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14-20 Cedar Glen Bond Ordinance Addendums
Fi1PCI !fl k,rk'a ()nice MAR 1 3 2020 DAWN�OH BEND,IN CIN CLERK,5 ALLONGE THIS IS AN ALLONGE to the Promissory Note dated 2020, from MAH CEDAR GLEN, LP, and MERCHANTS AFFORDABLE HOUSING CORP., an Indiana nonprofit corporation, in favor of the CITY OF SOUTH BEND, INDIANA, a municipal corporation duly organized and validly existing under the laws of the State of Indiana (hereinafter referred to as "Issuer"), in the original principal sum of Three Million Eighty-One Thousand Seven Hundred Thirty-Two and 00/100 Dollars ($3,081,732.00). Pay to the order of MERCHANTS BANK OF INDIANA, without recourse or warranty. Dated to be effective as of , 2020. CITY OF SOUTH BEND, INDIANA By: Name: Title: 2784571-1 (6300-2641) Filed in Clerk's Office r — MAR 18 2020 DAWN M.JONES $4,100,000 CITY CLERK,SOUTH BEND, IN CITY OF SOUTH BEND,INDIANA MULTIFAMILY HOUSING REVENUE BONDS,SERIES 2020A (CEDAR GLEN APARTMENTS PROJECT) BOND PURCHASE AGREEMENT City of South Bend, Indiana 227 W. Jefferson Blvd. South Bend. Indiana 46013 MAH Cedar Glen, LP c/o Merchants Affordable Housing Corp. 410 Monon Blvd., Suite 350 Cannel, Indiana 46032 [SALE DATE], 2020 Dear Ladies and Gentlemen: The Sturges Company (the "Underwriter"), on its own behalf and not as your agent or fiduciary, offers to enter into this Bond Purchase Agreement with the City of South Bend, Indiana(the"Issuer"), and MAH Cedar Glen, LP, an Indiana limited partnership (the"Owner"). The Issuer is authorized to issue the above-captioned bonds (the "Bonds"), pursuant to and in accordance with Indiana Code, Title 36, Article 7, Chapters 11.9 and 12, as amended (the "Act"), and an ordinance adopted by the Issuer, and are secured by a Trust Indenture, dated as of April 1, 2020 (the "Indenture"), between the Issuer and The Huntington National Bank, as trustee (the "Trustee"). The Bonds will mature on the date and in the amount and will bear interest at the rate shown on Schedule I hereto. The proceeds of the Bonds will be used to provide funds to finance a loan (the "Loan") to the Owner to provide for the acquisition, construction, improving and equipping of a 179-unit affordable rental housing project located in City of South Bend, Indiana(the"Project"). Section 1. Purchase, Sale and Delivery of Bonds. On the basis of the representations, warranties and agreements contained herein, but subject to the terms and conditions herein set forth, the Underwriter shall purchase the Bonds from the Issuer at a purchase price of [$ ], that being equal to the principal amount of the Bonds [$ ], plus accrued interest [$ ] to the Closing Date (as defined herein). In addition, the Underwriter shall deliver to the Trustee for the account of the Issuer a negative arbitrage deposit of [$ ]. For its services hereunder, the Underwriter shall receive a fee equal to 1$ ] payable in immediately available funds on the Closing Date and, after execution and delivery of this Bond Purchase Agreement, shall be reimbursed by the Owner not less than one business day prior to the Closing Date in immediately available funds for the negative arbitrage deposit amount. In the event the Underwriter does not pay for and take delivery of the Bonds notwithstanding its obligation to do so hereunder, the negative arbitrage deposit amount shall be immediately returned to the Owner. The Issuer shall deliver the Bonds to the order of the Underwriter for the account of the Underwriter against payment of the purchase price therefor by wire transfer payable in immediately available funds at the office of the Trustee on April [ ], 2020, or at such other time and place not later than seven business days thereafter as the Underwriter shall determine and advise the Issuer and the Owner(the"Closing Date"). The Issuer and the Owner(in reliance on the Underwriter's representations with regard to (a) below) acknowledge in connection with the purchase and sale of the Bonds, the offering of the Bonds for sale and the discussions and negotiations relating to the terms of the Bonds pursuant to and as set forth in this Bond Purchase Agreement that (a) the Underwriter has acted at arm's length, is acting solely as principal for its own account and is not agent of or advisor (including, without limitation, a Municipal Advisor (as such term is defined in Section 975(e) of the Dodd-Frank Wall Street Reform and Consumer Protection Act)) and owes no fiduciary duty to, the Issuer, the Owner or any other person, (b) the Underwriter's duties and obligations to the Issuer and the Owner shall be limited to those contractual duties and obligations set forth in this Bond Purchase Agreement and those prescribed by applicable law, (c) the Underwriter may have interests that differ from those of the Issuer and the Owner and (d) the Issuer and the Owner have consulted their legal and financial advisors to the extent they deemed appropriate in connection with the offering and sale of the Bonds. The Issuer and the Owner further acknowledge and agree that each is responsible for making its respective judgment with respect to the offering and sale of the Bonds and the process leading thereto. The Issuer and the Owner each agrees that it will not claim that the Underwriter acted as a Municipal Advisor to the Issuer or the Owner or rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Issuer or the Owner, in connection with the offering or sale of the Bonds or the process leading thereto. Section 2. Financing Documents. On or prior to the Closing Date, the Underwriter shall have received copies of the following: (a) the Official Statement relating to the Bonds (the "Official Statement"), certified by an authorized officer of the Owner as a "final official statement" within the meaning of Rule 15c2-12(f)(3) of the Securities Exchange Act of 1934, as amended (the"1934 Act"); (b) the Indenture, duly executed by the Issuer and the Trustee; (c) the Loan Agreement (the "Loan Agreement"), dated as of April 1, 2020, relating to the Bonds, between the Issuer and the Owner; (d) the Regulatory Agreement and Declaration of Restrictive Covenants (the "Regulatory Agreement"), dated as of April 1, 2020, among the Issuer, the Owner, the Trustee and the Series 2020B Bond Purchaser(as defined in the Regulatory Agreement); 2 (e) the Continuing Disclosure Agreement (the "Continuing Disclosure A eement" ), dated as of April 1, 2020, among the Owner, the Trustee, and the Trustee in its capacity as dissemination agent; (f) the Remarketing Agreement between the Underwriter and the Owner dated as of April 1, and 2020; (g) a certified copy or copies of the ordinance of the Issuer authorizing the issuance of the Bonds, the execution and delivery of the Indenture and the transactions contemplated thereunder. The documents listed in (a) through (g) above, together with this Bond Purchase Agreement and any other documents or agreements executed or entered into by the Issuer, the Owner or the Trustee, are referred to collectively as the"Bond Financing Documents." The Owner agrees to provide the Underwriter within seven business days of the date hereof, at the Owner's expense, a reasonable number of additional copies of the foregoing as the Underwriter shall request, and the Issuer consents to and the Owner authorizes the use of the Official Statement in connection with the offer, sale and distribution of the Bonds. The Issuer and the Owner confirm that they have heretofore made available to the Underwriter copies of a preliminary official statement of the Issuer, dated [ 1, 2020, relating to the Bonds (including the cover page and all appendices thereto, the "Preliminary Official Statement"), and the Issuer consents to and the Owner hereby ratifies the distribution thereof to prospective purchasers and investors. The Owner hereby represents to the Underwriter that the Preliminary Official Statement was deemed "final" by the Owner within the meaning of Rule 15c2-12(b) under the 1934 Act, except for the omission of the offering prices, interest rates, selling compensation, principal amounts, delivery dates, ratings, sources and uses of funds and other terms of the Bonds dependent upon on such matters. Section 3. Representations and Warranties of the Issuer. The Issuer represents and warrants to the parties hereto as follows: (a) The Issuer is a municipal corporation of the State of Indiana(the"State") with full right,legal powerauthority and (i) to enter into this Bond Purchase Agreement, (ii) to execute g and deliver the Bond Financing Documents to which it is a party (collectively, the "Issuer Documents"), (iii) to issue, sell and deliver the Bonds as provided herein, and (iv) to carry out the transactions contemplated by the Issuer Documents. (b) The information in the Preliminary Official Statement and the Official Statement under the caption "THE ISSUER" and, with respect to the Issuer, "ABSENCE OF LITIGATION" is true and correct in all material respects. (c) By official action of the Issuer prior to or concurrently with the acceptance hereof, the Issuer has duly authorized and approved the execution and delivery of, and the performance by the Issuer of the obligations on its part contained in, the Issuer Documents. 3 (d) The Issuer, to its knowledge, is not in breach of or default under any applicable law or administrative regulation of the State or the United States that would impair the performance of its obligations under this Bond Purchase Agreement; and the execution and delivery by the Issuer of the Bonds and the Issuer Documents, and compliance by the Issuer with its obligations thereunder, will not, to the knowledge of the Issuer, conflict with or constitute a breach of or default under any law, administrative regulation,judgment, decree, loan agreement, note, resolution, agreement or other instrument to which the Issuer is a party or is otherwise subject. (e) All approvals, consents and orders of any governmental authority, board, agency or commission having jurisdiction that would constitute a condition precedent to the performance by the Issuer of its obligations hereunder have, as advised by Bond Counsel, been obtained. (f) The Issuer has received no notice of any action, suit, proceeding, inquiry or investigation to which the Issuer is a party, at law or in equity, before or by any court, public board or body, pending or threatened against the Issuer affecting the existence of the Issuer or the titles of its officials to their respective offices or seeking to prohibit, restrain or enjoin the financing or the sale, issuance or delivery of the Bonds or the pledge of revenues or assets of the Issuer to be pledged, as provided in the Indenture, to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds or the Issuer Documents or contesting in any way the completeness or accuracy of the Official Statement, or contesting the powers or authority of the Issuer for the issuance of the Bonds, the execution and delivery of this Bond Purchase Agreement, the Bonds, or the Issuer Documents wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the Bonds or the Issuer Documents to which it is a party. (g) The Bonds, when issued, authenticated and delivered in accordance with the Indenture and sold to the Underwriter as provided herein, will be validly issued and outstanding special limited obligations of the Issuer payable solely from the Trust Estate (as defined in the Indenture) enforceable in accordance with their terms and entitled to the benefits of the Indenture subject to (i) the exercise of judicial discretion in accordance with general principles of equity, and (ii) bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable. The Bonds shall not be construed to constitute an indebtedness or pledge of the money (except as provided in the Indenture), the faith and credit or taxing power of the Issuer or a loan of credit of the foregoing. (h) The execution and delivery of this Bond Purchase Agreement by the Issuer shall constitute a representation by the Issuer to the Underwriter that the representations and agreements contained in this Section are true as of the date hereof; provided, however, that as to information furnished bytheOwner O epursuant to this Bond Purchase Agreement, the Issuer is relying solely on such information in making the Issuer's representations and agreements, and as to all matters of law the Issuer is relying on the advice of bond counsel or other counsel to the Issuer; and provided further, that no member, officer, agent or employee of the governing body of the Issuer shall be individually liable for the breach of any representation, warranty or agreement contained herein. 4 (i) The Issuer hereby certifies that there has been delivered to the underwriter (the "Underwriter") of the Bonds the Preliminary Official Statement and the Official Statement, which the Issuer deems to be final as of its date for purposes of Rule 15c2-12 promulgated under the 1934 Act, as amended ("Rule 15c2-12"), except for information permitted to be omitted therefrom by Rule 15c2-12; provided, however, that the foregoing certification as to the finality of the Preliminary Official Statement and the Official Statement only addresses those statements in the Preliminary Official Statement and the Official Statement concerning the Issuer under the captions "THE ISSUER" and"ABSENCE OF LITIGATION." Any certificate signed by an authorized officer of the Issuer and delivered to the Underwriter shall be deemed a representation and warranty by the Issuer to the Underwriter as to the statements made therein. Section 4. Representations and Warranties of the Owner. The Owner represents and warrants to the parties hereto: (a) The Owner (i) is an Indiana limited liability company, duly formed and validly existing under the laws of the State, (ii) has the full right, power and authority to own its properties and assets, and to carry on its business as now being conducted by it, and as contemplated by the Bond Financing Documents to which it is a party (collectively, the "Owner Documents"), and (iii) has the full right, power and authority to execute and deliver the Owner Documents and to perform all the undertakings of the Owner thereunder. (b) The execution and delivery of this Bond Purchase Agreement have been duly authorized by the Owner, and this Bond Purchase Agreement has been duly executed and delivered by the Owner. (c) The execution and delivery by the Owner of this Bond Purchase Agreement, and the performance by the Owner of its obligations hereunder, and the consummation by the Owner of the transactions contemplated hereby, will not violate any provision of law, rule or regulation applicable to the Owner, or any order or decree of any court or other agency or government or governmental instrumentality applicable to the Owner, or any provision of any of its organizational documents, by-laws, membership agreement or any resolution of the Owner, or conflict with or cause a breach of or default (or with notice or the passage of time will cause a default) under any mortgage, indenture, contract, agreement, document, instrument or other undertaking to which the Owner is a party or is to be binding upon the Owner or upon any of its assets. (d) Assuming due authorization, execution and delivery thereof by the other parties thereto, the Owner Documents are the legal, valid and binding obligations of the Owner enforceable against the Owner in accordance with their terms subject to (i) the exercise of judicial discretion in accordance with general principles of equity and matters of public policy, and (ii) bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable. (e) The information concerning the Owner and the Project in the Official Statement does not contain any untrue statement of material fact or omit to state a material fact necessary in 5 order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (f) The Owner hereby certifies that there has been delivered to the Underwriter of the Bonds the Preliminary Official Statement and the Official Statement, which the Owner deems to be final as of its date for purposes of Rule 15c2-12, except for information permitted to be omitted therefrom by Rule 15c2-12. Section 5. Covenants of the Issuer. The Issuer covenants with the parties hereto that: (a) If between the date of this Bond Purchase Agreement and the date 90 days following the Closing Date an event occurs, that is known to the Issuer, affecting the Issuer, that would cause statements in the Official Statement under the captions "THE ISSUER" or "ABSENCE OF LITIGATION" to contain an untrue statement with respect to the Issuer, the Issuer shall notify the Underwriter. (b) The Issuer, at the expense of the Owner, will furnish such information, execute such instruments and take such other action consistent with the provisions of the Indenture in cooperation with the Underwriter as the Underwriter may reasonably request to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate; provided, however, the Issuer shall not be obligated to qualify to do business in any such state or jurisdiction, be required to register as a dealer or broker in any such state or jurisdiction or be required to take any action or file a general consent to service of process or become subject to service of process in any state or jurisdiction in which the Issuer is not now subject to service of process. Section 6. Covenants of the Owner. The Owner covenants with the parties hereto that: (a) The Owner shall furnish or cause to be furnished to the Underwriter, at the expense of the Owner, in such reasonable quantities as shall be requested by the Underwriter, copies of the final Official Statement, within the meaning of Rule 15c2-12(f) under the 1934 Act, within seven business days of the date hereof (b) If between the date of this Bond Purchase Agreement and the date 90 days following the Closing Date an event occurs, that is known to the Owner, that would cause the Official Statement to contain an untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Owner shall notify the Issuer and the Underwriter and, if in the reasonable opinion of the Issuer or the Underwriter such event requires an amendment or supplement to the Official Statement, the Issuer and the Owner, at the expense of the Owner, will amend or supplement the Official Statement in a form and in a manner jointly approved by the Issuer, the Owner and the Underwriter; provided, however, if such event shall occur on or prior to the Closing Date, the Underwriter in its discretion shall have the right to terminate the obligations of the Underwriter hereunder by written notice to the Issuer and the Owner, and the Underwriter shall be under no obligation to purchase and pay for the Bonds. 6 (c) The Owner shall take all necessary action on its part to cause the Bonds to comply with the provisions of the laws and regulations of the State pursuant to which the Bonds are issued, the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder(the"Code") and will not take any action, or permit any action within its control to be taken, that would violate such provisions or that would cause interest on the Bonds to be included in gross income for federal income tax purposes. Section 7. Conditions to Obligations of Underwriter and Issuer. The obligation of the Underwriter to purchase and pay for the Bonds and of the Issuer to issue and sell the Bonds will be subject to (i) the accuracy of the representations and warranties of the Issuer and the Owner herein, (ii) the performance by the Issuer and the Owner of their respective obligations hereunder, (iii) the receipt of the documents specified in Section 2 hereof, and (iv) the following additional conditions precedent: (a) Except as may have been agreed to by the Underwriter, at the Closing Date, the Indenture and all official action of the Issuer relating thereto shall be in full force and effect and shall not have been amended, modified or supplemented, and the Official Statement shall not have been amended or supplemented. (b) The Underwriter and the Issuer shall have received the opinion of Kuhl & Grant, LLP, Indianapolis, Indiana, counsel to the Owner, dated the Closing Date, in substantially the form attached as Exhibit A hereto; (c) The Underwriter shall have received the approving opinion of Faegre Drinker Biddle & Reath LLP, Indianapolis, Indiana, Bond Counsel, dated the Closing Date, and a supplemental opinion of Bond Counsel, dated the Closing Date, in substantially the form attached as Exhibit B hereto; (d) The Underwriter shall have received the opinion of Squire Patton Boggs (US) LLP, Cleveland, Ohio, counsel to the Underwriter, as to such matters as the Underwriter may reasonably request; (e) The Underwriter shall have received a certificate, dated the Closing Date, signed by a duly authorized official of the Issuer, in substantially the form attached as Exhibit C hereto; (f) The Underwriter shall have received a certificate dated the Closing Date, signed by a duly authorized representative of the Owner, in substantially the form attached as Exhibit D hereto; (g) The Underwriter shall have received a certificate, dated the Closing Date and signed by an authorized officer of the Trustee, to the effect that (i) he or she is an authorized officer of the Trustee; (ii) the Indenture has been duly executed and delivered by the Trustee; (iii) the Trustee has all necessary corporate and trust powers required to carry out the trust created by the Indenture; and (iv) to the best of his or her knowledge, the acceptance by the Trustee of the duties and obligations of the Trustee under the Indenture and compliance with the provisions thereof will not conflict with or constitute a breach of or default under any law, administrative regulation, consent decree or any agreement or other instrument to which the Trustee is subject. 7 (h) The Underwriter shall have received evidence that Moody's Investors Service has assigned and not withdrawn a rating of"MIG-1"with respect to the Bonds. (i) The Underwriter shall have received such additional certificates, proceedings, instruments and other documents as the Underwriter may reasonably request to evidence compliance by the Trustee or the Owner with legal requirements of closing, and to certify the truth and accuracy, as of the Closing Date, of the representations of the Issuer and the Owner contained herein and the due performance or satisfaction by the Issuer and the Owner at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by each of them. Section 8. Establishment of Issue Price (a) The Underwriter agrees to assist the Issuer in establishing the issue price of the Bonds and shall execute and deliver to the Issuer at Closing an "issue price" or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit E, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the Issuer and Bond Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds. (b) The Issuer will treat the first price at which 10% of the Bonds (the "10% test") is sold to the public as the issue price of the Bonds. At or promptly after the execution of this Bond Purchase Agreement, the Underwriter shall report to the Issuer the price at which it has sold to the public the Bonds. For purposes of this Section, if Bonds mature on the same date but have different interest rates, each separate CUSIP number within that maturity will be treated as a separate maturity of the Bonds. (c) The Underwriter acknowledges that sales of any Bonds to any person that is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below) shall not constitute sales to the public for purposes of this section. Further, for purposes of this section: i "public"means anyperson other than an underwriter or a related party, ( ) p p (ii) "underwriter" means (A) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a third-party distribution agreement participating in the initial sale of the Bonds to the public), (iii) a purchaser of any of the Bonds is a"related party"to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (A) more than 50% common ownership of the voting power or the total value 8 of their stock, if both entities are corporations (including direct ownership by one corporation of another), (B) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (C) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other), and (iv) "sale date" means the date of execution of this Bond Purchase Agreement by all parties. Section 9. Termination. The Underwriter may terminate its obligations hereunder by written notice from the Underwriter to the Issuer and the Owner if, at any time subsequent to the date hereof and at or prior to the Closing Date: (a) (i) Legislation shall have been enacted by the Congress, or recommended to the Congress for passage by the President of the United States or the United States Department of the Treasury or the Internal Revenue Service, or favorably reported for passage to either House of the Congress by any Committee of such House to which such legislation has been referred for consideration, or (ii) a decision shall have been rendered by a court established under Article III of the Constitution of the United States, or the United States Tax Court, or (iii) an order, ruling, regulation or communication (including a press release) shall have been issued by the Department of the Treasury of the United States or the Internal Revenue Service, in each case referred to in clauses (i), (ii) and (iii), with the purpose or effect, and reasonable likelihood, directly or indirectly, of imposing federal income taxation upon interest to be received by any holders of the Bonds (other than for the purposes of computing branch profits tax, or tax on S corporations). (b) Legislation shall have been enacted or any action taken by the Securities and Exchange Commission that, in the reasonable opinion of the Underwriter, has the effect of requiring the offer or sale of the Bonds to be registered under the Securities Act of 1933, as amended, or the Indenture to be qualified as an indenture under the Trust Indenture Act of 1939, as amended, or any event shall have occurred that, in its reasonable judgment, makes untrue or incorrect in any material respect any statement or information contained in the Official Statement or that, in its reasonable judgment, should be reflected therein in order to make the statements contained therein not misleading in any material respect. (c) (i) In the Underwriter's reasonable judgment, the market price of the Bonds is materially adversely affected because: (a) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange; (b) the New York Stock Exchange or other national securities exchange, or any governmental authority, shall impose, as to the Bonds or similar obligations, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, underwriters; (c) a general banking moratorium shall have been established by federal, New 9 York or State authorities; or (d) a war involving the United States of America shall have been declared, or any other national or international calamity (including, without limitation, an act of terrorism) shall have occurred, or any conflict involving the armed forces of the United States of America shall have escalated to such a magnitude as to materially affect the Underwriter's ability to market the Bonds; (ii) any litigation shall be instituted, pending or threatened to restrain or enjoin the issuance or sale of the Bonds or in any way contesting or affecting any authority or security for or the validity of the Bonds, or the existence or powers of the Issuer, or (iii) legislation shall have been introduced in or enacted by the Legislature of the State with the purpose or effect, directly or indirectly, of imposing State personal income and municipal income taxes upon interest to be received by any holders of the Bonds, or (iv) any action has been taken by any agency of the United States Government with the purpose or effect, directly or indirectly, of imposing federal income taxation upon interest to be received by any holders of the Bonds or that would, in the Underwriter's reasonable judgment, adversely affect the security for the Bonds. (d) There shall have occurred any change that, in the reasonable judgment of the Underwriter, makes unreasonable or unreliable any of the assumptions upon which (i) yield for purposes of Section 103 of the Code, (ii) payment of debt service on the Bonds or (iii) the basis for the exclusion of interest on the Bonds from gross income for federal income tax purposes, is predicated. Section 10. Expenses. The Underwriter shall pay its own expenses relating to the offering and sale of the Bonds. All other expenses relating to the issuance of the Bonds, including, but not limited to, the Underwriting fee provided in Section 1 hereof; the fees and expenses of counsel to the Underwriter; the initial rating agency fees; the cost of printing the Preliminary Official Statement and the Official Statement; the fees and expenses of Bond Counsel; the Issuer's fee and the fees and expenses of its counsel; and the initial Trustee fees and expenses and expenses of its counsel shall be paid by the Owner on the Closing Date in immediately available funds. Such fees and expenses are estimated on Schedule II hereto. In addition, the Owner shall pay or cause to be paid any and all other costs and expenses in connection with the issuance of the Bonds including, but not limited to, the expenses of counsel to the Owner, and any document recording costs. The Owner shall pay or reimburse the Underwriter for any fees, expenses or costs incurred in connection with the breaking or extending of trades with purchasers of the Bonds or of trades for the purchase of securities for the investment of Bond proceeds as a result of a delay in the Closing Date or a failure to deliver the Bonds, other than a failure caused by the Underwriter's refusal to accept and pay for the Bonds for a reason that is not permitted pursuant to this Bond Purchase Agreement. Section 11. Notices. Any notice or other communication to be given to the Owner or the Issuer under this Bond Purchase Agreement may be given by delivering the same in writing to the Owner or the Issuer, as the case may be, at their respective addresses set forth on the cover page hereto, and any notice or other communication to be given to the Underwriter under this Bond Purchase Agreement may be given by delivering the same in writing to the Underwriter at The Sturges Company, 8787 Bay Colony Drive #1002 Naples, Florida, 34108, Attention: Michael R. Sturges, President. 10 Section 12. Successors. This Bond Purchase Agreement is made solely for the benefit of the Issuer, the Underwriter and the Owner (including their successors or assigns) and no other person shall acquire or have any right hereunder or by virtue hereof. The representations, warranties, and agreements continued herein shall remain operative and in full force and effect and shall survive delivery of and payment for the Bonds hereafter, regardless of any investigation made by or on behalf of the Underwriter. Section 13. Governing Law. This Bond Purchase Agreement shall be governed by the laws of the State. Section 14. Underwriter Not Acting as Advisor or Fiduciary. The Issuer (in reliance on the Underwriter's representations with regard to (a) below) and the Owner acknowledge in connection with the purchase and sale of the Bonds, the offering of the Bonds for sale and the discussions and negotiations relating to the terms of the Bonds pursuant to and as set forth in this Bond Purchase Agreement that (a) the Underwriter has acted at arm's length, is acting solely as principal for its own account and is not agent of or advisor (including, without limitation, a Municipal Advisor (as such term is defined in Section 975(e) of the Dodd-Frank Wall Street Reform and Consumer Protection Act)) and owes no fiduciary duty to, the Issuer, the Owner or any other person, (b) the Underwriter's duties and obligations to the Issuer and the Owner shall be limited to those contractual duties and obligations set forth in this Bond Purchase Agreement and those prescribed by applicable law, (c) the Underwriter may have interests that differ from those of the Issuer and the Owner and(d) the Issuer and the Owner have consulted their legal and financial advisors to the extent they deemed appropriate in connection with the offering and sale of the Bonds. The Issuer and the Owner further acknowledge and agree that each is responsible for making its respective judgment with respect to the offering and sale of the Bonds and the process leading thereto. The Issuer and the Owner agree that they will not claim that the Underwriter acted as a Municipal Advisor to the Issuer or the Owner or rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Issuer or the Owner, in connection with the offering or sale of the Bonds or the process leading thereto. The Underwriter agrees to deal fairly with the Issuer and the Owner with respect to the Bonds. Section 15. Indemnification. The Owner will indemnify and hold harmless the Underwriter and the Issuer and each person, if any, who controls the Underwriter and the Issuer within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, from and against any and all losses, claims, damages, expenses or liabilities,joint or several, to which they or any of them may become subject under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, or under any other statute or at common law or otherwise, or pursuant to a breach of contract by the Owner or an intentional, negligent or reckless untruthful representation by the Owner and, except as hereinafter provided, will reimburse the Underwriter, the Issuer and each such controlling person, if any, for any legal or other fees and expenses reasonably incurred by them or any of them in connection with investigating or defending any actions whether or not resulting in any liability, insofar as such losses, claims, damages, expenses, liabilities or actions: (i) against the Issuer, arise out of or are based upon any untrue or alleged untrue statement of a material fact contained in the Official Statement (other than under the headings "The Issuer," "Tax Matters," "Underwriting," Appendix A — "Form of Opinion of Bond Counsel" and Appendix B — `Book- Entry Only System" therein) or arise out of or are based upon the omission or alleged omission 11 to state therein a material fact required to be stated therein or necessary in order to make the statements therein not misleading or (ii) against the Underwriter, arise out of or are based upon any untrue or alleged untrue statement of a material fact concerning the Owner or the Project or arise out of or are based upon the omission or alleged omission to state therein a material fact concerning the Owner or the Project required to be stated therein or necessary in order to make the statements therein not misleading. Promptly after receipt by the Underwriter, the Issuer or any such controlling person of notice of the commencement of any action in respect of which indemnity may be sought against the Owner under this Section, such person will notify the Owner in writing of the commencement thereof, and, subject to the provisions hereinafter stated, the Owner shall assume the defense of such action (including the employment of counsel, who shall be counsel satisfactory to the Underwriter, the Issuer or such controlling person, as the case may be, and the payment of fees and expenses) insofar as such action shall relate to any alleged liability in respect of which indemnity may be sought against the Owner. The Underwriter, the Issuer or any such controlling person shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall not be at the expense of the Owner, unless: (i) the employment of such counsel has been specifically authorized by the Owner, or (ii) the named parties to any such action (including any impleaded parties) include both such indemnified party and the Owner and in the reasonable judgment of the person seeking indemnity, such separate counsel is advisable by reason of a conflict of interest between the Owner and such indemnified party is likely to arise. In such event, the Owner shall not have the right to assume the defense of such action as to the indemnified party, and the indemnified party shall have the right to select separate counsel to assume such legal defense and to otherwise participate in the defense of such action. It is understood that in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, the Owner shall not be liable for the fees and expenses of more than one separate firm of attorneys for all such indemnified parties. The Owner shall not be liable to indemnify any person for any settlement of any such action effected without its consent. This indemnity agreement will be in addition to any liability which the Owner may otherwise have. The Owner also agrees to notify the Underwriter and the Issuer promptly of the assertion against it or any of its officers, directors, employees or agents of any claim or the commencement of any action or proceeding arising from any act or omission of the Owner, including its independent contractors, consultants, and legal counsel, or any of its agents, servants, partners or employees. No party shall be liable to indemnify any person for any settlement of any aforementioned action effected without the consent of the indemnifying party. The indemnities contained herein shall survive the Closing under the Bond Purchase Agreement and any investigation made by or on behalf of the Underwriter or any person who controls any of such parties of any matters described in or related to the transactions contemplated hereby and by the Official Statement, the authorizing legislation, the Indenture and any Owner Documents. The Owner shall not be liable to indemnify any person in any settlement of any action effected without sufficient notice. The Owner shall not be liable for any judgment if, as a result of the failure of the indemnified person to give notice of the commencement of a suit in respect of which indemnity shall be sought, the Owner is not provided sufficient notice to defend such 12 suit. Notwithstanding the provision of this Section or of any other provisions of this Bond Purchase Agreement to the contrary, if, in the sole and exclusive discretion of the Issuer or any such controlling person of the Issuer, it is deemed desirable or necessary that the Issuer or such controlling person retain separate legal counsel in connection with any such matter, the fees and expenses of such separate legal counsel shall be included within the costs indemnified pursuant to this Section, and no prior approval to such separate representation and no consent by the Owner to settlement or other disposition of such matter shall be required. Section 16. Counterparts. This Bond Purchase Agreement may be executed in one or more counterparts, each of which shall be deemed to be one and the same document. [Balance of Page Intentionally Left Blank.] 13 Section 17. Effectiveness. This Bond Purchase Agreement shall become effective upon the execution of the acceptance hereof by the Issuer and the Owner. Very truly yours, THE STURGES COMPANY By: Michael R. Sturges, President The foregoing is confirmed and accepted as of the date first above written. MAH CEDAR GLEN,LP, an Indiana limited partnership, By: MAH Cedar Glen GP, LLC, an Indiana limited liability company, its general partner By: Merchants Affordable Housing Corp., an Indiana nonprofit corporation, its sole member By: Janine Betsey, President CITY OF SOUTH BEND, INDIANA, as Issuer By: James Mueller, Mayor S-1 SCHEDULE I MATURITIES, PRINCIPAL AMOUNTS, AND INTEREST RATES Maturity Date Principal Amount Interest Rate November 1, 2022 $4,100,000 [_%] SCHEDULE II COSTS OF ISSUANCE Underwriter's Fee $0.00 Bond Counsel Fees and Expenses 0.00 Underwriter's Counsel Fees and Expenses 0.00 Trustee's Fee 0.00 Rating Agency 0.00 Issuer's Upfront Fee 0.00 Issuer's Counsel Fees and Expenses 0.00 Printing and Miscellaneous 0.00 $0 Total Cost of Issuance EXHIBIT A FORM OF OPINION OF COUNSEL TO THE OWNER April [ ], 2020 The Sturges Company Naples, Florida The Huntington National Bank, as Trustee Indianapolis, Indiana Faegre Drinker Biddle& Reath LLP Indianapolis, Indiana City of South Bend, Indiana Hobart, Indiana Merchants Capital Corp. Carmel, Indiana Re: $4,100,000 City of South Bend, Indiana Multifamily Housing Revenue Bonds, Series 2020A(Cedar Glen Apartments Project) Ladies and Gentlemen: We have acted as counsel to MAH Cedar Glen, LP, an Indiana limited partnership (the "Owner"), in connection with the issuance of the above-referenced bonds (the "Bonds") by the City of South Bend, Indiana(the"Issuer"). Capitalized terms used but not defined herein have the meanings assigned to them in the Indenture or the Bond Purchase Agreement. In our capacity as such counsel, in rendering the opinions set forth below, we have examined, among other things, originals or copies, certified or otherwise identified to our satisfaction, of the following documents: (i) the Official Statement, dated [SALE DATE], 2020, of the Issuer relating to the Bonds (the "Official Statement"); (ii) the Regulatory Agreement and Declaration of Restrictive Covenants, among the Issuer, The Huntington National Bank, as trustee (the "Trustee") and the Owner, dated as of April 1, 2020 (the "Regulatory Agreement"); (iii) the Loan Agreement, dated as of April 1, 2020 (the "Loan Agreement"), duly executed by the Issuer, the Owner, and the Trustee; (iv) the Bond Purchase Agreement, dated [SALE DATE], 2020, among the Issuer, the Underwriter named therein and the Owner (the "Bond Purchase Agreement"); (v) the Continuing Disclosure Agreement, dated as of April 1, 2020, between the Owner and the Trustee; and (vi) such other documents, certificates and instruments as we have deemed necessary for the purposes of reaching the opinion expressed herein. We have also relied as to matters of fact upon a certificate of the Owner and examined certain other certificates and documents. In such examination, we have assumed the genuineness of all signatures (other than those relating to the Owner), the authenticity of all documents submitted to us as originals, and the A-1 conformity to the original document of all documents submitted to us as photostatic or certified copies. We have assumed due authorization, execution and delivery of all documents referenced herein by the parties thereto other than the Owner and that each of such parties has full power, authority and legal right to execute and deliver each such instrument. Based upon and subject to the foregoing, we are of the opinion that, as of the date hereof: (i) The Owner is a municipal corporation validly existing and in good standing under the laws of the State of Indiana, with full power and authority to execute and deliver the documents listed above numbered (ii) through (v) (the "Financing Documents") and the Official Statement and to perform its obligations under each respective agreement. (ii) The Financing Documents have each been duly authorized, executed and delivered by the Owner and constitute legal, valid and binding obligations of the Owner, enforceable in accordance with their respective terms, except as the enforcement thereof may be limited by (a) applicable bankruptcy, insolvency, moratorium, reorganization and similar laws (including fraudulent conveyance laws) affecting the enforcement of creditors' rights and remedies generally in effect from time to time, and (b) general principles of equity (regardless of whether such enforceability is considered in a proceeding at equity or at law). (iii) The execution and delivery of the Financing Documents and the performance by the Owner of the terms of the respective agreements do not conflict with or violate any other document, instrument, decree, indenture or agreement by which the Owner is bound. (iv) No approval, authorization or other action by, or filing with, the State of Indiana or any agency thereof, is required in connection with the execution and delivery by the Owner of the Bond Purchase Agreement. (v) There is no action, suit, proceeding, inquiry or investigation at law or in equity or before any court or public body pending or, to the best of our knowledge, threatened, to challenge the right, power or authority of the Owner to acquire, own and operate the Project or to perform its obligations under the Bond Purchase Agreement or the Financing Documents. (vi) The information concerning the Project and the Owner submitted by the Owner to the Trustee, the Underwriter or the Issuer and the information in the Preliminary Official Statement and the Official Statement relating to the Owner and the Project under the captions "THE PROJECT," "THE OWNER," "ESTIMATED SOURCES AND USES OF FUNDS," and "CERTAIN BONDHOLDERS' RISKS," does not contain an untrue statement of fact or fail to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading as of the date hereof. We express no opinion as to any matter whatsoever, relating to the accuracy or completeness of any financial accounting or projection information furnished to any party under any of the above-referenced agreements or any other related document. A-2 EXHIBIT B FORM OF SUPPLEMENTAL OPINION OF BOND COUNSEL April_, 2020 The Sturges Company Naples, Florida The Huntington National Bank, as trustee Indianapolis, Indiana Re: $4,100,000 City of South Bend, Indiana Multifamily Housing Revenue Bonds, Series 2020A (Cedar Glen Apartments Project) Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance and sale by City of South Bend, Indiana (the "Issuer") of its $4,100,000 aggregate principal amount of Multifamily Housing Revenue Bonds, Series 2020A (Cedar Glen Apartments Project) (the "Bonds"), and in such capacity, we have on the date of this opinion letter rendered our approving opinion regarding the Bonds. We have examined (a) a certified transcript of proceedings relating to, among other things, (i) the authorization, issuance and sale of the Bonds, and (ii) the authorization and execution of the Trust Indenture, dated as of April 1, 2020 (the "Indenture"), between the Issuer and The Huntington National Bank, as trustee, the Loan Agreement, dated as of April 1. 