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• •® ARTICLE IV OPERATION OF THE PROJECT Section 4.01. Disposition of Bond Proceeds. The Borrower agrees to the deposit of the proceeds of sale of the Bonds with the Trustee in accordance with the Indenture and further agrees that such proceeds shall be held and disbursed by the Trustee only in accordance with the provisions of the Indenture. At the written direction of Authorized Officers of the Borrower and NHC, moneys on deposit in any fund or account created by the Indenture shall be invested and reinvested by the Trustee or the Registrar and Paying Agent, as the case may be, as provided in Article V of the Indenture. Section 4.02. Right to Enter and Examine Proiect. The Issuer shall have the right, upon reasonable notice to the Borrower and NHC, to enter upon, inspect and examine the Project at any time during regular business hours in such manner as not to interfere with the normal operations of the Borrower and NHC so far as practicable. Representatives of the Borrowers or NHC may accompany the employees, members or representatives of the Issuer on the premises. Section 4.03. No Warranty y Issuer. The Issuer makes no warranty, either express or implied, of the actual or designed capacity of the Project, of the suitability of the Project for the purposes specified in this Loan Agreement, of the condition of the Project or of the suitability of the Project for the Borrower's purposes or needs. Section 4.04. Operation and Maintenance of Project. The Borrower shall cause the Project to be operated in a sound and economical manner and shall maintain, preserve and keep the Project in good condition and repair. The Borrower shall make all necessary and proper repairs, replacements and renewals so as to conduct the operation of the Project in accordance with all material governmental operating standards applicable to the Project. The Borrower shall operate the Project as a "health care facility" within the meaning of the Act. Section 4.05. Insurance. The Borrower shall keep the Project and its operations with respect thereto adequately insured at all times and shall maintain with responsible insurers insurance with respect to the Project and such operations of such types, in such amounts and against such risks as are customarily maintained with respect to comparable facilities and operations, including (without limitation) (i) full fire and extended coverage insurance on the Project providing for not less than full recovery of the insurable value (less reasonable deductibles and exclusions) of any damaged property and (ii) public liability and property damage insurance in amounts estimated to fully indemnify (less reasonable deductibles and exclusions) the estimated loss or damage. In the event that the Borrower shall at any time neglect or refuse to obtain or maintain insurance as herein required, the Trustee may obtain and maintain such insurance and the Borrower shall be obligated to reimburse the Trustee promptly for all amounts expended in connection therewith. - 15 -