West Orange Fourth Round HEFSP_adopted 111025_Appendices

The Owner shall 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 solely for its benefit for the purpose of assuring that the programs and goals of the Project are being fulfilled. The Owner shall not knowingly do any act which would cause the release, 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 contracto: contractor under the Architect’s Contract or Construction Contract, as applicable, or con: major change in the in the scope of plans and specifications or scope of the work, unl act would not cause any release because the surety has consented thereto. Section 9. Funding and Conditions Precedent té,Advance. A. Funding of Construction or Rehabilitatio: Upon and subject to the terms and conditi this Agreement, the Mortgage and Mortgage rincipal sum of $239,922 as follows: Note, the Agency agrees to advance and “aN * The balance of the Principal Supe Sap ,922 remaining after disbursement of acquisition costs shall be made only after the Age eceived and approved, subject to its sole discretion, all items required for closing on the, Document Checklist for Construction and Permanent Financing. 4) this Agreement shall continue to be true and shall not be breached. 2. If applicable, the full amount of the previous advance shall have been expended for Land acquisition, costs and discharge of any related lien. 3. All work performed and material furnished for the Project shall be in accordance with the plans and specifications for the Project and all work shall 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 deem 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 foregoing conditions have been satisfied. Section 10. 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 th an Documents to be insured against loss by fire and against loss by such other hazards as m: for the benefit of the Agency including, but not by way of limitatio the Project is located in an area designated by or on behalf of specific flood hazard. Such insurance shall be written by cor the Agency, and in amounts not less than the full replaceme; assign and deliver the policies to the Agency. All such insu licies which are obtained by the Owner during the term of the loan shall fully comply wath all cy requirements for property and liability insurance, including but not limited to the A; requirement that the insurer must meet certain rating standards. The Agency shall be listed gee, loss payee and additional insured under such policies. Such policies shall provide insurer may not cancel the policy and will not refuse to renew the policy except afte lays written notice to the Agency. If the Owner does not provide the Agency with th e of insurance as required herein, the Agency may (but shall not be required to) obtain Pad rage. The Owner shall reimburse the Agency on demand for any premiums paid for insuxancéprocured by the Agency, and until so reimbursed, the amount of such premiums shall be a the principal sum of the Mortgage Note and shall bear interest at the same interest rate.as i ortgage Note. government as having is as are satisfactory to e Project. The Owner shall In 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 condemnation, if, in the sole judgment of the Agency (which judgment '‘Shiall be conclusive): (a) the Project can be replaced or restored in whole or in

king of a substantial portion of the Project by condemnation, if, in the sole judgment of the Agency (which judgment '‘Shiall be conclusive): (a) the Project can be replaced or restored in whole or in part, and (b) the Rrojégt as so replaced will produce sufficient income to meet the obligations of the Owner under'the Beafi Documents, the proceeds of insurance or condemnation, together with any other mon: ulable for such purpose, if sufficient, shall be made available to the Owner, subject to the appreyal of the Agency. To 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 from loss or physical damage thereto in an amount not less than one year's gross It

rental income.: The Owner shail carry fidelity bond insurance covering all employees of the Owner authorized to handle the revenues derived from the Project in an amount equal to one-half times the maximum monthly rent roll. Section 11. Taxes or Payments in Lieu of Taxes. 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 and/or sewer charges, and in default thereof the Agency may pay the same. Any such sum or 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 ee Section 12. Liens. The Owner covenants and agrees to maing in the Project and Land and all items enumerated in Section 7 of th¢ liens and security interests, except Permitted Encumbrances, those@ in title insurance commitments and title insurance commitrnyeé t 278731 issued by Chicago Title Insurance Company dated March 1, 2010, and conti the date of this Agreement, as accepted by the Agency. Except with the written ne of thé*A gency, the Owner will not install ony right, title and interest pigage free and clear of all tiotts identified and set forth any item of tangible personal property as part of the fi s or furnishings of the Project, which is subject to a purchase money lien or security interest. The Agency may, at its sole option, p: ; int necessary to discharge any such lien, and the Owner shail promptly reimburse the A; any amounts so paid. Until reimbursement of the Agency of any amounts so paid, such’ t Shall be added to the Principal Sum as defined in and secured by the Mortgage, as determi has e Agency, and shail bear interest at the then current rate being received by the Agency (72) estments as determined in good faith by the Agency. le of Project. The Owner covenants and agrees not to sell, ct or the Land, or any part thereof, or the rents or revenues consent of the Agency, except by leasing to eligible residential tenants id this Agreement. Section 13. Encumbrénces lease or otherwise encumber thereof without prior wri as provided by the Mort; lacement. The Owner covenants and agrees

