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ARTICLE III Acquisition, Construction and Equipping of Facilities; Payment of Costs Section 3.1. Project Costs. The City has estimated that the costs of acquiring, constructing, and equipping of the Facilities and the Costs of Issuance of the Bonds will be not less than $4,430,000. In order to provide the moneys needed to pay such costs when due, and in consideration of the actions agreed to be performed by the City under this Lease, the Authority has adopted the Bond Resolution, pursuant to which the proceeds of the sale of the Bonds in the amount of $ (par amount of $4,430,000, [plus original issue premium of $ ,] [less original issue discount of $ ,] less underwriter's discount of $ ), plus accrued interest, if any, will be deposited with the City. Section 3.2. Acquisition, Construction and Equipping of Facilities; Payment of Costs. (a) The Authority shall cause the Facilities to be constructed with all reasonable dispatch. The Authority hereby appoints the City as its agent for the purpose of acquisition, construction and equipping of the Facilities, and the City may perform the same itself or through its agents, and may make or issue such contracts, orders, receipts and instructions, and in general do or cease to be done all such other things as it may consider requisite or advisable for the completion of the acquisition, construction and equipping of the Facilities and for fulfilling its obligations under this Article. The City shall have full authority and the sole right under this Lease to supervise and control, directly or indirectly, all aspects of the acquisition, construction and equipping of the Facilities. (b) The Authority shall deposit the proceeds of the Bonds in the amount of $ with the City for credit to the Project Fund, as provided in the Bond Resolution. Amounts in the Project Fund shall be disbursed to pay the following costs (referred to as "Project Costs"): (i) Obligations incurred for labor and to contractors, builders and material suppliers in connection with the construction of the Facilities, including obligations for machinery, materials and equipment therefor; (ii) Costs of acquisition of land and all interests in land required specifically for the Site, site improvements required for the construction or operation of the Facilities, demolition of any portion of the existing building on the Site and removal of any equipment therefrom (net of any salvage); (iii) Costs of acquisition and installation of equipment, furnishings and other tangible personal property required for the Facilities; (iv) Fees and expenses of engineers and architects for surveys, estimates and other preliminary investigations, preparation of plans, drawings and specifications, and supervising construction, as well as for the performance of all other duties of engineers and architects in relation to the Facilities or the issuance of the Bonds therefor, including the costs of such services as may have been performed by employees of the City; (v) Expenses of administration, supervision and inspection properly chargeable to the construction of the Facilities, administrative fees and other expenses relating to construction of the Facilities, title insurance premiums, abstracting and filing fees, and legal expenses and fees; 460515v2 JAE LN140-112 8