issuance of new or additional stock or classification of stock or otherwise, shall be deemed an assignment, conveyance, or transfer with respect to this Agreement, the housing to be rehabilitated hereunder or the rehabilitation contract. With respect to this provision, the Owner, and the party signing this Agreement on behalf of said Owner, represent that they have the authority of all of the existing stockholders of the Owner to agree to this provision on behalf of said stockholders and to bind them with respect thereto.

2.9. Annual contributions contract. The execution of the ACC by the Government signifies that said ACC has been properly authorized; that the faith of the United States is solemnly pledged to the payment of annual contributions pursuant to said ACC; and that funds have been obligated by the Government for such payment to assist the LHA in the performance of its obligations under the Housing Assistance Payments Contract. The LHA shall not, without the consent of the Owner, amend or modify the ACC in any manner which would reduce the amount of annual contributions payable under section 1.3b(1) thereof with respect to the units to be rehabilitated under this Agreement and any other Agreements entered into as a part of the Project except as authorized in the ACC and the Housing Assistance Payments Contract.

2.10. Prohibited methods of financing. If any of the methods of financing prohibited by the Housing Assistance Payments Program is used, (a) the LHA shall be under no obligation to enter into the Housing Assistance Payments Contract and (b) the LHA shall not be entitled to annual contributions with respect to the units to be rehabilitated under this Agreement.

APPENDIX XII-HOUSING

ASSISTANCE PAYMENTS CONTRACT-SUBSTANTIAL REHABILITATION

1.1. Purpose of contract; owner's warranty. a. LHA Obligation. The LHA hereby agrees to make housing assistance payments on behalf of eligible low-income families ("Families") for the number and type of units specified in Schedule "A", attached hereto ("assisted unit(s)"), to enable such Families to lease decent, safe, and sanitary housing pursuant to section 23 of the United States Housing Act of 1937.

b. Use and occupancy of assisted units. The assisted units are to be leased by the Owner

to Families for use and occupancy by such Families solely as private dwellings.

c. Owner's warranty. The Owner warrants that the rehabilitated housing is in good and tenantable condition and that all work has been completed in accordance with the terms and conditions of the Agreement.

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1.2. Annual contributions contract. a. The LHA has entered into an Annual Contributions Contract dated with the United States of America (hereinafter called the "Government"), with respect to Project No. ("ACC"), under which the Government will provide financial assistance to the LHA pursuant to section 23 of the United States Housing Act of 1937, for the purpose of making housing assistance payments, which ACC is attached hereto.

b. The LHA hereby pledges such annual contributions payable under section 1.3(b) (1) of Part I of the ACC to the payment of housing assistance payments pursuant to this and any other Housing Assistance Payments Contract(s) entered into as a part of said Project. The LHA shall not, without the consent of the Owner, amend or modify the ACC in any manner which would reduce the amount of such annual contributions, except as authorized in the ACC and this Contract.

1.3. Housing assistance payments. a. Housing assistance payments shall be made by the LHA to the Owner, under the terms and conditions of this Contract, for the period during which assisted units are leased by Families under Leases approved by the LHA. Housing assistance payments shall not be made for units which are vacant except:

(1) as provided in section 1.9c, below; and (2) where a Family vacates its unit in violation of the provisions of its Lease, in which case, the Owner may continue to receive housing assistance payments with respect to such unit in accordance with the terms of the Contract, not beyond the term of the Lease, but only if the Owner (a) immediately upon learning of the vacancy, has taken all feasible action to fill it including but not limited to contacting Families on his waiting list, requesting the LHA to refer eligible Families and advertising the availability of the unit, (b) has promptly (within 30 days of the date the Family vacated the unit) notified the LHA of the vacancy and (c) has not rejected, except for good cause acceptable to the LHA, any substitute Family provided by the LHA.

b. Housing assistance payments shall not be made for units which are leased to other than eligible Families. Housing assistance payments shall be subject to abatement in whole or in part as provided in Section 1.4b below.

