the indemnified party to represent the Indemnified Party within a reasonable time after notice of commencement of the action, or (iii) the Borrower has authorized the employment of counsel to represent the Indemnified Party at the expense of the Borrower. Notwithstanding the foregoing, the Trustee shall not be indemnified for income tax, franchise tax or similar tax liability. Notwithstanding any other provision of this Regulatory Agreement to the contrary, neither the Trustee nor the Credit Enhancer, as the case may be, nor any successor in interest to the Trustee or the Credit Enhancer, as the case may be (each a "Successor in Interest "), will assume or be subject to any liability for the indemnification obligations of the Borrower for acts or omissions of the Borrower prior to any transfer of title to such Successor in Interest, whether by foreclosure or deed in lieu of foreclosure. Following any transfer of title to a Successor in Interest, any obligation of such Successor in Interest under this Section shall be limited to acts and omissions of such Successor in Interest which occur following such transfer of title by such Successor in Interest, and only during the period of such Successor in Interest's ownership and operation of the Project. The Borrower shall remain liable under this Section for its actions and omissions prior to any transfer of title to a Successor in Interest, notwithstanding any consent given pursuant to Section 11. -17-