Agmt 2006 Mercy Housing California XXXIII (4)

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E. Assignment. Agency shall have the right to assign the Option and the Refusal Right to the City, any other governmental entity, or a qualified nonprofit corporation. If the Agency ceases to exist, the City shall automatically succeed to the rights of Agency. F. Inspection Rights; Rights to Direct Use of Reserves. In connection with the rights afforded to Agency pursuant to this Section 7.6, Agency shall have the right to review Developer's financial statements, partnership tax returns, and Developer's partnership agreement and all amendments thereto. During the period commencing upon Agency's exercise of the Option or Refusal Right, Agency shall have the right to require Project replacement reserves to be expended for improvements to the Project, as directed by Agency in its reasonable discretion. Developer agrees that it shall take reasonable steps to avoid the accrual of tax obligations on the part of the investor limited partner(s) upon sale of the Project to Agency pursuant to this Section 7.6. ARTICLE VIII FINANCING AND RIGHTS OF MORTGAGEES 8.1 Mortgages and Deeds of Trust for Development. Mortgages and deeds oftrust or any other reasonable security instrument are permitted to be placed on the Property, but only for the purpose of securing loans approved pursuant to the approved Financing Plan for the purpose of financing the costs of the design and rehabilitation of the Project and other expenditures necessary for development and permanent financing of the Project pursuant to this Agreement. Developer covenants and agrees, on behalf of itself and its successors and assigns, that it shall not enter into any conveyance for such financing without the prior written approval of the Agency's Executive Director. As used herein, the terms "mortgage" and "deed of trust" shall mean all other appropriate security interests used in financing real estate construction and land development. 8.2 Holder Not Obligated to Rehabilitate Improvements. The holder of any mortgage or deed of trust authorized by this Agreement shall not be obligated to complete the rehabilitation of the Improvements or to guarantee such completion. Nothing in this Agreement shall be deemed to or be construed to permit or authorize any such holder to devote the Property to any uses or to construct or rehabilitate any improvements thereon other than those uses or Improvements provided for or authorized by this Agreement. 8.3 Notice of Default; Right to Cure. Whenever Agency delivers any notice of default or demand to Developer with respect to the commencement, completion, or cessation of the work of rehabilitation of the Improvements, the Agency shall concurrently deliver a copy of such notice to each holder of record of any mortgage or deed of trust secured by the Property, provided that Agency has been provided an address for such notices. Agency shall have no liability to any such holder for any failure by the Agency to provide notice to such holder. Each such holder shall have the right, but not the obligation, at its option, within sixty (60) days after Agency's delivery of the copy of the notice, to cure or remedy or, if the default is of a nature that it cannot be cured within such time period, to commence to cure or remedy any default 803698-6 27