c. Housing assistance payments shall equal the difference between the rents for the units leased by Families as set forth in Schedule "A" and the amounts of such rents payable by Families (if the housing is financed with a mortgage insured under the National Housing Act, the Schedule "A" rents shall not

exceed the rent formula or other rents established by the Government in connection with that mortgage insurance). The LHA shall determine the eligibility of Families and the amount of rentals and other charges to be paid by each Family to the Owner in accordance with standards applicable to the Housing Assistance Payments Program. The amount of housing assistance payment payable on behalf of a Family and the amount of rent payable by such Family shall be subject to change by reason of changes in Family income or composition, as determined by the LHA, effective as of the date stated in a notification of such change by the LHA to the Owner and the Family. However, any increase in the amount payable by the Family shall be offset by a corresponding decrease in the amount of housing assistance payment; and any decrease in the amount payable by the Family shall be offset by a corresponding increase in the amount of housing assistance payment, but not in excess of the amount available with respect to the assisted unit(s) under this Contract out of the aggregate ACC amount pledged in section 1.2b of this Contract for all dwelling units under the ACC.

d. Neither the LHA nor the Government has assumed any obligation whatsoever for the amount of rent payable by any Family or the satisfaction of any claim by the Owner against any Family. The financial obligation of the LHA is limited to making housing assistance payments on behalf of Families in accordance with this Contract.

e. (1) The Owner shall submit monthly requests to the LHA for housing assistance payments. Each such request shall set forth: (a) the name of each Family and the address and/or number of the unit leased by the Family; (b) the rent as set forth in Schedule "A" for each leased unit and the amount of rent payable by the Family leasing the unit; and (c) the amount of housing assistance payment requested by the Owner. Upon the determination of the LHA that the amount of the request is correct and that the Owner is in compliance with the provisions of this Contract, the LHA shall pay to the Owner the amount of housing assistance payment requested, but not in excess of the amount available with respect to the assisted unit(s) under this Contract out of the aggregate ACC amount pledged in section 1.2b of this Contract for all dwelling units under the ACC.

(3) The statements set forth in each of the payment, the LHA, in addition to any other rights to recovery, may deduct the amount from any subsequent payment or payments.

(3) The statements set forth in each of the Owner's monthly requests for housing assistance payments shall be made subject to penalty under 18 U.S.C. 1001, which provides, among other things, that whoever knowingly and willfully makes or uses a document or writing containing any false, fictitious, or

fraudulent statement or entry, in any matter within the jurisdiction of any department or agency of the United States shall be fined not more than $10,000 or imprisoned for not more than five years or both.

1.4. Maintenance, operation and inspection. a. The term "Premises,” as used in this Contract, means units which are leased by eligible Families and areas, facilities and grounds which are for their benefit or use, as described in the "Property Description" attached hereto.

b. The Owner agrees (1) to maintain and operate the Premises so as to provide decent, safe, and sanitary housing, and (2) to provide the following services (including security) and maintenance:

[here insert the complete list as contained in the Government-approved Final Proposal] If, at any time during any term of this Contract, the Owner fails to comply with the obligation in (1) with respect to any unit leased by an eligible Family, housing assistance payments on behalf of such Family shall be wholly abated; and if the Owner fails to comply with the obligation in (2) with respect to any unit leased by an eligible Family, housing assistance payments on behalf of such Family shall be abated in whole or in part. Any abatement under this paragraph b shall be effective upon written notification to the Owner, and shall continue until such time as the obligation is complied with. The LHA shall promptly notify the Family of any such abatement.

c. (1) Prior to occupancy of any unit by an eligible Family, the LHA shall inspect the unit, or cause it to be inspected, to determine that the unit is in decent, safe, and sanitary condition.

(2) The LHA will inspect the Premises or cause them to be inspected, at least annually, to determine that they are in decent, safe, and sanitary condition.

1.5. Term of contract. a. The initial term of this Contract shall be years (not to exceed five years) beginning 19 and ending

--)

19

This

Contract shall be renewed, at the option of the Owner, for additional terms(s) of

1.6. Rent adjustments. Contract rents shall be adjusted, subject to the limitations contained in subsections d and e, below, as follows:

a. Automatic annual adjustments. On each anniversary date of the Contract, the monthly rents shown in the Contract shall be adjusted automatically by applying, as an adjustment factor, the Government-determined Automatic Annual Adjustment Factor most recently published by the Government for this purpose provided that the Adjustment Factor was published within one year prior to the date of the Contract adjustment. Rents may be adjusted upward or downward, as may be appropriate; however, in no case shall the adjusted rents be less than the rents set forth in the Contract on the date of execution of the Contract.

