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Escrow or at such other institution as agreed upon by the City, <br />Developer and Lender. <br />3.07. Use of Proceeds <br />The proceeds of the City Loan shall be used for materials, <br />supplies, labor and services that are an integral part of the <br />Project. Funds shall be disbursed only for the purposes and in the <br />amounts approved by City and Lender. <br />3.08. Disbursals <br />All disbursals for construction costs shall be made first from <br />equity deposits, if any, then from Lender Loan proceeds, and lastly <br />from City Loan proceeds, unless otherwise approved in writing by <br />the City Manager. <br />3.09. Pragress Payments_ <br />Upon written request of Developer, the City will request <br />disbursement of funds from the construction escrow account for <br />fully completed work items. Such requests by the City for payments <br />for individual work items shall be made after inspection and <br />acceptance of the work by the City and City approval of Developer's <br />requisitions and invoices and satisfactory proof that the property, <br />Developer and City are properly protected from Liens or claims of <br />liens for Labor and materials. All funds disbursed to Developer <br />shall be received by Developer in trust and Developer agrees that <br />the same shall be used only for the payment of these items <br />contemplated by the particular disbursement. <br />City shall not be required to request disbursement of any <br />amount which, in City's opinion, will reduce that portion of the <br />undisbursed -funds designated for the cost of completion of the <br />rehabilitation below that needed to pay for the labor and materials <br />necessary to complete the work. <br />3.10. Records <br />Developer and City shall maintain records which accurately and <br />fully show the date, amount, purpose, and payee of all expenditures <br />from the City Loan. <br />Page 5 of 10 Pages <br />EXHIBIT I <br />