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also be making a State /Local Program loan to the Borrower (the "State /Local Loan ") for the purpose of providing additional permanent mortgage financing for the Development. The term "Note" as used herein shall include the State /Local Loan note. The term "Deed of Trust" as used herein shall include the State /Local Loan deed of trust. The term "Loan" as used herein shall include the State /Local Loan, and the term "Loan Documents" as used herein shall include the State /Local Loan note and deed of trust. C. In order to assure the Agency and its bondholders that interest on the bonds sold to finance the Loan (the "Bonds ") will be excluded from gross income for federal income tax purposes under Section 103(a) of the Internal Revenue Code of 1986, as amended (the "Code "), and that the Bonds are "qualified bonds" within the meaning of Section 141 of the Code, and to satisfy the public purposes for which the Bonds are authorized to be issued under the Law, certain limits on the use and occupancy of the Development and certain other requirements need to be established. D. As an inducement to the Agency to make the Loan, the Borrower has agreed to enter into this Regulatory Agreement and has consented thereby to be regulated and restricted by the Agency as provided herein and in the Act and in the rules, regulations, policies and procedures of the Agency promulgated thereunder. NOW, THEREFORE, the parties hereto agree as follows: 1. Term of Agreement. This Agreement is effective as of the date of execution and shall remain in full force and effect and shall apply to the Development until the latest of (i) the end of the Qualified Project Period, as defined below, (ii) payment in full of the Loan or (iii) redemption of the Bonds issued to finance the Loan. 2. Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms shall have the following meanings: (a) "Closing Date" means the date on which the Note is delivered to or for the account of the Agency, and the Deed of Trust and this Agreement are recorded in the official records of the county in which the Development is located. (b) "Distribution" means any withdrawal, taking or payment of any assets, earnings or income of the Development excluding payments for current Operating Expenses of the Development and repayment of Operating Expense Loans. (c) "Gross Income" means all rents, charges, fees and any other income of the Development, including, without limitation, such income derived from the commercial facilities of the Development, if any. CHFA 53SLP /RIDGEVIEW 12/2/88 V01517(DNB) -2-