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200605646 8. Owners shall not without thc prior writtcn approval of the Sccretary: a) Convey, transfer, or cncumber any of the mortgagcd property, or permit the conveyance, transfer, or encumbrance of such property. b) Assign, transfcr, dispose of: or encumber any personal property of the project, including rents, or payout any funds except from surplus cash, except for reasonable operating expenses and necessary repairs. c) Convey, assign, or transfcr any beneficial interest in any trust holding title to the property, or any right to manage or receive the rents and profits from the mortgaged property. d) Remodel, add to, reconstruct, or demolish any part of the mortgaged property or subtract from any rcal or personal property of the project. e) Make, or receive and retain, any distribution of assets or any income orany kind of the project except surplus cash and except on the following conditions: 1) All distributions shall be made only as of and after the end of semiannual or annual fiscal period, and only as permitted by the law of the applicable jurisdiction; and, in the case ofa limitcd distribution mortgagor, all distributions in anyone fiscal year shall be limited to six per centum on the initial cquity investment, as determined by the Secretary which shall be cumulative; 2) No distribution shall be made from borrowed funds, prior to the completion ofthe project or when therc is any default under this Agreement or under the note or mortgage; 3) Any distribution or any funds of the project, which the party receiving such funds is not entitled to retain hereunder, shall be held in trust separate and apart from any other funds; and 4) There shall have been compliance with all outstanding notices of requirement for proper maintenance of the project. f) Engage, except for natural persons, in any other business or activity, including the operation of any other rental project, or incur any liability or obligation not in connection with the project. g) Require, as a condition of the occupancy or leasing of any unit in the project any consideration or deposit othcr than the prepayment of the first month's rent, plus a security deposit in an amount not in exccss of one month's rent (the gross family contribution in Section 8 units) to guarantee the performance ofthe covenants of the lease. Any funds collected as sccurity dcposits shall be kept separate and apart from all other funds of the project in a trust account the amount of which shall at all times equal or exceed the aggregate of all outstanding obligations under said account. h) Permit the use of the dwelling accommodations of the project for any purpose except the use which was originally intended, or permit commercial use greater than that originally approved by the Secretary. 9. a) Owners have executed an Agreement to enter into a Housing Assistance Payments Contract or have cxccuted a Housing Assistance Payments Contract if an insurance upon completion case. The terms of said Contract are shall be incorporated by reference into this Regulatory Agreemcnt. b) A violation of the terms of the Housing Assistance Payments Contract may be construed to constitute a default hereunder in the sole discretion ofthe Secretary. c) In the cvent said Housing Assistance Payments Contract expires or terminates before the expiration or termination of this Agreement, the provisions of this paragraph 9 and any other reference to said contract, to Section 8 and to Section 8 units contained herein shall be self-canceling and shall no longer be effcctivc as of the date ofthe expiration or termination of the Housing Assistance Payments Contract. 10. Owncrs shall maintain the mortgaged premises, accommodations and the grounds and equipment appurtenant thereto, in good repair condition. In the event all or any ofthe buildings covered by the mortgage shall be destroyed or damaged by fire or other casualty, thc moncy derived from any insurance on the property shall be applied in accordance with the terms of the insured mortgage. 11. Owners shall not file any petition in bankruptcy or for a receiver or in insolvcncy or for reorganization or composition, or make any assignment for the benefit of creditors or to a trustee for creditors, or permit an adjudication in bankruptcy or the taking possession of the mortgaged property or any part thereof under judicial process or pursuant to any power of sale, and fail to have such adverse actions sct aside with forty-five (45) days. 3