Status update on Dunbar Development

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SEP-24-2001 10:38 MJSK INVESTMENT BANKERS 7638477328 P.04/88 Land Acquisition 822,000.00 Development Fee 235,000.00 Architectural and Engineering 164,300.00 Furniture, Fixtures&Equipment 73,211.00 Management 70,000.00 501©3 Organizational Costs 50,000.00 Rounding Amount 2,305.72 Total Uses: $8.070.000.00. Operating Deficits Guarantee: The Borrower shall provide an Operating Deficit Guarantee in the form of cash or a Letter of Credit in an amount equal to $250,000. The Trustee may draw on this Guarantee after the Project Stabilization Account has been exhausted and, in the event that the revenue from operations of the Project are insufficient to pay operational expenses and debt service on the Bonds, This Guarantee will expire upon twenty-four months of continuous operations of the Project at a debt service coverage ratio of 1.15x. Debt Service Reserve Fund: A Debt Service Reserve Fund will be created and funded from Bond proceeds in an amount equal to the average one year principal and interest payment on the Bonds. The Debt Service Reserve Fund will be held by the Trustee for the benefit of the Bondholders and invested to the benefit of the Borrower. Security for the Bonds (Series A&B): The Bonds will be secured as follows: • First security interest and mortgage on the property including the land, building and personal property associated with the Project. • The City of Orono will hold title to the land and ground lease the property to the borrower for 99 years. The annual ground lease payment shall be$1.00. • City of Orono Tax Increment assistance. • Debt Service Reserve Fund as described above. • Operating Deficits Guarantee as described above. • An assignment of the Management Contract and any and all operating licenses and permits which may be assigned under Minnesota State Law. 3 Miller Johnson Steichen Kinnard, Inc.