2020 (the "Loan Agreement"), between the Issuer and MAH Cedar Glen, LP (the "Borrower"), and the Bond Purchase Agreement, dated April _, 2020 (the "Bond Purchase Agreement"), among the Issuer, the Underwriter named therein (the "Underwriter") and the Borrower; (b) opinions of counsel for the Issuer and MAH Cedar Glen, LP (the "Borrower"), dated as of the date of this opinion letter; (c) certificates showing execution, authentication and delivery of the Bonds and no litigation pending as of the date hereof; and (d) the statements contained in the Official Statement, dated April 2020, relating to the Bonds (the "Official Statement") under the captions "INTRODUCTION," "THE BONDS" (other than the statements contained under the subcaption "Book Entry Only System"), "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS," "THE INDENTURE," "THE LOAN AGREEMENT," "TAX MATTERS," and "APPENDIX A" (collectively, the"Identified Sections"). We have also examined the constitution and statutes of the State of Indiana (the "State"), including particularly Indiana Code 36-7-11.9 and 12 et seq., as supplemented and amended (the "Act"), and such other documents, statutes, certifications, records and matters of law as we have deemed necessary for purposes of this opinion. B-1 As to questions of fact material to our opinion, we have relied upon the certified transcript of proceedings and certificates of public officials. We have not undertaken to verify any facts or representations by independent investigation. We advise you that we are qualified to practice law only in the State, and we do not purport to be expert on, or to express an opinion herein concerning, any laws other than the laws of the State and the federal law of the United States of America. Based solely on the foregoing, we are of the opinion, under existing law, as follows: 1. The Bond Purchase Agreement has been duly authorized, executed and delivered by the Issuer and, assuming due execution and delivery by the other parties thereto, constitutes a valid, legal and binding special obligation of the Issuer in accordance with its terms, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights, by the application of equitable principles of equitable remedies are sought and by judicial discretion in appropriate cases. 2. The Bonds are exempt from registration under the Securities Act of 1933, as amended, and the Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended. 3. The statements in the Identified Sections, insofar as such statements purport to summarize certain provisions of the Bonds, the Indenture and the Loan Agreement, present fair and accurate summaries thereof as of the respective dates of the Preliminary Official Statement and the Official Statement, and the date hereof. The statements contained in the Official Statement under the caption "TAX MATTERS" are an accurate statement or summary of the matters therein. We have not independently verified the accuracy, completeness or fairness of the statements contained in the Official Statement and take no responsibility therefor, except as and to the extent set forth in paragraph 3 above. Based upon the participation by certain lawyers within this firm as bond counsel in the issuance, sale and delivery of the Bonds, nothing has come to our attention which would lead us to believe that the statements in the Identified Sections of the Official Statement contained or contains an untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Except as specifically described in this paragraph, we have not been consulted on disclosure matters, and we express no opinion with respect to and have not undertaken to determine independently the accuracy, completeness or fairness of any statements contained or incorporated by reference in the Official Statement or any other offering material relating to the Bonds. We do not express any opinion or belief as to any of the financial, technical or statistical data or information included in (or incorporated by reference into) the Official Statement or attached thereto. The purpose of our professional engagement was not to establish or confirm factual matters in the Official Statement, and we have not undertaken any obligation to verify independently any of the factual matters set forth therein. In rendering this opinion, we have relied upon certifications of the Issuer and the Borrower with respect to certain material facts B-2 within the knowledge of the Issuer and the Borrower. Our opinion represents our legal judgment based upon our review of the law and the facts that we deem relevant to render such opinion and is not a guarantee of a result. This opinion is given as of the date hereof and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. This letter is furnished by us in our capacity as bond counsel to the Borrower and is subject to the following matters, which by your acceptance of this letter you recognize and acknowledge: (1)that we have not been engaged to act, and have not acted, as your counsel for any purpose in connection with the issuance of the Bonds; (2) that no attorney-client relationship exists or has at any time existed between us in connection with the Bonds or by virtue of this letter; and (3) that this letter is based upon our review of proceedings and other documents undertaken as part of our engagement with the Borrower, and in order to deliver this letter we neither undertook any duties or responsibilities to you nor conducted any activities in addition to those undertaken or conducted for the benefit of, and requested by, the Borrower. Consequently, we make no representation that our review has been adequate for your purposes. In rendering our opinion, we wish to advise you that the enforceability of the Bond Purchase Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting creditors' rights heretofore or hereinafter enacted to the extent constitutionally applicable, and their enforcement may also be subject to the exercise of judicial discretion in appropriate cases. On the date hereof, we rendered to the Issuer our bond counsel opinion which, among other things, approved the validity of the issuance of the Bonds. You are authorized to rely on said opinion as if addressed to you. This letter is furnished by us solely for your benefit and may not be relied upon by any other persons. This letter is not to be used, circulated, quoted, or otherwise referred to or relied upon for any other purpose of by any other person. This letter is not intended to be relied upon by the holders of the Bonds. Very truly yours, FAEGRE DRINKER BIDDLE&REATH LLP B-3 EXHIBIT C CLOSING CERTIFICATE OF THE ISSUER $4,100,000 CITY OF SOUTH BEND,INDIANA MULTIFAMILY HOUSING REVENUE BONDS,SERIES 2020A (CEDAR GLEN APARTMENTS PROJECT) The undersigned, for and on behalf of the City of South Bend, Indiana (the "Issuer"), hereby certifies represents and warrants to the Underwriter and the Owner named in the Official Statement referred to below, as follows: (1) The information in the Official Statement, dated [SALE DATE], with respect to the above-captioned bonds (the "Official Statement") under the captions "THE ISSUER" and, with respect to the Issuer, "ABSENCE OF LITIGATION" is true and correct to my knowledge and belief. The Issuer has not confirmed and assumes no responsibility for the accuracy, sufficiency, completeness or fairness of any statements made in the Preliminary Official Statement or the Official Statement or any amendment thereto, or any reports or financial information or any offering or disclosure document or other information relating to the Bonds, the Bond Documents, the Owner or the Project, other than the information set forth under the captions "THE ISSUER" and "ABSENCE OF LITIGATION" (as it relates to the Issuer). (2) Except as disclosed in the Official Statement, I have received no notice of any litigation or other proceedings pending against the Issuer or threatened against the Issuer, in any court or other tribunal of competent jurisdiction, State of Indiana or federal, in any way (A) restraining or enjoining the issuance, sale or delivery of the Bonds, (B) questioning or affecting the validity of the Bond Purchase Agreement, the Bonds, the Indenture, the pledge to the Bondholders of any money or other security provided under the Indenture, the Loan Agreement and the Regulatory Agreement or any other transaction referred to in the Official Statement, (C) questioning or affecting the validity of any of the proceedings for the authorization, sale, execution, issuance or delivery of the Bonds, (D) questioning or affecting the organization or existence of the Issuer or the title to office of the officers thereof or (E) questioning or affecting the power and authority of the Issuer to issue the Bonds, or to execute the Bond Purchase Agreement, the Indenture, the Loan Agreement and the Regulatory Agreement. (3) The representations and warranties of the Issuer contained in the Bond Purchase Agreement are true and correct as of the date hereof. Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to them in the Official Statement. C-1 IN WITNESS WHEREOF, the undersigned has signed this certificate as of April [ ], 2020. CITY OF SOUTH BEND, INDIANA, as Issuer By: James Mueller, Mayor C-2 EXHIBIT D CLOSING CERTIFICATE OF OWNER $4,100,000 CITY OF SOUTH BEND,INDIANA MULTIFAMILY HOUSING REVENUE BONDS,SERIES 2020A (CEDAR GLEN APARTMENTS PROJECT) The undersigned on behalf of the Indiana limited liability company set forth below (the "Owner"), hereby certifies, represents and warrants to the City of South Bend, Indiana (the "Issuer") and the Underwriter named in the Bond Purchase Agreement described below, as follows: (1) The representations and warranties of the Owner contained in the Bond Purchase Agreement among it, the Issuer and The Sturges Company, as the Underwriter, (the "Bond Purchase Agreement") are true and correct in all material respects as of the date hereof. (2) The Owner has complied with all agreements and satisfied all material conditions contained in the Bond Purchase Agreement on its part to be performed or satisfied prior to the date hereof. (3) The information concerning the Project and the Owner submitted by the Owner to the Trustee, the Underwriter or the Issuer and the information relating to the Owner and the Project in the Preliminary Official Statement and the Official Statement (each as defined in the Bond Purchase Agreement) under the captions "THE PROJECT," "THE OWNER," "ESTIMATED SOURCES AND USES OF FUNDS," and "ABSENCE OF LITIGATION" does not contain an untrue statement of material fact. (4) The Preliminary Official Statement was deemed "final" by the Owner within the meaning of Rule 15c2-12(b) under the 1934 Act, except for the omission of the offering prices, interest rates, selling compensation, principal amounts, delivery dates, ratings, sources and uses of funds and other terms of the Bonds dependent upon on such matters. (5) There is no action, suit, proceeding, inquiry or investigation, at law or in equity, or before or by any court, public board or body pending or, to the best knowledge of the Owner, threatened against or affecting the Owner or any of its affiliates, nor, to the best knowledge of the Owner, is there any basis therefor, wherein an unfavorable decision, ruling or finding would, in any way, adversely affect the transactions contemplated by the Loan Agreement or the operation and management of the Project, or that might result in any material adverse change in the business, operations, properties, assets, liabilities or condition (financial or other) of the Owner or that affects the information concerning the Project and the Owner submitted by the Owner to the Trustee, the Underwriter or the Issuer and the information in the Preliminary Official Statement and the Official Statement under the captions "THE PROJECT," "THE OWNER," "ESTIMATED SOURCES AND USES OF FUNDS," or "ABSENCE OF LITIGATION." D-1 (6) The execution and delivery of the Loan Agreement, the Regulatory Agreement, and the Bond Purchase Agreement and the performance by the Owner of its obligations thereunder will not constitute a breach of or default by the Owner under its organizational documents or the terms and provisions of any agreement or commitment to which the Owner is presently a party or by which the Owner is presently bound. Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to them in the Bond Purchase Agreement. IN WITNESS WHEREOF, the undersigned has signed this certificate as of April [ ], 2020. MAH CEDAR GLEN,LP an Indiana limited partnership, as Borrower By: MAH Cedar Glen GP, LLC, an Indiana limited liability company, its general partner By: Merchants Affordable Housing Corp., an Indiana nonprofit corporation, its sole member By: Janine Betsey, President D-2 EXHIBIT E FORM OF ISSUE PRICE CERTIFICATE E-1 Filed in Clerk's Office MAR 18 2020 BOND PURCHASE AND LOAN AGREEMENT DAWN M,JONES CITY CLERK,SOUTH BOO IPPURCHASE AND LOAN AGREEMENT (hereinafter referred to as the "Agreement"), is made and entered into effective as of the day of 2020, by and among MAH CEDAR GLEN, LP, an Indiana limited partnership(hereinafter referred to as "Borrower"), the CITY OF SOUTH BEND, INDIANA(hereinafter referred to as "Issuer") and MERCHANTS BANK OF INDIANA, an Indiana banking and financial institution having a principal corporate office in the City of Carmel,Indiana and its successors and assigns (hereinafter referred to as "MBI" or"Bondholder"). PRELIMINARY RECITALS A. Borrower holds fee simple title to certain real estate located in St. Joseph County, Indiana, more particularly described in Exhibit "A" attached hereto and by reference made a part of this Agreement (hereinafter referred to as the "Real Estate"), and upon which it proposes to rehabilitate a 179-unit low income housing apartment project known as Cedar Glen Apartments. B. Borrower has applied to Issuer for a construction loan in the principal amount of Three Million Eighty-One Thousand Seven Hundred Thirty-Two and 00/100 Dollars($3,081,732.00)to finance, among other things as hereinafter described, the acquisition and rehabilitation of the Improvements (defined below) thereon,which loan will be funded by the sale of certain tax exempt bonds issued by the Issuer. C. Pursuant to and in accordance with the laws of the State, including without limitation, the Act, the Issuer has determined to issue and sell the Bonds in the aggregate principal amount of Three Million Eighty-One Thousand Seven Hundred Thirty-Two and 00/100 Dollars ($3,081,732.00) and to loan theP roceeds to be derived from the sale thereof to the Borrower to assist in the financing of the Project to be undertaken by the Borrower; D. All acts and conditions required to happen, exist and be performed precedent to and in the �1 PP issuance of the Bonds and the execution and delivery of this Agreement have happened,do exist and have been performed, or at the delivery of the Bonds will exist, will have happened and will have been performed (i) to make the Bonds, when issued, delivered and authenticated, valid special obligations of the Issuer in accordance with the terms thereof and hereof and (ii) to make this Agreement a valid, binding and legal trust agreement for the security of the Bonds in accordance with its terms; and E. Issuer, pursuant to the terms andprovisions of this Agreement, will assign its rights and �' title to the aforementioned construction loan to Bondholder who will administer such loan. F. Borrower desires that MBI purchase the tax exempt bonds in the principal amount of Thousand Seven Hundred Thirty-Two and 00/100 Dollars $3 081 732.00 Three Million Eighty-One ( ) (hereinafter referred to as the "Bonds")to fund the construction loan from Issuer to Borrower. NOW, THEREFORE, in consideration of MBI purchasing such Bonds, and taking an assignment of the Loan and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,Borrower, Issuer and MBI hereby agree as follows: ARTICLE I. DEFINITIONS AND INTERPRETATIONS Section 1.1 Definitions. In addition to the words and phrases defined elsewhere in this Agreement, the terms defined in this Section shall have the meaning indicated when capitalized and used herein. KD_Bond Purchase and Loan Agreement(Series B)4-0474-960-17deelePage 1 "Accounts" means the accounts created pursuant to Article IV hereof. "Act" means Indiana Code 36-7-11.9 and 36-7-12, as amended. "Authorized Representative"means any officer of the Borrower. "Agreement" shall mean this Bond Purchase and Loan Agreement as from time to time amended or modified. "Appraised Value" shall mean the market value of the Real Estate and Improvements, on an assumed completion basis, arrived at under any appraisal from time to time furnished to MBI pursuant to the terms of this Agreement, which is in form and substance and prepared by an appraiser acceptable to MBI. "Architect" shall mean "Architect Agreement" shall mean that certain AIA Document B108 — 2009 dated executed by and between Borrower and Architect, pursuant to which the Architect has agreed to provide certain architectural services for the construction of the Project. "Bond Fund"means the Bond Fund created in Section 4.2 hereof, including the various accounts created thereunder. "Bond Issuance Costs" means the costs, fees and expenses incurred or to be incurred by the Issuer and the Borrower in connection with the issuance and sale of the Bonds, including placement or other financingfees (includingapplicable counsel fees the fees and disbursements of bond counsel, fees PP ), of the Issuer's financial advisor, the initial Annual Fee and acceptance fee of MBI, application fees and � expenses, publication costs, the filing and recording fees in connection with any filings or recording necessary under the Agreement or to perfect the lien thereof,the out-of-pocket costs of the Issuer,the fees and disbursements of counsel to the Borrower, the fees and disbursements of the Borrower's accountants, the fees and disbursements of counsel to the Issuer, the fees and disbursements of counsel to the purchasers of the Bonds, the costs of preparing or printing the Bonds and the documentation supporting the issuance of the Bonds, the costs of reproducing documents, and any other costs of a similar nature reasonably incurred. "Bondholder"means a holder of the Bonds. "Bonds" shall mean the City of South Bend, Indiana, Multifamily Housing Revenue Bonds, Series 2020B (Cedar Glen Apartments Project) in the original aggregate principal drawing amount of Three Million Eighty-One Thousand Seven Hundred Thirty-Two and 00/100 Dollars ($3,081,732.00). "Borrower's Receipt and Certification" shall mean that certain Borrower's Receipt and Certification to be executed by Borrower in conjunction with a request for a Draw under the Loan. "Business Day" shall mean any day of the week (but not a Saturday, Sunday or holiday) on which the offices of MBI are open to the public for carrying on substantially all of MBI's business functions. Unless specifically referenced in this Agreement as a Business Day, all references to "days" shall be to calendar days. "Co-Borrower Agreement" shall mean that certain Co-Borrower Agreement of even date herewith, executed by Borrower and Co-Maker in favor of MBI. Page 2 "Co-Maker" and "Co-Makers" shall mean, individually or collectively, as the context may require, Merchants Affordable Housing Corporation,an Indiana nonprofit corporation. "Code" means the Internal Revenue Code of 1986, as amended, and all applicable regulations (whether proposed,temporary or final)under the Code and the statutory predecessor of the Code, and any official rulings and judicial determinations under the foregoing applicable to the Bonds. "Collateral Assignment of Equity Payments" shall mean that certain Assignment of Capital Contributions of even date herewith, executed or to be executed by Borrower in favor of MBI, as from time to time amended,modified,replaced or restated. "Collateral Assignment of Partnership Interest" shall mean that certain Assignment and Pledge of Partnership Interest and Contract Rights of even date herewith, executed or to be executed by General Partner in favor of MBI,as from time to time amended,modified,replaced or restated "Completion Date" means the latest date of completion of the Project, as evidenced in accordance with the requirements of Section 10.3 of this Agreement. "Completion Schedule" shall mean the construction draw schedule satisfactory to and approved by MBI. "Computation Date" means the last day of each fifth bond year (or such earlier bond year or bond years selected by the Issuer)and the date on which the final payment in full of all outstanding Bonds is made. "Construction Contract" shall mean that certain MA Document A104-2007 dated as of , executed by and between Borrower and General Contractor. "Construction Consultant" shall mean any architect, engineer or other consultant as MBI may engage from time to time to (i) review the Development Budget, the Plans and Specifications and any other report or information relating to the development of the Project and the construction or rehabilitation of the Improvements, (ii) review the progress and quality of the construction or rehabilitation of the Improvements and installation of the Personal Property, (iii) review any Draw Request and application for an advancement of the Loan, and (iv) perform such other consulting services as MBI may require in connection with the development of the Project and the construction or rehabilitation of the Improvements. "Construction Fund" means the Construction Fund created in Section 4.3 hereof, including the various accounts created thereunder. "Contingent Required Equity" shall mean, from time to time, that portion of the Required Equity (i) that has not been contributed toward the payment of the costs of the Project as shown on the Development Budget and (ii) for which the conditions set forth in the Partnership Agreement for the contribution of such funds to Borrower have not yet been fully satisfied. "Costs of Construction" means the following: (i) all Bond Issuance Costs; (ii) the cost of insurance of all kinds that may be required or necessary in connection with the acquisition, construction, equipping or installation of the Project; Page 3 (iii) all costs and expenses of site preparation and engineering services, including the costs of Issuer or Borrower for test borings, surveys, estimates, plans and specifications and preliminary investigation therefor, and for supervising construction, as well as for the performance of all other duties required by or consequent upon the proper acquisition, construction or installation of the Project; (iv) all costs and expenses which the Issuer or the Borrower shall be required to pay under the terms of any contract or contracts (including the architectural and engineering, development, and legal services with respect thereto) for the acquisition, construction or installation of the Project; and (v) any sums required to reimburse the Issuer or the Borrower for advances made by either of them subsequent to the date of the reimbursement resolution adopted by the Issuer for any of the above items or for any other costs incurred and for work done by either of them which are properly chargeable to the Project. "Deferred Developer Fees" shall mean all developer fees, deferred contractor profit and other fees payable to any party in connection with the development, construction, rehabilitation or operation of the Project that are specifically designated on the Development Budget as being deferred until such time as the Loan is paid in full or has been paid down to the Permanent Loan Amount. Notwithstanding anything contained herein to the contrary, no Project cost shown on the Development Budget shall be deemed to be a Deferred Developer Fee unless Borrower has furnished evidence acceptable to MBI that (i) the party to whom such fee is owed has no rights to any lien upon the Project in the event such fee is not paid, or(ii) the party to whom such fee is owed has waived in writing all rights to any lien upon the Project in the event such fee is not paid. "Developer" shall mean "Development Agreement" shall mean the Amended and Restated Development Agreement between the Borrower and the Developer dated , relating to the development of the Project and providing for the payment of a Development Fee. "Development Budget" shall mean a detailed hard and soft cost budget for (i) the costs of the construction or rehabilitation of the Improvements in accordance with the Plans and Specifications, (ii) the costs of the purchase and installation of the Personal Property, (iii) the payment of all operating expenses through the earlier of the date the Project will reach breakeven operations taking into account revenue from the Project generated prior to the point in time that the Project will reach breakeven operations or the date the Loan will be repaid, including without limitation interest expense, (iv) the payment of all professional fees and financing fees, and (v) the payment of all other related closing costs and soft costs to be incurred in connection with the development and construction or rehabilitation of the Project, all of which if requested by MBI shall be certified by Borrower and, as to the costs of construction or rehabilitation of the Improvements, by the general contractor or construction manager for the Project. The Development Budget shall not be revised without the prior written consent of MBI. The Development Budget, as from time to time modified, must be in form and detail acceptable to MBI in its reasonable discretion. The Development Budget submitted to MBI by Borrower is attached hereto as Exhibit B and by this reference made a part of this Agreement and shall not be revised without the prior written consent of MBI as set forth in Section 10.8 hereof. "Development Fee" shall mean the total development fee in the amount of and 00/100 Dollars ($ ) payable to the Developer in Page 4 respect to the Project in accordance with the terms and conditions set forth in the Development Agreement. "Draw Request" shall mean each written request from Borrower for an advancement of the Loan which shall be in the form of a Borrower's Receipt and Certification executed by Borrower which shall contain a request for an advancement of the Loan, a certification that the warranties and representations set forth in this Agreement are true and that there has been full compliance with the covenants set forth in this Agreement and such other certifications and representations as MBI may require. Each Draw Request shall be accompanied by such supporting documentation as may be required by the terms of this Agreement for the advancement of the Loan, including without limitation all documentation and materials required by Article X of this Agreement for any advancement of the Loan. "Environmental Law(s)" shall mean any present and future federal, state or local statute, law (including common law), ordinance, code, rule, regulation, guideline, order or decree regulating, relating to, or imposing liability or standards of conduct concerning (i) any Hazardous Substance, (ii) the protection of human health or the environment or(iii)any Wetlands, each as now or at any time hereafter in effect. The term "Environmental Law" includes, but is not limited to, the following statutes, as amended from time to time, any successor thereto, and any regulations promulgated pursuant thereto, and any state or local statutes,ordinances, rules, regulations, guidelines and the like addressing similar issues: (i)the Comprehensive Environmental Response, Compensation and Liability Act,42 U.S.C. 9601, et seq. and the regulations promulgated thereunder, (ii) the Clean Air Act, 42 U.S.C. 7401, et seq. and the regulations promulgated thereunder, (iii) the Clean Water Act, 33 U.S.C. 1251, et seq. and regulations promulgated thereunder, (iv) the Resource, Conservation and Recovery Act, 42 U.S.C. 6901, et seq. and regulations promulgated thereunder, (v) the Oil Pollution Act of 1990, 33 U.S.C. 2701, et seq. and regulations promulgated thereunder, and (vi) the Hazardous Materials Transportation Act, 49 U.S.C. 1801, et seq.and regulations promulgated thereunder. "Event of Default" shall have the meaning as defined in Section 17.1 of this Agreement. "Extended Use Agreement" shall mean that certain Lien and Extended Use Agreement executed or to be executed by Borrower and the Housing Authority in conjunction with the Tax Credits; which lien will be subordinated to the lien of the HUD Mortgage. "Fiscal Year" shall mean a period of twelve consecutive months constituting the fiscal year of the Borrower commencing on the first day of January of any year and ending on the last day of December of such year, both inclusive, or such other period as hereafter may be established from time to time for budgeting and accounting purposes by the Borrower or by the governing body of any successor entity to the Borrower. "Funds" means the funds created pursuant to Article IV hereof. "General Contractor" shall mean "General Partner" shall mean "Hazardous Substance(s)" shall mean any and all substances (whether solid, liquid or gas) defined, listed, or otherwise classified as "pollutants," "hazardous wastes," "hazardous substances," "hazardous materials," "extremely hazardous wastes," "toxic substances," "oil," "waste oil," and "used oil" or words of similar meaning or regulatory effect under any present or future Environmental Law or that may have a negative impact on human health, property value or the environment, including but not limited to Mold, petroleum and petroleum products, asbestos and asbestos-containing materials, Page 5 polychlorinated biphenyls, lead, lead-based paints, radon, radioactive materials, flammables and explosives. "Housing Authority" shall mean Indiana Housing and Community Development Authority. "HUD" shall mean the U.S.Department of Housing and Urban Development. "HUD Loan" shall mean the loan in the amount of and 00/100 Dollars ($ ) extended by Senior Lender to Borrower, and insured by HUD pursuant to Section 223(f) of the National Housing Act. "HUD Mortgage" shall mean that certain Multifamily Mortgage, Assignment of Leases and Rents and Security Agreement executed or to be executed by Borrower in favor of Senior Lender, which secures the obligations of Borrower under the HUD Loan. "HUD Mortgage Documents" shall mean the HUD Mortgage, the HUD Note and any and all other documents executed or to be executed by Borrower in connection with the HUD Loan. "HUD Note" shall mean that certain Note(Multi-State) executed or to be executed by Borrower in favor of Senior Lender in the principal amount of and 00/100 Dollars ($ )to evidence the HUD Loan. "Improvements" shall mean the site development and improvements to be made on and to the Real Estate pursuant to this Agreement and according to the Plans and Specifications which includes a 304-unit multifamily housing project and related facilities, together with (i) any paved driveways and parking facilities and sidewalks to be located on the Real Estate required under the Plans and Specifications or any other construction contract or agreement entered into in connection with the Project, (ii) any mechanical, electrical, plumbing, heating, ventilating, air conditioning and life safety equipment and systems; appliances, elevators and escalators and other similar systems and items of equipment installed in or upon, and affixed to such improvements, whether or not the same may be movable and whether or not removal thereof would cause damage to such improvements, (iii) any improvements off the Project required to be completed by Borrower as a condition to the approval of the Project by any applicable governmental authorities, (iv) any appropriate surrounding street improvements, and(v) all site demolition, site clearance,well capping,utility pipeline removal and relocation, site grading, landscaping, signage, installation of utilities, curb and gutter and any other items of construction required under the Plans and Specifications or any other construction contract or agreement entered into in connection with the Project. "In-Balance" shall mean, from time to time, with respect to the Loan, that the following conditions are all satisfied, as determined by MBI in its sole reasonable discretion: (i) the unadvanced portion of the Loan plus the Contingent Required Equity plus the unadvanced portion(s) of the Other Available Sources of Funds plus any other sums deposited with MBI pursuant Section 16.1, is sufficient to pay the Unpaid Project Costs and will be available to Borrower to pay the Unpaid Project Costs when such costs become due and payable, and (ii) the Contingent Required Equity expected to be funded to Borrower will be sufficient to pay the Loan in full on or before its maturity. For purposes of determining if the Loan is In-Balance, MBI shall use its sole reasonable judgment to determine the timing of when the Contingent Required Equity and the Other Available Sources of Funds will be advanced and available to Borrower for the payment of Unpaid Project Costs and for the payment of sums owing under the Loan, including without limitation whether the conditions that must be satisfied for the funding of the Contingent Required Equity and the funding of the Other Available Sources of Funds will be satisfied Page 6 within the time frames needed to pay the Unpaid Project Costs and the sums owing under the Loan when such costs and amounts become due and payable. "Indebtedness" shall mean all obligations and liabilities of Borrower to pay money to any Person (including without limitation all debts, claims and indebtedness) whether primary, secondary, direct, contingent, fixed or payable, heretofore, now and/or from time to time hereafter owing, due or payable, however evidenced, created, incurred, acquired or owing and however arising, whether under written or oral agreement, operation of law, or otherwise. Indebtedness includes, without limiting the generality of the foregoing, (a)obligations or liabilities of any Person secured by any lien, claim, encumbrance, or security interest upon property owned by Borrower even though Borrower has not assumed or become liable for the payment therefore; and(b)obligations or liabilities created or arising under any lease of real or personal property or conditional sale or other title retention agreement with respect to property used and/or acquired by Borrower, even though the rights and remedies of the lessor, seller and/or lender thereunder are limited to repossession of such property. "Interest Reserve Amount" shall mean a principal portion of the Loan equal to the amount allocated in the Development Budget for the payment of the monthly installments of accrued interest payable under the terms of the Note. MBI shall have the sole and absolute right to increase or reduce the Interest Reserve Amount at any time and from time to time. "Issuer" shall mean the City of South Bend,Indiana. "Limited Partner"shall mean "Limited Partner's Equity" shall mean the total amount of equity contributions Limited Partner shall pay to Borrower to acquire its limited partnership interest in Borrower, which total shall be in the amount set forth in the Development Budget, as such amount may be adjusted in accordance with the Partnership Agreement. "Limited Partner's Initial Equity Payment" shall mean the initial payment by the Limited Partner of a portion of the Limited Partner Equity in the amount of not less than that set forth in the Development Budget. "Limited Partner's Second Equity Payment" shall mean the second payment by the Limited Partner of a portion of the Limited Partner Equity in the amount set forth in the Development Budget, as such amount may be adjusted in accordance with the Partnership Agreement. "Limited Partner's Third Equity Payment" shall mean the third payment by the Limited Partner of a portion of the Limited Partner Equity in the amount set forth in the Development Budget, as such amount may be adjusted in accordance with the Partnership Agreement. "Loan" shall mean the construction loan to be made by Issuer to Borrower pursuant to the terms of this Agreement in a principal amount of Three Million Eighty-One Thousand Seven Hundred Thirty- Two and 00/100 Dollars($3,081,732.00)as such loan may be from time to time amended or modified. "Loan Document" and "Loan Documents" shall mean individually and collectively, this Agreement, the Note, Collateral Assignment of Equity Payments, Collateral Assignment of Partnership Interest, each Draw Request and all other documents evidencing, securing or entered into in connection with the Loan or the Bonds as such documents and agreements may be modified or amended from time to time and/or any documents and agreements which replace or restate such documents and agreements. The Loan Documents and the terms and conditions thereof are hereby incorporated by reference and made a part of this Agreement. Page 7 "LURA" shall mean that certain Regulatory Agreement executed by and among Issuer, MBI and Borrower in conjunction with the Bonds. "Management Agreement" shall mean the Management Agreement between the Borrower and the Property Manager dated , which agreement provides for the marketing and management services for the Project by the Property Manager. "Maturity Date" shall have the meaning for such term as defined in the Note. "MBI" shall mean Merchants Bank of Indiana. "Minimum Set-Aside Test" shall mean the set-aside test selected by the Borrower pursuant to Section 42(g) of the Code with respect to the percentage of units in the Project to be occupied by tenants with incomes equal to no more than a certain percentage of area median gross income. The Borrower has selected the 40/60 Set-Aside Test as the Minimum Set-Aside Test. "Mold" shall mean mold or any fungus, bacteria, spores or other airborne microbial contaminants of a type that could pose a risk of any kind to human health or the indoor or outdoor environment or could negatively impact the value of the Project. "Net Income" shall mean, for any period, gross revenues (excluding extraordinary income) less all operating expenses (including without implied limitation any monthly management fees), determined in accordance with generally accepted accounting principles. In determining Net Income, real estate taxes, insurance premiums and any other expenses which are incurred or are payable less frequently than on a monthly basis shall be annualized and treated as expenses incurred in equal monthly amounts based upon the amount of the most recent bills and invoices for such items(regardless of whether the same shall have been paid or have become due and payable during such period). "Non-Contingent Required Equity" shall mean, from time to time, that portion of the Required Equity for which the conditions set forth in the Partnership Agreement for the contribution of such funds to Borrower have been fully satisfied. "Note" shall mean that certain Promissory Note of even date herewith evidencing the Loan, executed by Borrower and Co-Maker in favor of Issuer and negotiated to MBI in the principal amount of Three Million Eighty-One Thousand Seven Hundred Thirty-Two and 00/100 Dollars ($3,081,732.00) as such promissory note may be modified or amended from time to time and/or any promissory note which is a direct or remote renewal, extension,restatement or replacement of such promissory note. "Original Maturity Date" shall mean