Multifamily Project Applications and Construction Prior to Initial Endorsement

OMB Control #2502-0029

Exp. xx/xx/xxxx

RIDER TO REGULATORY AGREEMENT MULTIFAMILY HOUSING PROJECTS HUD-92466 (Section ___)

Residential Tenant

THIS RIDER TO REGULATORY AGREEMENT- MULTIFAMILY HOUSING PROJECTS (“Rider”) is by and between _________________________, a ___________________________ (the "Residential Tenant"), and the SECRETARY OF HOUSING AND URBAN DEVELOPMENT (the "Secretary" or “HUD”).

RECITALS:

WHEREAS, _______________________________, a ____________________________________ (“Owner”) owns the fee interest in certain tracts or parcels of land located in the _____________________, _____________________ and more particularly identified on Exhibit A attached hereto and made a part hereof (the “Property”), including the improvements now existing and/or hereafter rehabilitated or constructed located thereon (collectively, the “Improvements,” which together with the Property are sometimes collectively referred to herein as the “Mortgaged Property”); and

WHEREAS, the Owner intends to rehabilitate certain Improvements in a manner that qualifies for federal and state historic rehabilitation tax credits (collectively, “Historic Tax Credits”), and also utilize New Markets Tax Credits (“NMTC”), to facilitate the planned rehabilitation of and construction on the Mortgaged Property (the “Project”);

WHEREAS, upon completion, the Project will consist of ____________________________________________________________ (the “Multifamily Portion”), _____________________________________ (“Office Portion”), ___________________________ (“Retail Portion,”), and ________________________________ (the “Parking Garage, which together with the Retail Portion and Office Portion are sometimes collectively referred to as the “Commercial Portion”);

WHEREAS, to maximize the benefits of the Historic Tax Credits and NMTC, the Owner has requested that HUD permit, with respect to an application for mortgage insurance purposes, a transaction (the “Transaction”) that will include Owner entering into a lease of the Mortgaged Property (the “Master Lease”) with ________________________________, a ______________________ (the “Master Tenant”);

WHEREAS, the Owner has further requested that HUD allow Master Tenant to sublease the Commercial Portion (“Master Commercial Sublease”) to ___________________________, a __________________________ (the “Commercial Tenant”) and the Multifamily Portion (the “Master Residential Sublease” and, together with the Master Commercial Sublease, the “Sublease(s)”) to Residential Tenant; and

WHEREAS, to finance the Project the Owner intends to utilize, among other sources, the proceeds from a ________________________________________________________ ($___________________) loan to be insured under section ___ of the National Housing Act (“FHA-Insured Loan”), and Owner, Master Tenant, Residential Tenant and Commercial Tenant have each agreed to execute a separate HUD prescribed regulatory agreement (respectively, a “Regulatory Agreement”), with a rider attached to provide HUD with additional protection now and as reasonably may be deemed necessary from time-to-time in the future by HUD, with respect to the FHA-Insured Loan, the Transaction, and the operation of the Mortgaged Property.

NOW, THEREFORE, for and in consideration of the premises and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:

1. Incorporation of Recitals/Definitions. The foregoing recitals are hereby incorporated by reference as if fully set forth herein.

2. Definitions/Applicability.

1. Residential Tenant is executing this Rider to amend and supplement the Regulatory Agreement (the Regulatory Agreement and this Rider are collectively referred to herein as the “Residential Tenant Regulatory Agreement”).

2. Except as otherwise provided, capitalized terms defined herein are for the purpose of convenience with respect to this Rider, and do not change or otherwise affect terms defined or used in the Regulatory Agreement.

3. The undertakings and obligations stated to be the Owner’s under the Residential Tenant Regulatory Agreement are hereby deemed to be obligations of the Residential Tenant, substituting Residential Tenant for Owner in the Regulatory Agreement except to the extent that Residential Tenant is incapable of performing, or otherwise should not be required to perform, such undertaking or obligation. The Residential Tenant’s capability or requirement to perform an undertaking or obligation shall be determined by HUD. For example, by way of illustration but not limitation, the Residential Tenant is not obligated to make payments due under the note and mortgage, as required under paragraph 1 of the Regulatory Agreement, but Residential Tenant is obligated to provide to HUD the annual financial report required under paragraph 9(e) of the Regulatory Agreement.

