West Orange Township_Fourth Round HEFSP_Final Draft

cuted, delivered and accepted subject to such covenants, reservations and testrictions regardless of whether such covenants, reservations and restrictions are set forth in such contract, decd or other instruments. Ifa portion or portions of the Land or Project are conveyed, all of such covenants, reservations and restrictions shall run to each portion of the Project and Land. Section 7. Term. This Agreement shall remain in full force and cffect until all indebtedness from the Owner to the Ageacy in respect to the Project shail have been paid in full in accordance with the provisions of this Agreement, the Mortgage Note and the other Loan Documents. Section 8. Construction or Rehabilitation of Project. The Owner covenants and agrees to comply with ali the provisions of the Architect's Contract and/or Construction Contract, as applicable. The Owner covenants and agrees diligently to pursue the construction or rehabilitation of the Project to completion in accordance with the plans and specifications set forth in the Owner's application for the Loan and the Architect's Contract and as approved by the Agency. 9

‘The Owner shail not approve or allow to occur any material change in the scope of plans and specifications for the Project without the express approval of the Agency. Construction or rehabilitation shall at all times be subject to the discretionary inspection, discretionary review, regulation and approval of the Agency and its duly authorized representatives, Any such inspection. regulation. review or approval of the Agency shall be solcly for its benefit for the purpose of assuring that the programs and goals of the Project are being fulfilled. The Owner shali not knowingly do any act which would cause the relcase, in whole or in part, of the surety bond or bonds issued in connection with the Architect’s Contract or Construction Contract, as applicable, including. without limitation, deviation from the payment schedule, waiver of any material requirements imposed on the architect or any contraclor or subcontractor under the Architect’s Contract or Construction Contract. as applicable, or consent to any major change in the in the scope of plans and specifications or scope of the work, unless such act would not cause any release becausc the surety has consented thereto. Section 9. Funding and Conditions Precedent toa Advance. A. Funding of Construction or Kehabilitation: Upon and subject to the terms and conditions of this Agreement, the Mortgage and Mortgage Note, the Agency agrees to advance and disburse the principal sum of $239.922 as follows: The balance of the Principal Sum of $239,922 remaining after disbursement of acquisition costs shall be made only after the Agency has received and approved, subject to its sole discretion, all items required for closing on the Agency Document Checklist for Construction and Permanent Financing. a B. Conditions Precedent to: Advance: The Agency's obligations to make the other disbursement under the Mortgage shall be subject to the satisfaction of the followmg conditions precedent, any of which may be waived in whole or part by the Agency. 1. Each of the Owner's covenants, agrcements, representations and warranties contained in this Agreement shail continue to be true and shall not be breached. 2. applicable, the full amount of the previous advance shall have been expended for Land acquisition, costs and discharge of any related lien. 3. Ail work performed and material furnished for the Project shall be in

he full amount of the previous advance shall have been expended for Land acquisition, costs and discharge of any related lien. 3. Ail work performed and material furnished for the Project shall be in accordance with the plans and specifications for the Project and ali work shali have been properly performed to the satisfaction of the Agency. 4. No event shall have occurred and no conditions shall exist that would prevent the advance from becoming a valid second mortgage lien on the Project and the Land or secured by a 10

prior protected security interest on any other collateral mentioned in the Mortgage. If the Agency shall deen? it necessary or desirable, all or part of the advance may be disbursed in escrow to a title insurance company licensed to do business in the State of New Jersey for the purpose of discharging any construction or other lien on the Project and Land or any other security mentioned in the Mortgage: and the Owner agrees to certify in writing that the toregoing conditions have been sausfied. Section [0. Insurance; Condemnation. During the term of the Agency Financing. the Owner shall cause all the buildings on the premises and the fixtures and articles of personal property covered by the Loan Documents to be insured against loss by fire and against loss by such other hazards as may be required by the Agency for the benefit of the Agency including, bul not by way of limitation, flood insurance if any part of the Project is located in an arca designated by or on behalf of the federal government as having specific flood hazard. Such insurance shall be written by companies, in forms as are satisfactory to the Agency, and in amounts not less than the full replacement valuc of the Project. The Owner shall assign and deliver the policies to the Agency, Ali such insurance policies which are obtained by the Owner during the term of the loan shail fully comply with all Agency requirements for property and liability insurance, including but not limited to the Agency requirement that the insurer must mect certain rating standards. ‘The Agency shall be listed as mortgagee, loss payee and additional insured ander such policies. Such policies shall provide that the insurer may not cancel the policy and will not refuse to renew the policy except after thirty (30) days written notice to the Agency, If the Owner does not provide the Agency with the evidence of insurance as required hercin, the Agency may (but shali not be required to) obtain such coverage. The Owner shall reirnourse the Agency on demand for any premiums paid for insurance procured by the Agency, and until so reimbursed, the amount of such premiums shall be added to the principal sum of the Mortgage Note and shall bear intcrest at the same interest rate as in the Mortgage Note. {n the event of substantial damage to the Project by the occurrence of an insured casualty or the taking of a substantial