b. Special additional adjustments. Special additional adjustments may be granted when approved by the Secretary of Housing and Urban Development for substantial, general increases in property taxes and/or utility rates but only if and to the extent that the Owner clearly demonstrates that such general increases have caused increases in the Owner's operating costs which are not adequately compensated for by automatic annual adjustments.

c. Renegotiations. The then current rents contained in the Contract may only be renegotiated to become effective at the beginning of the sixth and eleventh years of the Contract (if the Contract is renewed for that length of time), whether or not such effective date of renegotiation coincides with the beginning of a renewal term. Rents may be renegotiated above the rents which would be permitted by the automatic annual adjustment and/or any special additional adjustment, if the Owner submits to the Government financial statements which clearly support the increase. The Government shall review such statements and may approve rents which reflect reasonable amounts for operation of the Premises and return on investment in comparison with comparable rental projects of the same age. Renegotiated rents shall not be applied retroactively.

d. Housing financed under the National Housing Act. Notwithstanding any other provisions of this Contract, in no case may rents for housing financed with mortgages

2 Insert maximum total year specified in paragraph a of this Section plus two years.

insured under the National Housing Act exceed the rent formula or other rents established by the Government in connection with that mortgage insurance.

e. Limitation. The LHA will make housing assistance payments in increased amounts commensurate with rent adjustments or renegotiations under this Section, but not in excess of the amount available with respect to the unit or units under the Contract out of the maximum total amount of annual contributions payable under section 1.3(b) (1) of Part I of the ACC for all dwelling units under that ACC Part I. No commitment is made by the LHA or the Government that such maximum total amount of annual contributions will be increased by reason of any such rent adjustments or renegotiations. However, the Owner may select eligible Families in light of this limitation so that his total receipts (Family rents and housing assistance payments) would be commensurate with the adjusted or renegotiated Contract rents.

1.7. Contract Amendment. Any adjustment or renegotiation in Schedule "A" rents shall be incorporated by amendment to Schedule "A" of this Contract.

1.8. Utilities. The Owner agrees to provide and to pay promptly when due all utilities for the Premises, except to the extent that Families are obligated to pay directly for utilities for their respective units.

1.9. Admission of families. a. The Owner shall be responsible for the selection of Families, subject to certification of eligibility by the LHA.

b. If the Owner was required to submit an Affirmative Fair Housing Marketing Plan, marketing of units and selection of Families by the Owner shall be in accordance with the Owner's Government-approved Affirmative Fair Housing Marketing Plan. In all cases, such marketing and selection of Families shall be in accordance with all regulations relating to fair housing advertising including use of the Equal Opportunity logotype, statement and slogan in all advertising and with applicable LHA regulations establishing admission policies, including policies, if any, carrying out its responsibilities for rehousing displaced Families.

c. The Owner shall request the LHA, in accordance with procedures to be agreed upon between the Owner and the LHA, to make certifications of eligibility of selected Families and to approve proposed OwnerFamily Leases. Within days of the submission of any such request to the LHA, or the submission of additional information required by the LHA from the Owner, the LHA shall furnish the Owner with: (1) a determination that the Family is eligible; or (2) a determination that the Family is ineligible; or (3) a statement that specified additional information from the Owner is required to enable the LHA to make its determination. If the LHA fails to furnish a

determination

or statement within said time limit and such delay results in an eligible unit remaining vacant, the Owner shall be entitled to housing assistance payments for the number of days of vacancy directly due to such delay.

1.10. Eviction. The Owner shall not evict any Family unless the Owner complies with the requirements of local law, if any, and of this Section. The Owner shall give the Family a written notice of the proposed eviction, stating the grounds and advising the Family that it has 10 days (or such greater number, if any, that may be required by local law) within which to respond to the Owner. The Owner must obtain the LHA's authorization for an eviction; accordingly a copy of the notice shall be furnished simultaneously to the LHA, and the notice shall also state that the Family may, within the same time period, present its objections to the LHA in writing or in person. The LHA shall forthwith examine the grounds for eviction and shall authorize the eviction unless it finds the grounds to be insufficient under the Lease. The LHA shall notify the Owner and the Family of its determination within 20 days of the date of receipt of the notice by the Family, whether or not the Family has presented objections to the LHA.

