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SEP-24-2001 10:38 MJSK INVESTMENT BANKERS 7638477328 P.05/88 <br /> Security for the Bonds <br /> (Series C): The Bonds will be secured as follows: <br /> • A second mortgage on the Project. <br /> • Payment on the Series C Bonds will be subordinate to the <br /> Series A&B. <br /> Financial Covenants/ <br /> Conditions Precedent <br /> To Closing: <br /> • Maintenance of 501(c) (3)tax-exempt statues. <br /> Borrower• shall <br /> maintain all excess project cash <br /> The <br /> flows in an operating reserve fund until the balance <br /> equals $275,000. <br /> • Provision for additional bonds only in event of a <br /> nationally recognized feasibility consultant study which <br /> shows combined pro forma debt service coverage of <br /> 1.20%x minimum for a projected 5 years beyond the sale <br /> of the additional debt. <br /> • Agreement to provide a rate structure which will insure a <br /> 1.10x debt service coverage for the life of the Bonds. <br /> • Other financial covenants to be negotiated between the <br /> Borrower and the Underwriter. <br /> • An MAI appraisal on the land showing a market value of <br /> a minimum of$822,000. <br /> • A repair and replacement fund requirement equal to <br /> $150 per unit per year commencing 24 months after <br /> Certificate of Occupancy. <br /> 4 Miller Johnson Steichen Kinnard, Inc. <br />