have the meaning for such terms as set forth in the Note. "Other Available Sources of Funds" shall mean, from time to time, the following (i) the HUD Loan. "Partners" shall mean collectively the General Partner and the Limited Partner. "Partnership Agreement" shall mean the Amended and Restated Limited Partnership Agreement, executed by the Partners, as amended from time to time. "Permitted Encumbrances" shall mean the lien of the HUD Mortgage, the Extended Use Agreement, the LURA and those liens and encumbrances as shall be approved in writing by MBI in its sole discretion. Page 8 "Person" proprietorship, partnership, joint venture, trust, shall mean any individual, sole proprieto s p, unincorporated organization, association, corporation, limited liability company, institution, entity, party or government (whether national, federal, state, county, city, municipal or otherwise, including without limitation,any instrumentality,division,agency,body or department thereof). "Personal Property" shall mean all personal property, appliances, equipment, furniture, fixtures, fittings, furnishings and landscaping now or hereafter attached to, located at, or placed in the Improvements or on the Real Estate which will be owned or leased by Borrower or in which Borrower will otherwise acquire an interest, including without limitation all personal property contemplated by the Plans and Specifications to be incorporated into the Improvements or on the Real Estate. Personal Property shall exclude the trade fixtures, inventory, equipment or removable property of any tenant of the Project. "Plans and Specifications" shall mean, collectively, the architectural and engineering plans and specifications relating to the Improvements which shall include without limitation the graphic documents showing the design, location and dimensions of the Improvements and the written documents designating the materials, equipment, construction systems, standards and workmanship required in the construction or rehabilitation and installation of the Improvements, all of which must be acceptable to MBI in its sole and absolute discretion. Plans and Specifications shall include, without limitation, all architectural and engineering plans and specifications relating to any tenant improvements to be incorporated into the Improvements or on the Real Estate by Borrower pursuant to the terms of any current or future leases for all or any portion of the Project. "Prohibited Transfer" shall mean an occurrence of any of the following events without the prior written approval of MBI being first obtained,whether such event is voluntary, involuntary or by operation of law: (a) Borrower sells, conveys, transfers, assigns, changes the form of ownership, or disposes of the Project, or any part thereof, or any interest therein (including without limitation any right to collect any income therefrom), or agrees so to do; (b) Borrower further mortgages, encumbers, collaterally assigns, pledges or grants a security interests in any portion of the direct or beneficial interest of Borrower in the Project, or any part thereof, or any interest therein (including without limitation any right to collect any income therefrom), or agrees so to do; or(c) any stock, partnership, membership or beneficial interest of Borrower is sold, conveyed, transferred, collaterally assigned, pledged or encumbered (or a security interest is granted therein), or there is an agreement so to do. Notwithstanding the foregoing or anything contained herein or in the Loan Documents to the contrary, the following events (each such permitted event is herein referred to as a "Limited Permitted Transfer") shall not be deemed to be Prohibited Transfers and shall not require the consent of the MBI: (A)the removal, or withdrawal in lieu of removal, and replacement of the General Partner with an Affiliate of the Limited Partner(the "Replacement GP"), in accordance with the terms and provisions of the Partnership Agreement, provided the following condition is satisfied prior to any such event: (i)the Replacement GP has executed and delivered to MBI a collateral assignment of its general partner interest in form and substance substantially similar to the Assignment of Partnership Interest, (B) the interest of the Limited Partner is transferred to an affiliate of the Limited Partner(the "Affiliated Replacement ILP"), in accordance with the terms and provisions of the Partnership Agreement and any amendment to the Partnership Agreement, provided that prior to any such transfer the Affiliated Replacement ILP (i) has assumed in writing all of the Limited Partner's obligations under the Partnership Agreement for any and all unpaid portions of Limited Partner's Equity and MBI has been provided a copy of such written assumption, and (ii) the Limited Partner has certified in writing to MBI that the Affiliated Replacement ILP has the funds necessary to pay any and all unpaid portions of the Limited Partner's Equity, if any, pursuant to the terms and conditions of the Partnership Agreement, and (C) the interests of the Limited Partner is transferred to anyone, including Affiliates of the Limited Partner(the "Unrestricted Replacement ILP"), in accordance with the terms and provisions of the Partnership Agreement and any amendment to the Partnership Agreement, provided that prior to Page 9 any such transfer (i) the Limited Partner and/or the Affiliated Replacement ILP have paid all of the Limited Partner's Equity in accordance with the Partnership Agreement, and (ii) the Unrestricted Replacement ILP has assumed in writing all of the Limited Partner's obligations under the Partnership Agreement and MBI has been provided a copy of such written assumption. An amendment to the Partnership Agreement to effectuate a Limited Permitted Transfer shall not require the consent of MBI and shall not constitute a Prohibited Transfer. "Project" shall mean collectively the Real Estate, Improvements and Personal Property. "Property Manager" shall mean , in its capacity as management and rental agent for the Project. "Qualified Basis" shall mean the amount of the "eligible basis" (as defined in Section 42 of the Code) in the Project attributable to the units in the Project occupied by Tenants meeting the income limitations of the Minimum Set-Aside Test and whose rental payments are limited by the provisions of the Rent Restriction Test. "Qualified Investments" means any of the following investments which mature (or are redeemable at the option of MBI) at such time or times as to enable disbursements to be made from the fund in which such investment is held in accordance with the applicable terms: (a) Direct obligations of the United States of America, including the Initial Investment, or obligations the full and prompt payment of which is secured by the pledge of the full faith and credit of the United States of America, provided that the obligation has an interest accrual period and interest payment dates that provide for timely payments in amounts sufficient to meet the payment obligations under this Agreement; (b) Non-callable, non-prepayable obligations of the following federal government agencies: Federal Home Loan Bank,Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, Tennessee Valley Authority, Farm Credit System, Washington Metropolitan Area Transit Authority, United States Import-Export Bank, United States Department of Housing and Urban Development, Farmers Home Administration, General Services Administration and United States Maritime Administration, provided the entity maintains a rating of"Aaa" from a rating agency and provided, further, that the obligation has an interest accrual period and interest payment dates that provide for timely payments in amounts sufficient to meet the payment obligations under this Agreement; (c) Obligations of any state or any political subdivision of any state, which are rated in the highest category for long-term debt by the rating agency,the interest on which is excluded from gross income for federal income tax purposes and the full and timely payment of the principal of and any premium and the interest on which is fully and unconditionally payable from obligations of the character described in(a)or(b)above,provided that the obligation has an interest accrual period and interest payment dates that provide for timely payments in amounts sufficient to meet the payment obligations under this Agreement; and (d) (1) the following money market funds, so long as they invest solely in direct obligations issued by the U.S. Treasury or repurchase agreements backed by those obligations: First American U.S. Treasury Money Market Fund; Wells Fargo Advantage 100% Treasury Money Market Funds; Federated U.S. Treasury Cash Reserves (Fund 125); and Federated Treasury Obligations Fund(Fund 68); or(2) in the event those funds cease to exist or no longer have a rating of the highest category (without regard to gradation within a category) by the Rating Page 10 Agency, money market funds conforming to Rule 2a-7 of the Federal Investment Company Act of 1940,including any money market fund the investment advisor of which is the Trustee or an affiliate of the Trustee, (i) whose shares are registered under the Federal Securities Act of 1933 that invest solely in direct obligations issued by the U.S. Treasury and repurchase agreements backed by those obligations, (ii) which have a rating of the highest category (without regard to gradation within a category)by the Rating Agency and(iii)which are acceptable to a rating agency and MBI. "Rebate Amount" means as of each Computation Date an amount equal to the sum of(i)plus(ii) where: (i) is the excess of (a) the aggregate amount earned from the date of issuance of the Bonds to such Computation Date on all nonpurpose investments in which gross proceeds of the Bonds are invested (other than investments attributable to excess earnings described in this clause (i)) including any gain or deducting any loss from disposition of nonpurpose investments,over (b) the amount which would have been earned during such period if those nonpurpose investments (other than amounts attributable to an excess described in this clause (i)) had been invested at a rate equal to the yield on the Bonds; and (ii) is any income attributable to the excess described in this definition. The foregoing sums shall be determined in accordance with Section 148 of the Code. As used herein,the terms "gross proceeds", "nonpurpose investments" and "yield" have the meanings assigned to them for purposes of Section 148(f)of the Code. "Rebate Fund"means the Rebate Fund created in Section 4.4 hereof. "Record Date" means for the first Interest Payment Date, the Issue Date, and for months thereafter,means the fifteenth day of the month preceding any Interest Payment Date. "Requisite Bondholders" means the holders 662A%in aggregate principal amount of Bonds. "Real Estate" shall have the meaning as defined in the Preliminary Recitals of this Agreement. "Rent Restriction Test" shall mean the test pursuant to Section 42 of the Code whereby the gross rent charged to tenants of the low-income units of the Project cannot exceed thirty percent(30%) of the qualifying income levels for the area in which the Project is located. "Required Equity" shall mean the equity contribution made by Borrower toward the acquisition, development and construction or rehabilitation of the Project which shall be in an amount equal to the greater of (i) and 00/100 Dollars ($ ) or (ii) the amount from time to time by which the total of the Development Budget (as from time to time amended with the consent of MBI) exceeds the sum of(A) principal amount of the Loan, plus (B) the total Other Available Sources of Funds,plus (C)the total Deferred Developer Fees. "Restricted Distribution" shall mean any of the following: (i) any direct or indirect distribution of cash or other assets to any Beneficial Owner, including distributions made for the purpose of paying income or other taxes owed by the Beneficial Owners of Borrower, (ii) any repayment of all or any portion of a loan to a Beneficial Owner or to any Affiliate of a Beneficial Owner, (iii) any return of capital contributions to a Beneficial Owner, (iv) any distribution to a Beneficial Owner upon the Page 11 termination, liquidation or dissolution of Borrower, or(v)the payment of any development, construction, property management, accounting or other fee to a Beneficial Owner or to any Affiliate of a Beneficial Owner except to the extent such fee is reasonable in comparison to the cost of similar services from an independent third party and is specifically provided for in the Development Budget. "Senior Lender" shall mean Merchants Capital Corp., an Indiana corporation, and its successors and/or assigns. "Supporting Agreement" or"Supporting Agreements" shall mean, individually or collectively, the Architect Agreement, the Construction Contract, the Management Agreement, and the Development Agreement. "Target Completion Date" shall mean which is the date by which the construction of the Improvements shall be substantially completed in strict accordance with the Plans and Specifications and all of the Personal Property which is contemplated by the Development Budget shall be purchased and installed. "Tax Credits" shall mean the aggregate amount of the low-income housing tax credits available for the Project in the total annual amount of not less than Million Thousand and 00/100 Dollars ($ )per annum which shall be available to the Project by Housing Authority pursuant to its 2020 State of Indiana Housing Credit Qualified Allocation Plan under Section 42 of the Code and the regulations applicable thereto. "Termination Date" shall mean that date which is sixty (60) days after the effective date of this Agreement. "Trust Estate" means the funds and accounts,the Note, the Loan Documents, and other property described in the Granting Clause of this Agreement. "Unpaid Project Costs" shall mean at any applicable point in time the remaining unpaid costs and expenses incurred and/or estimated by MBI, in its sole discretion, to be incurred in connection with (i) the acquisition of the Real Estate, (ii) the construction or rehabilitation of the Improvements in accordance with the Plans and Specifications, (iii) the purchase and installation of the Personal Property which is contemplated by the Development Budget to be purchased and installed, (iv) the payment of all operating expenses through the date MBI, in its sole discretion, estimates will be the earlier of the date the Project will reach breakeven operations or the date the Loan will be repaid, including without limitation interest expense, and (v) the payment of any other item included in the Development Budget or not included but which MBI anticipates Borrower will incur in connection with the Project, including but not limited to all unpaid costs and expenses incurred, or estimated by MBI to be incurred, in connection with the Loan and all unpaid development fees (other than Deferred Development Fee) and soft costs incurred or estimated to be incurred by Borrower in connection with the Project. "Unsatisfactory Work" shall mean any portion of the construction or rehabilitation of the Improvements which the Construction Consultant or MBI determines has not been completed (i) in a good and workmanlike manner, (ii) in substantial conformity with the Plans and Specifications, (iii) in accordance with all applicable laws, or (iv) in a manner consistent with sound design principles and/or sound construction practices. "Wetland(s)" shall have the meaning ascribed in 33 C.F.R. §328.3, as hereinafter amended, or defined by any other federal, state or local statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to, or imposing liability or standards of conduct concerning any such Wetlands, as now or at any time hereafter in effect. Page 12 Section 1.2 Accounting Terms and Determinations. All accounting calculations and reports shall be prepared, and all accounting terms shall be construed, in accordance with generally accepted accounting principles for financial accounting purposes, as in effect from time to time, unless otherwise hereinafter specified. Section 1.3 Uniform Commercial Code Terms. To the fullest extent reasonably possible, all terms defined herein shall be construed to be complementary with any of the meanings set forth and ascribed to such terms in the Uniform Commercial Code as from time to time adopted in the State(s) in which the Project is located and, if different, in which Borrower is organized. Section 1.4 Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise (a)any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time modified, amended or restated (subject to any restrictions on such modifications set forth herein), (b)any reference herein to any person or entity shall be construed to include such person's or entities successors and assigns, (c)the words "herein", "hereof' and"hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d)all references herein to Paragraphs, Articles, Sections, and Exhibits shall be construed to refer to Paragraphs, Articles and Sections of, and Exhibits to, this Agreement, (e)the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights and (f)whenever this Agreement provides that any consent or approval will not be "unreasonably withheld" or words of like import, the same shall be deemed to include within its meaning that such consent or approval will not be unreasonably delayed or conditioned. Section 1.5 Exhibits. The Exhibits attached to this Agreement are by reference made a part of this Agreement. ARTICLE H. AUTHORIZATION,ISSUANCE,EXECUTION AND PURCHASE OF BONDS Section 2.1 Authorized Amount of Bonds. No Bonds may be issued under the provisions of this Agreement except in accordance with this Article. The principal amount of the Bonds (other than Bonds issued in substitution therefor pursuant to Section 2.8 hereof) that may be issued is hereby expressly limited to$3,081,732.00. Section 2.2 Issuance and Purchase of Bonds. The Bonds shall be designated "City of South Bend, Indiana, Multifamily Housing Revenue Bonds, Series 2020B (Cedar Glen Apartments Project)." The Bonds shall be originally issuable in fully registered form without coupons in denominations of $100,000 and any $1 integral multiples in excess thereof and shall be lettered and numbered BR-1 and upward. Interest on any Bonds shall be paid to the owners of such Bonds (determined as of the close of business of the Record Date next preceding each Interest Payment Date) at the registered addresses of such owners as they shall appear on the registration books of the Issuer notwithstanding the cancellation of any such Bonds upon any exchange or transfer thereof subsequent to the Record Date and prior to such Interest Payment Date, except that, if and to the extent that there shall be a default in the payment of the interest due on such Interest Payment Date, such defaulted interest shall be paid to the owners in whose name any such Bonds (or any Bond issued upon transfer or exchange thereof) are registered at the close Page 13 of business of the Special Record Date next preceding the date of payment of such defaulted interest. Payment of interest to all Bondholders shall be by check drawn on the main office of the Paying Agent and mailed to such Bondholder to the registered owner thereof as shown on the registration books of the Issuer or, if prior written instructions have been provided to the Issuer and the Borrower, by wire transfer of immediately available funds on the interest payment date. If the payment date occurs on a date when financial institutions are not open for business, the wire transfer shall be made on the next succeeding business day. The Special Record Date shall be the date established by the Issuer for the payment of defaulted interest. The Bonds shall be dated as of the date of their delivery. Interest shall be computed on the basis of a 360-day year applied to the actual number of days in each interest payment period. The interest on the Bonds shall be payable commencing on the first day of the first calendar month following the first Principal Advance and continuing on the first day of each calendar month thereafter,through and including the Original Maturity Date or until the total sum of all Principal Advances is paid in full and the Borrower has made its final draw request under this Agreement and has filed the Certificate of Substantial Completion for the Project as described in Section 15.3 of this Agreement. Each Principal Advance of the Bonds shall bear interest at the Interest Rate from the date of such Principal Advance; provided, however,that if,as shown by the records of MBI, interest on the Bonds shall be in default, then the Bonds shall bear interest at the Default Rate (as defined in the Note) from the date of such default until it is cured. Bonds issued in exchange for Bonds surrendered for transfer or exchange shall bear interest from the date to which interest has been paid in full on the Bonds or, if no interest has been paid on the Bonds, interest will accrue on each Principal Advance from the date of each Principal Advance. The Bonds shall mature on the Maturity Date. Section 2.3 Purchase, Sale and Delivery of Bonds. On the basis of the representations, warranties and agreements contained herein,but subject to the terms and conditions herein set forth, MBI shall purchase the Bonds from the Issuer at a purchase price equal to 100% of the amount from time to time drawn on the Bonds. MBI agrees to purchase the Bonds on a draw basis as conditions precedent set forth in this Agreement for each draw on the Loan are satisfied. The Issuer shall deliver the Bonds to the order of MBI for the account of MBI against payment of the purchase price therefor by wire transfer payable in immediately available funds (the "Closing") at the office of on (the"Closing Date"). The Issuer (in reliance on the MBI's representations with regard to (a) below) and the Borrower acknowledge in connection with the purchase and sale of the Bonds, the offering of the Bonds for sale and the discussions and negotiations relating to the terms of the Bonds pursuant to and as set forth in this Agreement that (a) MBI has acted at arm's length, is acting solely as principal for its own account and is not agent of or advisor (including, without limitation, a Municipal Advisor (as such term is defined in Section 975(e) of the Dodd-Frank Wall Street Reform and Consumer Protection Act)) and owes no fiduciary duty to, the Issuer, the Borrower or any other person, (b) MBI's duties and obligations to the Issuer and the Borrower shall be limited to those contractual duties and obligations set forth in this Agreement and those prescribed by applicable law, (c) MBI may have interests that differ from those of the Issuer and the Borrower and (d) the Issuer and the Borrower have consulted their legal and fmancial advisors to the extent they deemed appropriate in connection with the offering and sale of the Bonds. The Issuer and the Borrower further acknowledge and agree that each is responsible for making its respective judgment with respect to the offering and sale of the Bonds and the process leading thereto. The Issuer and the Borrower agree that they will not claim that MBI acted as a Municipal Advisor to the Issuer or the Borrower or rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Issuer or the Borrower, in connection with the offering or sale of the Bonds or the process leading thereto. Page 14 Section 2.4 Payment on Bonds. The principal of and interest on the Bonds shall be payable Ym p P P Y in any coin or currency of the United States of America which, at the respective dates of payment thereof, is legal tender for the payment of public and private debts. The final payments on the Bonds shall be payable at the principal corporate office of the Bondholder. All other payments on the Bonds shall be made to the person appearing on the Bond registration books of the Issuer as the registered owner of the Bonds by check mailed to the registered owner thereof as shown on the registration books of the Issuer or, if prior written instructions have been provided to the Issuer and the Borrower, by wire transfer of immediately available funds on the interest payment date. If the payment date occurs on a date when financial institutions are not open for business, the wire transfer shall be made on the next succeeding business day. Section 2.5 Execution: Limited Obligation. The Bonds shall be executed on behalf of the Issuer with the manual or facsimile signature of its Mayor and attested with the manual or facsimile signature of its Clerk and shall have impressed or printed thereon the corporate seal of the Issuer. Such facsimiles shall have the same force and effect as if such officer had manually signed each of the Bonds. If any officer whose signature or facsimile signature shall appear on the Bonds shall cease to be such officer before the delivery of such Bonds, such signature or such facsimile shall, nevertheless, be valid and sufficient for all purposes,the same as if he had remained in office until delivery. The Bonds, and the interest payable thereon, do not and shall not represent or constitute a debt of the Issuer,the State of Indiana or any political subdivision or taxing authority thereof within the meaning of the provisions of the constitution or statutes of the State of Indiana or a pledge of the faith and credit of the Issuer, the State of Indiana or any political subdivision or taxing authority thereof.The Bonds, as to both principal and interest, are not an obligation or liability of the State of Indiana, or of any political subdivision or taxing authority thereof, but are a special and limited obligation of the Issuer and are payable solely and only from the Trust Estate, consisting of funds and accounts held under this Agreement and payments to be made on the Note issued under this Agreement pledged and assigned for their payment in accordance with this Agreement. Neither the faith and credit nor the taxing power of the Issuer, the State of Indiana or any political subdivision or taxing authority thereof is pledged to the payment of the principal of or premium, if any, or interest on the Bonds. The Bonds do not grant the owners or holders thereof any right to have the Issuer,the State of Indiana or its General Assembly, or any political subdivision or taxing authority of the State of Indiana, levy any taxes or appropriate any funds for the payment of the principal of or premium, if any, or interest on the Bonds. No covenant or agreement contained in the Bonds or this Agreement shall be deemed to be a covenant or agreement of the the Issuer or of any member, director, officer, agent, attorney or employee of the Issuer in his or her individual capacity, and neither the Issuer nor any member, director, officer, agent, attorney or employee of the Issuer executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance of the Bonds. Section 2.6 Authentication. No Bond shall be valid or obligatory for any purpose or entitled to any security or benefit under this Agreement unless and until the certificate of authentication on such Bond substantially in the form set forth in Exhibit D hereto shall have been duly executed by the City Clerk of the Issuer, and such executed certificate of the City Clerk of the Issuer upon any such Bond shall be conclusive evidence that such Bond has been authenticated and delivered under this Agreement. The City Clerk of the Issuer's certificate of authentication on any Bond shall be deemed to have been executed by it if signed by an authorized officer of the City Clerk of the Issuer, but it shall not be necessary that the same officer sign the certificate of authentication on all of the Bonds issued hereunder. Section 2.7 Form of Bonds. The Bonds and the City Clerk of the Issuer's certificate of authentication to be endorsed thereon shall be substantially in the forms set forth in Exhibit D hereto, Page 15 with such appropriate variations, omissions and insertions as are permitted or required by this Agreement or deemed necessary by the Mayor and City Clerk of the Issuer. Section 2.8 Delivery of Bonds. Upon the execution and delivery of this Agreement, the Issuer shall execute and deliver to MBI the Bonds in the maximum aggregate stated principal drawing amount of$3,081,732.00. The City Clerk of the Issuer shall authenticate such Bonds and deliver them to MBI, as purchaser thereof,upon receipt of: (a) A copy, duly certified by the City Clerk of the Issuer, of the ordinance adopted and approved by the Issuer authorizing the execution and delivery of the Loan Documents and this Agreement and the issuance of the Bonds; (b) Executed counterparts of the Loan Documents and this Agreement; (c) The Note in the principal amount equal to the principal amount of the Bonds, duly executed by the Borrower and endorsed by the Issuer to the order of the Bondholder; and (d) A written request of the Borrower requesting the Issuer to authenticate, or cause to be authenticated, and deliver the Bonds in the stated principal amount of $3,081,732.00, of which $ shall be paid over to the Issuer and deposited to the credit of various Funds as provided under Section 3.1 hereof. Section 2.9 Mutilated, Lost, Stolen or Destroyed Bonds. If any Bond is mutilated, lost, stolen or destroyed, the Issuer may execute and the City Clerk of the Issuer may authenticate a new Bond of like date, maturity and denomination as that mutilated, lost, stolen or destroyed; provided that, in the case of any mutilated Bond, such mutilated Bond shall first be surrendered to the Issuer, and in the case of any lost, stolen or destroyed Bond, there shall be first furnished to the City Clerk of the Issuer evidence of such loss,theft or destruction satisfactory to MBI,together with indemnity satisfactory to it. If any such Bond shall have matured, instead of issuing a duplicate Bond, the Issuer may pay the same without surrender thereof; provided, however, that in the case of a lost, stolen or destroyed Bond, there shall be first furnished to the City Clerk of the Issuer evidence of such loss, theft or destruction satisfactory to the City Clerk of the Issuer, together with indemnity satisfactory to it. The Issuer may charge the holder or owner of such Bond with its reasonable fees and expenses in this connection. Any Bond issued pursuant to this Section 2.9 shall be deemed part of the original series of Bonds in respect of which it was issued and an original additional contractual obligation of the Issuer. Section 2.10 Registration and Exchange of Bonds; Persons Treated as Owners. The Issuer shall cause books for the registration and for the transfer of the Bonds as provided in this Agreement to be kept by the City Clerk of the Issuer, which is hereby constituted and appointed the registrar of the Issuer (the "Registrar"). Upon surrender for transfer of any fully registered Bond at the office of the City Clerk of the Issuer, duly endorsed by, or accompanied by a written instrument or instruments of transfer in form satisfactory to the City Clerk of the Issuer, and duly executed by the registered owner or his attorney duly authorized in writing, the Issuer shall execute and the City Clerk of the Issuer shall authenticate and deliver in the name of the transferee or transferees a new fully registered Bond or Bonds of the same series and maturity for a like aggregate principal amount. The execution by the Issuer of any fully registered Bond without coupons of any denomination shall constitute full and due authorization of such denomination,and the City Clerk of the Issuer shall thereby be authorized to authenticate and deliver such registered Bond. The City Clerk of the Issuer shall not be required to transfer or exchange any fully registered Bond during the period between the Record Date and any Interest Payment Date of such Bond, nor to transfer or exchange any Bond after the mailing of notice calling such Bond for redemption has Page 16 been made, nor during a period of 15 days next preceding mailing of a notice of redemption of any Bonds. The City Clerk of the Issuer shall be under no obligation to transfer any Bond until the Issuer has been provided (i) a satisfactory opinion of counsel that the sale or transfer will not violate the 1933 Act, the Securities Exchange Act of 1934, as amended, or the Investment Company Act of 1940, as amended, or regulations issued pursuant to such Acts, or (ii) a no-action letter of the staff of the Securities and Exchange Commission that the staff will recommend that no action be taken with respect to such sale or transfer, or (iii) a certificate stating that the transferor reasonably believes that the transferee is a "Qualified Institutional Buyer" within the meaning of Section (a) of Rule 144A ("Rule 144A") promulgated by the Securities and Exchange Commission pursuant to the 1933 Act and that the transferor informed the transferee of the transfer restrictions applicable to the Bonds and that the transferor may be relying upon Rule 144A with respect to the transfer of the Bonds. If ownership of the Bond is transferred prior to MBI having made all Principal Advances contemplated under this Agreement, the transferee shall take ownership subject to the obligation to make additional Principal Advances until the maximum $3,081,732.00of purchase price has been advanced or until the Borrower makes its final draw request under this Agreement and files the completion certificate for the Project, as described in Section 4.3(b)of this Agreement. As to any fully registered Bond, the person in whose name the same shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of principal or interest thereon shall be made only to or upon the order of the registered owner thereof or its legal representative, but such registration may be changed as hereinabove provided. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. Section 2.11 Indemnification. The Borrower will indemnify and hold harmless the Purchaser and the Issuer and each person, if any, who controls the Purchaser and the Issuer within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, from and against any and all losses, claims, damages, expenses or liabilities,joint or several, to which they or any of them may become subject under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, or under any other statute or at common law or otherwise, or pursuant to a breach of contract by the Borrower or an intentional, negligent or reckless untruthful representation by the Borrower and, except as hereinafter provided, will reimburse the Purchaser, the Issuer and each such controlling person, if any, for any legal or other fees and expenses reasonably incurred by them or any of them in connection with investigating or defending any actions whether or not resulting in any liability, insofar as such losses, claims, damages, expenses, liabilities or actions against the Issuer or the Purchaser, arise out of or are based upon any untrue or alleged untrue statement of a material fact concerning the Borrower or the Project or arise out of or are based upon the omission or alleged omission to state a material fact concerning the Borrower or the Project required to be stated or necessary in order to make the statements not misleading. Promptly after receipt by the Purchaser, the Issuer or any such controlling person of notice of the commencement of any action in respect of which indemnity may be sought against the Borrower under this Section, such person will notify the Borrower in writing of the commencement thereof. The Purchaser, the Issuer or any such controlling person shall have the right to employ separate counsel in any such action and to participate in the defense thereof. This indemnity agreement will be in addition to any liability which the Borrower may otherwise have. The Borrower also agrees to notify the Purchaser and the Issuer promptly of the assertion against it or any of its officers,directors, employees or agents of any claim or the commencement of any action or proceeding arising from any act or omission of the Borrower, including its independent contractors, consultants, and legal counsel, or any of its agents, servants, partners or employees. No party shall be Page 17 liable to indemnify any person for any settlement of any aforementioned action effected without the consent of the indemnifying party. The indemnities contained herein shall survive the Closing under this Agreement and any investigation made by or on behalf of the Purchaser or any person who controls any of such parties of any matters described in or related to the transactions contemplated hereby and by the Bond Ordinance and any Loan Documents. ARTICLE III. APPLICATION OF BOND PROCEEDS Section 3.1 Deposit of Funds. In accordance with Article IV hereof, on the Issue Date, MBI shall deposit the initial Principal Advance of the purchase price for the Bonds with the , which shall be an amount in excess of$50,000. MBI shall deposit$0.00 of the initial Principal Advance into the Costs of Issuance Account of the Construction Fund and $ of the initial Principal Advance into the Construction Account of the Construction Fund for the Project. Thereafter, as the Borrower makes requests for disbursements to pay Costs of Construction from the Construction Account of the Construction Fund, upon approval of each request for disbursement from the Borrower, MBI shall, subject to the terms and conditions in this Agreement,make additional Principal Advances in amounts and at such times as are required to fully fund the Costs of Construction, up to the maximum total Principal Advance amount for the Project, and MBI shall deposit said funds into the Construction Account. MBI has no duty to confirm that the requirements for each Principal Advance have been satisfied. Upon receipt of each Principal Advance MBI shall make a notation on its books and records of such Principal Advance. The books and records of MBI shall be determinative of the amounts so advanced. Throughout the term of the Bonds, all Principal Advances of Bond proceeds shall be allocated for tracing purposes to the Cost of Issuance Account of the Construction Fund or the Construction Account of the Construction Fund. Notwithstanding anything else in this Agreement or the Loan Documents, the proceeds of the Bonds shall be used exclusively to pay costs that (i) are (A) capital expenditures (as defined in Section 1.150-1(a) of the Code's regulations) and (B) not made for the acquisition of existing property, to the extent prohibited in Section 147(d) of the Code, and(ii) are made exclusively with respect to a "qualified residential rental project" within the meaning of Section 142(d) of the Code and that for the greatest number of buildings the proceeds of the Bonds shall be deemed allocated on a pro rata basis to each building in the Project and the land on which it is located so that each building and the land on which it is located will have been financed fifty percent (50%) or more by the proceeds of the Bonds for the purpose of complying with Section 42(h)(4)(B) of the Code; provided, however, the foregoing representation, covenant and warranty is made for the benefit of the Borrower and its partners and neither MBI nor the Issuer shall have any obligation to enforce this covenant nor shall they incur any liability to any person, including without limitation, the Borrower, the partners of the Borrower, any other affiliate of the Borrower or the holders of the Bonds for any failure to meet the intent expressed in the foregoing representation, covenant and warranty; and provided further, failure to comply with this representation, covenant and warranty shall not constitute a default or Event of Default under this Agreement. Page 18 ARTICLE IV. REVENUE AND FUNDS Section 4.1 Source of Payment of Bonds. The Bonds herein authorized and all payments to be made by the Issuer hereunder are not general obligations of the Issuer but are special and limited obligations payable solely from the Trust Estate as authorized by the Act and as provided herein. No covenant or agreement contained in the Bonds or this Agreement shall be deemed to be a covenant or agreement of the Issuer or of any member, director, officer, agent, attorney or employee of the Issuer in his or her individual capacity, and neither the Issuer nor any member, director, officer, agent, attorney or employee of the Issuer executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance of the Bonds. Section 4.2 Bond Fund. MBI shall establish and maintain, so long as any of the Bonds are outstanding, a separate fund to be known as the "Bond Fund." There shall be deposited into the Bond Fund, as and when received, (a)all payments received pursuant to the Note,respectively; (b) all payments specified in this Agreement, unless this Agreement provides for those payments to be made to another payee; (c) any amount remaining in the Construction Fund to be transferred to the Bond Fund pursuant to this Agreement upon completion of the Project, and any amount remaining in the Construction Fund to be transferred to the Bond Fund pursuant to this Agreement upon acceleration of the maturity of the Bonds; (d) all interest and other income derived from investments of Bond Fund moneys as provided herein; and (e)all other moneys received by MBI under and pursuant to any of the provisions of the Loan Documents which are required, or which are accompanied by directions that such moneys are to be paid, into the Bond Fund. The Issuer hereby covenants and agrees that, so long as any of the Bonds issued hereunder are outstanding, it will deposit, or cause to be paid to MBI for deposit into the Bond Fund, all revenues derived from the Note and the Loan Documents,promptly to meet and pay the principal of and premium, if any, and interest on the Bonds as the same become due and payable, along with such additional amount as is required to pay Annual Fees to MBI. Nothing herein should be construed as requiring the Issuer to deposit or cause to be paid to MBI for deposit into the Bond Fund money from any source other than receipts derived from the Note, and the Loan Documents. Moneys in the Bond Principal and Interest Account shall first be used by MBI to pay interest on the Bonds as it becomes due. MBI shall transmit such funds to the Paying Agent for the Bonds in sufficient time to ensure that such payment will be made as it becomes due. Money deposited in the Bond Principal and Interest Account for the payment of payments specified in the Loan Documents, other than principal and interest, shall be paid to the holder of the Bonds, unless the Loan Documents provide for a different payee. Money remaining in the Bond Principal and Interest Account after each principal and interest payment and