te and shall bear intcrest at the same interest rate as in the Mortgage Note. {n the event of substantial damage to the Project by the occurrence of an insured casualty or the taking of a substantial portion of the Project by condermnation, if, in the sole judgment of the Agency (which judgment shall be conclusive): (a) the Project can be replaced or restored in whole or in part, and (b) the Project as so replaced wil! produce sufficient income to meet the obligations of the Owner under the Loan Documents, the proceeds of insurance or condemnation, together with any other money available for such purpose, if sufficient, shall be made available to the Owner, subject to the approval of the Agency. ‘Yo the extent the Project is not replaced or restored, the balance of such proceeds shall be applied to the indebtedness secured thereby. Nothing in this Section shall affect the lien of this Agreement and the obligation of the Owner under the Loan Documents to pay the entire balance of the Loan. The Owner shall maintain continuously in effect such other insurance coverage of the types and in the amounts specified by the Agency. including workers” compensation insurance and other insurance required by law with respect to employees of the Owner, and liability insurance, protecting the Owner and the Agency against any loss or liability or damage for personal injury or property damage with respect to the Project. Owner shall also maintain use and occupancy insurance covering loss of revenues derived from the Project by reason of interruption, total or partial, of the use of the Project resulting {rom loss or physical damage thereto in an amount not less than one year's gross tt

rental ncome.: The Owner shall carry fidelity bond insurance covering all employees of the Owner authorized to handle the revenucs denved trom the Project in an amount equal to one-half times the maximum monthly reni roll Section 11. Taxes or Payments in Lieu of Faxes. Unless the Owner has received a full tax exemption for the taxes on the Project at the time the Owner takes title to the Project, the Owner covenants and agrees to pay any valid municipal taxes, payments in lieu of taxes, charges. assessments, water charges andor sewer charges, and in default thereof the Agency may pay the same. Any such sur oF sums so paid by the Agency shall be added to the principal sum secured by the Mortgage. as determined by the Agency, and shall bear interest at the then current rate being received by the Agency on its investment as determined in good faith by the Agency. Section 12. Liens. The Owner covenants and agrees to maintain its right, title and interest in the Project and Land and ail items enumerated in Section 7 of the Mortgage free and clear of all liens and security interests. except Permitted Encumbrances, those exceptions identified and set forth in litle insurance commitments and title insurance commitment number 278731 issued by Chicago Title Insurance Company dated March 1, 2010, and cantinued to the date of this Agrecment, as accepted by the Agency. Except with the written consent of the Agency, the Owner will not install any item of tangible personal property as part of the fixtures or furnishings of the Project, which is subject to a purchase money licn or security interest. The Agency may, at its sole option, pay the amount necessary to discharge any such len, and the Owner shall promptly reimburse the Agency for any amounts so paid. Until reimbursement of the Agency of any amounts so paid, such amount shall be added to the Principal Sum as defined in and secured by the Mortgage. as determined by the Agency, and shall bear interest at the then current rate being received by the Agency on its investments as determined in good faith by the Agency. Ye Section 13. Encumbrances - Sale of Project. ‘The Owner covenants and agrees not to sell, lcase or otherwise encumber the Project or the Land, or any part thereof, or the rents or revenues thereof without prior written consent of the Agency. except by leasing to eligible residential tenants as

e or otherwise encumber the Project or the Land, or any part thereof, or the rents or revenues thereof without prior written consent of the Agency. except by leasing to eligible residential tenants as provided by the Mortgage and this Agreement, \ Section 14.\Mainienance, Repair and Replacement. The Owner covenants and agrees to maintain the Project and the appurtenant equipment and grounds in goad repair and condition so as to provide decent, safe and sanitary housing accommodations. Following completion of construction or rehabilitation, the Owner will not make any substantial alteration in the Project without the consent of the Agency, nor will the Owner permit the removal of any fixtures or articles of personal property except in connection with the replacement thereof with appropriate property of at least equal value and free of all liens or claims. The Owner will not permit any waste with respect to the Project or any of tts real or personal property without the consent of the Agency, or make any alteration which will increase the hazard of fire or other casualty.

