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Service from time to time pertaining to obligations the interest on which is tax-exempt under Section
142(d) of the Code and affecting the Project.
If the Borrower defaults in the performance of its obligations under the Regulatory Agreement
or breaches any covenant, agreement or warranty of the Borrower set forth in the Regulatory
Agreement, and if such default remains uncured for a period of sixty (60) days after notice thereof shall
have been given by the Trustee or the Issuer to the Borrower and the Federal Investor Limited Partner
(or for an extended period approved in writing by Bond Counsel if such default stated in such notice
can be corrected, but not within such sixty (60) day period, and if the Borrower commences such
correction within such sixty (60) day period, and thereafter diligently pursues the same to completion
within such extended period), then (i) the Borrower agrees to pay the Issuer any rents or other amounts
received by the Borrower for any units in the Project which were in violation of the Regulatory
Agreement during the period such violation continued, and (ii) the Issuer or the Trustee may apply to
any court, state or federal, for specific performance of the Regulatory Agreement or an injunction
against any violation of the Regulatory Agreement or any other remedies at law or in equity or any such
other actions as it may deem necessary or desirable so as to correct noncompliance with the Regulatory
Agreement. Any cure of any event of default under the Regulatory Agreement made or tendered by the
Federal Investor Limited Partner shall be deemed to be cure by the Borrower, and shall be accepted or
rejected by the Issuer and Trustee on the same basis as if made or tendered by the Borrower.
Notwithstanding anything to the contrary stated in the Regulatory Agreement, the Indenture or
the Loan Agreement, the Issuer and the Trustee shall have the right to seek specific performance of any
of the covenants and requirements of the Regulatory Agreement concerning the rehabilitation and
operation of the Project. The Trustee and the Issuer shall have the right, either jointly or severally, to
enforce the Regulatory Agreement and require curing of defaults in such shorter periods than specified
above as Bond Counsel may determine necessary to maintain the tax-exempt status of interest on the
Bonds. The Trustee shall have the right in accordance with this section, following written notice to the
Issuer, to exercise any or all of the Issuer鈥檚 rights or remedies under the Regulatory Agreement.
The Issuer shall receive any reports submitted by the Borrower pursuant to the Regulatory
Agreement and shall monitor or cause to be monitored any such reports in accordance with the
standards set forth below. In performing their duties and obligations under the Regulatory Agreement,
the Issuer, the Trustee and their respective counsel may rely upon statements and certificates of the
Borrower and tenants and upon audits of the books and records of the Borrower pertaining to occupancy
of the Project.
The Borrower and the Issuer each acknowledges that the primary purposes for requiring
compliance by the Borrower with the restrictions provided in the Regulatory Agreement are to comply
with the requirements of the Act and to preserve the federal income tax exemption of interest on the
Bonds to the Bondholders, and that the Trustee on behalf of the Bondholders who are declared to be
third-party beneficiaries of the Regulatory Agreement shall be entitled, for any breach of the provisions
of the Regulatory Agreement, to all remedies both at law and in equity in the event of any default under
the Regulatory Agreement.
Notwithstanding the foregoing, enforcement of the Regulatory Agreement shall not serve as a
basis for acceleration of the Loan or result in any claim under such Loan, or claim against the Project,
the proceeds of the Loan, or against the rents or other income from the Project (other than Surplus Cash)
for payment under the Regulatory Agreement.
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