after payment of other amounts specified under the Loan Documents shall remain in said account until the next Interest Payment Date. Section 4.3 Construction Fund. The Issuer shall establish with MBI a separate fund to be known as the "Construction Fund", to the credit of which the deposits are to be made as required by Section 3.1 hereof. The Construction Fund shall consist of the Construction Account and within the Construction Fund on account for the Project and the Costs of Issuance Account. (a) On the Issue Date, $0.00 of the proceeds of the initial Principal Advance of the Bonds shall be deposited in the Costs of Issuance Account of the Construction Fund and the remaining proceeds of the initial Principal Advance in the amount of$ of the Bonds shall be deposited into the Construction Account, as described in Article III hereof. Page 19 (b) When received in connection with any subsequent Principal Advance, the proceeds of the Bonds shall be deposited in the Construction Account of the Construction Fund, as described in Article III hereof. Amounts on deposit in the Construction Account and the Costs of Issuance Account shall be paid out from time to time by MBI to or upon the order of the Borrower to pay,or as reimbursement to the Borrower for its payment of, the Costs of Construction and Bond Issuance Costs for the Project within two Business Days of receipt by MBI of the written request in the form attached hereto as Exhibit E signed by the Authorized Representative of the Borrower and the Investor Limited Partner and approved in writing by MBI: (1) stating that the costs of an aggregate amount set forth in such written request have been made or incurred and were necessary for the acquisition, construction, equipping or installation of the Project and were made or incurred in accordance with the construction contracts, plans and specifications, or purchase contracts therefor then in effect or that the amounts set forth in such written request are for allowable Costs of Construction of the Project; (2) stating that the amount paid or to be paid, as set forth in such written request, is reasonable and represents a part of the amount payable for the Costs of Construction of the Project, and that such payment was not paid in advance of the time, if any, fixed for payment and was made in accordance with the terms of any contracts applicable thereto and in accordance with usual and customary practice under existing conditions; (3) stating that no part of said costs was included in any written request previously filed with MBI under the provisions hereof; (4) stating that such costs are appropriate for the expenditure of proceeds of the Bonds under the Act; and MBI shall rely fully on any such written request delivered pursuant to this Section 4.3(a)and shall not be required to make any investigation in connection therewith. (c) The Borrower shall deliver to the Issuer and the Bondholders within 30 days of completion of the Project a certificate of the Authorized Representative of the Borrower: (i) stating the date that the Project was completed; and (ii) stating that it has made such investigation of such sources of information as are deemed by him to be necessary, including pertinent records of the Issuer, and that it is of the opinion that the Project has been fully paid for, and that no claim or claims exist against the Borrower or the Issuer or against the properties of either out of which a lien based on furnishing labor or material for the Project exists or might ripen; provided, however, that there may be excepted from the foregoing statement any claim or claims out of which a lien exists or might ripen if the Borrower intends to contest such claim or claims, in which event such claim or claims shall be described; provided, further, however, that it shall be stated that funds are on deposit in the Construction Account sufficient to make payment of the full amount which might in any event be payable in order to satisfy such claim or claims. Page 20 If such certificate shall state that there is a claim or claims in controversy which create or might ripen into a lien, there shall be filed with the Issuer and the Bondholders a certificate of the Borrower when and as such claim or claims shall have been fully paid. If, after payment by MBI of all orders theretofore tendered to MBI under the provisions of subparagraph (a) of this Section 4.3 and after receipt of the statement mentioned in subparagraph (b)(i) and(ii) of this Section 4.3,there shall remain any balance of moneys in the Construction Fund, MBI shall transfer all moneys then in the Construction Fund (except any disputed claims described in the completion certificate required in Section 4.3(b)hereof)to the Bond Fund. MBI, as directed in writing by the Issuer at the request of the Borrower, shall use any amount transferred to the Bond Fund to prepay the Note and thereby redeem all or a portion of the Bonds,at the earliest redemption date. Section 4.4 Rebate Fund. Any provision hereof to the contrary notwithstanding, amounts credited to the Rebate Fund shall be free and clear of any lien hereunder. • Within five days after each Computation Date, the Borrower, or an Independent accounting firm or other firm knowledgeable with regard to the computation of the Rebate Amount engaged by the Borrower, shall calculate the Rebate Amount as of that Computation Date and provide the results of such calculations to the Issuer and MBI. If the amount then on deposit in the account in the Rebate Fund is in excess of the Rebate Amount, MBI shall forthwith pay that excess amount to the Borrower. If the amount then on deposit in the applicable account in the Rebate Fund is less than the Rebate Amount, the Borrower shall, within five days after receipt of the aforesaid notice from MBI, pay to MBI for deposit in the Rebate Fund an amount sufficient to cause the applicable account to contain an amount equal to the Rebate Amount. Within 30 days after the initial Computation Date, and every Computation Date thereafter, upon written direction from the Borrower, MBI, acting on behalf of the Issuer, shall pay to the United States in accordance with Section 148(f) of the Code from the moneys then on deposit in the Rebate Fund an amount equal to 90% (or such greater percentage not in excess of 100%as the Borrower may direct MBI to pay) of the Rebate Amount as of such Computation Date. Within 60 days after the payment in full of all outstanding Bonds, upon written direction from the Borrower, MBI shall pay to the United States in accordance with Section 148(f) of the Code from the moneys then on deposit in the Rebate Fund an amount equal to 100% of the Rebate Amount as of such final Computation Date and any moneys remaining in the Rebate Fund following such payment shall be paid to the Borrower as described herein. The Issuer and MBI shall be entitled to rely on the calculations made pursuant to this Section and shall not be responsible for any loss or damage resulting from any action taken or omitted to be taken in reliance upon those calculations. MBI shall keep such records of the computations made and provided by the Borrower pursuant to this Section as are required under Section 148(f)of the Code. MBI shall keep and make available to the Borrower such records concerning the investments of the gross proceeds of the Bonds and the investments of earnings from those investments as may be requested by the Borrower in order to enable the Borrower to make the aforesaid computations as are required under Section 148(f)of the Code. Notwithstanding the foregoing, the computations and payments of Rebate Amounts referred to in this Section and Section 3.8 of this Agreement need not be made to the extent that neither the Issuer nor the Borrower will thereby fail to comply with any requirements of Section 148(f)of the Code based on an Opinion of Bond Counsel. Page 21 Section 4.5 Investment. Moneys on deposit in the Funds established in this Article IV hereof shall be invested as provided in Section 6.8 hereof. ARTICLE V. REDEMPTION OF BONDS BEFORE MATURITY Section 5.1 Redemption Dates and Prices. (a) The Bonds are subject to optional redemption by the Issuer, prior to maturity, at the option of the Borrower, on any date on or after the Completion Date, in whole or in part, in such order of maturity as the Borrower shall direct and by lot within maturities, at face value, without premium,plus accrued interest to the date fixed for redemption. (b) Redemption Price. In accordance with the terms of this Agreement, the Bonds may be redeemed at any time prior to maturity at 100%of par and without a premium. Section 5.2 Notice of Redemption. In the case of an optional redemption of Bonds pursuant to Section 5.1 hereof, notice of the call for any such redemption identifying the Bonds, or portions of Bonds, to be redeemed shall (unless waived by the registered owners of the Bonds to be redeemed) be given by mailing a copy of the redemption notice by first class mail not less than 30 days nor more than 60 days prior to the date fixed for redemption to the registered owner of each Bond to be redeemed at the address shown on the registration books. Such notice of redemption shall specify any applicable CUSIP number and, in the event of a partial redemption,the Bond numbers and called amounts of each Bond,the redemption date, redemption price, interest rate, maturity date and the name and address of the Issuer and the Paying Agent; provided, however, that failure to give such notice by mailing, or any defect therein, with respect to anysuch Bond shall not affect the validityof anyproceedings for the redemption of other P g p Bonds. Notices of optional redemption provided hereunder must be unconditional. On and after the redemption date specified in the aforesaid notice, such Bonds, or portions thereof,thus called shall not bear interest, shall no longer be protected by this Agreement and shall not be deemed to be outstanding under the provisions of this Agreement, and the holders thereof shall have the right only to receive the redemption price thereof plus accrued interest thereon to the date fixed for redemption. Section 5.3 Cancellation. All Bonds which have been redeemed in whole shall be canceled and cremated or otherwise destroyed by MBI and shall not be reissued, and a counterpart of the certificate of cremation or other destruction evidencing such cremation or other destruction shall be furnished by MBI to the Issuer and the Borrower. Section 5.4 Redemption Payments. Prior to the date fixed for redemption, funds shall be deposited with MBI to pay, and MBI is hereby authorized and directed to apply such funds to the payment of,the Bonds or portions thereof called, together with accrued interest thereon to the redemption date. Upon the giving of notice (unless waived as set forth above) and the deposit of funds for redemption, interest on the Bonds thus called shall no longer accrue after the date fixed for redemption. No payment shall be made by the Paying Agent upon any Bond until such Bond shall have been delivered for payment or cancellation or MBI shall have received the items required by Section 2.8 hereof with respect to any mutilated, lost, stolen or destroyed Bond. Section 5.5 Partial Redemption of Bonds. If fewer than all of the Bonds at the time outstanding are to be called for redemption, the maturities of Bonds or portions thereof to be redeemed shall be selected by the Issuer at the direction of the Borrower. If fewer than all of the Bonds within a maturity are to be redeemed, the Issuer shall select by lot(meaning also random selection by computer) in Page 22 such manner as the Issuer, in its discretion, may determine, the Bonds or portions of Bonds within such maturity that shall be redeemed. The Issuer shall call for redemption in accordance with the foregoing provisions as many Bonds or portions thereof as will, as nearly as practicable, exhaust the moneys available therefor. Particular Bonds or portions thereof shall be redeemed only in amounts such that the Bonds remaining outstanding thereafter will be in the minimum principal amount of$100,000 and any$1 integral multiples in excess thereof. If less than the entire principal amount of any registered Bond then outstanding is called for optional redemption pursuant to Section 5.1,then,upon notice of redemption given as provided in Section 5.2 hereof, the owner of such registered Bond shall forthwith surrender such Bond to the Paying Agent in exchange for(a)payment of the redemption price and accrued interest on the principal amount called for redemption and (b) a new Bond or Bonds of like series in an aggregate principal amount equal to the unredeemed balance of the principal amount of such registered Bond, which shall be issued without charge therefor. The books and records of MBI shall be determinative of the amounts so redeemed. ARTICLE VI. GENERAL COVENANTS Section 6.1 Payment of Principal and Interest. The Issuer covenants that it will promptly pay the principal of and premium, if any,and interest on every Bond issued under this Agreement at the place, on the dates and in the manner provided herein and in the Bonds according to the true intent and meaning thereof. The principal of and interest and premium, if any, on the Bonds are payable solely and only from the Trust Estate, consisting of funds and accounts held under this Agreement and the payments to be made on the Note which payments are hereby specifically pledged and assigned to the payment thereof in the manner and to the extent herein specified, and nothing in the Bonds or in this Agreement should be considered as pledging any other funds or assets of the Issuer. The Bonds, and the interest payable thereon, do not and shall not represent or constitute a debt of the Issuer within the meaning of the provisions of the constitution or statutes of the State of Indiana or a pledge of the faith and credit of the Issuer. The Bonds, as to both principal and interest, are not an obligation or liability of the State of Indiana, or of any political subdivision or taxing authority thereof, but are a special and limited obligation of the Issuer and are payable solely and only from the Trust Estate, consisting of funds and accounts held under this Agreement and payments to be made on the Note issued under this Agreement pledged and assigned for their payment in accordance with this Agreement. Neither the faith and credit nor the taxing power of the Issuer, the State of Indiana or any political subdivision or taxing authority thereof is pledged to the payment of the principal of or premium, if any, or interest on the Bonds. The Bonds do not grant the owners or holders thereof any right to have the Issuer,the State of Indiana or its General Assembly, or any political subdivision or taxing authority of the State of Indiana, levy any taxes or appropriate any funds for the payment of the principal of or premium, if any, or interest on the Bonds. The Issuer has no taxing power with respect to the Bonds. No covenant or agreement contained in the Bonds or this Agreement shall be deemed to be a covenant or agreement of the Issuer or of any member, director, officer, agent, attorney or employee of the Issuer in his or her individual capacity, and neither the Issuer nor any member, director, officer, agent, attorney or employee of the Issuer executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance of the Bonds. Section 6.2 Performance of Covenants. The Issuer covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations and provisions contained in this Agreement, in any and every Bond executed, authenticated and delivered hereunder and in all proceedings of its members pertaining thereto. The Issuer represents that it is duly authorized under the constitution and laws of the State of Indiana to issue the Bonds authorized hereby and to execute this Agreement, and to Page 23 pledge and assign the Note, and assign the Loan Documents in the manner and to the extent herein set forth; that all action on its part for the issuance of the Bonds and the execution and delivery of this Agreement has been duly and effectively taken,and that the Bonds in the hands of the holders and owners thereof are and will be valid and enforceable obligations of the Issuer according to the import thereof, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws,judicial decisions and principles of equity relating to or affecting creditors' rights generally and subject to the valid exercise of the constitutional powers of the Issuer,the State of Indiana and the United States of America. Section 6.3 Ownership; Instruments of Further Assurance. The Issuer represents that at the time of the pledge and assignment thereof it will lawfully own the Note and that such pledge and assignment and the assignment of the Loan Documents to MBI hereby made will be valid and lawful. The Issuer covenants that it will defend the title to the Note and its interest in the Loan Documents to MBI, for its benefit as the holders and owners of the Bonds, against the claims and demands of all persons whomsoever. The Issuer covenants that it will do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered such supplemental agreements and such further acts, instruments and transfers as MBI may reasonably require for the better assuring, transferring, mortgaging, conveying, pledging, assigning and confirming unto MBI the Note, the Loan Documents and all payments thereon and thereunder pledged hereby to the payment of the principal of and premium, if any, and interest on the Bonds. Section 6.4 Filing of Loan Documents and Security Instruments. The Issuer, at the sole expense of the Borrower, shall cause the Loan Documents and all supplements thereto as well as such other security instruments, financing statements and all supplements thereto and other instruments as may be required from time to time to be filed in such manner and in such places as may be required by law in order to fully preserve and protect the lien hereof and the security of the holders and owners of the Bonds and the rights of MBI hereunder. This Section shall impose no duty to record or file the instruments noted above where filing or recordation is not required by law in order to perfect a security interest. Continuation of financing statements may be filed without consent of the debtor party thereto. Section 6.5 Inspection of Books. The Issuer covenants and agrees that all books and documents in its possession relating to the Project and the revenues derived from the Project shall at all times me open to inspection by such accountants or other agents as MBI may from time to time designate. Section 6.6 List of Bondholders. MBI will keep on file at its principal office a list of names and addresses of the holders of all Bonds. At reasonable times and under reasonable regulations established by MBI, said list may be inspected and copied by the Borrower or by holders and/or owners (or a designated representative thereof) of 25% or more in principal amount of Bonds then outstanding, such ownership and the authority of any such designated representative to be evidenced to the satisfaction of MBI. Section 6.7 Rights Under Loan Documents. The Issuer agrees that MBI in its name or in the name of the Issuer may enforce all rights of the Issuer and all obligations of the Borrower under and pursuant to the Loan Documents for and on behalf of the Bondholders, whether or not the Issuer is in default hereunder. Section 6.8 Investment of Funds. Moneys in the Funds established under this Agreement may be invested in Qualified Investments. MBI shall not be liable or responsible for any loss resulting from any such investment. The interest accruing thereon and any profit realized from such investments shall be credited, and any loss resulting from such investments shall be charged, to the fund in which the money was deposited. At no time shall the Borrower direct that any funds constituting gross proceeds of the Bonds be used in any manner as would constitute failure of compliance with Section 148 of the Code. Page 24 Section 6.9 Non presentment of Bonds. If any Bond shall not be presented for payment when the principal thereof becomes due, either at maturity, or at the date fixed for redemption thereof, or otherwise, if funds sufficient to pay any such Bond shall have been made available to the Paying Agent for the benefit of the holder or holders thereof, all liability of the Issuer to the holder thereof for the payment of such Bond shall forthwith cease, determine and be completely discharged, and thereupon it shall be the duty of the Paying Agent to hold such funds for five years without liability for interest thereon, for the benefit of the holder of such Bond, who shall thereafter be restricted exclusively to such funds, for any claim of whatever nature on his part under this Agreement or on, or with respect to, such Bond. Any moneys so deposited with and held by the Paying Agent not so applied to the payment of Bonds within five years after the date on which the same shall become due shall be repaid by the Paying Agent to the Borrower, and, thereafter, Bondholders shall be entitled to look only to the Borrower for payment, and then only to the extent of the amount so repaid, and the Borrower shall not be liable for any interest thereon and shall not be regarded as a trustee of such money. Section 6.10 Direction of Bondholders. Whenever any action, direction or consent is required of the Issuer, the Issuer shall consult with the holders of the Bonds and shall take such action, give such direction or give such consent as shall be directed by the Requisite Bondholders. ARTICLE VII. CONSTRUCTION LOAN Section 7.1 Construction Loan. Upon the written request of an authorized representative of Borrower and subject to the terms and conditions of this Agreement and the compliance by Borrower with its obligations to MBI hereunder, MBI shall advance principal of the Bonds and pay such proceeds to Borrower as provided herein and Borrower shall borrow from the Loan as shall be necessary for the purpose of the construction or rehabilitation of the Improvements and the purchase and installation of the Personal Property which is contemplated by the Development Budget to be purchased and installed. The Loan shall be advanced as provided for in Article X of this Agreement and the proceeds shall be used by Borrower solely for the purposes permitted under the terms of this Agreement. The Loan shall bear interest on amounts advanced as provided for under the Note. The Loan shall be evidenced by and payable in the manner specified in the Note. Section 7.2 Loan Repayment; Delivery of Note. Upon the terms and conditions of this Agreement,the Issuer will make the Loan to Borrower. In consideration of and in repayment of the Loan, Borrower shall deliver or cause to be delivered to MBI, on or before each date payment is due under the Note,payments equal to the amount necessary to pay interest on and principal of the Bonds next due. All such Loan payments shall be paid to MBI in accordance with the terms of the Note for the account of the Issuer and shall be held and disbursed in accordance with the provisions of this Agreement. To the extent that amounts are in the Bond Fund for the payment of the Bonds,the Borrower shall be entitled to a credit against the Loan payments required to be made with respect to the Bonds on any date equal to the amount withdrawn from the Bond Fund for the payment of principal and interest on the Bonds on that date. To secure the Borrower's performance of its obligations under this Agreement, the Borrower shall execute and deliver the Loan Documents concurrently with the issuance and delivery of the Bonds. Upon payment in full of the Bonds, in accordance with this Agreement, whether at the Original Maturity Date or otherwise, or upon provision for the payment thereof having been made in accordance Page 25 with this Agreement, (i) the Note shall be deemed fully paid, the obligations of the Borrower thereunder shall be terminated, and the Note shall be surrendered to the Borrower, and shall be cancelled by the Borrower, or(ii) an appropriate notation shall be endorsed thereon evidencing the date and amount of the principal payment (or prepayment) equal to the Bonds so paid, or with respect to which provision for payment has been made, and the Note shall be surrendered by MBI to the Borrower for cancellation if all Bonds shall have been paid and cancelled as aforesaid. The Borrower and the Issuer each acknowledge that neither the Borrower nor the Issuer has any interest in the Bond Fund and any moneys deposited therein shall be in the custody of and held for the benefit of the holders of the Bonds. Section 7.3 Assignment of Agreement. To secure the payment of the Loan, the Issuer shall assign to MBI, by this Agreement and the Allonge, its rights under and interest in the Loan Documents. The Borrower hereby agrees and consents to those assignments. The Issuer shall not attempt to further assign, transfer or convey its interest in this Agreement or the Loan Documents or create any pledge or Lien of any form or nature with respect to its interest herein or Loan payments hereunder. The Borrower shall make payments directly to MBI as provided in the Note without defense or set-off by reason of any dispute between the Borrower and the Issuer, and hereby agrees that its obligations to make payments hereunder and to perform its other agreements contained herein are absolute and unconditional. Until the principal of and interest on the Bonds shall have been fully in accordance with this Agreement, the Borrower (a) will not suspend or discontinue any payments provided for in this Agreement, (b) will perform all its other duties and responsibilities called for by this Agreement, and (c) will not terminate this Agreement for any cause including any acts or circumstances that may constitute failure of consideration, destruction of or damage to the Project, commercial frustration of purpose, any change in the laws of the United States or the State of Indiana or any political subdivision of either or any failure of the Issuer to perform any of its agreements, whether express or implied,or any duty, liability or obligation arising from or connected with this Loan. ARTICLE VIII. COLLATERAL AND GUARANTEES OF CONSTRUCTION LOAN Section 8.1 Collateral. The indebtedness and obligations of Borrower under the Loan, and any other agreement, instrument or document executed in connection herewith shall be secured by: (a) an assignment of all rights, title and interests Borrower has to receive payments of the Limited Partner's Equity, all granted under the terms of the Collateral Assignment of Equity Payments, (c) an assignment of all rights, title and interests General Partner has under the Partnership Agreement and under any contracts and agreements entered into by the General Partner in connection with the development, construction, management, operation or maintenance of the Project, all granted under the terms of the Collateral Assignment of Partnership Interest, and(d) any other security agreements or documents from time to time executed in connection with this Agreement or the Loan. Notwithstanding anything contained in the Loan Documents to the contrary, until such time as the HUD Loan is paid in full, the Loan shall be non- recourse against the Project and the Borrower, and Issuer and MBI shall have no claim against the Project,proceeds of the HUD Loan or any reserve or deposit made with Senior Lender in connection with the HUD Loan. Notwithstanding anything contained in the Loan Documents to the contrary, in the event HUD acquires title to the Project by foreclosure or deed in lieu of foreclosure, Borrower's obligations under the Loan shall automatically terminate and Borrower shall be released of its obligations with respect to the Loan. Section 8.2 Release of Collateral. When all of the indebtedness evidenced by the Loan Documents secured as provided in Section 8.1 hereof has been paid, there is no default, or event which Page 26 with the giving of notice or the lapse of time would become a default, MBI shall release the collateral securing the loan. ARTICLE IX. CONDITIONS PRECEDENT TO INITIAL ADVANCEMENT OF THE LOAN Section 9.1 Conditions Precedent to Initial Advancement of the Loan. In addition to the conditions set forth in Section 10.1 of this Agreement, each of the following conditions shall be a condition precedent to the initial advancement of the Loan by MBI pursuant to this Agreement,provided, however, that any condition not satisfied at the time of the initial advancement of the Loan shall not be deemed waived but shall be satisfied as MBI may later require: (a) Borrower has executed and delivered to Issuer the Note, the Collateral Assignment of Equity Payments, and any other Loan Documents which Issuer may require that Borrower execute. (b) Borrower has caused the Co-Borrower Agreement and any other Loan Documents which Issuer may require that any Co-Maker or other third party execute in connection with the Loan,to be executed and delivered to MBI. (c) Borrower has drawn down and invested the Non-Contingent Required Equity toward the construction or rehabilitation of the Improvements and the purchase and installation of the Personal Property on the Project,with the balance of the Limited Partner's Equity proceeds to be paid in accordance with the Partnership Agreement, all in accordance with the terms and provisions herein. (d) [This paragraph is intentionally left blank]. (e) Borrower has furnished to MBI copies of all documents and agreements entered into by Borrower in connection with the Other Available Sources of Funds and the form of the documents evidencing the Other Available Sources of Funds are acceptable to MBI. (f) Borrower has furnished to MBI evidence that the Required Equity and Other Available Sources of Funds are sufficient to allow the purchase of the Real Estate, the construction or rehabilitation of the Improvements, the purchase and installation of the Personal Property which is contemplated by the Development Budget to be purchased and installed, and the payment of any other item included in the Development Budget, including the construction of all landscaping and site improvements. (g) [This paragraph is intentionally left blank]. (h) Borrower has furnished to MBI evidence of hazard insurance coverage for the Project which during construction or rehabilitation of the Improvements shall be on a "Builder's Risk" non-reporting "Completed Value" form, and after completion of construction or rehabilitation on an "All Risk" coverage form, all in such amounts and in form and with insurers acceptable to MBI. Such insurance shall be in amounts equal to the full replacement costs of the Improvements plus borrower's interest in any leasehold improvements and shall include such special coverages as MBI may require, including without limitation coverage for earthquakes and mudslides. All policies shall include a standard mortgagee endorsement and loss payee endorsement in favor of MBI. Page 27 (i) Borrower has furnished to MBI evidence of public liability insurance with MBI named as an additional insured, in such amounts and in form and with insurers acceptable to MBI. (j) Borrower has furnished, or caused the general contractor to furnish, to MBI evidence of worker's compensation and other insurance required by the laws of the State in which the Project is located, or any other applicable jurisdiction,with MBI named as a certificate holder, such insurance to be with companies and in amounts acceptable to MBI. (k) Borrower has either furnished to MBI evidence that the Real Estate is not located in a flood hazard area as defined under the Flood Disaster Protection Act of 1973 and the National Flood Insurance Act of 1968 or furnished to MBI evidence of flood insurance coverage, with a standard mortgagee endorsement in favor of MBI, such insurance to be with a company and in an amount acceptable to MBI. (1) Borrower has furnished to MBI a Development Budget for the Project which is in form and substance acceptable to MBI. (m) Borrower has furnished to MBI executed copies of all agreements, quotations and estimates between or for Borrower and contractors or, to the extent requested by MBI, subcontractors with respect to the construction or rehabilitation of the Improvements and the purchase and installation of the Personal Property, including but not limited to a fixed price, contract with the general contractor. (n) [This Section is intentionally left blank]. (o) Borrower has furnished to MBI a copy of(1) Borrower's Partnership Agreement, and(2)Borrower's certificate of limited partnership filed with the Office of the Secretary of State of Indiana, and all amendments thereto, certified by the General Partner of Borrower. (p) Borrower has furnished to MBI an original, current Certificate of Existence for Borrower issued by the Office of the Secretary of State of Indiana. (q) [This paragraph is intentionally left blank]. (r) Borrower has furnished to MBI copies of organizational documents for the General Partner, the Developer, and any partner, manager or member of Borrower, General Partner, and Developer, as applicable, which will be executing any Loan Document for and on behalf of Borrower or General Partner or Developer and which is a partnership, corporation, limited liability company or other organized entity, together with certificates of existence/good standing issued by the state in which such partner, manager or member was formed and resolutions authorizing such partner, manager or member to execute any documents required in connection with the extension of the Loan to Borrower. (s) Borrower has furnished to MBI an opinion of Borrower's counsel which is acceptable to MBI. (t) Borrower has furnished to MBI a satisfactory schedule or chart for the development of the Project and the construction or rehabilitation of the Improvements. (u) Borrower has furnished to MBI evidence satisfactory to MBI that the Real Estate is in compliance with current zoning use and restrictions and is adequately zoned for Borrower's Page 28 intended use and that all appropriate or necessary private and governmental approvals and permits have been obtained in connection with the construction or rehabilitation of the Improvements and Borrower's intended use of the Project, including without limitation all applicable development and building permits and approvals and all consents and approvals required from applicable property owner associations, architectural review committees and other private third parties with approval rights relating to the construction or rehabilitation of improvements on the Real Estate. (v) Borrower has furnished to MBI evidence satisfactory to MBI that all public utility services are currently available to the Real Estate and Improvements. (w) Borrower has furnished to MBI copies of all applicable building and construction permits for the Improvements,which are in form and substance satisfactory to MBI. (x) Borrower has furnished to MBI an environmental inspection report in form and substance acceptable to MBI that at a minimum meets the Standard Practice for Environmental Site Assessments: Phase 1, Environmental Site Assessment Process, ASTM E-1527 of the American Society for Testing and Materials, prepared and certified by an environmental consultant acceptable to MBI, stating that there are not present on, under, in or about the Project any Hazardous Substances and that the condition of the Real Estate currently complies with all applicable state and federal environmental protection laws. (y) Borrower has furnished to MBI one (1) complete set of the Plans and Specifications sealed by a responsible professional architect or engineer, which shall contain mechanical and electrical designs and the original approval of the appropriate building authority. (z) If required by MBI, Borrower has furnished to MBI a current written geotechnical and soil assessment of the Project performed by a licensed geotechnical and soil engineer satisfactory to MBI, indicating no geotechnical and soil matters unsatisfactory to MBI and otherwise acceptable to MBI. (aa) Borrower has caused to be executed and delivered to MBI a certification from the architect or engineer involved in preparing the Plans and Specifications which certifies the existence of such conditions as MBI may require. (bb) Borrower has caused to be executed and delivered to MBI such written consents, in form and substance acceptable to MBI, as MBI may require from any architect, engineer, general contractor, construction manager or other subcontractors and suppliers as MBI may require, who have entered into, or who Borrower contemplates will enter into, one or more contracts or agreements to (i)provide construction related services in connection with the Project and/or(ii)to construct or rehabilitate all or certain portions of the Project. (cc) MBI has received, reviewed and approved an appraisal of the Real Estate and Improvements, on an assumed completion basis, conforming to Title XI of the Financial Institution Reform, Recovery & Enforcement Act of 1989 and stating an as-is value of not less than and 00/100 Dollars ($ ). Such appraisal shall be certified to MBI, made by an appraiser acceptable to MBI which is licensed by the State in which the Project is located and shall be in form and substance acceptable to MBI. (dd) Borrower has furnished to MBI a copy of the fully executed Management Agreement for the Project containing terms and conditions acceptable to MBI. Page 29 (ee) Borrower has furnished to MBI a copy of executed non-residential lease, if any, affecting any portion of the Project and all such leases must contain terms and conditions acceptable to MBI. (ff) Borrower has furnished to MBI evidence that the Project is compliant with all zoning requirements, including,but not limited to,all necessary zoning variances and approvals. (gg) If required by MBI, the Construction Consultant shall have reviewed the Plans and Specifications and the Development Budget and shall have delivered to MBI a report and analysis, in form and substance acceptable to MBI, which(i) confirms the reasonable expectation that the Project can be built in accordance with the Plans and Specifications for the total cost set forth in the Development Budget,and(ii)addresses such other issues as MBI may require. (hh) [This paragraph is intentionally left blank]. (ii) [This paragraph is intentionally left blank]. (jj) Borrower has furnished written confirmation, in form and substance acceptable to MBI,that the Tax Credits are available to the Project. (kk) [This paragraph is intentionally left blank]. (11) [This paragraph is intentionally left blank]. (mm) [This paragraph is intentionally left blank]. (nn) [This paragraph is intentionally left blank]. (oo) Borrower has furnished to MBI written confirmation, in form and substance acceptable to MBI,that Issuer has authorized the issuance of, and has issued,the Bonds. (pp) [This paragraph is intentionally left blank]. (qq) Borrower has furnished to MBI fully executed copies of this Agreement, the LURA, and all other documents executed in connection with the Bonds, in form and substance satisfactory to MBI. (rr) Borrower has furnished to MBI an opinion of bond counsel in form and substance satisfactory to MBI. Section 9.2 Conditions to be Satisfied in a Manner Acceptable to MBI. All conditions required to have occurred or be satisfied under Section 4.1 shall have occurred or have been satisfied in a manner acceptable to MBI. All documents required to be delivered to MBI under Section 9.1 shall be satisfactory in form and substance to MBI. Section 9.3 No Waiver of Full Compliance. Any of the conditions set forth in Section 9.1 may be waived by MBI at the time of each advancement; however, any such waiver by MBI at the time of a particular advancement shall not be deemed or construed as a waiver of the right of MBI to require full compliance with all conditions precedent prior to the next succeeding advancement. In the event MBI, in its sole discretion, shall require further evidence of the occurrence or satisfaction of any condition precedent set forth in Section 4.1 or in the event circumstances occur whereby any condition precedent is Page 30 no longer wholly satisfied, MBI may at any time require Borrower to provide further evidence of the occurrence or satisfaction of any condition precedent set forth in Section 9.1. Section 9.4 Termination Date. In the event all of the conditions set forth in Section 9.1 have not occurred or otherwise been satisfied on or before the Termination Date, then, without limitation of any other right or remedy of MBI hereunder or at law or in equity, the obligation of MBI under this Agreement to extend the Loan shall terminate. In such event, Borrower shall pay upon demand all costs and expenses incurred by MBI which Borrower is obligated to pay pursuant to the terms of this Agreement and MBI shall be entitled to retain any fees paid to MBI as provided for under this Agreement. ARTICLE X. CONDITIONS PRECEDENT TO EACH ADVANCEMENT OF THE LOAN Section 10.1 Conditions Precedent to Each Advancement of the Loan. Each of the following conditions shall be a condition precedent to each advancement of the Loan by MBI pursuant to this Agreement, provided, however, that any condition not satisfied at the time of any advancement of the Loan shall not be deemed waived but shall be satisfied as MBI may later require: (a) There exists no Event of Default under this Agreement or event which with the giving of notice or the lapse of time would become an event of default under the terms of this Agreement,the Note or any other Loan Document. (b) Borrower is in full compliance with all terms and conditions of this Agreement and the other Loan Documents and all warranties and representations made hereunder remain true and correct. (c) Borrower has furnished to MBI a completed Draw Request executed by Borrower, together with any supporting documentation which may be required pursuant to the terms of this Agreement for the requested advancement, including without limitation a list of each and every contractor, subcontractor and materialman to whom payment must be made and dollar amount owed and any other supporting documentation required pursuant to Article XV of this Agreement. (d) Borrower has furnished to MBI a current cost budget on AIA Form G702/G703 (or such similar forms acceptable to MBI) for construction or rehabilitation of the Improvements and the purchase and installation of the Personal Property, executed by Borrower, the general contractor or construction manager for the Project and the architect of record for the Project; such AIA Form G702/G703 (or such similar forms acceptable to MBI) shall be in detail satisfactory to MBI and shall