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-10- 200702332 The Owner shall be under no obligation to deposit any additional sums of money into the Reserve for Replacements Account under this Regulatory Agreement until the FHA-Insured First Mortgage Regulatory Agreement is extinguished (or otherwise does not exist). Upon termination (or in the absence) of the FHA-Insured First Mortgage Regulatory Agreement this paragraph shall become operative for the purpose of continuing to maintain the Reserve for Replacements Account to cover the cost of major replacements that are for the purpose of effecting replacement of structural elements and mechanical equipment of the Project or for any other purpose approved by HUD. The reserve for replacement fund shall be in a separate account in a bank which is a member of the Federal Deposit Insurance Corporation, Savings Association Insurance Fund, or the National Credit Union Share Insurance Fund. Beginning upon the termination of the FHA-Insured First Mortgage Regulatory Agreement, the Owner agrees to deposit a monthly amount equal to the amount deposited in the Reserve for Replacements Account for the month immediately prior to the termination of the FHA-insured first mortgage. The amount of the monthly deposit will be increased annually by the published Operating Cost Adjustment Factor, and may be otherwise increased or decreased from time to time at the written direction of HUD, without a recorded amendment to this Agreement. The Owner agrees to carry the balance in this fund on the financial records as a restricted asset. The Owner agrees that disbursements from such fund may be made only after receiving the consent in writing of the Secretary or his designee. In the event of a default in the terms of the Note(s), pursuant to which the Security Instrument(s) has/have been accelerated, the Secretary may apply the balance in such fund to the amount due on the Note(s) as accelerated. 4. Amendment and revision of Paragraph 8 of this Regulatory Agreement. Paragraph 8 of this Regulatory Agreement is hereby amended and revised to read as follows: Owner shall not without the written approval of the Secretary: (a) Transfer, assign, pledge, dispose of, encumber or allow easements on any of the mortgaged property. Any such transfer shall be only to a person or persons or corporation satisfactory to and approved by HUD, who shall, by legal and valid instrument in writing, to be recorded or filed in the same recording office in which conveyances of the property covered by the Mortgages are required to be filed or recorded, duly assume all obligations under this Agreement and under the Notes and Mortgages. (b) Assign, transfer, pledge, dispose of, or encumber any personal property, including rents or charges, and shall not disburse or payout any funds except as provided herein and in the Mortgage Restructuring Note or the Contingent Repayment Note, as applicable. (c) Remodel, reconstruct, add to, or demolish any part of the mortgaged property or subtract from any real or personal property of the project except as necessary to provide a reasonable accommodation or modification; (d) Pay any compensation or make any distribution of income or other assets of any kind except as provided in the Mortgage Restructuring Note or the Contingent Repayment Note, as applicable; (e) Engage, except for natural persons, in any business or activity, including the operation of any other project, or incur any liability or obligation not in relation with the project; HUO~92465 (7-77)