3. Master Residential Sublease and Remedies.

1. Residential Tenant covenants and agrees to comply with all of the terms and conditions contained in the Master Residential Sublease. A Master Residential Sublease default by Residential Tenant beyond any reasonable cure period that may be provided therein is a default default under the Residential Tenant Regulatory Agreement. Such default does not require notice and an opportunity to cure, as a condition to HUD’s exercise of remedies available under the Residential Tenant Regulatory Agreement.

2. The Residential Tenant agrees that the Master Residential Sublease (i) incorporates the obligations and undertakings of the Residential Tenant under the Residential Tenant Regulatory Agreement, as additional covenants and agreements under the Master Residential Sublease, and (ii) shall not be modified or amended, without the prior written consent of HUD. An uncured default under the Residential Tenant Regulatory Agreement shall be deemed to be an incurable default under the Master Residential Sublease.

3. Upon Residential Tenant’s receipt of notification of the issuance of a notice of a default under the Regulatory Agreement between HUD and the Owner or HUD and the Master Tenant, or a default under any other document that is executed to evidence, secure or otherwise executed in connection with the FHA-Insured Loan, Residential Tenant agrees to pay all rent due Master Tenant under the Master Residential Sublease to HUD or to the FHA-Insured Loan mortgagee (“Mortgagee), as directed by HUD. Moreover, Residential Tenant agrees that in the event that the FHA-Insured Loan is assigned to the Secretary, at HUD’s election and upon thirty (30) days notice to Residential Tenant at any time thereafter the Master Residential Sublease shall terminate. Further, Residential Tenant acknowledges and agrees that a default by Master Tenant under the Master Lease that results in the termination of the Master Lease will cause the termination of the Master Residential Sublease.

4. The Master Residential Sublease, including without limitation the estate and rights created thereunder, is and shall remain fully subordinate to the FHA-Insured Loan and to the documents that are executed to evidence, secure or otherwise executed in connection with the FHA-Insured Loan.

3. Further Conveyance.

1. Notwithstanding the prohibition contained in paragraph 6(a) of the Regulatory Agreement against the conveyance or transfer of any interest in any of the Mortgaged Property, HUD approves the (sub)subleasing by the Residential Tenant of the Multifamily Portion, in a commercially reasonable and practical manner.

2. Without limiting any regulatory or administrative controls, or paragraph 6(c) of the Regulatory Agreement, Residential Tenant agrees not to permit or suffer a conveyance, transfer or encumbrance of any interest in the Residential Tenant, directly or indirectly, without the written consent of HUD.

3. Surplus Cash

Without limiting any provision of the Residential Tenant Regulatory Agreement, Residential Tenant specifically acknowledges and agrees to conform to and be bound by the limitations and controls with respect to Distribution(s) and Surplus Cash, as defined and contained in the Residential Tenant Regulatory Agreement. Surplus Cash will be determined as if the Mortgaged Property is owned and operated by one single purpose entity, by consolidating all income derived from the Mortgaged Property by the Owner, Master Tenant, Commercial Tenant and Residential Tenant (collectively, “All Parties”),

(a) and, then determining and excluding therefrom the reasonable expenses incident to the operation and maintenance of the Mortgaged Property, the expenditure and accounting of which shall be governed by HUD regulations, handbooks, guides, directives and the FASS-MF system guides. The cost of oversight by tax credit agencies, including asset management fee, are entity expenses and may not be deemed to be an expense of the Mortgaged Property.

(b) Distributions of Surplus Cash are permitted subject to the full compliance by All Parties (i) of each party’s undertakings and obligations under their respective Regulatory Agreement, as amended and (ii) with all other applicable statutory and regulatory provisions and obligations to and/or contracts with HUD, including applicable HUD directives.