include, without limitation, an itemization of quantities, unit prices and extension for labor and material for all Project costs incurred to date and for the period for which the advancement is requested and such other breakdown of construction or rehabilitation and other costs as MBI may require. (e) The Project and Improvements have been inspected by the Construction Consultant and the Construction Consultant has certified to MBI the percentage of completion of the Improvements and that the Draw Request and application for advancement of the Loan conforms with the Development Budget and the current cost budget on AIA Form G702/G703 (or such similar forms acceptable to MBI) and the requirements of this Agreement relating to the completion of the construction or rehabilitation of the Improvements. Page 31 (f) Borrower has furnished to MBI evidence that it has drawn down and invested all Non-Contingent Required Equity toward the costs on the Development Budget that have been incurred by Borrower. (g) The Loan is In Balance as required by Article XVI of this Agreement. (h) To the extent any condition precedent for the initial advancement of the Loan was waived by MBI for the initial advancement of the Loan or in the event circumstances occur whereby any condition precedent for the initial advancement of the Loan is no longer wholly satisfied, Borrower has furnished to MBI such agreements, documentation, reports and information which MBI may require in order to cause such condition precedent to be fully satisfied. (i) Borrower has paid all fees, costs and expenses which Borrower is required to pay pursuant to Article XII of this Agreement. (j) No structure or improvement on the Project shall have been materially damaged by fire or other casualty, or in the event any such damage or casualty has occurred, MBI shall have received insurance proceeds or other funds from Borrower in an amount equal to the full cost, as estimated by the Construction Consultant, to fully repair and restore all such damage and casualty. The receipt by MBI of such insurance proceeds or other funds from Borrower shall not obligate MBI to advance such proceeds to restore and repair the Project unless all conditions and requirements specifically provided for under the terms of the Loan Documents for the use of insurance proceeds to restore the Project have been satisfied in full. (k) [This paragraph is intentionally left blank]. (1) [This paragraph is intentionally left blank]. (m) If requested by MBI, Borrower has furnished to MBI (i) a complete updated list of all contractors, subcontractors, suppliers,materialmen, architects and other parties who have or will provide labor, materials or services in connection with the development of the Real Estate, the construction or rehabilitation of the Improvements and the delivery and installation of the Personal Property and who may be entitled to a lien thereon and (ii) such acknowledgments of payment and releases of liens and/or lien waivers required pursuant to Article XV of this Agreement from any contractor, architect, subcontractor, mechanic, journeyman, laborer, materialman, lessor leasing construction or other equipment and tools, or other person against the Project, covering all work performed or furnished and materials supplied in the construction or rehabilitation of the Improvements and the delivery and installation of the Personal Property. respect to the final advancement of the Loan, the Improvements(n) With resP have been substantially completed in substantial accordance with the Plans and Specifications, free and clear of construction and mechanics' liens. (o) With respect to the final advancement of the Loan, all fixtures and equipment required for the operation of the Project which are to be installed or paid for by Borrower have been installed free and clear of all liens and security interests, other than MBI's lien and the Permitted Encumbrances. (p) With respect to the final advancement of the Loan for construction costs, Borrower has furnished to MBI applicable certificates of occupancy from the local governmental authority, and such other evidence reasonably satisfactory to MBI, certifying that the Project complies with all applicable zoning ordinances, building and use regulations and codes and all Page 32 requirements with respect to licenses, permits and agreements necessary for the lawful use and operation of the Project and, upon request of MBI, Borrower's certificate that no notices of any claimed violations of ordinances were or have been served on Borrower. MBI may also require a written certification from Borrower's architect that the Improvements have been completed in accordance with the Plans and Specifications. (q) [This paragraph is intentionally left blank]. (r) Borrower has executed and delivered to MBI such other documents, instruments, information and materials as may be required under the terms of this Agreement or otherwise by MBI in connection with the Loan. (s) Borrower has furnished to MBI evidence that the payments of the Limited Partner's Equity are being timely paid to the Borrower in full for the benefit of the Project by the Limited Partner in accordance with the Partnership Agreement. (t) Borrower has executed and delivered to MBI such other documents, instruments, information and materials as may be reasonably required under the terms of this Agreement or otherwise by MBI in connection with the Loan. (u) There exists no "Event of Default" under any of the documents executed in connection with the Other Available Sources of Funds or event which with the giving of notice or the lapse of time would become an event of default under the terms of any of the Other Available Sources of Funds. (v) There exists no "Event of Default" under any of the documents executed in connection with the Bonds or event which with the giving of notice or the lapse of time would become an event of default under the terms of any of the documents executed in connection with the Bonds. Section 10.2 Conditions to be Satisfied in a Manner Acceptable to MBI. All conditions required to have occurred or be satisfied under Section 10.1 shall have occurred or have been satisfied in a manner acceptable to MBI. All documents required to be delivered to MBI under Section 10.1, including without limitation the Draw Request and all supporting documentation, shall be satisfactory in form and substance to MBI, and shall be submitted by Borrower to MBI at least seven(7) Business Days prior to the date upon which Borrower is requesting that MBI make the requested disbursement. Section 10.3 No Waiver of Full Compliance. Any of the conditions set forth in Section 10.1 may be waived by MBI at the time of any advancement; however, any such waiver by MBI at the time of a particular advancement shall not be deemed or construed as a waiver of the right of MBI to require full compliance with all such conditions prior to all subsequent advancements. In the event MBI, in its sole discretion, shall require further evidence of the occurrence of any condition precedent set forth in Section 10.1 or in the event circumstances occur whereby any condition precedent is no longer wholly satisfied, MBI may at any time require Borrower to provide further evidence of the occurrence of any condition precedent set forth in Section 10.1. ARTICLE XI. CONSTRUCTION OR REHABILITATION OF IMPROVEMENTS Section 11.1 Construction or Rehabilitation of Improvements. On or before the Target Completion Date,Borrower shall(i)construct or rehabilitate the Improvements on the Real Estate in strict accordance with the Plans and Specifications and shall substantially complete the Improvements, (ii) Page 33 cause to be purchased and installed all of the Personal Property which is contemplated by the Development Budget to be purchased and installed, (iii) provide MBI with copies of all applicable certificates of occupancy for the use and occupancy of the Project from the local governmental authority, and (iv) provide MBI with an executed Certificate of Substantial Completion issued by Borrower's architect with respect to the Improvements. The Improvements shall be constructed or rehabilitated strictly in accordance with all applicable building codes, ordinances and statutes and the requirements of all regulatory authorities having jurisdiction and the Board of Fire Underwriters, or similar body, entirely on the Real Estate without any encroachments or overhangs,within the building restriction lines,however established, and without any violation of any applicable use restrictions or other restrictions. The Plans and Specifications shall be certified by the architect employed by Borrower as in compliance with the Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et seq.) and the Americans with Disabilities from time to time). Borrower shall from time to time Act of 1990 Architectural Guidelines (as amended ) upon request by MBI furnish satisfactory evidence of compliance with the foregoing, together with any surveys required by MBI to show that the Improvements are entirely on the Real Estate and no violations as aforesaid exist. Section 11.2 Changes in Plans and Specifications. Borrower shall make no material changes in the Plans and Specifications, any architect's contract, any engineer's contract, any construction manager contract, any contract for the purchase or installation of the Personal Property, or any construction contract, nor shall any change orders be made thereunder, without the prior written consent of MBI,which consent shall not be unreasonably withheld, conditioned, or delayed. Notwithstanding the foregoing, MBI's consent shall not be required for any change order which does not (i) involve a reduction in the scope of the Project, (ii) involve a reduction in the value of the Project, (iii) materially affect the electrical, plumbing, mechanical, HVAC or structural portions of the Project, (iv) materially change the gross square footage of the Improvements or the number of rooms, floors, or basic layout of the Improvements, (v) materially change the parking layout for the Project, (vi) materially change the quality of any materials for the Improvements, (vii) extend the estimated completion date for the Improvements beyond the Target Completion Date, (viii) involve an expenditure exceeding five percent (5%) of the contract amount as to any individual change order,provided after such change order the Loan remains "In Balance" as required by Section 16.1, or(ix) involve,as to the aggregate of all change orders, an expenditure exceeding five percent (5%) of the total construction cost for the Improvements as set forth in the Development Budget, provided after such change order the Loan remains "In Balance" as required by Section 16.1. All change orders must be included on AIA Form G702/G703 (or such similar forms acceptable to MBI) and copies must be promptly furnished to MBI. Borrower hereby authorizes MBI to contact any contractor, subcontractor or material supplier to discuss the course of construction or rehabilitation of the Improvements. ARTICLE XII. PAYMENT OF FEES AND EXPENSES Section 12.1 Payment of Loan Fees and Expenses. In addition to all of the terms and conditions to be performed by Borrower under this Agreement, Borrower shall pay to MBI at the time of the execution of this Agreement, if Borrower has not previously paid, a commitment and service fee of and 00/100 Dollars ($ ) or one half of one percent (0.50%) of the Loan, whichever is greater,and shall reimburse MBI upon demand for all costs and expenses incurred in connection with the Loan and the Bonds, including but not limited to premiums and fees of title insurance companies,recording fees, lien search fees, survey expenses,the fees of inspecting architects or engineers, fees and expenses of MBI's counsel, appraisal fees, fees for environmental studies, mortgage and intangible taxes and other miscellaneous expenses connected with the Loan or the Bonds. Borrower also shall pay upon demand all fees charged by MBI in connection with MBI's review of any appraisal reports, inspection reports, environmental reports and any other reports or material required to be Page 34 provided in connection with the Loan or the Bonds. All of such fees,costs and expenses may be deducted by MBI from the advancements made hereunder. Section 12.2 Construction Consultant Fees. Borrower shall, within ten (10) days of written demand, pay or reimburse MBI for all fees and expenses charged by any Construction Consultant engaged in connection with the Loan or the Bonds. Section 12.3 Fees and Expenses Incurred after Event of Default. If, after the occurrence of an Event of Default hereunder, MBI employs an attorney or attorneys to protect MBI's rights or remedies arising in connection with this Agreement or any security for the Loan, then Borrower shall pay to MBI upon demand all reasonable attorneys' fees and expenses incurred by MBI in connection with such Event of Default, regardless of whether any action is actually commenced against Borrower by reason of any such Event of Default. Section 12.4 Payment of Related Expenses. Borrower shall, within ten (10) days of written demand, pay or reimburse MBI for all reasonable attorneys' fees and expenses incurred by MBI in any proceedings involving the estate of a deceased Borrower or Co-Maker, an insolvent or a bankrupt Borrower or Co-Maker, or in any action,proceeding or dispute of any kind in which MBI is made a party, or appears as an intervenor or party plaintiff or defendant, affecting or relating to this Agreement or any of the other Loan Documents, Borrower, or the Project, including, without limitation, the foreclosure of the collateral for the Loan, any condemnation action involving the Project, or any action to protect the security for the Loan. Section 12.5 Amounts Payable Upon Demand. Any amounts payable by Borrower pursuant to this Article VII shall be due and payable within ten(10) days of written demand. Section 12.6 No Advancements if Fees and Expenses are Unpaid. MBI shall not be obligated to fund any additional advances of the Loan until Borrower has paid all amounts then due under this Article VII. Furthermore, MBI hereby reserves the right (without any obligation) to disburse to itself under the Loan, any or all of such amounts which are not received by MBI within ten (10) days after demand has been made by MBI for such payment. ARTICLE XIII. WARRANTIES AND REPRESENTATIONS Section 13.1 Warranties and Representations. Borrower warrants and represents to the Issuer and MBI that: (a) Borrower is a limited partnership duly organized and validly existing under the laws of the State of Indiana, and has full power under its certificate of limited partnership and Partnership Agreement, and any amendments thereto, and under all applicable provisions of law to purchase, develop, own, lease and operate the Project; (b) Borrower is the owner in fee simple of the Real Estate(or shall acquire title with the proceeds of the initial advancement of the Loan) subject only to the lien of current real estate taxes not delinquent, and easements,rights of way and other restrictions of record; (c) The Plans and Specifications are final and are in full compliance with all applicable building codes, zoning ordinances and the requirements of regulatory agencies having jurisdiction [including but not limited to the specifications required to be complied with under the Americans With Disabilities Act of 1990 (42 U.S.C. § 12101 et seq.) as from time to time Page 35 amended and the Americans With Disabilities Act of 1990 Architectural Guidelines as from time to time amended] and have been approved by all applicable governmental authorities; (d) The contracts for the construction or rehabilitation of the Improvements and the furnishing of the Personal Property contemplated by the Plans and Specifications are now in full force and effect and have not been modified or amended; (e) No security interests in or title retention claims exist against any Personal Property except for the lien and security interest granted in favor of MBI and the interests granted by virtue of the Permitted Encumbrances; (f) All governmental authorizations, certificates, licenses, filings, registrations, consents, approvals and permits necessary (with regard to anyone other than MBI) to (i) make, execute and deliver this Agreement, (iii) perform all of its obligations under this Agreement, and (iii) construct or rehabilitate the Improvements and use the Project, including but not limited to building permits, storm water drainage permits and those approvals concerning flood hazards and Wetlands,have been obtained and no appeal thereof is pending or threatened; (g) After construction or rehabilitation of the Improvements is completed,the Project will be in conformity with all applicable building, zoning and environmental laws, regulations, ordinances, rules and regulations and all variances and exceptions granted with respect thereto, including but not limited to set-back requirements, minimum parking requirements and height restrictions; (h) All utilities necessary for the intended use of the Project including without limitation for gas, electricity, water, drainage or storm sewers, sanitary sewers, and telephone directly and adequately serve the Project through publicly dedicated easements without the necessity of private easement agreements and all necessary hook-up permits for such utilities have been obtained and no appeal thereof is pending or threatened; (i) All environmental impact statements for the Project required by any governmental authority have been duly filed and approved; (j) The Real Estate directly abuts a publicly dedicated and maintained road or street and has legal access to the same through governmentally approved curb cut permits or no such permits are required for legal access; (k) All required federal, state and other tax returns have been filed by or on behalf of Borrower and the taxes in connection therewith paid to date and no additional taxes or assessments have been asserted or are anticipated; (1) There is no litigation, or proceeding pending or, to the knowledge of Borrower, threatened against or otherwise affecting Borrower or any of its properties or assets, before any court or before or by any governmental agency; (m) Except in connection with litigation set forth on Exhibit "C" attached hereto, there is no litigation, or proceeding pending or, to the knowledge of Borrower,threatened against or otherwise affecting any Co-Maker or any properties or assets of any Co-Maker, before any court or before or by any governmental agency which would materially and adversely impact the ability of any Co-Maker to perform its obligations under the Loan Documents executed by such Co-Maker; Page 36 (n) None of Borrower's representations or warranties set forth in this Agreement or in any document or certificate taken together with any related document or certificate furnished pursuant to this Agreement or in connection with the transactions contemplated hereby contains or will contain any untrue statements of a material fact or omits or will omit to state a financial fact necessary to make any statement of fact contained herein or therein, in light of the circumstances under which it was made, not misleading; (o) The execution of this Agreement and all other agreements, instruments and documents executed by Borrower in connection herewith, the consummation of all transactions connected herewith, and the construction or rehabilitation of the Improvements on the Real Estate,have been duly authorized by all necessary action required on the part of Borrower; (p) Each of the Loan Documents has been duly authorized, executed and delivered by Borrower and is legal, valid, binding and enforceable against Borrower in accordance with its terms; (q) Each individual Co-Maker is of legal age and is under no legal disability,and has all power, authority, permits, consents, authorizations and licenses necessary to execute, deliver and perform the Loan Documents to which such Co-Maker is a party and any other document to be executed and delivered by such Co-Maker in connection with the Loan; (r) Each document to be executed and delivered by each Co-Maker in connection with the Loan has been duly authorized, executed and delivered by each Co-Maker, as applicable, so as to constitute the valid and binding obligations of each such Co-Maker, enforceable in accordance with their respective terms; (s) Borrower has provided true and accurate copies of all documents and agreements between Borrower and its Partners and there are no other agreements existing between Borrower and its Partners; (t) Neither the execution of this Agreement(or the consummation of the transactions contemplated hereby) nor compliance with the terms and provisions hereof or of any agreements, documents and instruments required of Borrower hereunder conflict with, result in a breach of or constitute a default under the terms, conditions or provisions of the certificate of limited partnership and Partnership Agreement of Borrower or any amendments thereto, any agreement to which Borrower is a party or by which Borrower is bound or any law, regulation, order, writ, injunction or decree of any court or governmental agency or instrumentality having jurisdiction; (u) If any Co-Maker is a limited liability company, a corporation, a partnership or other legally created entity, neither the execution of any Loan Documents (or the consummation of the transactions contemplated thereby) nor compliance with the terms and provisions hereof or of any agreements, documents and instruments required of such Co-Maker under the Loan Documents executed by such Co-Maker conflict with, result in a breach of or constitute a default under the terms, conditions or provisions of the articles of organization, operating agreement, articles of incorporation, bylaws, partnership agreement or other organizational documents of such Co-Maker or any amendments thereto, any agreement to which such Co-Maker is a party or by which such Co-Maker is bound or any law, regulation, order, writ, injunction or decree of any court or governmental agency or instrumentality having jurisdiction; Page 37 (v) To the best of Borrower's knowledge after diligent inquiry, Borrower is in full compliance with all federal, state and local health, safety, building, zoning, environmental and other statutes,regulations and ordinances; (w) To the best of Borrower's knowledge after diligent inquiry, Borrower is in full compliance with all federal, state and local laws, statutes and ordinances, rules or regulations pertaining to Wetlands; (x) The financial statements of Borrower and, to the best of Borrower's knowledge after diligent inquiry, each Co-Maker heretofore delivered to MBI are true and correct in all material respects and fairly present the financial condition of Borrower and each Co-Maker as of the dates indicated therein, and there has been no material adverse change in the financial condition of Borrower or any Co-Maker since the date of such statements. (y) To the best of Borrower's knowledge after diligent inquiry, any and all employee pension plans of Borrower are in full compliance with the terms and provisions of the Employee Retirement Income Security Act of 1974 and all other federal, state and local statutes, regulations and ordinances governing the establishment and administration of pension plans; (z) The Loan is being incurred by Borrower solely for the purpose of carrying on a business or commercial enterprise, and not for personal, family or household purposes and the Note evidences a business loan exempt from the Federal Truth in Lending Act (15 USC 1601, et seq.), Regulations G, U, X and Z of the Board of Governors of the Federal Reserve System, and the Indiana Uniform Consumer Credit Code(IC 24-4.5-3-101, et seq.); (aa) Neither Borrower nor any Co-Maker is a "foreign person" within the meaning of Section 1445 or 7701 of the Internal Revenue Code; (bb) Borrower, General Partner, the Project and, to the knowledge of Borrower, the Limited Partner are in compliance with all of the terms and conditions of the Partnership Agreement; (cc) The Project has received a reservation of Tax Credits, and that the reservation of Tax Credits has not expired and remains in full force and effect; (dd) (i) Borrower is not now engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any margin stock (within the meaningRegulation U of the Board of Governors of the Federal Reserve System); of � Y ), (ii) nopart of theproceeds of anycredit hereunder has been or will be used topurchase or p c ase carry any such margin stock or to extend credit to others for the purpose of purchasing or carrying any such margin stock; and (iii) no part of the proceeds of any credit hereunder has been or will be used for any purpose that violates or which is inconsistent with the provisions of Regulations G, U or X of said Board of Governors; (ee) As of the date hereof, no construction activity has commenced on the Real Estate; (ff) General Partner is a limited liability company duly organized and validly existing under the laws of the State of Indiana, and has full power under its Operating Agreement to perform its obligations under the Loan Documents; Page 38 (gg) Developer is a duly o r anized and validly existing under the laws of the State of Indiana, and has full power under its articles of incorporation and by-laws to perform its obligations under the Loan Documents; (hh) The Tax Credits are available to the Project; (ii) The Project has received an allocation of private activity bond volume in an aggregate amount of not less than and 00/100 Dollars ($ ), of which Three Million Eighty-One Thousand Seven Hundred Thirty-Two and 00/100 Dollars ($3,081,732.00)and 00/100 Dollars is being used for the Bonds and the allocation for such bonds has not expired and remains in full force and effect; (jj) The provision of financial assistance to be made available to it under this Agreement and the commitments therefor made by the Issuer have induced the Borrower to undertake the transactions contemplated by this Agreement; (kk) Borrower presently intends to use or operate the Project in a manner consistent with the Act and in accordance with the LURA for the life of the Bonds, or for such longer period as may be required by the LURA and knows of no reason why the Project will not be so operated. If, in the future, while the Bonds are outstanding, there is a cessation of that operation, Borrower will use its best efforts to resume that operation or accomplish an alternate use by the Borrower or others approved by the Issuer which will be consistent with the Act and the LURA; (11) The Project will be completed in accordance with the Plans and Specifications and the portion of the Project funded with the proceeds of the Bonds will constitute a qualified residential rental project within the meaning of Section 142(d) of the Code and will be operated and maintained in such manner as to conform in all material respects with all applicable zoning, planning, building, environmental and other applicable governmental regulations and as to be consistent with the Act; (mm) The Project will be located entirely within the boundaries of the Issuer; (nn) At least 95% of the net proceeds of the Bonds (as defined in Section 150 of the Code)will be used to provide a qualified residential rental project(as defined in Section 142(d)of the Code), and the Borrower will not request or authorize any disbursement pursuant to Section 9.1 hereof,which, if paid,would result in less than 95%of the net proceeds of the Bonds being so used; (oo) The costs of issuance financed by the Bonds will not exceed 2% of the proceeds i n the meaningof Section 147(g) of the Code), and the Borrower will not of the Bonds (within request or authorize any disbursement pursuant to Section 4.1 hereof or otherwise, which, if paid, would result in more than 2%of the proceeds of the Bonds being so used; (pp) At least 95% of the proceeds of the Bonds shall be used or deemed used exclusively to pay costs that are (A) capital expenditures (as defined in Section 1.150-1(a) of the Code's regulations) and (B) not made for the acquisition of existing property, to the extent prohibited in Section 147(d) of the Code; (qq) The proceeds of the Bonds shall be used or deemed used exclusively to pay costs that are made exclusively with respect to a "qualified residential rental project" within the meaning of Section 142(d) of the Code and that for the greatest number of buildings the proceeds of the Bonds shall be deemed allocated on a pro rata basis to each building in the Project and the Page 39 land on which it is located so that each building and the land on which it is located will have been financed fifty percent (50%) or more by the proceeds of the Bonds for the purpose of complying with Section 42(h)(4)(B) of the Code; (rr) [This paragraph is intentionally left blank]. (ss) Neither the Borrower nor any related person thereto shall acquire any Bonds in any amount; (tt) The Borrower understands the nature and structure of the transactions relating to the financing of the Project; it is familiar with the provisions of all of the documents and instruments relating to such financing to which it is a party or of which it is a beneficiary, including the Loan Documents; it understands the risks inherent in such transactions, including, without limitation, the risk of loss of the Project; and it has not relied on any other party to the transaction or their counsel for any guidance or expertise in analyzing the financial or other consequences of the transactions contemplated by this Agreement or otherwise relied on any other party to the transaction or their counsel in any manner; (uu) The Project is, as of the date hereof, in compliance with all requirements of the LURA, including all applicable requirements of the Act and Code. The residential units in the Project are to and will be rented or available for rental on a basis which satisfies the requirements of the LURA, including all applicable requirements of the Act and the Code. All current leases comply, and all future leases will comply, with all applicable laws and the LURA. The Project pp J meets the requirements of this Agreement, the LURA, the Act and the Code with respect to multifamily rental housing; (vv) The Borrower hereby represents that it has taken or caused to be taken, and covenants that it will take or cause to be taken, all actions that may required uired of it, alone or in q conjunction with the Issuer, for the interest on the Bonds to be and to remain excluded from gross income for federal income tax purposes, and represents that it has not taken or permitted to be taken on its behalf, and covenants that it will not take or permit to be taken on its behalf, any actions that would adversely affect such exclusion under the provisions of the Code. Section 13.2 Representations of the Issuer. The Issuer represents and warrants to Borrower and MBI that: (a) It is a municipal corporation of the State of Indiana (the "State") organized and validly existing and, pursuant to the Act, has full legal right, power and authority(i) to enter into this Agreement; (ii) to adopt the ordinance authorizing the Bonds (the "Bond Legislation") and cause the delivery of the Bonds pursuant to the Bond Legislation and this Agreement as provided herein; (iii) to loan the proceeds of the Bonds to the Borrower for the purpose set forth in this Agreement; and (iv) to carry out and consummate the transactions contemplated by the Loan Documents; (b) The Issuer, with respect to the Bonds, as advised by Bond Counsel, has complied, and will, on the date of issuance of the Bonds, be in compliance in all material respects with the Loan Documents and the relevant laws of the State; (c) (i) On or prior to the date of issuance of the Bonds, the Issuer will have taken all action required to be taken by it to authorize the issuance and sale of the Bonds and the performance of its obligations hereunder; (ii)the Issuer has full legal right,power and authority to enter into the Loan Documents, will have full legal right, power and authority to deliver the Page 40 Bonds to the purchaser and to perform its obligations under the Loan Documents, and all other documents to be executed by the Issuer in accordance with the issuance of the Bonds, and to carry out and effectuate the transactions contemplated by the Loan Documents; (iii) on or prior to the issuance of the Bonds, the execution and delivery of, and the performance by the Issuer of the obligations contained in the Bonds, the Loan Documents shall have been duly authorized, and when executed the Loan Documents will constitute valid and legally binding limited obligations of the Issuer enforceable against the Issuer in accordance with their respective terms, subject to any applicable bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditors' rights generally and the application of equitable principles where equitable remedies are sought and limitations on the enforcement of judgments against public bodies; (iv) the Issuer has duly authorized the consummation by it of all transactions contemplated by this Agreement; and(v)the Loan Documents have been duly and validly adopted by the Issuer and are at the time of acceptance hereof in full force and effect; (d) The Issuer, with respect to the Bonds,has not received notice that it is in material breach of or default under any applicable law or administrative regulation of the State, any department, division, agency or instrumentality thereof, or the United States or any applicable judgment or decree or any loan agreement, note, resolution, certificate, agreement or other instrument to which the Issuer is a party or is otherwise subject; and the adoption of and the execution and delivery of the Bonds,the Loan Documents and all other documents to be executed by the Issuer in connection with the issuance of the Bonds, and compliance with the provisions of each thereof do not, to the Issuer's knowledge, conflict with or constitute a material breach of or default under any applicable law or administrative regulation of the State, any department, division, agency or instrumentality thereof, or the United States or any applicable judgment or decree, or any loan agreement, note, resolution, certificate, agreement or other instrument to which the Issuer is a party or is otherwise subject; (e) All approvals, consents, and orders of any governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to the performance by the Issuer,of its obligations hereunder and under the Bond Legislation, the Issuer Documents and the Bonds and all other documents to be executed by the Issuer in connection with the issuance of the Bonds have been obtained; (f) The Issuer will not take or omit to take any action,which action or omission will adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Bonds under the Code; (g) The Bonds, when delivered and sold as provided herein, will have been duly authorized and executed and will constitute validly issued and binding limited obligations of the Issuer in conformity with, and entitled to the benefit and security of, the Act and the Loan Documents; (h) The Issuer agrees that all representations, warranties and covenants made by it herein, and in certificates, agreements or other instruments delivered pursuant hereto or in connection herewith, shall be deemed to have been relied upon by the bondholders, and that all representations, warranties and covenants made by the Issuer herein and therein and all the bondholders' rights hereunder and thereunder shall survive the delivery of the Bonds; (i) The Issuer covenants that it will not pledge the amounts derived from this Agreement other than as contemplated by this Agreement; Page 41 (j) The Issuer hereby finds and determines that financing the Project by the issuance of the Bonds will further the public purposes of the Act; (k) To the best of its knowledge, no member or director of the Issuer, nor any other official or employee of the Issuer, has any interest, financial employment or other, in the Borrower, the Project or the transactions contemplated hereby; (1) There is no action, suit, proceeding, inquiry or investigation pending or, to the knowledge of the Issuer, threatened against the Issuer by or before any court, governmental agency or public board or body,which(i)affects or questions the existence or the title to office of any member of the Issuer; (ii) affects or seeks to prohibit, restrain or enjoin the execution and delivery of any of the Loan Documents, or the issuance, execution or delivery of the Bonds; (iii) affects or questions the validity or enforceability of any of the Loan Documents or the Bonds; (iv) questions the exclusion from gross income for federal income taxation of interest on the Bonds; or (v) questions the power or authority of the Issuer to perform its obligations under any of the Loan Documents or the Bonds or to carry out the transactions contemplated by any of the Loan Documents or the Bonds; and (m) THE ISSUER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, THAT THE PROCEEDS OF THE BONDS WILL BE SUFFICIENT TO FINANCE THE REHABILITATION AND EQUIPPING OF THE PROJECT OR THAT THE PROJECT WILL BE ADEQUATE OR SUFFICIENT FOR THE BORROWER'S INTENDED PURPOSES. FURTHER, THE ISSUER MAKES NO WARRANTY, EITHER EXPRESS OR IMPLIED, AND SPECIFICALLY DISCLAIMS ANY WARRANTY AS TO THE PROJECT OR THE CONDITION THEREOF, OR THAT THE PROJECT WILL BE SUITABLE FOR THE PURPOSES OR NEEDS OF THE BORROWER. THE ISSUER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AND SPECIFICALLY DISCLAIMS ANY WARRANTY THAT THE BORROWER WILL HAVE QUIET AND PEACEFUL POSSESSION OF THE PROJECT. THE ISSUER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AND SPECIFICALLY DISCLAIMS ANY WARRANTY WITH RESPECT TO THE MERCHANTABILITY, CONDITION OR WORKMANSHIP OF ANY PART OF THE PROJECT OR ITS SUITABILITY FOR THE BORROWER'S PURPOSES. ARTICLE XIV. COVENANTS Section 14.1 Covenants of Borrower. So long as Borrower has any liability hereunder or under or with respect to the Loan or any agreement, instrument or document executed in connection herewith or so long as MBI may be obligated to make any advancement to Borrower,Borrower covenants and agrees as follows: (a) Borrower will use the proceeds of the Loan and Other Available Sources of Funds solely for the purpose of paying Unpaid Project Costs and for no other purpose. (b) Borrower will comply in all material respects with all the terms of, and take all actions necessary to comply in all material respects with, this Agreement, including without limitation executing and delivering to MBI such other documents as it may require to carry out the terms and provisions of this Agreement. (c) [This paragraph is intentionally left blank]. Page 42 (d) Borrower will promptly pay and discharge all taxes, assessments and governmental charges which may be lawfully levied, assessed or imposed upon it or its properties, or upon its income or profits, and all lawful claims for labor, material and services which, if unpaid, might become a lien or charge against any of the Project; provided, however, that Borrower shall have the right to contest in good faith any such tax, assessment, charge, levy or claim by appropriate proceedings without the prior payment thereof unless payment is required to contest. (e) Borrower will keep and safeguard accurate and complete books and records, and maintain the same,together with all valuable papers and records at Borrower's principal offices. (f) Borrower will defend, or cause to be defended, at all times any adverse claim by a third party relating to the possession of or any interest in the assets of Borrower. (g) Borrower will furnish, or cause to be furnished, to MBI, at Borrower's expense, the following financial statements and other information of Borrower: (i) As soon as available and in any event within ninety (90) days following the end of each calendar year, (i) the balance sheet and annual statements of income and surplus accounts for Borrower as of and for the calendar year then ended, all in reasonable detail, prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods involved and audited, if requested by MBI after an occurrence of an Event of Default, by an independent certified public accountant which shall furnish to MBI a standard unqualified opinion regarding such financial statements, (ii) a cash flow analysis for Borrower for the calendar year then ended in such form and in such detail as MBI may require, and(iii) a current rent roll for the Project in such form and in such detail as MBI may require; (ii) As soon as available and in any event within thirty (30) days from filing and in no event later than ninety (90) days following the end of each calendar year, a copy of the federal income tax return for Borrower for the calendar year then ended unless an extension is filed with the Internal Revenue Service (evidence of such extension to be promptly provided to MBI), and then within thirty (30) days of the extension date,but in no event later than October 15 of each calendar year; (iii) Commencing upon the completion of the construction or rehabilitation of the Improvements and continuing thereafter, within thirty (30) days following the end of each calendar quarter, (i) the balance sheet and quarterly statements of income and surplus accounts for Borrower as of and for the calendar quarter then ended, all in reasonable detail, prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods involved, and (ii) a current rent roll for the Project in such form and in such detail as MBI may require; (iv) If at any time the financial statements for Borrower on file with MBI are more than twelve months old, within thirty (30) days of receiving a request from MBI, current financial statements for Borrower on such form and in such detail as MBI may require; and (v) From time to time at such times as MBI may reasonably require, such further information regarding the business affairs and financial conditions of Borrower as MBI may require, including but not limited to, a certified rent roll, accounting and Page 43 management recommendations and certificates of no default under this Agreement, all in form and detail satisfactory to MBI. Borrower shall deliver to MBI at the same time as the delivery of any annual, quarterly or monthly financial statement required hereunder (i)a description in reasonable detail of any material variation between the application of accounting principles employed in the preparation of such statement and the application of accounting principles employed in the preparation of the immediately preceding annual, quarterly or monthly financial statements and (ii)reasonable estimates of the difference between such statements arising