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Any disbursements from the Project Fund shall be made by the Trustee only as permitted pursuant
to Section 5.03 of the Indenture and upon the written request of the Borrower in a Disbursement Request
in substantially the form attached hereto as EXHIBIT E in compliance with the provisions hereof and of
the Disbursing Agreement. No disbursement shall be made by the Trustee upon the basis of any such
Disbursement Request except upon satisfaction of the following conditions and pursuant to the following
procedures:
(1) An executed certificate of the FHA Lender substantially in the form attached hereto as
EXHIBIT C, or an executed certificate of the Borrower substantially in the form attached hereto as
EXHIBIT D, related to the deposit of Available Money into the Collateral Fund for the applicable
Disbursement Request.
(2) All Loan Payments that are then due shall have been paid.
Each Disbursement Request for a disbursement of funds from the Project Fund shall be made in
accordance with the Disbursing Agreement and shall be deemed a representation by the Borrower that:
(i) All items for which disbursement is requested thereunder either (A) are presently due and
payable, constitute Project Costs properly incurred by the Borrower in connection with the Project being
financed with the proceeds of the Loan, or are reimbursable Project Costs properly chargeable against the
Loan; or (B) are to be deposited to an escrow fund to be disbursed therefrom solely for Project Costs
properly incurred by the Borrower in connection with the Project; and in each case none of the items for
which disbursement is requested has formed the basis for any disbursement heretofore made from the
Project Fund.
(ii) Each such item is or was necessary in connection with the rehabilitation of the Dwelling
Units (as defined in the Regulatory Agreement) of the Project.
(iii) The costs specified in the Disbursement Request, when added to all previous disbursements
under the Loan, will result in at least 95% of the aggregate amount of all disbursements having been used
to pay costs properly chargeable to the capital account of a qualified residential rental project within the
meaning of Section 142(d) of the Code and functionally related and subordinate property thereto.
(iv) The costs specified in the Disbursement Request, when added to all previous and all
proposed future disbursements under the Loan, will result in the rehabilitation expenditures, within the
meaning of Section 147(d) of the Code, with respect to the Project [equaling or exceeding 15% of the
portion of the cost of acquiring the Project] financed with proceeds of the Bonds.
(v) To the knowledge of the Borrower, there is no current or existing event of default pursuant
to the terms of this Loan Agreement or the Regulatory Agreement and no event exists which by notice or
passage of time or both would constitute an event of default under any of the foregoing documents.
(vi) No representation or warranty of the Borrower contained in this Loan Agreement or the
Regulatory Agreement is materially incorrect or inaccurate, except as the Borrower has set forth in writing,
and there has been no event of default under the terms of any of those documents and which is continuing
and no event shall exist which by notice, passage of time or both would constitute an event of default under
any of those documents.
(vii) Each expense for which disbursement is requested was or will be paid on or after the date
of issuance of the Bonds. Notwithstanding the foregoing, the Borrower may be reimbursed for Project
Costs incurred prior to the Closing Date of the Bonds in accordance with Section 1.150-2 of the Code.
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