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It is expressly stipulated and agreed by the Regulatory Agreement that any Disposition of the
Project by the Borrower in violation of this section shall be null, void and without effect, and shall be
ineffective to relieve the Borrower of its obligations under the Regulatory Agreement and the Loan
Agreement. The Borrower shall include by incorporation by reference or verbatim the requirements and
restrictions contained in the Regulatory Agreement in any deed or other documents transferring any
interest in the Project to another person to the end that such transferee has notice of and is bound by
such restrictions, and shall obtain the express agreement from any transferee so to abide. In the event
that the Issuer approves the Disposition of the Project in accordance with this section, and the transferee
has agreed to perform the obligations of the Borrower under the Loan Agreement and the Regulatory
Agreement in accordance with the terms and conditions of the Loan Agreement and the Regulatory
Agreement, the Borrower shall be released from its obligations under the Regulatory Agreement
automatically and without further action by the Issuer, and the Issuer shall confirm such release by
recordable written instrument, if requested to do so by the Borrower.
Except as permitted in the first paragraph of this section, so long as any portion of the Bonds
remains outstanding, there shall be no transfer by any party of more than a fifty percent (50%) ownership
interest in the Borrower, nor shall there be any other similarly significant change in the ownership
interest, control or relative distribution thereof, of the Borrower by any other method or means
including, but not limited to, increased capitalization, merger, corporate or other amendments, issuance
of additional or new stock or classification of stock, or otherwise, without the prior written consent of the
Issuer, which consent shall not be unreasonably withheld; provided, however, that this paragraph shall
not apply to transfers of the interests in the Borrower to the Federal Investor Limited Partner or of the
interests of the Federal Investor Limited Partner in the Borrower.
Any Disposition will be subject to the Issuer, the Trustee, and if the closing of the FHA Insured
Mortgage Loan has occurred, the FHA Lender, receiving an opinion of Bond Counsel that the transaction
contemplated and as carried out will not adversely affect the exclusion of the interest on the Bonds of
the holders thereof from gross income for federal income tax purposes.
The restrictions contained in the foregoing provisions of this section shall not be applicable to
any of the following exceptions, and the prior consent of the Issuer shall not be required as to such
exceptions: (i) any transfer pursuant to or in lieu of a foreclosure under the FHA Mortgage or other
similar disposition of the Project, (ii) grants of utility related easements and utility and other service
related leases or easements, including without limitation, laundry service leases or television cable
easements, over portions of the Project, provided the same are granted in the ordinary course of business
in connection with the operation of the Project as contemplated by the Regulatory Agreement, (iii) leases
of apartment units to Low Income Tenants or other tenants in accordance with the requirements of the
Regulatory Agreement, (iv) any sale or conveyance to a condemning governmental authority as a direct
result of a condemnation or a governmental taking or a threat thereof, and (v) any change in allocations
of preferred return capital, depreciation or losses or any final adjustments in capital accounts (all of
which may be freely transferred or adjusted by Borrower pursuant to Borrower鈥檚 Partnership
Agreement).
Enforcement
The Issuer, the Borrower and the Trustee each covenant that it will not knowingly take or permit
any action that would adversely affect the exemption from federal income taxation of interest on the
Bonds. Moreover, each covenants to take any lawful action (including amendment of the Regulatory
Agreement as may be necessary, in the opinion of Bond Counsel) to comply fully with the
requirements of the Act and with all applicable rules, rulings, policies, procedures, regulations or other
official statements promulgated or proposed by the Department of the Treasury or the Internal Revenue
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