as a consequence thereof. (h) Borrower will furnish, or cause to be furnished, to MBI, at Borrower's expense, the following financial statements and other information relating to Co-Maker: (i) As soon as available and in any event within ninety (90) days following the end of each calendar year, a current annual financial statement for Co-Maker on such form and in such detail as MBI may require; (ii) As soon as available and in any event within thirty (30) days from filing and in no event later than one hundred twenty (120) days following the end of each calendar year, a copy of the federal income tax return for Co-Maker for the calendar year then ended unless an extension is filed with the Internal Revenue Service (evidence of such extension to be promptly provided to MBI), and then within thirty (30) days of the extension date,but in no event later than October 15 of each calendar year; (iii) If at any time the financial statement for Co-Maker on file with MBI is more than twelve months old, within thirty (30) days of receiving a request from MBI, a current financial statement for Co-Maker on such form and in such detail as MBI may require; (iv) As soon as available and in any event within ninety (90) days following the end of each calendar year, a cash flow analysis for Co-Maker for the calendar year then ended on such form and in such detail as MBI may require; and (v) From time to time at such times as MBI may require, such further information regarding the business affairs and financial conditions of Co-Maker as MBI may require, all in form and detail satisfactory to MBI. (i) Borrower will permit any authorized representative of MBI and its attorneys and accountants to inspect,examine and make copies and extracts of the books of account and records of Borrower at reasonable times during normal business hours. (j) Borrower will permit any authorized representative of MBI, including but not limited to its attorneys and inspectors, to enter upon and inspect and examine the Project at reasonable times during normal business hours. (k) Borrower will promptly correct or cause any applicable contractor to correct any defects in the Improvements or any departure from the Plans and Specifications not previously approved by MBI; Borrower agrees that the making of an advancement of the Loan shall not constitute a waiver of MBI's right to require compliance with this covenant. Page 44 (1) Borrower will give prompt written notice to MBI of any process or action taken or pending whereby a third party is asserting a material claim against Borrower or any of its assets. (m) Borrower will pay when due all costs, expenses, fees, and other charges incurred in connection with the acquisition of the Real Estate, the construction or rehabilitation of the Improvements,the purchase and installation of the Personal Property,the operation of the Project, and any other items set forth on the Development Budget, except for claims contested in good faith by appropriate proceedings. (n) Borrower will maintain all of Borrower's depository accounts with MBI, including but not limited to an account for the receipt of advancements of the Loan. (o) Borrower will maintain the following insurance and, upon request by MBI, furnish to MBI evidence of such insurance coverage and payment of premiums therefore: (i) Commercial general liability insurance against claims for personal injury, bodily injury, death or property damage occurring upon, in or about the Project, such insurance (A)to be on the so-called "occurrence" form with an occurrence limit of not less than $1,000,000 and an aggregate limit of not less than $3,000,000; (B)to continue at not less than the aforesaid limit until required to be changed by MBI by reason of changed economic conditions making such protection inadequate or changed due to changes in the standard practice of lenders in the business of making loans secured by collateral similar to the Project; and (C)to cover at least the following hazards: (1)premises and operations; (2)products and completed operations on an "if any" basis; (3)independent contractors; and (4)blanket contractual liability for all legal contracts. All policies shall name MBI as an additional insured. (ii) During the construction or rehabilitation of the Improvements and until such time as the construction or rehabilitation of the Improvements has been fully completed, Builder's Risk "All Risk" insurance in such amount as MBI shall require but in no event less than one hundred percent (100%) of the replacement cost value of the completed Improvements and one hundred (100%) percent of the replacement cost value of all tenant improvements. Such policy shall be written on a Builder's Risk Completed Value Form(100%non-reporting) or its equivalent and shall include coverage for loss by collapse, theft, flood, earthquake, transit coverage and water damage, with standard non- contributing mortgagee clauses. Such insurance policy shall also include coverage for: (A) loss suffered with respect to materials, equipment, machinery, and supplies whether on-site, in transit, or stored off-site and with respect to temporary structures, hoists, sidewalks, retaining walls, and underground property; (B) soft costs, plans, specifications, blueprints and models in connection with any restoration following a casualty; (C) demolition and increased cost of construction or rehabilitation, including, without limitation, increased costs arising out of changes in applicable laws and codes; and (D) operation of building laws. All policies shall name MBI as a "mortgagee" on a non-contributing New York type of standard mortgagee clause or an equivalent endorsement satisfactory to MBI and as "Loss Payee" as respects rental/business income insurance. (iii) Upon the final completion of the Improvements and continuing thereafter, comprehensive all risk insurance on the Project(A) in an amount equal to one hundred percent (100%) of the full replacement cost value of the Improvements, which Page 45 for purposes of this Agreement shall mean actual replacement value(exclusive of costs of excavations, foundations, underground utilities and footings) with a waiver of depreciation; (B) containing an agreed amount endorsement with respect to the Improvements and personal property at the Project waiving all co-insurance provisions; (C)providing for no deductible in excess of$25,000 for all such insurance coverage; (D) containing an "Ordinance or Law Coverage" or"Enforcement" endorsement if any of the Improvements or the use of the Project shall at any time constitute legal non-conforming structures or uses; and (E) shall also insure costs of demolition and increased cost of construction. The insurance policy shall be endorsed to also provide guarantied building replacement cost to the Improvements in an amount to be subject to the consent of MBI, which consent shall not be unreasonably withheld. All policies shall name MBI as a "mortgagee" on a non-contributing New York type of standard mortgagee clause or an equivalent endorsement satisfactory to MBI and as the "Loss Payee" as respects rental/business income insurance. Such insurance shall include such special coverages as MBI may require, including without limitation coverage for earthquakes and mudslides if the Project is located in an area which MBI determines is an area which is at risk for such events. (iv) If applicable, comprehensive boiler and machinery insurance covering all mechanical and electrical equipment against physical damage, rent loss and improvements loss in an amount equal to 100%of the replacement costs of the equipment and the area surrounding the equipment and naming MBI as "mortgagee" on a non- contributing Standard Mortgagee Endorsement providing that any loss payable thereunder shall be paid solely to MBI. (v) If any portion of the Improvements is currently or at any time in the future located in a federally designated "special flood hazard area", flood hazard insurance in an amount equal to the lesser of(i) the principal balance of the Loan or (ii) the maximum amount of such insurance available under the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or the National Flood Insurance Reform Act of 1994,as each may be amended. (vi) If liquor is sold on the Project, liquor liability coverage in such amounts and with such special coverages as MBI may require. (vii) Upon the final completion of the Improvements and continuing thereafter, rent loss insurance, without a co-insurance provision, in an amount which is not less than twelve(12) months of scheduled rental income from the Project, with a loss payable clause in favor of MBI, such insurance to be carried with such company or companies and upon such terms and conditions as MBI may require. (viii) Such other types and amounts of insurance with respect to Borrower, the Project, the Improvements and the operation thereof that are commonly maintained by prudent owners of other property and buildings similar to the Project in nature, use, location, height, and type of construction, as may from time to time be reasonably required by MBI. Borrower shall cause General Contractor to maintain the following insurance and, upon request by MBI, furnish to MBI evidence of such insurance coverage and payment of premiums therefore: Page 46 (i) Coverage for claims under worker's compensation, disability benefits and other similar employee benefit acts which are applicable to the construction or rehabilitation of the Improvements and the development of the Project in an amount equal to the statutory limit in the state where the Project are located. All policies shall name MBI as a certificate holder. Borrower and MBI shall be named as insured, as their interests may appear, on each policy of insurance with the originals of such policies to be issued to MBI together with appropriate endorsement thereto, evidence of payment of premiums thereon and written agreements by the insurer or insurers therein to give MBI not less than thirty (30) days' prior written notice of any intention to cancel. All insurance coverages required by this Agreement and the other Loan Documents must be provided by insurance companies acceptable to MBI that are rated at least an "A- IX" or better by Best's Insurance Guide. All insurance policies shall contain terms and conditions acceptable to MBI. Borrower may satisfy the insurance requirements set forth in this Section by causing the general contractor to maintain all, or any part, of the required insurance coverage provided Borrower is named as an additional insured on all such insurance policies. (p) Borrower will not carry any separate insurance on the Project concurrent in kind or form with any insurance required hereunder or contributing in the event of loss without MBI's prior written consent(which consent shall not be unreasonably withheld, conditioned, or delayed) and, in the event MBI grants its consent, any such policy shall nevertheless have attached thereto a standard non-contributing mortgagee clause, with loss payable to MBI, and shall otherwise meet all other requirements set forth in this Agreement. (q) Borrower shall cause each contractor and subcontractor involved in the construction or rehabilitation of the Improvements to obtain and carry at all times (i) contractor's comprehensive general liability insurance including premises and operations liability, products and completed operating liability to be maintained for two years after the date the construction or rehabilitation of the Improvements is substantially completed, broad form property damage liability, blanket contingent liability operations, operations of subcontractors, completed operations, contractual liability insurance and comprehensive automobile liability insurance (including hired and non-owned liability) with severability of interests and with combined single limit and general aggregate coverage for personal and bodily injury and property damage of at least $1,000,000.00 for each occurrence and with $2,000,000 excess liability coverage, and (ii) coverage for claims under worker's compensation, disability benefits and other similar employee benefit acts which are applicable to the construction or rehabilitation of the Improvements and the development of the Project in an amount equal to the statutory limit in the State where the Project is located. (r) Borrower shall cause each architect, engineer and other design professionals involved in the design or construction or rehabilitation of the Improvements to obtain and carry at all times (i) contractor's comprehensive general liability insurance including premises and operations liability, products and completed operating liability to be maintained for two years after the date the construction or rehabilitation of the Improvements is substantially completed, broad form property damage liability, blanket contingent liability operations, operations of subcontractors, completed operations, contractual liability insurance and comprehensive automobile liability insurance (including hired and non-owned liability) with severability of interests and with combined single limit and general aggregate coverage for personal and bodily injury and property damage of at least $1,000,000.00 for each occurrence and with $2,000,000 excess liability coverage, (ii) coverage for claims under worker's compensation, disability benefits and other similar employee benefit acts which are applicable to the construction or Page 47 rehabilitation of the Improvements and the development of the Project in an amount equal to the statutory limit in the State where the Project are located, and (iii) Architects & Engineers Professional Liability insurance covering errors and/or omissions in the performance of professional services in conjunction with the Project in amounts satisfactory to MBI, with coverage continuing for a five-year discovery period after acceptance in which claims can be made. (s) Borrower will maintain at all times Borrower's existence in good standing under the laws of the State of Indiana, and shall(1)retain its name as set forth on page 1 hereof, and(2) maintain its existence in good standing in each state in which it conducts business. (t) Borrower will cause the construction or rehabilitation of the Improvements to commence on or before the Termination Date and to continue without stoppage or delay in excess of ten(10)Business Days, except for delays beyond the reasonable control of Borrower, until the construction or rehabilitation of Improvements has been completed in accordance with the Plans and Specifications,as approved by MBI. (u) [This paragraph is intentionally left blank]. (v) [This paragraph is intentionally left blank]. (w) Borrower will cause all of the construction contracts for the Improvements to contain fixed-prices. (x) Borrower will notify MBI,upon MBI's request at any time and from time to time, of all sites at which Borrower is conducting business or at which inventory, equipment or other assets of Borrower are located. (y) Borrower will provide to MBI, promptly upon its execution, a copy of each contract executed by Borrower that is material to the operation of Borrower's businesses, and give prompt written notice to MBI of any act of default by Borrower under any existing or future contract, which default could have a material adverse effect on the financial condition or business operations of Borrower, or any acceleration of any indebtedness caused thereby. (z) [This paragraph is intentionally left blank]. (aa) [This paragraph is intentionally left blank]. (bb) Borrower will comply with all applicable federal, state and local statutes, regulations and ordinances. (cc) Borrower will from time to time upon the request of MBI, furnish to MBI information regarding arrangements between Borrower and its suppliers and further assurances that Borrower has the financial and operational ability and capacity, to perform its obligations hereunder. (dd) Borrower will indemnify and hold MBI harmless from and against any and all claims, losses, damages, setoffs, counterclaims or expenses (including attorneys' fees and costs) which MBI may sustain as a result of the transactions evidenced by this Agreement or because of the breach of or inaccuracy in any of the representations and warranties contained in this Agreement or in any other document executed by Borrower in connection herewith or in any other written communication of Borrower to MBI in connection with the transactions secured Page 48 hereby whether or not any such inaccuracy was known by Borrower to be incorrect, including but not limited to construction-related claims unless the claim for indemnification is the result of the intentional misconduct of MBI. (ee) Borrower will indemnify, defend and hold MBI harmless from and against any claim, loss or damage to which MBI is subjected as a result of the presence of any Hazardous Material or the use, handling, storage, transportation or disposal thereof within or upon any real estate owned by Borrower or violation of the covenants, representations and warranties contained in this Agreement unless such matters arise solely out of the intentional misconduct of MBI. (ff) Borrower will notify MBI in writing within ten (10) days after obtaining knowledge of the initiation of any criminal investigation or proceeding initiated by any federal, state or local agency, department, or instrumentality against (i) Borrower, (ii) any Co-Maker, or (iii) any employee of Borrower if such investigation or proceeding could have a material adverse effect on the financial condition, business operations or assets of Borrower or result in any collateral granted to MBI in connection with the Loan being seized pursuant to 18 U.S.C. Sec. 1963, 21 U.S.C. Sec. 853, 21 U.S.C. Sec. 881, 46 App. U.S.C. Sec. 1904, I.C. 34-24-1 et sec. or any similar federal, state or local law and/or regulation adopted in publications promulgated pursuant to such laws, or as such laws or regulations may be further amended, modified or supplemented. (gg) Borrower will not create or permit to exist any mortgage, deed of trust, pledge, security interest,title retention device or other encumbrance on the Project or any other property, right, or asset owned or hereafter acquired by Borrower, except for the Permitted Encumbrances . (hh) Borrower will not dispose of any of its assets or properties other than in the ordinary course of business for fair value. (ii) Borrower will not directly or indirectly make (i) any loan, gift, distribution, transfer or advance of cash or other real, personal or intangible property, or (ii) any transfer of any other benefit or thing of value to any person except for fair value received by Borrower; it is intended that this paragraph prohibit, by way of example and not by way of limitation, any payment by Borrower characterized as a commission or referral fee, and any payments by Borrower characterized as the consideration for a purchase to the extent that such payment is not bona fide or exceeds the real value received by Borrower. (jj) Borrower will not make payments to any affiliate of Borrower out of disbursements from the Loan except for payments approved by MBI to a general contractor or subcontractor for the construction or rehabilitation of the Improvements or as otherwise included in the Development Budget. (kk) Borrower will not make any capital distributions to any partner of Borrower. (11) Borrower will not assume, guarantee or otherwise become liable as guarantor or surety for the obligation of any person or entity except in connection with the endorsement of checks for deposit in the ordinary course of business and other similar collection transactions in the ordinary course of business and construction contracts for the Improvements. (mm) [This paragraph is intentionally left blank]. Page 49 (nn) Borrower will not make any financial arrangements for borrowed money through any financial institution, entity or party other than MBI, except as specifically permitted by this Agreement. (oo) Borrower will not directly or indirectly make any payment or transfer to any affiliate, partner or employee of Borrower, except for certain Unpaid Project Costs in the amount and at the time set forth in the Development Budget. (pp) Borrower will not perform or cause to be performed any excavation or fill activity or other acts which would in any way destroy, eliminate, alter, obstruct, interfere with or otherwise affect any Wetlands unless in compliance with applicable laws or other governmental regulations. (qq) Borrower will not take any action, allow any event to occur or permit a condition to exist which could materially and adversely affect Borrower's ability to complete its obligations under the terms of this Agreement, the Note or any other instruments, agreements or documents required of Borrower hereunder. (n) Borrower will not change the nature of Borrower's business. (ss) Except as otherwise expressly permitted pursuant to the Loan Documents, Borrower will not make any change in the key management of Borrower. (tt) Except as otherwise expressly permitted pursuant to the Loan Documents, Borrower will not sell, convey, transfer, further mortgage, change the form of ownership, or encumber or dispose of the Project, or any part thereof, or any interest therein(including without limitation any right to collect any income therefrom). (uu) Borrower will not enter into any consolidation, acquisition or merger. (vv) Except as otherwise expressly permitted pursuant to the Loan Documents, Borrower will prevent anyone having a direct or indirect legal or beneficial ownership interest in Borrower from selling, conveying, transferring, pledging or encumbering any stock, partnership, membership or beneficial interest in Borrower, or entering into any agreement to do so, whether such event is voluntary,involuntary or by operation of law. (ww) Borrower shall remain at all times a single purpose entity which (i) is formed or organized solely for the purpose of acquiring, developing, operating and owning a real property interest in the Project and the activities incidental thereto, (ii) does not engage in any business unrelated to the Project, (iii) does not have any assets other than those related to its interest in the Project and the cash revenue generated therefrom, (iv) does not have any indebtedness(including contingent liabilities) other than the Loan, the Other Available Sources of Funds, and any indebtedness which is otherwise expressly permitted under the terms of the Loan Documents, (v) maintains its books and records,accounts separate and apart from the books,records and accounts of any other entity, and (vi) holds itself out as being an entity separate and apart from any other entity. (xx) Borrower will comply in all material respects with all the terms of, and take all actions necessary to comply in all material respects with and keep in full force and effect all of the agreements providing for the payment to Borrower of the Required Equity and of the Other Available Sources of Funds, and will not terminate (except in accordance with its terms) or materially modify any such agreements without the prior written consent of MBI. Page 50 (yy) Borrower shall cause the Limited Partner to contribute the Limited Partner's Equity as set forth in the Partnership Agreement as soon as Borrower is entitled to such funds. Borrower shall cause the Limited Partner's Initial Equity Payment and other Limited Partner's Equity to be paid out in the amounts and at the times required by the terms of the Partnership Agreement, without any adjustments except as specifically provided for in the Partnership Agreement. (zz) Borrower shall take any and all lawful actions reasonably required to assure that: (i) the Borrower, General Partner and the Project continue to comply with the Partnership Agreement, (ii) Borrower, each Co-Maker and the General Partner will perform all of the requirements and acts set forth in the Partnership Agreement as required by the Partnership Agreement, and (iii) the Limited Partner will fund the entire Limited Partner's Equity in accordance with the Partnership Agreement. (aaa) Each installment of the Limited Partner's Equity shall be made in accordance with the Partnership Agreement. (bbb) Borrower shall furnish to MBI copies of all correspondence and documents regarding any amendments, defaults or capital contributions (including but not limited to correspondence and documents regarding any reductions in Limited Partner's Equity) pertaining to the Tax Credits and the Partnership Agreement, and shall do and cause all lawful acts and things reasonably necessary to preserve and maintain the Project's eligibility for the Tax Credits. Additionally, Borrower shall notify MBI if Borrower reasonably anticipates a reduction in any installment of Limited Partner's Equity. (ccc) [This paragraph is intentionally left blank]. (ddd) Borrower shall record on a timely basis the Extended Use Agreement in conjunction with the grant of low income housing tax credits for the Project approved by MBI with respect to the Project. (eee) Borrower shall develop the Project in a manner which satisfies, and shall continue to satisfy, all restrictions and requirements, including, without limitation, date placed in service, Qualified Basis, tenant income and rent restrictions applicable to projects that are allocated the Tax Credits. (fff) Borrower shall provide a copy to MBI of any notice required to be given by the Limited Partner pursuant to the terms of the Partnership Agreement. (ggg) Borrower shall furnish to MBI final certificates of occupancy for all units in the Project, if required by the authority with jurisdiction, and third party verification acceptable to MBI that the Project is completed in accordance with the Plans and Specifications. (hhh) Borrower shall not amend,terminate or breach any contract for the development, construction, rehabilitation or management of the Improvements (except for change orders permitted herein), including without limitation the general construction contract,the management agreement or the architect agreement relating to the Project. (iii) Except as otherwise expressly permitted pursuant to the Loan Documents, Borrower shall not amend the Partnership Agreement without MBI's prior written consent. Page 51 (jjj) Borrower shall tender such portion of the Limited Partner's Third Equity Payment to MBI necessary in an amount that is sufficient to repay the outstanding principal balance of the Loan, such portions of the Limited Partner's Equity shall be immediately tendered by Borrower to MBI upon Borrower's receipt of such Limited Partner's Equity, or any portion thereof,pursuant to the terms and conditions of the Partnership Agreement. (kk() [This paragraph is intentionally left blank]. (111) [This paragraph is intentionally left blank]. (mmm)Borrower shall cause a minimum of fifty percent(50%)of the costs of the Project to be funded with proceeds of tax exempt bonds and otherwise comply with the requirements of the Code to maintain the Bonds'tax exempt status. (mm) Borrower shall record on a timely basis the LURA in conjunction with the issuance of tax exempt bonds for the Project approved by MBI with respect to the Project. (000) Prior to the issuance of a written Notice of Conversion, Borrower shall not make anypayments of Deferred Developer Fees. P Ym p ARTICLE XV. LOAN ADVANCEMENTS AND USE OF PROCEEDS Section 15.1 Written Advancement Request. Upon the satisfaction of all terms and conditions contained in this Agreement for the advancement of proceeds of the Loan (including without limitation the conditions set forth in Section 9.1 and Section 10.1), MBI will from time to time, but not more than once per calendar month, advance principal on the Bonds to, or for the benefit of, Borrower upon the written request by an authorized representative of Borrower to finance Unpaid Project Costs. The proceeds of all advancements obtained by Borrower under this Agreement shall be used solely for the payment of Unpaid Project Costs and any other proper charge incurred by Borrower in making the Loan. Each application required for an advancement of the Loan shall be accompanied by a Draw Request from Borrower on a form approved by MBI and shall be only for work done upon the Real Estate or proper charges incurred by Borrower in the making of the Loan and shall be accompanied by copies of all invoices for hard and soft costs and such other supporting documentation required by the terms of this Agreement. Section 15.2 Supporting Documentation for Each Request. Each Draw Request shall be supported by (i) an AIA Form G702/G703 (or such similar forms acceptable to MBI) for construction or rehabilitation of the Improvements and the purchase and installation of the Personal Property,executed by Borrower, the general contractor and the architect of record in form and substance acceptable to MBI, (ii) any further affidavits and requests for payment which MBI may require, (iii) if requested by MBI, a conditional acknowledgment of payment and release of lien from the general contractor which conditionally waives the general contractor's rights to file a lien against the Project as to any work performed or furnished and materials supplied in the construction or rehabilitation of the Improvements and furnishing of the Personal Property down to the date of the advancement contingent upon payment in full from the requested advancement of the amount specifically stated in the lien waiver as currently due and payable to the general contractor from Borrower, less any applicable retainage, and (iv) acknowledgments of payment and releases of liens down to the date covered by the last advancement from any contractor, architect, subcontractor, mechanic,journeyman, laborer, materialman, lessor leasing construction or other equipment and tools, or other person against the Project, covering all work performed or furnished and materials supplied in the construction or rehabilitation of the Improvements, Page 52 and/or lien waivers from all contractors, subcontractors, architects, mechanics, journeymen, laborers, materialmen, lessors leasing construction or other equipment and tools, or other persons entitled to a lien, waiving their rights to file liens against the Project as to any work performed or furnished and materials supplied in the construction or rehabilitation of the Improvements and furnishing of the Personal Property down to the date of the last advancement. Each Draw Request for non-construction items shall be supported by whatever documentation MBI may reasonably require. Section 15.3 Supporting Documentation for Final Request. Concurrently with the Draw Request for the final advancement of the Loan for construction costs, Borrower shall deliver to MBI (i) a Certificate of Substantial Completion executed by Borrower, the general contractor and the architect of record, (ii)a copy of a certificate of occupancy or completion for the Improvements issued by the appropriate governmental authority, if certificates of occupancy or completion are available and routinely issued for such types of improvements, and (iii) a complete list of all subcontractors, suppliers, materialmen, architects, contractors and any other party who has provided labor, materials or services in connection with the development, construction or rehabilitation of the Real Estate and Improvements and who may be entitled to a lien thereon. Within ten (10) days after making the final advancement of the Loan to Borrower, if requested by MBI, Borrower shall deliver to MBI acknowledgments of payment and releases of liens from any contractor, architect, subcontractor, mechanic, journeyman, laborer, materialman, lessor leasing construction or other equipment and tools, or other person against the Project, covering all work performed or furnished or to be performed or furnished and materials supplied or to be supplied in the construction or rehabilitation of the Improvements, and/or final lien waivers from all contractors, architects, subcontractors, mechanics, journeymen, laborers, materialmen, lessors leasing construction or other equipment and tools, or other persons entitled to a lien, waiving their rights to file liens against the Project as to any work performed or furnished or to be performed or furnished and materials supplied or to be supplied in the construction or rehabilitation of the Improvements and furnishing of the Personal Property. Section 15.4 Approval of Each Draw Request by Construction Consultant. MBI shall have the right to require a Construction Consultant to review the Development Budget and each Draw Request, i Request.any supporting materials submitted by Borrower in connection with the Draw eq uest. Prior to making the requested advancement, the Construction Consultant must certify to MBI (i) that the construction or rehabilitation of the Improvements can be completed as shown by the Development Budget, (ii) what the percentage of completion of the Improvements is as of the time of such requested advancement, (iii) that the Draw Request conforms with the Development Budget, and (iv) such other matters as MBI may require in connection with such Draw Request. The certification of the Construction Consultant shall verify the percentage, cost and schedule of the completion of the construction or rehabilitation of the Improvements, the amount of the materials stored at the Real Estate, and the compliance of the construction with the Plans and Specifications and any applicable building codes, ordinances,regulations and requirements. Section 15.5 Advancements Relating to Construction and Materials Costs. The advancements to which Borrower shall be entitled, with respect to construction and materials costs, shall be the total of (i)the purchase price of Uninstalled Materials for which MBI has approved funding pursuant to the terms of this Agreement, plus (ii) the cost of the portions of the work acceptably completed less prior advancements with respect thereto and any applicable retainages required by MBI all as certified by the Construction Consultant; provided however, Borrower shall not be entitled to and MBI shall have no obligation to make an advancement if either prior to such advancement or after the intended application of the proceeds of such advancement the Loan is not In Balance. No advancements for construction costs shall be made, however, unless and until all work requiring an inspection at the time by municipal or other governmental authorities having jurisdiction has been duly inspected and approved by such authorities. Page 53 Section 15.6 Conditions Relating to Uninstalled Materials. The advancements to which Borrower shall be entitled with respect to Uninstalled Materials shall be subject to such funding conditions as MBI may from time to time require in its sole reasonable discretion. Notwithstanding anything contained herein to the contrary, MBI shall have no obligation to advance more than One Hundred Thousand and 00/100 Dollars ($100,000.00) at any time for Uninstalled Materials. The funding conditions required by MBI for Uninstalled Materials may include, without limitation, the following: (i) that Borrower provides proof the Uninstalled Materials are fully insured in a manner acceptable to MBI, (ii)the Uninstalled Materials have been inspected by a third party acceptable to MBI, (iii) MBI has been furnished with satisfactory evidence that title to the Uninstalled Materials has been transferred to Borrower free and clear of all liens and security interests except the lien and security interest granted to MBI, (iv) the Uninstalled Materials are stored in a manner and at a location that provides for a level of security acceptable to MBI, (v)the amount of the Loan funded for any Uninstalled Materials may not include any costs for the installation of such Uninstalled Materials into the Project, and (vi) all Uninstalled Materials must be incorporated into the project within sixty (60) days of either the date Loan proceeds were advanced for such Uninstalled Materials, or sixty (60) days from the date the Uninstalled Materials were purchased by Borrower as an equity contribution by Borrower to the Project. MBI shall have the right from time to time to inspect any Uninstalled Materials until they are incorporated into the Project. Borrower shall reimburse MBI upon demand for all costs incurred in connection with inspection of Uninstalled Materials. Section 15.7 Retainage Requirements. MBI shall have the right, at its reasonable sole discretion, to require a ten percent (10%) retainage be withheld from advancements under the Loan for any construction cost. Any retainage reasonably required by MBI shall be funded upon the completion of the work, in a manner acceptable to MBI, of the construction item for which the retainage was required. Section 15.8 Advancements for Line Items. The Development Budget includes as line items the cost of all labor, materials, equipment, fixtures and furnishings needed for the completion of the construction or rehabilitation of the Improvements, and all other costs, fees and expenses relating in any way whatsoever to the development of the Project and the operation of the Project prior to the Target Completion Date. Borrower agrees that each advancement under the Loan shall be used only for the payment of those line item costs on the Development Budget for which the Draw Request specifically references. Except as specifically permitted in this Agreement, MBI shall not be obligated to make any advancements for any category of costs set forth as a line item on the Development Budget which is greater than the amount set forth for such category in the Development Budget. Except for the line item for the Interest Reserve and subject to MBI's prior consent (which consent shall not be unreasonably withheld, conditioned, or delayed), Borrower may apply savings from one category of line item costs on the Development Budget to cost overruns in another category of line item costs on the Development Budget or to the contingency fund line item on the Development Budget, or to any other unbudgeted cost, provided: (i)no Event of Default then exists hereunder, (ii) all costs to be paid out of the category of line item costs from which funds are being reallocated have been paid or sufficient sums remain in said line item to pay such costs when the same become due, or (iii) said savings are actual savings and are documented to the satisfaction of MBI and the Construction Consultant in their discretion. Section 15.9 Unsatisfactory Work. If the Construction Consultant or MBI shall determine that any Unsatisfactory Work has occurred, MBI shall be entitled to (i) withhold from advancements of the Loan such amounts which are intended to pay for the correction of the Unsatisfactory Work and (ii) require the construction work on such portion of the Improvements to be stopped until such time as MBI and the Construction Consultant are satisfied that the Unsatisfactory Work is corrected. No such action by MBI shall be deemed to affect Borrower's obligation to complete the Improvements on or before the Target Completion Date. MBI shall, subject to compliance by Borrower with all other applicable requirements of this Agreement, be required to make advancements of the Loan with respect to such Page 54 Unsatisfactory Work only after the Construction Consultant and MBI shall have determined that the work which had been identified as Unsatisfactory Work has been corrected to the satisfaction of the Construction Consultant and MBI. Section 15.10 Advancement Account, Other Advancement Requirements. Unless otherwise permitted by MBI, the advancements of the Loan shall be made by MBI to a special account maintained by Borrower with MBI for the receipt and disbursement of the proceeds of the Loan. MBI may, at its discretion, require that payments to the general contractor which relate to any work performed by any subcontractor be made by checks payable jointly to the general contractor and each such subcontractor that MBI designates. In addition, MBI may, at its discretion, require that all or any disbursements of the Loan be funded through a title insurance company with the title insurance company making payment directly to the parties who are to be paid from the proceeds of such advancement. Section 15.11 Limitation on Total Amount Advanced. Anything contained herein to the contrary notwithstanding, it is stipulated and agreed that MBI shall not be obligated to advance under the Loan more than the lesser of(i)the total principal amount of the Loan, or(ii)the total of(A) the costs as shown on the Development Budget which are actually incurred by Borrower minus (B) the amount from time to time of the Non-Contingent Required Equity minus (C) the from time to time advanced portions of the Other Available Sources of Funds. Section 15.12 MBI's Right to Advance without Borrower Request. MBI, without a request from Borrower, shall have the right, but not the obligation, from time to time to advance funds under the Loan to pay (i) any amounts owed by Borrower under the Loan, including, but not limited to, interest accrued on the Loan and any fees and expenses for which Borrower is obligated to reimburse MBI pursuant to the terms of this Agreement or any other Loan Document, (ii) any costs, premiums, fees, expenses, or other charges incurred in connection with the Loan,the Bonds or the Project which Borrower has agreed to pay pursuant to the terms of this Agreement or any other Loan Document, including without limitation real estate taxes and insurance premiums, and (iii) any other cost, expense or charge for which Borrower's failure to pay has created an Event of Default under this Agreement or under any of the other Loan Documents. In each such instance, the funds so advanced by MBI shall be paid directly to such other party to whom payment is owed, and evidenced by the Note and secured by the Loan Documents to the same effect as if such funds had been advanced directly to Borrower and MBI shall promptly provide Borrower with written notice after each such advance,if any. Section 15.13 [This paragraph is intentionally left blank]. Section 15.14 Disbursement of Interest Reserve. The amount of the Loan was determined on the basis of the Development Budget approved by MBI, setting forth, among other things, the estimated accrued interest on the disbursed principal of the Note during the term of the Loan. Subject to the satisfaction of all terms and conditions in this Agreement for the advancement of proceeds of the Loan (including without limitation the conditions set forth in Section 4.1 and Section 5.1), Borrower shall be entitled to advancements of the Loan to pay interest as it accrues on the Loan up to the Interest Reserve Amount. Borrower hereby authorizes MBI to disburse on each day when interest is due and