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Issuer and the Owner. The Issuer expects to issue the Bonds as soon as the terms of the Bonds have been • agreed upon by The Issuer, the Owner, and the initial purchaser(s) of the Bonds. The proceeds of the Bonds will be loaned by The Issuer to the Owner to finance the design, construction, and equipping of the Project, and such proceeds are also to be applied to any of the following purposes: (i) fund debt service reserve funds or other reserves for the Bonds; (ii) fund interest on the Bonds during construction of the Project; and (iii) pay a portion of the costs of issuance with respect to the Bonds. It is anticipated that the Bonds will be sold simultaneously in two separate series as follows: (1) Series 2005A - $5,300,000 Tax-Exempt; and (2) Series 2005B - $ 200,000 Taxable. The Bonds will be sold on a negotiated sale basis to the retail and institutional marketplace. The Series A Bonds shall have a 30 year stated final maturity and shall amortize over a 27 year period. The Series B Bonds shall have a 3 year final maturity, amortize over a 2 year period, and shall have a fixed rate of interest for the term. While the final interest rate on the Bonds is subject to market conditions at the time of Bonds pricing, it is estimated that the interest rate on the Bonds in today's market would be as follows: Average,_Coupon Series A 5.89% -Fixed for 30 years Series B 6.00% -Fixed for 3 years The Issuer will not hire additional staff for the administration of the Program. No administrative costs will be paid from The Issuer's budget with respect to this Program. The Bonds will be special, limited revenue obligations of The Issuer and the Bonds and interest thereon will be payable solely from the revenues and assets pledged to the payment thereof. No Holder of any Bonds will ever have the right • to compel any exercise of the taxing power of The Issuer to pay the Bonds or the interest thereon, nor to enforce payment against any property of The Issuer (except revenues of the Borrower) to be paid to The Issuer and pledged to the payment of the Bonds. Section C. Standards and Requirements Relating to the Financing of the Project Pursuant to the Pry. The following standards and requirements shall apply with respect to the operation of the Project by the Owner pursuant to this Program: (1) Substantially all of the proceeds of the sale of the Bonds will be applied to (i) the design, construction, and equipping of the Project, (ii) the payment of the costs of issuing the Bonds, (iii) the payment of interest on the Bonds during construction of the Project, and (iv) the funding of appropriate reserves. The proceeds will be made available to the Owner pursuant to the terms of a Loan Agreement or other revenue agreement, which will include certain covenants to be made by the Owner to The Issuer regarding the use of proceeds and the character and use of the Project. (2) The Owner, and any subsequent owner of the Project, will not arbitrarily reject an application from a proposed tenant because of race, color, creed, religion, national origin, sex, affectional preference, marital status, or status with regard to public assistance or disability. (3) The Project is designed primarily for rental to elderly persons. Thus, Section 46X.05, Subdivision 4 of the Act provides that the limitations set forth in Section 46X.05, Subdivision 2 of the Act are not applicable. • Subsection D. Evidence of Compliance. The Issuer may require from the Owner at or before the issuance of the Bonds, evidence satisfactory to The Issuer of the ability and intention of the Owner to 1771867v1 -3- /9