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Note and all evidences of indebtedness secured hereby, and shall not seek a personal judgment against any
member, partner, officer, director, member or stockholder of the Borrower, provided that nothing herein
shall relieve any such Related Party from liability for any of the following:
(a) rent collected for more than one month in advance and received by such Related Party and
not applied to the reasonable operating requirements of the Project;
(b) misappropriation or misapplication by such Related Party of insurance or eminent domain
proceeds;
(c) fraud or material misrepresentation by such Related Party against the Issuer or the Holder;
(d) conversion by such Related Party of all or a material portion of the Project; or
(e) gross negligence, willful misconduct or intentional torts of such Related Party relating to
the Project or the revenues therefrom.
Section 8.11 HUD-Required Provisions. The Borrower and the Issuer acknowledge that this
Loan Agreement and all the Borrower’s obligations hereunder are subject and subordinate to the FHA Loan
Documents and the Program Obligations. Notwithstanding any provisions of this Loan Agreement to the
contrary, no obligations of the Borrower hereunder shall be payable except from (a) Surplus Cash; (b) funds
that are not derived from (1) revenues of the Project (as defined in the FHA Mortgage), (2) the proceeds of
the FHA Note, or (3) any reserve or deposit made with the FHA Lender or any other party as required by
HUD in connection with the FHA Loan Documents; or (c) FHA Lender Funds which have been deposited
into the Collateral Fund by or at the direction of the FHA Lender (collectively, “Non-Project Sources”).
No claims or actions shall be made (or payable) under this Loan Agreement against the Project, the FHA
Lender, the proceeds of the FHA Note, or the assets of the Borrower, except from Non-Project Sources. In
addition, the rights and obligations of the parties under this Loan Agreement and all other documents
evidencing, implementing, or securing this Loan Agreement (collectively, the “Subordinate Bond
Documents”) are and shall be subordinated in all respects to the rights and obligations of the parties to and
under the FHA Loan Documents. In the event of any conflict between the provisions of (i) this Loan
Agreement or the Subordinate Bond Documents and (ii) the provisions of the FHA Loan Documents or the
Program Obligations, the provisions of the FHA Loan Documents or the Program Obligations shall control.
The provisions of this section shall control over any inconsistent provisions in this Loan Agreement or the
Subordinate Bond Documents. This Loan Agreement shall not be amended or modified without the prior
written consent of HUD.
Section 8.12 THE BONDS ARE LIMITED
Limitation on Liability of the Issuer.
OBLIGATIONS OF THE ISSUER PAYABLE SOLELY FROM THE PLEDGED REVENUES
(AS DEFINED IN THE INDENTURE) AND FROM OTHER MONEY PLEDGED UNDER THE
INDENTURE. NEITHER THE FAITH AND CREDIT OF THE COMMONWEALTH OF
VIRGINIA (THE “COMMONWEALTH”) NOR THE FAITH AND CREDIT OF ANY
POLITICAL SUBDIVISION THEREOF (INCLUDING THE ISSUER AND THE CITY OF
NEWPORT NEWS, VIRGINIA (THE “CITY”)) ARE PLEDGED TO THE PAYMENT OF THE
PRINCIPAL OF OR THE INTEREST OR PREMIUM, IF ANY, ON THE BONDS. THE
ISSUANCE OF THE BONDS SHALL NOT DIRECTLY OR INDIRECTLY OR
CONTINGENTLY OBLIGATE THE COMMONWEALTH OR ANY POLITICAL
SUBDIVISION THEREOF (INCLUDING THE ISSUER AND THE CITY) TO LEVY ANY
TAXES WHATEVER THEREFOR OR TO MAKE ANY APPROPRIATION FOR THEIR
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