payable under the Note a portion of the Loan sufficient to pay accrued interest then due and payable on the Note, and the amount thereof shall increase the principal of the Note outstanding and shall reduce the balance of the Interest Reserve Amount. In lieu of disbursing Loan proceeds to Borrower for payment of accrued interest thereon, MBI may handle such disbursement and payment by making appropriate entries on the books and records of MBI. MBI shall have no obligation to disburse the Interest Reserve Amount (i) if any condition set forth in this Agreement for the advancement of proceeds of the Loan has not been satisfied or(ii) during any period in which there exists an Event of Default. Notwithstanding anything to the contrary contained in this Agreement, at such time as the Interest Reserve Amount has been fully Page 55 funded, MBI shall have no obligation to disburse any portion of the Loan to pay accrued interest then due and payable on the Note. Section 15.15 Interest Begins Accruing at Time of Advancement. Borrower expressly agrees that interest shall accrue, at the rate of interest specified in the Note, on the principal amount of each advancement of the Loan from the time such advancement is made by MBI, whether advanced directly to Borrower, or to the Title Company, or to any other applicable third party to whom Borrower has requested the advancement be made. With respect to each Loan advancement made by wire transfer, the advancement shall be deemed to have been made when funds are wired by MBI regardless of when such Loan proceeds are actually received, or applied,by such party. Section 15.16 MBI's Right to Waive Advancement Procedures. Any of the advancement procedures or requirements set forth herein may be waived by MBI at the time of any advancement; however, any such waiver by MBI at the time of a particular advancement shall not be deemed or construed as a waiver of the right of MBI to require full compliance with all procedures and requirements with respect to any succeeding advancement. Section 15.17 Disbursement of Limited Partner's Equity. Borrower shall cause notice of all disbursements of Limited Partner's Equity to be promptly provided to MBI along with copies of any and all lien waivers provided to any Co-Maker and/or to Limited Partner. ARTICLE XVI. LOAN IN BALANCE Section 16.1 Loan in Balance. MBI shall have no obligation to make any advancement of the Loan at any time unless Borrower has contributed all Non-Contingent Required Equity toward the costs of the Project as shown on the Development Budget. The Non-Contingent Required Equity shall remain invested in the Project and Borrower shall not be entitled to any reimbursement for such equity funds from advancements of the Loan or otherwise until the Loan is paid in full or has been paid down to the Permanent Loan Amount. Borrower shall cause the Loan to be In-Balance at all times. If at any time MBI determines that the Loan is not In-Balance, then upon the demand of MBI, Borrower shall put the Loan In-Balance by depositing in a restricted account with MBI an amount equal to the amount MBI determines is needed to bring the Loan In-Balance, such amount to be held and disbursed as provided for in this Section. Borrower may not put the Loan In-Balance by amending the Development Budget to increase the Deferred Developer Fees unless such amendment is consented to in writing by MBI, provided MBI shall have no obligation to give any such consent and such consent may be withheld by MBI at its sole and absolute discretion. If required by MBI at any time after the occurrence of an Event of Default, Borrower shall also deposit, or cause to be deposited, with MBI in one or more restricted accounts the Contingent Required Equity which Borrower is to contribute toward the cost of the Project. All such amounts deposited with MBI pursuant to this Section shall be advanced to Borrower from time to time, pursuant to the same advancement procedures set forth in this Agreement for advancements of the Loan, to fund the remaining Unpaid Project Costs before any further advancements of the Loan shall be made. Until all Non-Contingent Required Equity and any other amounts required to be deposited with MBI pursuant to this Section have been paid or deposited with MBI and applied toward the payment of the Unpaid Project Costs,MBI shall not be required to make any further advances of the Loan. Page 56 ARTICLE XVII. EVENTS OF DEFAULT Section 17.1 Events of Default. The occurrence of any of the following events or circumstances shall constitute an event of default hereunder (each such event or circumstance is herein referred to as an"Event of Default"): (a) A failure by Borrower to pay when due any installment of interest or principal due and payable pursuant to the terms of this Agreement or the Note and the continuation of such failure for a period of ten(10) days after written notice of such failure has been sent to Borrower; provided, however, after two (2) such notices in a twelve(12) month period, an Event of Default shall exist hereunder if such principal or interest is not paid when due; (b) A failure by Borrower or any other obligor to pay upon demand or when due, any other amounts due and payable pursuant to the terms of the Note, this Agreement or any of the other Loan Documents and the continuation of such failure for a period of ten (10) days after written notice of such failure has been sent to Borrower; (c) A failure by Borrower to maintain any insurance policies as required hereunder and the continuation of such failure for a period of ten (10) days after written notice of such failure has been sent to Borrower; (d) A default under or a failure by Borrower to observe or perform any agreement or covenant contained herein which default or failure can be cured by the payment of money and the continuation of such default or failure for a period of ten (10) days after written notice of such default or failure has been sent to Borrower; (e) A default under or a failure by Borrower to observe or perform any other agreement or covenant contained herein or in the Loan Documents(for which a cure period is not already specified) and the continuation of such default or failure for a period of thirty (30) days after written notice of such default or failure has been sent to Borrower; provided, however, that if the nature of a default is such that it can be cured by Borrower but cannot be cured within the thirty (30) day period provided above or by the payment of money by Borrower, and if Borrower (i) commences efforts to effect such cure within such thirty (30) day period and thereafter diligently proceeds to take such actions as may be reasonably required to effect such cure and(ii) provides written notice to MBI within such thirty (30) day period describing what efforts it has commenced and intends to continue to effect such cure, the thirty (30) day cure period provided above shall be extended for a period ending the earlier of(i) ninety (90) days after the expiration of such thirty(30)day cure period provided above, (ii)the date as of which Borrower shall cease the diligent pursuit of such actions as may be reasonably required to effect such cure, or(iii) the date as of which the cure of such default by Borrower shall become impossible; (f) Any warranty,representation, certification or statement made by Borrower in this Agreement, in any of the other Loan Documents or in any certification or other agreement or document executed or delivered in connection herewith is false or incorrect in any material respect upon the date when made or deemed to be made or repeated and is not cured to the satisfaction of MBI within thirty (30) days after MBI provides notice as required hereunder; provided,however,that if Limited Partner(i)commences efforts to replace the General Partner as general partner of the Borrower with an affiliate of the Limited Partner as permitted by this Agreement and to effect a cure acceptable to MBI within such thirty (30) day period and thereafter diligently proceeds to take such actions as may be reasonably required to so replace Page 57 General Partner and effect such cure and (ii) provides written notice to MBI within such thirty (30) day period describing what efforts it has commenced and intends to continue to effect such cure, the thirty (30) day cure period provided above shall be extended for a period ending the earlier of(i) ninety (90) days after the expiration of such thirty (30) day cure period provided above, (ii) the date as of which Limited Partner shall cease the diligent pursuit of such actions as may be reasonably required to effect such cure, or (iii) the date as of which the cure of such default by Limited Partner shall become impossible; (g) The occurrence of a Prohibited Transfer; (h) The occurrence of an"Event of Default" under the Note or any of the other Loan Documents (for purposes of this paragraph, an "Event of Default" under shall mean the occurrence of any event or circumstance which is either defined as, or would constitute, an "Event of Default" under the terms of such Loan Document); (i) With respect to any Loan Document which does not contain an express definition for an"Event of Default", the occurrence of any default under such Loan Document and a failure to cure such default within the applicable cure period specified herein or therein,if any; 6) In the event the Project is abandoned or the construction or rehabilitation of the Improvements or installation of the Personal Property is stopped or delayed, except for delays beyond the reasonable control of Borrower, and such event continues for a period of thirty (30) days after written notice of such default or failure has been sent to Borrower; provided, however, that if Limited Partner (i) commences efforts to replace the General Partner as general partner of the Borrower with an affiliate of the Limited Partner as permitted by this Agreement and to effect such cure within such thirty (30) day period and thereafter diligently proceeds to take such actions as may be reasonably required to so replace the General Partner and effect such cure and (ii) provides written notice to MBI within such thirty (30) day period describing what efforts it has commenced and intends to continue to effect such cure, the thirty (30) day cure period provided above shall be extended for a period ending the earlier of(i) ninety (90) days after the expiration of such thirty (30) day cure period provided above, (ii) the date as of which Limited Partner shall cease the diligent pursuit of such actions as may be reasonably required to effect such cure, or (iii) the date as of which the cure of such default by Limited Partner shall become impossible; (k) In the event (i) the Improvements are not completed in substantial compliance with the Plans and Specifications, as approved by MBI and any applicable statutes, ordinances, codes, rules and regulations of civil authorities having jurisdiction, and all of the Personal Property required or contemplated by the Plans and Specifications has not been installed by the Target Completion Date, or (ii) the construction or rehabilitation of the Improvements or installation of the Personal Property is delayed for any period of time for any reason whatsoever and MBI determines, in its reasonable judgment, that the construction or rehabilitation of the Improvements and the installation of the Personal Property required or contemplated by the Plans and Specifications will not be completed by the Target Completion Date; (1) In the event any mechanic's lien or other lien (other than the Permitted Encumbrances) shall be asserted or filed against the Project and such lien shall not be released, bonded over or insured over by a title insurance company in a manner satisfactory to MBI within sixty(60) days after the assertion or filing thereof; Page 58 (m) In the event any lawsuit shall be filed against Borrower (i) which enjoins the ongoing construction or rehabilitation of the Improvements or effectively causes the construction or rehabilitation of the Improvements to be stopped or delayed, or (ii) which, if adversely determined, would substantially impair the ability of Borrower to perform its obligations under the Loan Documents or complete the construction or rehabilitation of the Improvements by the Target Completion Date, and which is not dismissed within sixty(60)days after its filing; (n) A failure of the Loan to be In-Balance as required by Section 16.1 of this Agreement and the continuation of such failure for a period of ten (10) days after written notice of such failure has been sent to Borrower; (o) In the event all of the conditions set forth in Section 9.1 of this Agreement have not occurred or otherwise been satisfied or waived by MBI in writing on or before the Termination Date; (p) The dissolution, liquidation, winding-up or termination of Borrower or the business of Borrower; (q) Except for organizational changes otherwise expressly permitted under the Loan Documents,the occurrence of any material organizational change in Borrower or General Partner, including, without limitation, any member, partnership or joint venture dispute which MBI determines, in its sole and absolute discretion, shall have a material adverse effect on the Loan, on the Project, or on the ability of Borrower to perform its obligations under the Loan Documents or the occurrence of any organizational change that requires a "transfer of physical assets" or a "modified review transfer of physical assets" as such terms are defined by HUD; (r) A consolidation or merger of Borrower; (s) An assignment by Borrower for the benefit of its creditors; (t) The appointment of a receiver, trustee, custodian or liquidator for Borrower or any of its assets, which appointment is consented to or, if not consented to, shall not be removed or discharged within sixty(60)days after such appointment; (u) The filing of a petition by or on behalf of Borrower for relief under the United States Bankruptcy Code, or under any other present or future state or federal law regarding bankruptcy, reorganization or other debtor relief law, which petition is consented to or, if involuntary,remains undismissed for sixty(60)days after such filing; (v) One or more judgments for the payment of money shall have been entered against Borrower or any Co-Maker, which judgment or judgments exceed Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) in the aggregate with respect to Borrower or any such Co-Maker, and such judgment or judgments shall have remained undischarged and unstayed for a period of ninety (90) consecutive days, and, in the event such judgment or judgments are entered against any Co-Maker, the failure of Borrower to provide a substitute accommodation party acceptable to MBI, in its sole and absolute discretion, within ninety (90) days after such judgment or judgments have been entered; (w) An assignment by any Co-Maker for the benefit of its creditors and the failure of Borrower to provide a substitute accommodation party acceptable to MBI, in its sole and absolute discretion, within sixty(60)days after such assignment; Page 59 (x) The appointment of a receiver, trustee, custodian or liquidator for any Co-Maker or any of its assets, which appointment is consented to or, if not consented to, shall not be removed or discharged within sixty(60) days after such appointment, and the failure of Borrower to provide a substitute accommodation party acceptable to MBI, in its sole and absolute discretion,within sixty(60)days after such appointment; (y) The filing of a petition by or on behalf of any Co-Maker for relief under the United States Bankruptcy Code, or under any other present or future state or federal law regarding bankruptcy, reorganization or other debtor relief law, which petition is consented to or, if involuntary, remains undismissed for sixty (60) days after such filing, and the failure of Borrower to provide a substitute accommodation party acceptable to MBI, in its sole and absolute discretion,within sixty(60)days after the filing of such petition; (z) A failure by any Co-Maker to pay within ten (10) days upon demand or when due any amounts due under the Loan Documents executed by any Co-Maker; (aa) [This paragraph is intentionally left blank]; (bb) Any Co-Maker gives written notice to MBI that (i) such Co-Maker contests liability for any obligations under the Loan Documents executed by such Co-Maker, (ii) such Co- Maker does not intend to be liable for any future obligations under the Loan Documents executed by such Co-Maker, or(iii) attempts to cancel or terminate the Loan Documents executed by such Co-Maker, and the failure of Borrower to provide a substitute accommodation party acceptable to MBI, in its sole and absolute discretion,within sixty(60) days after such written notice; (cc) The death or insolvency of any Co-Maker which causes the remaining Co- Makers as a group to fail to meet any net worth and liquidity requirements of MBI as of the date of such death or insolvency and the failure of Borrower to provide an substitute accommodation party acceptable to MBI, in its sole and absolute discretion, within ninety (90) days after such death or insolvency; (dd) Any representation or warranty made or deemed to be made by or on behalf of any Co-Maker in this Agreement or in any of the other documents executed by a Co-Maker in connection herewith, or in any report, certificate, financial statement, document or other instrument delivered pursuant to or in connection with this Agreement, is false or incorrect in any material respect upon the date when made or deemed to be made or repeated and the failure by Borrower to provide a substitute accommodation party acceptable to MBI, in its sole and absolute discretion,within sixty(60)days of such representation or warranty; (ee) [This paragraph is intentionally left blank]; (ff) The Borrower defaults under the terms of the Supporting Agreements or the Borrower terminates any of the Supporting Agreements by virtue of a default by a party thereto without default by the Borrower thereunder and, upon such termination, the Borrower fails to promptly notify MBI or fails to retain another contracting party reasonably satisfactory to MBI within sixty(60) days after such termination or, within sixty (60) days after the termination, fails to cause the replacement contracting party to execute documents and make undertakings substantially comparable to those contained in the subject Supporting Agreement and additional loan documents substantially comparable to those Loan Documents executed by the contracting party; Page 60 (gg) The Borrower, General Partner or any Co-Maker fails for any reason to materially comply with any of the provisions or terms of the Partnership Agreement and such failure is not cured or waived within any cure period allowed thereunder; (hh) The occurrence of any default by Borrower under the documents or agreements executed in connection with the Other Available Sources of Funds and a failure to cure such default within the applicable cure period specified therein, if any; (ii) [This paragraph is intentionally left blank]; (jj) [This paragraph is intentionally left blank]; (k() A determination by MBI, in its sole reasonable discretion, that any action, inaction, commission, omission or circumstance has occurred or may occur which may subject any assets of Borrower, including but not limited to the Real Estate and Improvements, to be seized by any federal, state or local governmental department, agency or instrumentality pursuant to 18 U.S.C. Sec. 1963, 21 U.S.C. Sec. 853, 21 U.S.C. Sec. 881,46 App. U.S.C. Sec. 1904 or any similar federal, state or local laws and/or regulations adopted in publications promulgated pursuant to such laws, or as such laws or regulations may be amended,modified or supplemented from time to time; (11) This Project loses its eligibility for any portion of the Tax Credits available to the Project which cause the Loan to no longer be In-Balance and failure of Borrower to deposit in a restricted account with MBI an amount equal to the deficiency and/or revise the Development Agreement to increase the amount of Deferred Developer Fee in order to put the Loan In-Balance as required in Article XVI hereof; or (mm) The occurrence of an "Event of Default" under any of the documents executed in connection with the Bonds (for purposes of this paragraph, an "Event of Default" under the documents evidencing the Bonds shall mean the occurrence of any event or circumstance which is either defined as, or would constitute, an "Event of Default" under the terms of such document evidencing the Bonds); or (nn) With respect to any document executed in connection with the Bonds, which does not contain an express definition for an "Event of Default", the occurrence of any default under such document executed in connection with the Bonds, and a failure to cure such default within the applicable cure period specified therein, if any; Notwithstanding anything expressed or implied in this Section to the contrary, if MBI is prevented or prohibited by any applicable provision of the United States Bankruptcy Code or other applicable law from giving Borrower a notice of default hereunder, then in such event with respect to any default for which this Section provides that notice shall be given (i) no notice of a default shall be given to Borrower and any requirement that notice of a default must be given in order for an Event of Default to have occurred hereunder shall be deemed eliminated, and (ii) any applicable cure period which this Section provides shall follow such notice shall run from the occurrence of the event or condition of default rather than from the date of notice. Notwithstanding anything contained in the Loan Documents to the contrary,the parties hereby agrees that any cure of any default or Event of Default made or tendered by the Limited Partner during any applicable cure period set forth in Section 17.1 shall be deemed to be a cure by Borrower and shall be accepted or rejected on the same basis as if made or tendered by Borrower, provided, however, it is expressly understood that such Limited Partner shall be under no obligation to make or tender such cure. Page 61 ARTICLE XVIII. REMEDIES Section 18.1 MBI Remedies. Upon the occurrence of any Event of Default hereunder, MBI may, in its sole discretion without further notice or demand to Borrower, pursue any one or more of the following rights,powers and remedies concurrently or successively, it being the intent hereof that none of such rights,powers and remedies shall be to the exclusion of any other: (a) Declare all of the indebtedness evidenced by the Note and remaining unpaid, including without limitation the entire unpaid principal balance, any accrued and unpaid interest, all prepayment premiums payable under the Note, if any, and all other amounts payable under the Note,to be immediately due and payable, anything contained herein or in the Note to the contrary notwithstanding; (b) Withhold making any further advancement under the Loan; (c) Perform all acts necessary for the performance, sale, collection and enforcement of any collateral securing the Loan; (d) Exercise any of the various rights, powers and remedies provided in any of the Loan Documents; (e) Without demand or notice of any kind, apply any funds of Borrower on deposit with or in the possession of MBI toward the payment of any indebtedness outstanding under the Loan Documents, in such manner of application as MBI may choose, to the extent such funds are not Mortgaged Property(as defined in the HUD Mortgage); and (f) In addition to the rights, powers and remedies herein expressly conferred upon MBI,MBI shall be entitled to exercise all rights,powers and remedies available to MBI by law or at equity. Section 18.2 [This Section is intentionally left blank]. Section 18.3 Rights not Exclusive. All rights and remedies of MBI herein specified are cumulative and in addition to,not in limitation of, any rights and remedies which it may have by law or at equity. Enforcement by MBI of any security for Borrower's obligations under or in connection with the Loan or this Agreement shall not constitute an election by MBI of remedies so as to preclude the exercise of any other right or remedy available to MBI. Section 18.4 No Waiver. MBI may exercise any remedy available to MBI hereunder regardless of any prior forbearance. No waiver of any default or failure or delay to exercise any right or remedy by MBI shall operate as a waiver of any other default or of the same default in the future or as a waiver of any right or remedy with respect to the same or any other occurrence. The acceptance by MBI of(i) any payment after the due date of such payment, (ii) any payment in an amount which is less than the required payment, or (iii) the partial performance of any other obligation of Borrower arising under the Loan, shall not be a waiver of MBI's right to require prompt payment when due of all other payments, prompt performance of all other obligations or to exercise any right or remedy with respect to any failure to make prompt payment or perform such obligations. Section 18.5 Un-Cured Defaults. Notwithstanding anything expressed or implied herein to the contrary, MBI shall have no obligation to make any advancement under the Loan during any period in which an event or circumstance exists that, with the giving of notice or the lapse of time, would become Page 62 an event of default under the terms of this Agreement other Loan Document. Without limitation, �' or any this shall include any period during which any failure, breach, or default specified under this Agreement or in any other Loan Document has occurred but the applicable cure period has not expired. Section 18.6 Right to Order Updated Appraisal and Environmental Report. Upon the occurrence of an Event of Default hereunder, at the option of MBI and without further notice or demand to Borrower, MBI may (i) order an appraisal of the Project, to be in such form and scope and to be performed by an appraiser as MBI may choose in its sole discretion, and (ii) order a current phase I environmental assessment of the Project, to be in such form and scope and to be performed by an engineer as MBI may choose in its sole discretion. All costs and expenses of such appraisal and environmental assessment shall be immediately pby upon Borrower u on demand by MBI and such amounts shall be added to the indebtedness evidenced by the Loan. Section 18.7 Cooperation by Borrower. Upon an Event of Default hereunder, Borrower, immediately upon demand by MBI, shall assemble all collateral for the Loan and make it available to MBI at a place or places to be designated by MBI which are reasonably convenient to MBI and Borrower. Borrower recognizes that in the event Borrower fails to perform, observe or discharge any of its obligations under this Agreement or any other documents executed in connection herewith, MBI shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages. Section 18.8 No Liabilityof MBI. Whether or not MBI elects to employ anyor all of the P Y remedies available upon the occurrence of an Event of Default, MBI shall not be liable for the construction of or failure to construct,rehabilitate,complete or protect the Improvements or the Project or for payment of any expenses incurred in connection with the exercise of any remedy available to MBI or for the performance or non-performance of any other obligation of Borrower. ARTICLE XIX. GENERAL CONDITIONS AND MISCELLANEOUS Section 19.1 Extension of the Note. In the event that Borrower does not pay the Note at its maturity, the Note may be extended at the sole option of MBI for such period of time as MBI may determine. Any such extension shall be made by appropriate notation on an attachment to the Note and Borrower shall be furnished with a copy of the same. Section 19.2 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of MBI and Borrower provided that no assignment or alienation of any rights or obligations by Borrower shall be effective without the prior written consent of MBI and further provided that any party who takes any rights or obligations of Borrower by assignment, alienation or otherwise shall assume all of the rights and obligations of Borrower the same as if such party were an original party to this Agreement. This Agreement is entered into by MBI with Borrower in reliance upon Borrower and the current Partners of Borrower and no assignment or alienation (except to MBI) of any or rights obligations of Borrower or the current Partners of Borrower, hereunder shall be effective without g g the prior written consent of MBI, except as otherwise permitted in the Loan Documents. Section 19.3 No Third-Party Beneficiaries. Except with respect to the Limited Partner, nothing contained herein shall be deemed or construed to create an obligation on the part of MBI to any third party nor shall any third party have a right to enforce against MBI any rights which Borrower may have under this Agreement. Page 63 Section 19.4 No Waiver. No waiver by MBI of the breach of any term, condition, warranty, representation, covenant or agreement contained herein or in the agreements, instruments, guaranties or documents delivered pursuant thereto shall be considered as a waiver of the same default in the future or any other default and no delay or omission by MBI in exercising any right or remedy hereunder shall impair any such right or remedy or be construed as a waiver of any default. The acceptance by MBI of any payment after the due date of such payment, or in an amount which is less than the required payment, shall not be a waiver of MBI's right to require prompt payment when due of all other payments or to exercise any right or remedy with respect to any failure to make prompt payment. The inclusion of deadlines and the references to dates later than the maturity of any obligation shall not by implication or otherwise obligate MBI to renew or extend any maturity. Section 19.5 Waiver of Presentment. Borrower waives presentment, demand and protest and notice of presentment, maturity, release, compromising settlement, extension or renewal of any or all promissory notes, commercial paper, accounts receivable, contract rights, documents, instruments, chattel paper and guaranties entered into by Borrower in connection herewith and at any time held by MBI and on which Borrower may be liable in any way. Section 19.6 Amendments. Any modification of or amendment to this Agreement shall be ineffective unless in writing and signed by the duly authorized representatives of Borrower,the Issuer and MBI. Section 19.7 Additional Rights of MBI. Each payment to MBI shall be applied to the payment of accrued and unpaid interest and to the reduction of the principal balance in such order and in such amounts as MBI shall determine, in its sole discretion. MBI may from time to time without notice to Borrower (a) release any collateral or substitute or exchange any collateral, (b) release, modify or compromise any liability of Borrower, the Co-Maker or any other obligor, or the terms thereof and (c) apply any amounts paid to MBI with such marshalling of security as MBI may, in its sole discretion, determine appropriate; all without the consent of or proper notice to Borrower. The liability of Borrower shall not be released in part or in whole by reason of the foregoing, the addition of co-makers, endorsers, guarantors or sureties, or a failure to perfect any security interest or lien in any collateral or a failure to proceed in any particular manner with respect to any collateral. Section 19.8 Preferences. To the extent that Borrower makes a payment or payments to MBI, which payment or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or proceeds received, the obligations arising hereunder and under the Note, or such part thereof intended to be satisfied, shall be revived and continue in full force and effect, as if such payment or proceeds had not been received by MBI. Section 19.9 Notices. Any written notice required or permitted to MBI or Borrower hereunder shall be deemed effective when (a) mailed by certified United States mail, postage prepaid with return receipt requested or (b) sent by an overnight carrier which provides for a return receipt, to the applicable address specified below: If to Borrower: MAH CEDAR GLEN, LP Page 64 With a copy to: Kuhl&Grant LLP 707 E. North Street, Suite 800 Indianapolis, IN 46202 If to MBI: Merchants Bank of Indiana 410 Monon Blvd.,4th Floor Carmel, Indiana 46032 Attention: James E. Russell With a copy to: Wooden&McLaughlin, LLP One Indiana Square, Suite 1800 Indianapolis, Indiana 46204 Attention: Michael A. Valinetz If to Issuer: City of South Bend, Indiana 425 S. 25th Street South Bend, Indiana 46615 or at such other address as either Borrower or MBI may from time to time specify by notice hereunder. Any notice may be given on behalf of MBI or Borrower by such party's legal counsel. Notwithstanding anything contained herein to the contrary, any notice required to be given by MBI of a sale, lease, other disposition of the collateral or any other intended action by MBI, deposited in the United States Mail postage prepaid duly addressed as specified above no less than ten (10) days prior to such proposed action, or if sent by overnight carrier five (5) days prior to such proposed action shall constitute commercially reasonable and fair notice to Borrower of same. Section 19.10 Prior Agreements. This Agreement replaces and supersedes any inconsistent provisions of any agreements heretofore made by MBI, Issuer and Borrower. This Agreement and the other Loan Documents are intended to be complementary and supplementary to one another. In the event of any conflict between the terms of one or more thereof, such terms shall,to the fullest extent reasonably possible, be construed to be complementary. However, if such terms cannot be construed as complementary,then the terms of this Agreement shall govern. Section 19.11 No Partnership/Joint Venture. It is hereby acknowledged by MBI and Borrower that the relationship between MBI and Borrower created hereby and by any other document executed in connection with the Loan is that of creditor and debtor and is not intended to be and shall not in any way be construed to be that of a partnership, a joint venture or that of principal and agent; and it is hereby further acknowledged that any control of or supervision over the construction or rehabilitation of the Improvements by MBI or disbursement of the Loan to anyone other than Borrower shall not be deemed to make MBI a partner,joint venturer or principal or agent of Borrower, but rather shall be deemed to be solely for the purpose of protecting MBI's security for the indebtedness evidenced by the Note and other indebtedness of Borrower to MBI. Section 19.12 Advertising. Borrower agrees and authorizes MBI, if MBI desires, for a reasonable period of time to place a sign on the Real Estate (subject to applicable zoning ordinances and governmental approvals) advertising this financing or may otherwise refer to or describe this financing in its advertising. Section 19.13 Governing Law. This Agreement has been entered into and shall be governed by and construed in accordance with the laws of the State of Indiana, notwithstanding that Indiana conflicts of law rules might otherwise require the substantive rules of law of another jurisdiction to apply. Page 65 Section 19.14 Brokers. Borrower hereby represents to MBI that it has not dealt with or engaged the services of any broker, underwriter, placement agent, or finder in connection with the Loan. Borrower hereby agrees to indemnify and hold MBI harmless from and against any and all claims, liabilities, losses, costs and expenses of any kind in any way relating to or arising from a claim by any party that such party acted on behalf of Borrower in connection with the Loan and is owed a fee or commission. Section 19.15 Survival of Indemnities. All indemnities from Borrower to MBI set forth in this Agreement shall survive this Agreement. Section 19.16 Invalidity of any Provision. It is the intent of this Agreement to confer to MBI the rights and benefits hereunder to the full extent allowable by law. If any provision (or a portion thereof) of this Agreement or of any other document executed in connection herewith is held invalid or unenforceable or the application thereof to any person or circumstance shall to any extent be invalid or unenforceable (each such provision, or applicable portion thereof, is herein referred to as an "Invalid Provision"), then(i)the remainder of this Agreement, or the application of such Invalid Provision to any other person or circumstance, shall be valid and enforceable to the fullest extent permitted by law, (ii)the Invalid Provision shall be deemed to be severable in such instance, and (iii) Borrower and MBI shall negotiate an equitable adjustment in the provisions of the same in order to effect, to the maximum extent permitted by law,the purpose of this Agreement. Section 19.17 Authorization To Complete Blanks. In the event Borrower executes and delivers this Agreement or any other Loan Documents to MBI with any blank incomplete, Borrower authorizes MBI or its agents to complete any such open blanks, including without limitation any blanks relating to the effective date of any such Loan Documents, the maturity date of the Note, the address of any party to the Loan Document or the effective date of any other document referenced herein or therein. Section 19.18 Additional Actions. Upon the request from time to time of MBI, Borrower shall execute and deliver such additional instruments, documents and agreements and shall take such further actions as may be reasonably requested by MBI to effectuate the transactions contemplated by this Agreement. Section 19.19 Participants. MBI may transfer participation interests in the Bonds to other financial institutions without notice or consent by Borrower. Borrower agrees that MBI may deliver any and all information, including financial information, in MBI's possession concerning Borrower, Co- Makers or the Project,to any prospective participant. Section 19.20 No MBI Liability. To the extent permitted by applicable law, MBI shall have no liability to Borrower or any third party for any loss, damage, injury, cost or expense resulting from any action or omission by MBI, or any of its representatives, which was taken, omitted or made in good faith in connection with the Loan,this Agreement or any of the Loan Documents. Section 19.21 Joint and Several Obligations. The obligations, agreements and covenants of the persons or entities constituting Borrower hereunder are joint and several and unconditional. Section 19.22 Interpretation. The parties agree that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party will not be employed in the interpretation of this Agreement or any amendments or schedules hereto. All references herein to a party's best knowledge shall be deemed to mean the best knowledge of such party based on a commercially reasonable inquiry. Unless specified to the contrary herein, all references herein to an exercise of discretion or judgment by MBI, to the making of a determination or designation by MBI, to Page 66 the application of MBI's discretion or opinion, to the granting or withholding of MBI's consent or approval, to the consideration of whether a matter or thing is satisfactory or acceptable to MBI, or otherwise involving the decision making of MBI, shall be deemed to mean that MBI shall decide unilaterally using its sole and absolute discretion or judgment. Where it expressly specifies herein, or in any of the Loan Documents, that the exercise of discretion or judgment by MBI shall be reasonable or that any consent, approval, decision or other determination by MBI shall not be unreasonably withheld, it is intended to mean that (i) MBI shall act in a commercially reasonable manner in the exercise of such discretion or judgment and in considering any such consent, approval, decision or other determination, and(ii) any such any consent, approval, decision or other determination by MBI shall not be unreasonably withheld, conditioned or delayed. Where it expressly specifies herein, or in any of the Loan Documents, that a decision or determination shall be in the sole discretion of MBI, it is intended to mean that MBI shall decide unilaterally using its sole and absolute discretion or judgment. Section 19.23 USA Patriot Act Notice; Compliance. The USA Patriot Act of 2001 (Public Law 107-56) and federal regulations issued with respect thereto require all financial institutions to obtain, verify and record certain information that identifies each individual or business entity which opens an "account" or establishes a relationship with such financial institution. Consequently, MBI may from time-to-time request, and Borrower shall provide to MBI, (i) Borrower's name, address, tax identification number, date of birth, and other information that will allow MBI to identify Borrower, (ii) the name, address, tax identification number, date of birth, and other information that will allow MBI to identify each guarantor of the Loan, (iii) the name, address, tax identification number, date of birth, and other information that will allow MBI to identify each officer, partner, member, shareholder or other stakeholder of Borrower, and/or(iv) such other identification information as shall be necessary for MBI to comply with federal law. An "account" for this purpose may include, without limitation, a deposit account, cash management service, a transaction or asset account, a credit account, a loan or other extension of credit,and/or other financial services product. Section 19.24 Waiver of Trial by Jury. Borrower, Issuer and MBI hereby agree that any suit, action or proceeding, whether a claim or counterclaim, brought or instituted by any party on or with respect to this Agreement or any other document executed in connection herewith or which in any way relates,directly or indirectly to the Note or any event,transaction or occurrence arising out of or in any way connected with this Agreement or the dealings of the parties with respect thereto,shall be tried only by a court and not by a jury. BORROWER, ISSUER AND MBI HEREBY EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING. Borrower acknowledges that Borrower may have a right to a trial by jury in any such suit, action or proceeding and that Borrower hereby is knowingly, intentionally and voluntarily waiving any such right. Borrower further acknowledges and agrees that this Section is material to this Agreement between Borrower,Issuer and MBI and that adequate consideration has been given by MBI and Issuer and received by Borrower in exchange for the waiver made by Borrower pursuant to this Section. Section 