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The benefits of this section and the section titled “Qualified Residential Rental Project” above
shall inure to, and may be enforced by, the Trustee and the Issuer and their successors and assigns for
the Qualified Project Period.
Sale, Lease or Transfer of the Project
Except as may be permitted by the Loan Documents (as defined in the Regulatory Agreement),
the Borrower shall not sell, lease (other than to resident tenants in the normal course of business),
exchange, assign, convey, transfer or otherwise dispose of all or substantially all of the Project or shall
not have a change in any manager of the Borrower (in the Regulatory Agreement collectively called
“Disposition”) without the prior written consent of the Issuer, and after the closing of the FHA Insured
Mortgage Loan, the FHA Lender (such Issuer consent not unreasonably to be withheld).
Notwithstanding anything to the contrary contained in the Loan Documents, (i) the transfer of interests
in the Borrower to the Federal Investor Limited Partner shall not constitute a default under any of the
Loan Documents or accelerate the maturity of the Loan and (ii) the withdrawal, removal and/or
replacement of Borrower’s manager for cause in accordance with Borrower’s Amended and Restated
Agreement of Limited Partnership (the “Partnership Agreement”) shall not require the consent of Issuer
and shall not constitute a default under any of the Loan Documents or accelerate the maturity of the Loan
so long as the manager is replaced with an affiliate of the Federal Investor Limited Partner. T h e Issuer
shall not unreasonably withhold its consent to the substitute manager if it is other than an affiliate of
the Federal Investor Limited Partner. Notwithstanding the foregoing, any substitute manager shall
assume all of the rights and obligations of the removed manager under all of the Loan Documents. It is
expressly agreed that in connection with determining whether to grant or withhold such consent to a
Disposition, the Issuer and the FHA Lender may (but are not obligated to) (i) consider the
creditworthiness of the party to whom such Disposition will be made, its ability to provide services
specifically to Low Income Tenants, its prior operation of lower income rental housing, its operation of
other housing facilities in the City, if any, and its management ability with respect to the Project; (ii)
consider whether or not any security for the performance of the obligations hereunder will be impaired
in any material way by the proposed Disposition; (iii) consider such other factors as the Issuer and the
FHA Lender may reasonably deem appropriate; (iv) require that the Issuer and the FHA Lender be
reimbursed for all reasonable costs and expenses incurred by the Issuer for investigating the
creditworthiness and management ability of the party to whom such Disposition will be made and in
determining whether the Issuer’s and the FHA Lender’s security will be impaired by the proposed
Disposition; (v) require the payment to the Issuer of a transfer fee equal to the reasonable costs of
investigating and approving the Disposition and documenting the Disposition in its records; (vi) require
the payment of its reasonable attorney’s fee in connection with such Disposition; (vii) require the
execution of modification agreements, supplemental security documents and financing statements,
where appropriate, reasonably satisfactory in form and substance to the Issuer and the FHA Lender, it
being understood and agreed that no material change shall be required to any of the terms and conditions
of the Loan Agreement, the Regulatory Agreement or any related instrument or agreement as a
condition for the approval of any such Disposition; and (viii) require the payment of the Ordinary
Issuer’s Fees (as defined in the Indenture) prorated to the date of disposition of the Project. The
foregoing provisions shall not operate to limit in any manner any requirements that the Borrower obtain
the consent of any other party to such Disposition under the terms of the Loan Agreement or any of the
other documents executed in connection with the Bonds.
The Borrower covenants that upon a Disposition, it will require the party to whom a Disposition
will be made to assume in writing, in a form acceptable to the Issuer, the Trustee, and if the closing of
the FHA Insured Mortgage Loan has occurred, the FHA Lender, all duties and obligations of the
Borrower under the Regulatory Agreement, including this section. The Borrower shall deliver the
assumption agreement to the Issuer, the Trustee and the FHA Lender concurrently with the Disposition.
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