ng to eligible residential tenants id this Agreement. Section 13. Encumbrénces lease or otherwise encumber thereof without prior wri as provided by the Mort; lacement. The Owner covenants and agrees to he appurtenant equipment and grounds in good repair and condition so as and sanitary housing accommodations. Foliowing 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 its 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. _Adyance 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 Agreement, 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 exp and 4 of this Agreement or as otherwise agreed to in writing by the approved by the Agency as normally appurtenant to residential pro; laundry facilities), the Project shall be used solely (or as otherwis: to provide affordable housing units for a special needs pop: provided in Section 3 except for facilities nén-transients (such as pproved by the Agency) inder the Agency’s Program. Section 18. Consideration for Lease. The Owne condition of the occupancy or leasing of any dwelli any employee or agent to accept any consideration rent, plus a security deposit not in excess of one (1 covenants of the rent agreement or lease. nts and agrees not to require as a Project and not to accept or allow an the prepayment of the first month's rent to guarantee the performance of the Section 19. Security Deposit Thi to the Owner by any resident, if any, as charges under any use and occupanc: ovenants and agrees to deposit all moneys paid ‘y deposit for the payment of rent or other allowable nt and/or lease in a separate interest bearing bank 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 10 for a project escrow. 13

Additionally, the Owner will deposit an amount as agreed upon between the Borrower and the Agency for 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 equal 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 Escrow 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 interest whii ay be earned on such reserves shall remain in the escrow account and shall be used for simil es unless the Owner payment of taxes, payments in lieu of taxes, insurance “or to properly fund painting, decorating, repair and replacement needs with respect to t, then the Agency may require an increase in the minimum required escrow amounts ngcessar’ assure proper funding. Section 22. Inspection of Premises. Th: er covenants and agrees to permit the Agency, its agents or representatives, to inspe et gre at any and all reasonable times with or without notice, pursuant to the provisions et id the Program. Section 23. Books and Recordye ue wher covenants and agrees to maintain adequate books and records of its transactiong{"in@iyding the social services provided to the Project's residents, with respect to the Project i wner’s standard form. Such books and records shall be available for inspection and au eA gency or its agents at any time during business hours, with notice, pursuant to the provigions e 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 ish the Agency with its audit report of such accountants as may public accountants and ghall from time to time be re d by the Agency. The Owne Q.. to the Agency such other information and reports respecting the Project as ma € to time be required by the Agency. Section 24. Management Contract. The Owner may, and if the Agency so elects, shall contract for the services of a

mation and reports respecting the Project as ma € to time be required by the Agency. Section 24. Management Contract. The Owner may, and if the Agency so elects, shall contract for the services of a firm experienced in real estate management to act as the managing agent for the Project. The selection of any such managing agent, the scope of the agent's duties and the basis of the agent's compensation shal! be the subject of a consultation between the Agency and the Owner and any contract for the employment of any managing agent shall provide that such contract may be terminated by the Agency at any time by notice of such determination by the Agency given to the Owner and managing agent. Section 25. Prohibited Actions. Except with the express approval of the Agency, which approval shall not be unreasonably withheld, the Owner shall not with Project Revenues (as defined in Section 20 hereof), Loan disbursements or grant advances: 4

1. incur any liabilities, except in connection with the acquisition, rehabilitation and rental of the Project and its operation and maintenance; 2. engage in any business activity except the ownership and operation of the Project; 3. pay more than fair market value thereof for goods or services; and 4, pay compensation to any officer, director or partner in such capacity or make any cash distribution to any of the foregoing. transfer or sell any ing such transfers. Section 26. Transfers of Ownership Interests. The Owner interest in the Project, except in accordance with the Agency's regulati Section 27. Statutory Powers and Restriction: powers set forth in the Act, the Program and the regulation: to the Act and the Program and the Owner hereby c bound thereby. Such powers and restrictions shall be of the Agency expressly set forth in this Agreement ch restrictions and agrees to be ion to and not in limitation of the rights toppel. Upon the occurrence of an Event and therefore by the Agency, and otherwise by the Agency, the Owner will furnish to the ount remaining due on the Loan, together with a exist as to any liability of the Owner on the Notes or Section 28. Accounting in Event o' of Default and within ten (10) business di within ten (10) business days of writte Agency in writing a statement of the p1 statement of any known defenses whi otherwise thereunder. ents. The Owner hereby irrevocably authorizes the Agency nancing statements or renewals thereof in respect to any of the Mortgage. Section 29. Financeii to execute on its behalf o security interests granted Section 30. . The Owner hereby consents to any assignment of any Loan Docume: Section 31. Defaults. Each of the following shall be an Event of Default: (a) failure by the Owner to pay more than thirty (30) calendar days after the due date any installment of principal or interest on the Loan or any other payment required by the Owner to the Agency or any other person pursuant to the terms of this Agreement, the Mortgage or the other Loan Documents; provided, however, that interest shall accrue on any payment made beyond its due date; (b) commission by the Owner of any act prohibited by the terms of this Agreement, the Mortgage or any other Loan Document, failure by the Owner to perform or observe in a timely fashion any action or covenant required by any of the terms of this

ited by the terms of this Agreement, the Mortgage or any other Loan Document, failure by the Owner to perform or observe in a timely fashion any action or covenant required by any of the terms of this Agreement, the Mortgage or any