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\ 200509638 residual receipts account. Residual receipts shall be under the control of HUD and shall be disbursed only at the discretion of HUD for such purpose as it may determine to be necessary or appropriate. 6. The real property covered by the Mortgage and this Agree- ment is described in Schedule A attached hereto. 7. Mortgagor shall not without the written approval of the Secretary; (a) Transfer, dispose of or encumber 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 Mortgage are required to be filed or recorded, duly assume all obligations under this Agreement and under the Note and Mortgage; (b) Assign, transfer, dispose of, or encumber any personal property, including rents orcharges, and shall not dis- burse or payout any funds except as provided herein and in the Capital Advance Agreement. (c) Remodel, reconstruct, add to, or demolish any part of the mortgaged property or subtract from any real or personal property of the project; (d) Pay any compensation or make any distribution of income or other assets to any of its officers, directors or stockholders; (e) Enter into any contract or contracts for supervisory or managerial services; (f) Require as a condition of occupancy or leasing of any unit or residential space in the project, any consider- ation or dcposit other than a security deposit in an amount equal to one month's total tenant payment or $50, whichever is greater. The family is expected to pay the security deposit from its own resources and other available public or private resources. The Mortgagor may collect the security deposit on an installment basis. The security deposits must be placed in a segregated interest-bearing account. A record shall be maintained of the amount in this account that is attributable to each family in residence in the project. Annually for all families, and when computing the amount available for disbursement, the Mortgagor shall allocate to the family's balance, the interest accrued on the balance during the year. Unless prohibited by State or local law, theMortgagor may deduct for the family, from the accrued interest for the year, the administrative cost of computing the allocation to the family's balance. The amount of the administrative cost adjustment shall not exceed the accrued interest allocated to thc family's balance for the year. The amount of the segregated, interest-bearing account maintained by the Mortgagor must at all times equal the total amount collected from the families then in occupancy plus any accrued interest and less allowable administrative cost adjustments. Page 2 of 5 The Mortgagor must comply with any applicable State and local laws concerning interest payments on security deposits. The Mortgagor, subject to State and local law, may use the family's security deposit balance as reimbursement for any unpaid family contribution or other amount which the family owes under the lease in accordance with the Regulations. (g) Permit the use of the dwelling accommodations of the project for any purpose except the use which was origi- nally intended, or permit commercial use greater than that originally approved by HUD. (h) Amend its articles of incorporation or by-laws other than as permited under the terms of the articles of incorporation approved by HUD. 8. Mortgagor shall maintain the mortgaged premises, accom- modations and the grounds and equipment appurtenant thereto, in good and substantial repair and condition; pro- vided that, in the event all or any of the buildings covered by the Mortgage shall be destroyed or damaged by fire or other casualty, the money derived from any insurance on the property shall be applied in accordance with the terms of the Mortgage. 9. Mortgagor shall not file any petition in bankruptcy or insolvency, or for a receiver, or for reorganization or com- position, or make any assignment for the benefit of creditors or to a trustee for creditors; or permit an adjudication in bankruptcy, or insolvency, the taking possession of the mortgaged property or any part thereof by a receiver, or the seizure and sale of the mortgaged property or any part thereof under judicial process or purusant to any power of sale and fail to have such adverse actions set aside within 45 days. 10. Mortgagor shall from funds other than project income im- mediately satisfy or release any mechanic's lien, or any other lien which attaches to the mortgaged property or any personal prop-erty used in the operation of the proj ect, and shall dismiss or have dismissed or vacated any receivership, or petition in bank-ruptcy or assignment for benefit of creditors, creditors bill or insolvency proceeding involving the project or the mortgaged property. 11. (a) If the Mortgagor has or comes to have any nonproject funds, all income and other funds of the mortgaged project shall be segregated from any such funds of the Mortgagor and segregated from any funds of any other corporations or persons. Income and other funds pledged to the mortgaged project shall be expended only for the purposes of the project. (b) Mortgagor shall provide for the management of the project satisfactory to HUD. Any management contract entered into by the Mortgagor involving the project shall contain a provision that it shall be subject to termination, without penalty and with or without cause, upon written request by HUD addressed to the Mort- gagor and the management cgrt:. lfn1. ~ of s..d1 req.mt. de M::rt.g:g::a:" mill IDrnrli.ately rro.e to teJ:m:inate form HUD.92466.CA (4/92) ref. Handbook4571.4 & 4571.5