Section 15, . Advance Amortization Payments, The Owner shall not make any advance principal repayment except as allowed by the Program and Program Guidelines. Section 16. Compliance with the Program, the Act, Agency's Regulations and Any Federal or State Subsidy Source. The Owner covenants and agrees to comply with the Program. the Act and any regulations promulgated pursuant thereto, and with any amendments or supplements to the Program, the Act or regulations. Throughout the term of this Agrcement, the Owner further covenants and agrees to comply with any and all requirements imposed upon it as a condition of any federal or state grant, subsidy or loan. Section 17. Use of Project- Leasing. Except as otherwise expressly provided in Section 3 and 4 of this Agreement or as otherwise agreed to in writing by the Agency, and except for facilities approved by the Agency as normally appurtenant to residential projects for nan-transients (such as laundry facilities), the Project shall be used seicly (or as otherwise may be approved by the Agency) to provide affordable housing units for a special nceds population(s) under the Agency's Program Section 18. Consideration for Lease. The Owner covenants and agrees not to require as a condition of the occupancy or leasing of any dwelling unit in the Project and not ta accept or allow any cmployee or agent to accept any consideration other than the prepayment of the first month's rent, plus a sccurity deposit not in excess of one (1) month’s rent to guarantee the performance of the covenants of the rent agreement or lease. Section 19. Security Deposit The Owner covenants and agrees to deposit all moneys paid to the Owner by any resident, if any, as a security deposit for the payment of rent or other allowable charges under any use and occupancy agreement and/or lease in a separate interest bearing bank account held and maintained in accordance with applicable law. Section 20. Account for Project Revenues/Operating Account. The Owner covenants and agrecs to establish an account for Project Revenues specific io the Project. “Project Revenues” shall mean al] rents and other revenues of any type whatsoever received in respect of the Project or the Owner, except for Loan dishursements. Project Revenues shall be deposited in such account and all operating expenses should be paid from this account. Section 21, Reserve and

ct of the Project or the Owner, except for Loan dishursements. Project Revenues shall be deposited in such account and all operating expenses should be paid from this account. Section 21, Reserve and Escrow Payments. On the date of the execution of this Agreement, the Owner will deposit with the Agency the following amounts as shown on the closing budget for the Project (“Form 10°) which will serve as a reserve against late payments and be available to pay expenses when due or be available to assist with project expenses. These amounts will comprise the Special Needs Project Escrow: (a) an amount equal to twelve (12} months of the estimated annual insurance payments: and {b) an amount equal to twelve (12) months of the estimated annual tax payments; and (c} an amount(s) as stated on the Form 16 for a project escrow. 43

Additionally, the Owner will deposit an amount as agreed upon between the Borrower and the Agency tor the Project as a reserve for repairs and replacement of items at the Project and initial project costs, excluding social service and/or operating costs. Additionally. the repair and replacement reserve will be funded quarterly by the Borrower with an amount cqual to three (3} months repair and replacement reserve as shown on the Project's Form 10. This reserve will be separate from the Special Needs Project fiscrow and will be known as the Repair and Replacement Reserve. All reserve and escrow payments required pursuant to this Section shall be held in accounts under the sole control of the Agency and shall be paid out for the benefit of the Project as needed on request of the Owner or on the Agency’s own initiative. Any mterest which may be eamed on such reserves shall remain in the escrow account and shal! be used for similar purposes unless the Owner and Agency motually agree to apply the funds to some other Project purpose. Ifthe Agency determines that the payments specified herein are msufficient to ensure prompt payment of taxes. payments in lieu of taxes, insurance premiums. or to properly fund painting, decorating. repair and replacement needs with respect to the Project, then the Agency may require an increase in the minimum required escrow amounts necessary to assure proper funding. Section 22. Inspection of Premises. The Owner covenants and agrees to permit the Agency, its agents or representatives, to inspcet the Project at any and al! reasonable times with or without notice, pursuant to the provisions of the Act and the Program, Section 23. Books and Records. The Owner covenants and agrees to maintain adequate bgoks and records of its transactions, ineluding the social services provided to the Project's residents, with respect to the Project in the Owner's standard form. Such backs and records shall be available for inspection and audit by the Agency or its agents at any time during business hours, with notice, pursuant fo the provisions of the Act and the Program. The Owner further covenants and agrees to cause the financial affairs with respect to the Project to be audited by independent certified public accountants and shall furnish the Agency with its audit report of such accountants as may from time to time be required by the