1.11. Owner-family lease. The Lease between the Owner (Lessor) and the Family (Lessee) shall contain the following provisions:

In case of any conflict between these and any other provisions of the Lease, these provisions shall prevail.

a. Of the total rent ($---- per month), shall be payable by the Housing Authority (LHA) as housing assistance payments on behalf of the Lessee and $--shall be payable by the Lessee. These amounts shall be subject to changes by reason of changes in the family income or composition, as determined by the LHA, effective as of the date stated in a notification of such change by the LHA to the Lessee and Lessor.

b. The Lessor shall provide the following services (including security) and maintenance:

[here insert the complete list as contained in section 1.4b of the Housing Assistance Payments Contract]

c. The Lessor shall not evict the Lessee unless the Lessor complies with the requirements of local law, if any, and of this provision. The Lessor shall give the Lessee a written notice of the proposed eviction, stating the grounds and advising the Lessee that he has 10 days (or such greater number, if any,

that may be required by local law) within which to respond to the Lessor. Because the Lessor must obtain the LHA's authorization for an eviction, a copy of the notice shall be furnished simultaneously to the LHA, and the notice shall also state that the Lessee may, within the same time period, present his objections to the LHA in writing or in person. The LHA shall forthwith examine the grounds for eviction and shall authorize the eviction unless it finds the grounds to be insufficient under the Lease. The LHA shall notify the Lessor and the Lessee of its determination within 20 days of the date of receipt of the notice by the Lessee, whether or not the Lessee has presented obections to the LHA.

d. The Lessor shall not discriminate against the Lessee in the provision of services, or in any other manner, on the grounds of race, color, creed, religion, sex, or national origin.

WARNING: 18 U.S.C. 1001 provides, among other things, that whoever knowingly or willfully makes or uses a document or writing containing any false, fictitious, or fraudulent statement or entry, in any matter within the Jurisdiction of any department or agency of the United States, shall be fined not more than $10,000 or imprisoned for not more than five years, or both.

[If the assisted units are to be completed and accepted in stages, execution of the Contract with respect to the several stages appears on the first pages of this Contract.]

sistance Payments Program because of membership in a class such as unmarried mothers, recipients of public assistance, etc. b. The Owner shall comply with all requirements imposed by Title VIII of the Civil Rights Act of 1968, Public Law 90-284, 82 Stat. 73 and any rules and regulations pursuant thereto.

c. The Owner shall comply with all requirements imposed by Title VI of the Civil Rights Act of 1964, Public Law 88-352, 78 Stat. 241; the regulations of the Department of Housing and Urban Development issued thereunder, 24 CFR, Subtitle A, Part 1, § 1.1, et seq.; the requirements of said Department pursuant to said regulations; and Executive Order 11063 to the end that, in accordance with that Act, the regulations and requirements of said Department thereunder, and said Executive Order, no person in the United States shall, on the ground of race, color, creed, religion or national origin, be excluded from participation in, or be denied the benefit of, the Housing Assistance Payments Program, or be otherwise subjected to discrimination. This provision is included pursuant to the regulations of the Department of Housing and Urban Development, 24 CFR, Subtitle A, Part 1, § 1.1, et seq.; issued under Title VI of the said Civil Rights Act of 1964, and the requirements of said Department pursuant to said regulations; and the obligation of the Owner to comply therewith inures to benefit of the Government, the said Department, and the LHA any of which shall be entitled to invoke any remedies available by law to redress any breach thereof or to compel compliance therewith by the Owner.

2.2 Employment of project area residents and contractors. The Owner shall comply and shall require each of its contractors and subcontractors employed in the performance of this Contract to comply (including compliance with the Government-approved affirmative action plan for utilization of project area businesses) with section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) and the regulations and requirements of the Government thereunder, requiring that, to the greatest extent feasible, opportunities for training and employment be given lower income residents of the project area and that contracts for work in connection with the operation of the Premises be awarded to business concerns which are located in or owned in substantial part by persons residing in the area of the Premises.

2.3. Cooperation in equal opportunity compliance reviews. The LHA and the Owner shall cooperate with the Government in the conducting of compliance reviews and complaint investigations pursuant to all applicable civil rights statutes, Executive Orders, and rules and regulations pursuant thereto.

2.4. Flood insurance. If the Premises are located in an area that has been identified by the Secretary of Housing and Urban Development as an area having special flood