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II III. FINANCING OF THE PROJECT The funds provided by your subscription and the subscription of other members will constitute the equity investment and are intended to cover the cost of acquiring the Project over and above the mortgage proceeds and to provide working capital funds, as required by HUD/FHA, in an amount equal to two percent (2%) of the principal amount of the HUD/FHA insured mortgage. Construction financing for the Project has been arranged for the Cooperative by Sand Companies, Inc. and HUD/FHA has issued its commitment to insure a mortgage loan up to $5,800,000 upon completion of Project construction. The HUD/FHA insured mortgage will- cover all of the property of the Cooperative and provide for amortization over a period of forty (40) years with an interest rate of 6.15%. The total estimated development cost of the Project is $9,955,810; and HUD/FHA, for its own purposes in determining a maximum insurable mortgage of $5,800,000, has estimated the replacement cost of the Project at $9,468,729. The members of the Cooperative are, in effect, their own landlords. They pay monthly carrying charges to the Cooperative to cover the Cooperative's operating costs, in accordance with the terms of the Occupancy Agreement. The Cooperative corporation will hold title to the property and will execute a blanket mortgage covering the entire property. The individual member signs no note or mortgage and has no personal obligation under the blanket mortgage of the Cooperative. The following table(s) set forth the initial value allocated by the Project sponsor to each unit/membership, the proportionatefactor of unit value to total Project value, each member's required cash payment for his/her membership based upon the type of dwelling unit selected, ' and the estimated monthly charges to be paid by members pursuant to their Occupancy Agreements, to cover the Cooperative's operating expenses. The total required cash down payment set forth below will be payable in two (2) installments, consisting of an initial down payment in an amount equal to fifteen percent (15%) of the applicable initial value, which initial down payment will be due upon signing a Subscription Agreement, and the balance of the total required cash down payment will be due upon demand to be made by the Cooperative on or about the date of completion of construction of the Project. Please refer to Section Vill, PROCEDURE TO PURCHASE, herein.. 1. Dwelling Unit 2. Proportionate 3. Required 4. Initial Estimated Designation and Factor of Unit Total Cash Monthly Charges Initial Value Valuation to Down to Be Paid to Total Payment Cooperative Valuation N