Authorize- Issuance of Revenue Bonds $11,960,000

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1 . An amount equal to the Debt Service Requirement received from the sale of the Bonds on the date of their issuance shall be deposited into the Reserve Account. The remaining proceeds from the sale of the Bonds shall be deposited in a special fund to be designated as the "City of South Bend, Indiana, Economic Development Project Construction Fund" (the "Construction Fund"). Such fund shall be deposited with a legally qualified depository or depositories for funds of the City as provided by law and shall be segregated and kept separate and apart from all other funds of the City and may be invested as permitted by law. The money in the Construction Fund shall be expended only for the purpose of paying the costs of the Economic Development Project together with expenses in connection with the issuance of the Bonds. Any balances in the Construction Fund after the completion of the Economic Development Project which are not required to meet unpaid obligations incurred in connection with the construction of the Economic Development Project together with expenses in connection with the issuance of the Bonds, shall be deposited into the Bond Principal and Interest Account of the Economic Development Income Tax Fund and used solely for the purposes of that account as provided for herein. SECTION 10. (a) Optional Redemption. The Bonds maturing on or after August 1, 2008, may be redeemed by the City in whole or in part, on August 1, 2007, or at any time thereafter, in order of maturity determined by the City, and by lot within any such maturities by the Registrar, at a redemption price expressed as a percentage of the principal amount of each Bond to be redeemed in accordance with the following schedule, plus accrued interest to the date of redemption: Redemption Period (Both Dates Inclusive� Redemption Price August 1, 2007, through and including July 3l, 2008 102% August l, 2008, through and including July 31, 2009 101% August 1, 2009, and thereafter prior to maturity 100% Official notice of such redemption identifying the Bonds shall be mailed by the Registrar and Paying Agent by certified or registered mail at least thirty (30) days and not more than sixty (60) days prior to the scheduled redemption date to each of the registered owners of the Bonds called for redemption (unless waived by any such registered owner) at the address shown on the registration books of the Registrar and Paying Agent, or at such other address as is furnished in writing by such registered owner to the Registrar; provided, however, that failure to give such notice by mailing, or any defect therein, with respect to any Bond shall not affect the validity of the proceedings for the redemption of any other Bond. The notice shall specify the redemption price, the date and place of redemption, and the registration numbers (and, in case of partial redemption, the respective principal amounts) of the Bonds called for redemption. The place of redemption may be at the principal corporate office of the Registrar and Paying Agent or as otherwise determined by the City. Interest on the Bonds (or portions thereo� so called for redemption shall cease to accrue on the redemption date fixed in such notice, if sufficient funds are available at the place of redemption to pay the redemption price on the redemption date and when such Bonds (or portions thereo� are presented for payment. Any Bond redeemed in part may be exchanged for a Bond or Bonds of the same maturity in authorized denominations equal -15-