(c) When available as a Distribution, Surplus Cash may be shared among All Parties in the amounts and manner determined by such parties.

3. Additional Compliance.

1. Residential Tenant covenants and agrees to comply with all HUD statutes, regulations, and directives with respect to the FHA-Insured Loan, to the extent HUD deems applicable, consistent with section 2. (c) above, as if Residential Tenant is the mortgagor thereunder.

2. Without limiting the foregoing, there shall be full compliance with the provisions of (i) any State or local laws prohibiting discrimination in housing on the basis of race, color, creed, or national origin; and (ii) with the Regulations of the Federal Housing Administration providing for non-discrimination and equal opportunity in housing. It is understood and agreed that failure or refusal to comply with any such provisions shall be a proper basis for HUD to take any corrective action deemed necessary including, but not limited to, the refusal to consent to a further renewal of the Master Commercial Sublease, and the refusal to enter into future contracts of any kind in which the Residential Tenant is identified; and further, if the Residential Tenant is a corporation or any other type of business association or organization which may fail or refuse to comply with the aforementioned provisions, HUD shall have a similar right of corrective action (iii) with respect to any individuals who are officers, directors, trustees, managers, partners, members, associates or principal stockholders of the Residential Tenant; and (iv) with respect to any other type of business association, or organization with which the officers, directors, trustees, managers, partners, members, associates or principal stockholders of the Residential Tenant may be identified.

3. Residential Tenant recognizes that annual financial reports required under paragraph 9(e) of the Regulatory Agreement cannot, at this time, be filed electronically in HUD’s FASS-MF system. Residential Tenant agrees to submit such reports to HUD on paper, but otherwise in conformance with the electronic filing requirements of the FASS-MF system. Upon direction from HUD, Residential Tenant agrees to utilize the FASS-MF system to file annual financial reports.

(d) Two initial operating deficit escrows (“IOD(s)”) are being established contemporaneously with the execution of this Residential Tenant Regulatory Agreement, pursuant to terms and conditions contained in the Firm Commitment for mortgage insurance, one for the Multifamily Portion and another for the Commercial Portion of the Mortgaged Property. Residential Tenant agrees to cooperate fully with the O2wner to process from time to time the release of funds from the IODs.

7. Security Interest. Contemporaneous with the execution of the Residential Tenant Regulatory Agreement and the funding of the FHA-Insured Loan, Residential Tenant is executing the Master Residential Sublease which contains a security agreement that encumbers all personal property owned by the Residential Tenant and used in the operation or maintenance of the Mortgaged Property, to secure its performance under the Master Residential Sublease, which Master Residential Sublease (including the security agreement contained therein) is being collaterally assigned to secure further the Mortgagee.

8. Statutory Penalties. Notwithstanding that Residential Tenant is not the mortgagor or owner of record, for purposes of establishing liability for Residential Tenant's actions, Residential Tenant agrees to be treated as an "owner" or a "mortgagor" under the double damages provision at 12 U.S.C. § 1715z-4a, the equity skimming penalty under 12 U.S.C. §1715z-19, and the civil money penalty under Section 537 of the National Housing Act, 12 U.S.C. § 1735f-15.

9. Further Assurances. Residential Tenant and HUD each agree to execute and deliver all additional instruments and/or documents reasonably required by either party to this the Residential Tenant Regulatory Agreement to further evidence or confirm the intent of the Residential Tenant Regulatory Agreement.

10. Headings. The headings or titles to the sections of this Rider are inserted for convenience only and shall not be deemed a part hereof or affect the construction or interpretation of any provisions hereof.

Residential Tenant

By: ________________________________

Name: ______________________________

Title: _______________________________

Date: ________________________

Secretary of Housing

and Urban Development

By:_________________________

Authorized Agent

Date:________________________

[ADD ACKNOWLEDGMENTS FOR RECORDING PURPOSES]

Form HUD-92466-R2

Ref Handbook 4571.1