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Borrower in its own behalf and not as agent or contractor for the Issuer. The Borrower agrees that it will
compensate all workers employed in the rehabilitation and improvement of the Project as required by law.
Section 3.2 Plans and Specifications. The Borrower may revise the Plans and Specifications
from time to time, provided that no revision shall be made which would change the Project Purposes to
purposes other than those permitted by the Act and the Regulatory Agreement.
Section 3.3 Issuance of the Bonds; Application of Proceeds. To provide funds to make the
Loan for purposes of assisting in paying the Project Costs, the Issuer will issue, sell and deliver the Bonds
to the Underwriter. The Bonds will be issued pursuant to the Indenture in the aggregate principal amount,
will bear interest, will mature and will be subject to redemption, mandatory tender and remarketing as set
forth therein. The Borrower hereby approves the terms and conditions of the Indenture and the Bonds, and
of the terms and conditions under which the Bonds will be issued, sold and delivered.
The proceeds from the sale of the Bonds in the amount of $23,000,000 shall be loaned to the
Borrower and paid over to the Trustee for the benefit of the Borrower and the Holders of the Bonds. The
proceeds of the sale of the Bonds (including without limitation, premium, if any, and interest accrued
thereon) in the amount of $23,000,000 shall be deposited by the Trustee on the Closing Date to the Project
Fund. Pending disbursement pursuant to Section 3.4 hereof, the proceeds of the Bonds deposited in the
Project Fund, together with any investment earnings thereon, shall constitute a part of the Issuer Revenues
assigned by the Issuer to the Trustee as security for the payment of Bond Debt Service Charges as provided
in the Indenture.
Section 3.4 Disbursements from the Project Fund. Subject to the provisions below and so
long as no Event of Default hereunder has occurred and is continuing for which the Loan Payments and
principal amount of the Bonds has been declared to be immediately due and payable pursuant to Section 7.2
hereof and Section 7.03 of the Indenture, respectively, disbursements from the Project Fund shall be made
only to pay any of the following Project Costs:
(a) costs incurred directly or indirectly for or in connection with the renovation, rehabilitation,
equipping and improvements of the Project, including costs incurred in respect of the Project for
preliminary planning and studies; architectural, legal, engineering, accounting, consulting, supervisory and
other services; labor, services and materials; and recording of documents and title work;
(b) premiums attributable to any surety bonds and insurance required to be taken out and
maintained during the Construction Period with respect to the Project;
(c) taxes, assessments and other governmental charges in respect of the Project that may
become due and payable during the Construction Period;
(d) costs incurred directly or indirectly in seeking to enforce any remedy against any contractor
or subcontractor in respect of any actual or claimed default under any contract relating to the Project;
(e) any other costs, expenses, fees and charges properly chargeable to the cost of acquisition,
rehabilitation, renovation, construction and equipping of the Project;
(f) payment of interest on the Bonds during the Construction Period; and
(g) payments to the Rebate Fund.
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