19.25 Submission To Jurisdiction. Borrower irrevocably agrees that any suit, action or other legal proceeding arising directly, indirectly or otherwise in connection with, out of, related to or from the Loan, the Note, this Agreement or any of the other Loan Documents may be brought in a court located within the State of Indiana Furthermore, Borrower irrevocably (i) consents and submits to the jurisdiction of any local, state or federal court located within the State of Indiana, (ii) waives any objection which Borrower may have to the laying of venue in any suit, action or proceeding in any such courts, and (iii) waives any claim that any such suit, action or proceeding has been brought in an inconvenient forum. Notwithstanding anything contained in this paragraph to the contrary, Issuer and MBI shall have the right to commence and litigate any suit, action or proceeding against Borrower or any property of Borrower in any court of any other appropriate jurisdiction. Nothing herein shall be deemed to limit any rights, powers or privileges Page 67 which Issuer and MBI may have pursuant to any law of the United States of America or any rule, regulation or order of any department or agency thereof and nothing herein shall be deemed to make unlawful any transaction or conduct by Issuer and MBI which is lawful pursuant to,or which is permitted by,any of the foregoing. Section 19.26 Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original though not fully executed, but all of which, when taken together, shall constitute but one instrument. Any party hereto may execute this Agreement by executing any such counterpart. The signature and acknowledgement page(s) of any counterpart may be detached from a counterpart without impairing the legal effect of the signature(s) thereon and attached to any other counterpart identical thereto except for the signature and acknowledgement page attached to it. Any executed counterpart which is transmitted to MBI or its attorneys by facsimile or electronic mail transmission shall be deemed to have been properly executed and delivered by all parties executing such counterpart for all purposes hereof to the same effect as if such original executed counterpart was delivered to MBI or its attorneys. Section 19.27 Captions. The captions or headings herein have been inserted solely for the convenience of reference and in no way define or limit the scope, intent or substance of any provision of this Agreement. Section 19.28 MBI Determinations. Issuer, pursuant to the terms and provisions of this Agreement, assignedrights its ri hts and title to the Loan to MBI who will administer such loan for the benefit of the bondholders. Notwithstanding anything contained in any Loan Document to the contrary, Borrower and Issuer hereby acknowledge and agree that any determinations, discretionary actions, approvals, consents, discretionary decisions or waivers to be made by Issuer pursuant to the Loan Documents shall not be made without written direction from MBI. Notwithstanding anything contained in any Loan Document to the contrary, Borrower hereby acknowledges and agrees that any determinations, discretionary actions, approvals, consents, discretionary decisions or waivers made by Issuer that are not accompanied by a written direction from MBI shall be void and have no force and effect unless and until accompanied by a written direction from MBI. Section 19.29 Issuer Deliverables. Notwithstanding anything contained in any Loan Document to the contrary, Borrower and Issuer hereby acknowledge and agree that any items to be provided to Issuer pursuant to the Loan Documents shall be provided to MBI instead. Notwithstanding anything contained in any Loan Document to the contrary, Borrower and Issuer hereby acknowledge and agree that any reserve, deposit, escrow or account established or to be established by Borrower with Issuer, as applicable, pursuant to the terms and conditions of any Loan Document shall be established by Issuer and Borrower at a bank or banks selected by MBI, in its sole discretion. Furthermore, MBI shall have the right of setoff with respect to any such reserves,deposits, escrows or accounts. Section 19.30 MBI Indemnification. Borrower hereby acknowledges and agrees that any indemnification provisions set forth in any Loan Document indemnifying Issuer shall also indemnify MBI to the same extent as such provisions indemnify Issuer. ARTICLE XX. CASUALTY AND CONDEMNATION Section 20.1 Assignment of Insurance Policies, Application of Proceeds and Additional Requirements. All insurance policies are to be held by and, to the extent of its interests, for the benefit of and, subject to the HUD Mortgage, payable in case of loss to MBI, and Borrower shall deliver to MBI a new policy as replacement for any expiring policy at least fifteen (15) days before the date of Page 68 such expiration. Subject to the HUD Mortgage, MBI shall have the right to settle and compromise any and all claims under any of the insurance policies required to be maintained by Borrower under this Agreement; to demand, receive and receipt for all monies payable thereunder; and to execute in the name of Borrower or MBI or both any proof of loss, notice or other instruments in connection with such policies or anyloss thereunder. the HUD Mortgage,all amounts recoverable under any policy are Subject hereby assigned to MBI and, in the event of a loss, each insurance company concerned is hereby authorized and directed to make payment for such loss directly to MBI rather than jointly to MBI and Borrower, and, subject to the HUD Mortgage the amount collected shall be used in any one or more of the following ways, at the option of MBI: (a)applied upon the indebtedness secured by the Loan Documents, whether or not such indebtedness is then due and payable, (b) used to fulfill any of the covenants Property contained herein, or (c) used to replace or restore the Project or Personal op y to a condition satisfactory to MBI. All insurance proceeds applied toward the indebtedness secured hereby shall be applied without the imposition of a prepayment penalty or premium. Subject to the HUD Mortgage, Borrower transfers and grants a security interest, within the meaning of the Uniform Commercial Code as adopted in Indiana, to MBI in and to all monies at any time held by MBI pursuant to this paragraph and such monies and all of Borrower's right, title and interest therein are hereby assigned to MBI, all as additional security for the indebtedness secured by the Loan Documents. Borrower warrants and represents to MBI that Borrower has not received any notice from any insurance company of any defects or inadequacies in the Project which would adversely affect the insurability of the Project or materially increase the cost of insuring the Project beyond that which is customarily charged for similar property in the vicinity of the Project used for a similar purpose. Borrower covenants and agrees to provide to MBI, promptly after receipt by Borrower, copies of any notices received from any insurance company regarding any defects or inadequacies in the Project. Notwithstanding anything contained herein to the contrary, if Borrower provides a written request to MBI within thirty(30)days after the occurrence of any casualty in which improvements located on the Real Estate are damaged, to use the insurance proceeds to restore or rebuild the Project, then MBI shall disburse the net proceeds of any such insurance proceeds received by MBI to or for the benefit of Borrower for the purpose of restoring the Project provided that the following conditions are satisfied in a manner reasonably acceptable to MBI: (a) No material adverse change in the financial condition of Borrower has occurred prior to the loss or casualty; (b) There is no default or event which with the giving of notice or lapse of time would constitute an Event of Default under this Agreement; (c) The Project is to be restored to its original condition prior to the occurrence of the casualty with such modifications as MBI may approve in its reasonable discretion; (d) MBI determines, in its reasonable discretion, that such restoration can be completed to MBI's satisfaction prior to the maturity date of the Note; (e) MBI determines, in its reasonable discretion, that Borrower has sufficient funds available to Borrower, including without limitation anticipated payments from business interruption insurance, to pay when due all costs and expenses relating to the operation of the Project during such restoration; (f) MBI determines, in its reasonable discretion, that such net insurance proceeds together with any additional funds made available for such purpose by Borrower and deposited Page 69 with MBI shall be sufficient to restore the Project in accordance with plans and specifications approved by MBI and Borrower, free and clear of all liens except any Permitted Encumbrances; (g) MBI shall not be deemed a fiduciary, and shall have no obligation to restore or repair the Project; (h) The disbursement of all proceeds shall be done in accordance with terms, conditions, plans and procedures set forth in this Agreement for the disbursement of Loan proceeds. (i) MBI is reimbursed from each such advance for (i) all costs incurred by MBI in connection with the collection or handling of such funds (including but not limited to reasonable attorney's fees incurred by MBI in collecting or handling such funds or obtaining a settlement of an insurance claim) and(ii)all costs and expenses incurred by MBI in connection with advancing such insurance proceeds for the restoration or rebuilding of the Project, including without limitation any inspection fees, engineer review fees,title insurance update fees and survey fees; (j) The insurance companies providing coverage for the Project do not deny any liability for the payment of the claims and all insurance proceeds payable in connection with such claims have been paid to MBI. (k) Notwithstanding the forgoing, subject to the HUD Mortgage, if the total net casualty insurance proceeds payable with respect to a particular casualty are Twenty-Five Thousand Dollars ($25,000.00) or less, then Borrower shall be entitled to retain such proceeds provided(at the time of the casualty and/or the payment of proceeds) there is no default or event which with the giving of notice or lapse of time would constitute an Event of Default under this Agreement and Borrower applies such proceeds to restoring the Project. MBI at its option may waive any requirement set forth herein for the advancement of insurance proceeds. Section 20.2 Eminent Domain. Subject to the HUD Mortgage, all awards made by any public or quasi-public authority for damages to the Project by virtue of an exercise of the right of eminent domain by such authority, including any award for a taking of title, possession or right of access to a public way, or for any change of grade of streets affecting the Project, are hereby assigned to MBI and MBI, at its option, is hereby authorized, directed and empowered to collect and receive the proceeds of any such award to the extent of the indebtedness secured by the Loan Documents from the appropriate governmental authority. Subject to the HUD Mortgage, such award shall be used in any one or more of the following ways, at the option of MBI: (i) applied upon the indebtedness secured hereby or payable hereunder, whether or not such indebtedness is then due and payable, or(ii) applied to replace or restore the Project to a condition satisfactory to MBI. Upon the occurrence of an Event of Default hereunder and subject to the HUD Mortgage, MBI is authorized, at its option,to appear in and prosecute in its own name any action or proceeding or,with consent and joinder of Borrower,to make any compromise or settlement in connection with such taking or damage. Subject to the HUD Mortgage, Borrower will, upon request by MBI, execute and deliver any and all assignments and other instruments sufficient for the purpose of assigning, upon the occurrence of an Event of Default hereunder, all proceeds from such awards to MBI free and clear and discharged of any and all encumbrances or claims of any kind or nature whatsoever. Subject to the HUD Mortgage,Borrower transfers and grants a security interest,within the meaning of the Uniform Commercial Code as adopted in Indiana, to MBI in and to all monies at any time held by MBI pursuant to this paragraph and such monies and all of Borrower's right, title and interest therein are hereby assigned to MBI, all as additional security for the indebtedness secured hereby. All condemnation proceeds applied toward the indebtedness secured hereby shall be applied without the imposition of a prepayment penalty or premium. Page 70 Notwithstanding anything contained herein to the contrary and subject to the HUD Mortgage, if Borrower provides a written request to MBI within thirty (30) days after the occurrence of any condemnation in which less than twenty-five percent (25%) of the market value of the improvements located on the Real Estate are condemned, to use the condemnation proceeds to restore or rebuild the Project,then MBI shall disburse the net proceeds of any such condemnation award received by MBI, after deducting from such proceeds any expenses incurred by MBI in the collection or handling of such funds (including but not limited to reasonable attorney's fees incurred by MBI in collecting or handling such funds or obtaining a settlement of a condemnation claim), to or for the benefit of Borrower for the purpose of restoring the Project in accordance with terms, conditions, plans and procedures acceptable to MBI provided that the following conditions are satisfied in a manner reasonably acceptable to MBI: (a) No material adverse change in the financial condition of Borrower has occurred prior to the loss or casualty; (b) There is no default or event which with the giving of notice or lapse of time would constitute an Event of Default under this Agreement; (c) MBI determines, in its reasonable discretion, that such restoration can be completed to MBI's satisfaction prior to the maturity date of the Note; (d) MBI determines, in its reasonable discretion, that such net condemnation proceeds together with any additional funds made available for such purpose by Borrower and deposited with MBI shall be sufficient to restore the Project in accordance with plans and specifications approved by MBI and Borrower, free and clear of all liens except the Permitted Encumbrances; (e) MBI shall not be deemed a fiduciary, and shall have no obligation to restore or repair the Project; (f) The disbursement of all proceeds shall be done in accordance with terms, conditions,plans and procedures set forth in this Agreement for the disbursement of Loan; (g) MBI is reimbursed from each such advance for (i) all costs incurred by MBI in connection with the collection or handling of such funds (including but not limited to reasonable attorney's fees incurred by MBI in collecting or handling such funds or obtaining a settlement of a condemnation claim) and (ii) all costs and expenses incurred by MBI in connection with advancing such condemnation proceeds for the restoration or rebuilding of the Project, including without limitation any inspection fees, engineer review fees, title insurance update fees and survey fees; and (h) The Project can be restored to a size and economic condition satisfactory to MBI in its sole and absolute discretion. Notwithstanding the forgoing and subject to the HUD Mortgage, if the total net condemnation proceeds payable with respect to a particular condemnation are Twenty-Five Thousand Dollars ($25,000.00) or less, then Borrower shall be entitled to retain such proceeds provided (at the time of the condemnation and/or the payment of proceeds) there is no default or event which with the giving of notice or lapse of time would constitute an Event of Default under this Agreement and Borrower applies such proceeds to restoring the Project and to the expenses incurred by Borrower to settle the condemnation claim. MBI at its option may waive any requirement set forth herein for the advancement of any condemnation proceeds. Page 71 SIGNATURE PAGE FOR BORROWER TO BOND PURCHASE AND LOAN AGREEMENT IN WITNESS WHEREOF, Borrower has caused this Agreement to be executed effective as of the day and the year first above written. BORROWER: MAH CEDAR GLEN,LP, an Indiana limited partnership, By: MAH Cedar Glen GP,LLC, an Indiana limited liability company, its General Partner By: Merchants Affordable Housing Corp., an Indiana nonprofit corporation, its Sole Member By: Janine Betsey,President STATE OF ) ) SS: COUNTY OF ) Before me, a Notary Public in and for said County and State,personally appeared Janine Betsey, the President of Merchants Affordable Housing Corp., an Indiana nonprofit corporation which is the Sole Member of MAH Cedar Glen GP, LLC, an Indiana limited liability company, which is the General Partner of MAH Cedar Glen, LP, an Indiana limited partnership, who, after having been duly sworn, acknowledged the execution of the foregoing Bond Purchase and Loan Agreement for and on behalf of such limited partnership. Witness my hand and Notarial Seal this day of , 2020. ( )Notary Public My Commission Expires: My County of Residence: [Signatures continued on next page.] SIGNATURE PAGE FOR MBI TO BOND PURCHASE AND LOAN AGREEMENT IN WITNESS WHEREOF,MBI has caused this Agreement to be executed effective as of the day and the year first above written. MBI: MERCHANTS BANK OF INDIANA By: Philip Daubenmire,Vice President STATE OF INDIANA ) ) SS: COUNTY OF ) Before me, a Notary Public in and for said County and State, personally appeared Philip Daubenmire, the Vice President of Merchants Bank of Indiana, who, after having been duly sworn, acknowledged the execution of the foregoing Bond Purchase and Loan Agreement for and on behalf of such bank. Witness my hand and Notarial Seal this day of ,2020. ( )Notary Public My commission expires: My County of residence: SIGNATURE PAGE FOR ISSUER TO BOND PURCHASE AND LOAN AGREEMENT IN WITNESS WHEREOF, Issuer has caused this Agreement to be executed effective as of the day and the year first above written. ISSUER: CITY OF SOUTH BEND,INDIANA By: Printed: Title: STATE OF INDIANA ) ) SS: COUNTY OF ) Before me, a Notary Public in and for said County and State, personally appeared , who, after having been duly sworn, acknowledged the execution of the foregoing Bond Purchase and Loan Agreement for and on behalf of the. Witness my hand and Notarial Seal this day of ,2020. ( )Notary Public My commission expires: My County of residence: This instrument was prepared by Michael A. Valinetz, Wooden McLaughlin LLP, One Indiana Square, Suite 1800, Indianapolis, Indiana 46204. EXHIBITS: Exhibit"A" Description of Real Estate Exhibit"B" Development Budget Exhibit "C" Litigation Exhibit"D" Form of Bond Exhibit"E" Disbursement Request EXHIBIT A Legal Description A-1 EXHIBIT B Development Budget B-1 EXHIBIT C Litigation C-1 EXHIBIT D Form of Bond D-1 EXHIBIT E Disbursement Request 2784574-3(6300-2641) E-1 Filed in Clerk's Office MAR 18 2020 RESOLUTION EDC #2020- DAWN M.JONES CITY CLERK,SOUTH BEND, IN RESOLUTION OF THE SOUTH BEND ECONOMIC DEVELOPMENT COMMISSION APPROVING AND AUTHORIZING CERTAIN ACTIONS AND PROCEEDINGS WITH RESPECT TO CERTAIN PROPOSED MULTIFAMILY HOUSING REVENUE BONDS FOR MAH CEDAR GLEN,LP WHEREAS, Indiana Code Title 36, Article 7, Chapters 11.9 and 12 (collectively, the "Act") declares that the financing and refinancing of economic development facilities constitutes a public purpose; and WHEREAS,pursuant to the Act,the City of South Bend, Indiana(the"City")is authorized to issue revenue bonds for the purpose of financing, reimbursing or refinancing the costs of acquisition, construction, renovation, installation and equipping of economic development facilities in order to foster diversification of economic development and creation or retention of opportunities for gainful employment in or near the City and to provide affordable housing; and WHEREAS, representatives of MAH Cedar Glen, LP, an Indiana limited partnership (the " Borrower") or one or more limited liability companies or limited partnerships to be formed by the Borrower, have advised the South Bend Economic Development Commission (the "Commission") and the City that it proposes that the City lend the proceeds of an economic development revenue bond financing to the Borrower to provide all or a portion of the funds for the acquisition, construction, renovation, installation and equipping of the existing multifamily housing facilities known as Cedar Glen Apartments, located in the City at 425 South 25th Street, containing 179 affordable residential rental units and functionally related and subordinate facilities (collectively, the"Project")to be owned by the Borrower and to pay related costs; and WHEREAS, the Commission has rendered its report (the "EDC Report") concerning the proposed financing for the Borrower and the Plan Commission has been given the opportunity to comment thereon; and WHEREAS, the Commission has studied the Project and the proposed financing of the Project and its effects on the health and general welfare of the City and its citizens; and WHEREAS, the creation or retention of opportunities for gainful employment and the provision of quality,affordable,multifamily housing to be achieved by the acquisition,renovation and equipping of the Project will be of public benefit to the health, safety and general welfare of the City and its citizens; and WHEREAS, it would appear that the financing of the Project would be of benefit to the health or general welfare of the City and its citizens; and WHEREAS, pursuant to and in accordance with the Act, the City desires to provide funds to finance all or a portion of the Project by issuing not to exceed S7,300,000 aggregate principal amount of its City of South Bend, Indiana Multifamily Housing Revenue Bonds, Series 2020 (the "Bonds") in one or more series with such further or different series designation as may be necessary, desirable or appropriate, including such series designation to indicate the year in which the bonds are issued and the applicable project (the"Bonds"); and WHEREAS, the Act provides that such revenue bonds may be secured by and issued pursuant to the terms of a financing agreement or indenture between of which the City shall be a party; and WHEREAS, the City intends to issue at least one of the series of the Bonds pursuant to a trust indenture (the "Indenture"), by and between the City and a trustee to be designated by the Borrower (the "Trustee") in order to obtain funds to lend to the Borrower for the purpose of the acquisition, construction, renovation, installation and equipping of the Project pursuant to a loan agreement(the"Loan Agreement")by and between the City and the Borrower; and WHEREAS, the City intends to issue at least one of the series of the Bonds pursuant to a bond purchase and loan agreement(the"Bond Purchase and Loan Agreement"),by and among the City, the Borrower and the purchaser of the series of Bonds being issued thereunder in order to obtain funds to lend to the Borrower for the purpose of the acquisition, design, construction, renovation, improvement and/or equipping the Project; and WHEREAS, the Loan Agreement and the Bond Purchase and Loan Agreement, respectively, provide for the repayment by the Borrower of the loan of the proceeds of the Bonds pursuant to which the Borrower will agree to make payments sufficient to pay the principal and interest on the Bonds as the same become due and payable and to pay administrative expenses in connection with the Bonds; and WHEREAS, pursuant to Indiana Code 36-7-12-24, as amended, and Section 147(f) of the Internal Revenue Code of 1986, as amended (the"Code"), the Commission published notice of a public hearing (the "Public Hearing") on the proposed issuance of the Bonds to finance all or a portion of the Project, and has on this date prior to adoption of this resolution held the Public Hearing for the purpose of receiving evidence and testimony on the Project and matters related to the proposed financing thereof and heard all persons interested in the proceedings and considered written remonstrances and objections, if any; and WHEREAS,no member of the Commission has any pecuniary interest in any employment, financing agreement or other contract made under the provisions of the Act and related to the Bonds authorized herein,which pecuniary interest has not been fully disclosed to the Commission and no such member has voted on any such matter,all in accordance with the provisions of Indiana Code 36-7-12-16. WHEREAS, there has been submitted to the Commission for its approval substantially final forms of the Indenture, Loan Agreement, the Bond Purchase and Loan Agreement, Regulatory Agreement and Declarations of Restrictive Covenants among the City,the Trustee and the Borrower, the forms of the Bonds (hereinafter referred to collectively as the "Financing Agreements"), and the proposed form of the Ordinance which are by this reference incorporated herein; now, therefore: 2 BE IT RESOLVED BY THE SOUTH BEND ECONOMIC DEVELOPMENT COMMISSION: SECTION 1. After considering the evidence presented at the Public Hearing and findings of fact set forth in the EDC Report, this Commission hereby finds, determines, ratifies and confirms that the financing of the economic development facilities referred to in the Financing Agreements consisting of the Project, the issuance and sale of the Bonds, and the use of the net proceeds thereof by the Borrower to finance all or a portion of the Project will: (i) promote a substantial likelihood of the diversification of industry, the creation or retention of business opportunities, the creation or retention of opportunities for gainful employment and the provision of quality, affordable, multifamily rental housing within the jurisdiction of the City; (ii) serve a public purpose, and will be of benefit to the health and general welfare of the City; (iii) comply Y with the purposes and provisions of the Act and it is in the public interest that the City take such lawful action as determined to be necessary or desirable to encourage the diversification of industry, the creation or retention of business opportunities, and the creation or retention of opportunities for gainful employment and the provision of quality, affordable, multifamily rental housing within the jurisdiction of the City, and (iv) will not have a material adverse competitive effect on any similar facilities already constructed or operating in or near South Bend, Indiana. SECTION 2. This Commission hereby approves(i)the Financing Agreements in the form presented at this meeting, and (ii) the form of the Ordinance of the South Bend Common Council (the "Council") authorizing the issuance of the Bonds and providing for the terms thereof. The forms of the Financing Agreements and the Ordinance presented herewith are hereby approved, with any and all such changes as may be deemed necessary,desirable or appropriate by the Mayor and the Clerk of the City(the"Clerk"). In compliance with Indiana Code 36-1-5-4,two (2)copies of the Financing Agreements will be placed on file in the office of the Clerk for public inspection prior to adoption of the Ordinance by the Council. SECTION 3. This Commission hereby approves and recommends that the City issue the Bonds, in one or more series, with a maximum aggregate principal amount not to exceed Seven Million Three Hundred Thousand Dollars($7,300,000), with a maximum term not to exceed forty (40) years and with a maximum interest rate not to exceed ten percent (10.0%) per annum, for the purpose of procuring funds to pay all or a portion of the costs of the Project by making a portion of the proceeds of such Bonds available as set forth in the Financing Agreements and pay all incidental expenses incurred on account of the issuance of the Bonds. The Bonds shall be sold to the purchasers thereof at a price not less than 97% of the aggregate principal amount thereof plus accrued interest, if any. The Bonds shall be payable as to principal and interest upon such terms and conditions as otherwise provided in the Financing Agreements and the Ordinance, but solely from the Borrower's payments or other monies available therefor under the Financing Agreement as further described in the Financing Agreements. The Bonds may be subject to mandatory tender or optional redemption at one or more times prior to maturity. The Bonds shall never constitute a general obligation of, moral obligation of, an indebtedness of, or charge against the general credit of the City or a pledge of the full faith or credit of the City within the purview of any constitutional or statutory limitation or provision,nor are they payable in any manner from revenues raised by taxation. SECTION 4. This Commission recommends that the Mayor and Clerk be authorized and directed to execute those Financing Agreements approved herein which require the signature of 3 the Mayor and Clerk and any other document which may be necessary or desirable to consummate the transaction, and their execution is hereby confirmed on behalf of the City. The signatures of the Mayor and the Clerk on the Bonds may be facsimile signatures. This Commission also recommends that the Clerk be authorized to arrange for the delivery of such Bonds to the purchaser, payment for which will be made in the manner set forth in the Financing Agreements. The Mayor and Clerk may, by their execution of the Financing Agreements requiring their signatures and imprinting of their facsimile signatures thereon, approve changes therein and also in those Financing Agreements which do not require the signature of the Mayor and/or Clerk without further approval of this Council or the Commission if such changes do not affect terms set forth in Section 27(a)(1) through(a)(10) of the Act. SECTION 5. If necessary or desirable, a Preliminary Official Statement of the City relating to the Bonds(the"Preliminary Official Statement"), in a form acceptable to the Mayor, is hereby (a) authorized and approved, together with such changes in form and substance as may be deemed necessary or appropriate by the Mayor, (b) authorized and approved, as the same may be appropriately confirmed, modified and amended pursuant hereto, for distribution as the Preliminary Official Statement of the City, (c) authorized to be deemed and determined by the Mayor on behalf of the City, as of its date, to constitute the "final" official statement of the City with respect to the Bonds to be offered thereby, subject to completion as permitted by and otherwise pursuant to the provisions of Rule 15c2-12 of the Securities and Exchange Commission (the"SEC Rule"), and(d)authorized and approved,consistent with the provisions of any Purchase Agreement (as defined herein) and the SEC Rule, to be placed into final form and distributed and delivered to purchasers and potential purchasers of the Bonds offered thereby as the final official statement of the City, as of the date thereof, with respect to the Bonds (the"Official Statement"). Any form of Continuing Disclosure Agreement included or referenced in The Preliminary Official Statement and the Official Statement shall require the Borrower to undertake all continuing disclosure obligations required under the SEC Rule, and expressly state that the City will have no liability to the holders of the Bonds or any other person with respect to such continuing disclosure requirements. SECTION 6. Subject to the obligations of the Borrower set forth in the respective Financing Agreements and/or the certificates or agreements of such Borrower to be executed upon the issuance of the Bonds, if any of the Bonds are issued on a tax-exempt basis for purposes of federal income taxation, the City will use its best efforts to restrict the use of the proceeds of the Bonds in such a manner and to expectations at the time the Bonds are delivered to the purchasers thereof, so that they will not constitute "arbitrage bonds" under Section 148 of the Code and the regulations promulgated thereunder, or to preserve any other desired tax status under the Code. The Mayor and the Clerk,or any other officer having responsibility with respect to the issuance of the Bonds, are authorized and directed, alone or in conjunction with any of the foregoing, or with any other officer, employee, consultant or agent of the City, to deliver a certificate for inclusion in the transcript of proceedings for the Bonds, settingforth the facts, estimates and circumstances p p g and reasonable expectations pertaining to the use of the Bond proceeds as of the date of issuance thereof. SECTION 7. A purchase agreement in form and substance acceptable to the Mayor and the Clerk (the"Purchase Agreement"), is hereby authorized and approved, and the Mayor and the Clerk are hereby authorized and directed to execute and deliver the Purchase Agreement in form 4 and substance acceptable to them and consistent with the terms and conditions set forth in the Ordinance, with such to be conclusively evidenced by their execution thereof. SECTION 8. This Commission approves the form of the Ordinance presented at this meeting and recommends the adoption of the Ordinance by the Council. The provisions of such Ordinance,if and when adopted, and the Financing Agreements shall constitute a contract binding between the City and the holder or holders of the Bonds and after the issuance of said Bonds, the special resolution shall not be repealed or amended, in any respect which would adversely affect the right of such holder or holders so long as said Bonds or the interest thereon remains unpaid. SECTION 9. Any officer of this Commission is hereby authorized and directed, in the name and on behalf of this Commission, to execute any and all other agreements, documents and instruments,perform any and all acts, approve any and all matters, and do any and all other things deemed by such person to be necessary or desirable in order to carry out and comply with the intent, conditions and purposes of this resolution (including the preambles hereto and the documents mentioned herein), the Project, the issuance and sale of the Bonds and any such execution, performance, approval or doing of other things heretofore effected be, and hereby is, ratified and approved. SECTION 10. This Commission finds and determines that the amount of tax credits to be allocated to the Project under Section 42 of the Internal Revenue Code of 1986, as amended, does not exceed the amount necessary for the financial feasibility of the Project and its viability as a qualified housing project throughout the credit period for the Project. In making the foregoing determination, this Commission has relied upon representations of the Borrower. The foregoing determination shall not be construed to be a representation or warranty by this Commission as to the feasibility or viability of the Project. In reliance upon the representations of the Borrower, it is hereby found and determined that the Project satisfies the requirements for the allocation of a housing credit dollar amount under the Indiana Housing and Community Development Authority's qualified allocation plan. SECTION 11. The Secretary of this Commission shall transmit this resolution, together with two (2) copies of the forms of the Financing Agreements and the Ordinance approved by this Resolution,to the Office of the Clerk for presentation to the Council with the recommendation that the Council approve the forms of the FinancingAgreements and adopt the proposed Ordinance Pp �' hereby recommended to the Council. The provisions of such Ordinance,if and when adopted, and the Financing Agreements shall constitute a contract binding between the City and the holder or holders of the Bonds and after the issuance of said Bonds, the special resolution shall not be repealed or amended, in any respect which would adversely affect the right of such holder or holders so long as said Bonds or the interest thereon remains unpaid. SECTION 12. This resolution shall be in full force and effect upon adoption. (Signature page follows.) 5 Adopted this day of March, 2020 SOUTH BEND ECONOMIC DEVELOPMENT COMMISSION , President ATTEST: , Secretary US.126992478.02 6 Filed in Clerk's Office f 1 Form of Bond + MAR 1 0 2020 I ' � I DAWN M.JONES CITY CLERK,SOUTH BEND, IN UNITED STATES OF AMERICA STATE OF INDIANA COUNTY OF CITY OF SOUTH BEND, INDIANA MULTIFAMILY HOUSING BOND OF 2020, SERIES B No. BR— ORIGINAL INTEREST MATURITY ORIGINAL AUTHENTICATION RATE DATE DATE DATE See Bond Purchase As Described Herein and Loan Agreement and Note PRINCIPAL AMOUNT: DOLLARS ($) REGISTERED OWNER: MERCHANTS BANK OF INDIANA The City of South Bend, Indiana(the"Issuer"),a political subdivision duly organized and existing under the laws of the State of Indiana, for value received, hereby promises to pay in lawful money of the United States of America to the Registered Owner listed above,but solely from the payments on the Note (as defined in the Bond Purchase and Loan Agreement) pledged and assigned for the payment hereof,the Principal Amount set forth above, or of so much of the Principal Amount as shall have been advanced, unless this Bond shall have previously been called for redemption and payment of the redemption price made or provided for or unless payments shall be accelerated as provided in the Bond Purchase and Loan Agreement, and to pay interest on the unpaid principal amount hereof in like money, at the Tax Exempt Interest Rate,commencing on the first day of the first calendar month following the first Principal Advance (as defined in the Bond Purchase and Loan Agreement) and continuing on the first day of each calendar month thereafter, through and including the Maturity Date (as set forth in the Note) or until the total sum of all Principal Advances is paid in full and the Borrower has made its final draw request under the Bond Purchase and Loan Agreement by and among the Issuer, MBI and the Borrower dated as of(the "Bond Purchase and Loan Agreement"),and has filed the Certificate of Substantial Completion for the Project as described in Section 15.3 of the Bond Purchase and Loan Agreement. Interest on each Principal Advance will accrue from the date of the Principal Advance and be calculated on the basis of a 360-day year applied to the actual number of days in each interest payment period. Upon receipt of each Principal Advance, Merchants Bank of Indiana ("MBI") shall make a notation on its books and records of such Principal Advance. The books and records of MBI shall be determinative of the amounts so advanced. "Tax Exempt Interest Rate" means the Applicable Rate, as defined in the Note. The principal and premium, if any, of this Bond are payable at the office of MBI, in the City of Cannel, Indiana, or at the principal office of any successor trustee or paying agent or, if payment is made to a depository,by wire transfer of immediately available funds on the payment date. The Bonds are issued under and entitled to the security of the Bond Purchase and Loan Agreement dated as of , 2020, duly executed and delivered by the Issuer, the Borrower and MBI,pursuant to which Bond Purchase and Loan Agreement,the Note and all rights of the Issuer under the Loan Documents, except certain rights to payment for expenses,indemnity rights and rights to perform certain discretionary acts as set forth in the Loan Documents, are pledged and assigned by the Issuer to MBI as security for the Bonds. This Bond is one of the Issuer's Multifamily Housing Revenue Bonds of 2020, Series B (Cedar Glen Apartment Project) (the "Bonds"), which are being issued pursuant to , adopted by the of the Issuer on (the "Bond Ordinance"), and under the hereinafter described Bond Purchase and Loan Agreement, in the aggregate principal amount of Three Million Eighty-One Thousand Seven Hundred Thirty-Two and 00/100 Dollars($3,081,732.00). The Bonds are being issued for the purposes of financing all or any portion of the cost of the Project(as defined in the Bond Purchase and Loan Agreement),by lending the proceeds of the Bonds to MAH Cedar Glen, LP (the "Borrower"), pursuant to the Bond Purchase and Loan Agreement, which prescribes the terms and conditions under which the Borrower shall repay such loan and pursuant to which the Borrower will execute and deliver to the Issuer the Note in a principal amount equal to the principal amount of the Bonds,in order to evidence such loan. The Bond Purchase and Loan Agreement provides for the payment of the purchase price of the Bonds in one or more Principal Advances (as defined in the Bond Purchase and Loan Agreement). If ownership of the Bonds is transferred prior to MBI having made all Principal Advances contemplated under the Bond Purchase and Loan Agreement, the transferee of the Bonds shall take ownership subject to the obligation to make additional Principal Advances until the maximum$_3,081,732.00 of purchase price has been advanced or until the Borrower makes its final draw request under the Bond Purchase and Loan Agreement and files the completion certificate for Project, as described in Section 4.3(b) of the Bond Purchase and Loan Agreement. THE OWNER OF THIS BOND, BY ACCEPTANCE OF THIS BOND, HEREBY AGREES TO ALL OF THE TERMS AND PROVISIONS IN THE BOND PURCHASE AND LOAN AGREEMENT AND THIS BOND AND ACKNOWLEDGES THAT: 1. It is an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3), (5), (6) or (7) under the Securities Act of 1933, as amended (the "1933 Act")), purchasing Bonds for its own account or for the account of another such institutional"accredited investor",and it is acquiring the Bonds for investment purposes and not with a view to, or for offer or sale in connection with, any distribution in violation of the 1933 Act. It has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risk of its investment in the Bonds and invest in or purchase securities similar to the Bonds in the normal course of its business, and it and any investor accounts for which it is acting are able to bear the economic risk of its or their investment for an indefinite period of time. It confirms that neither the Issuer nor any person acting on its behalf has offered to sell the Bonds by, and that it has not been made aware of the offering of the Bonds by,any form of general solicitation or general advertising, including, but not limited to, any advertisement, article, notice or other communication published in any newspaper,magazine or similar media or a broadcast over television or radio. 2. It is familiar with the Issuer and the Borrower;it has received such information concerning the Issuer and the Borrower, the Bonds as it deems to be necessary in connection with investment in the Bonds. It has received,read and commented upon copies of the Bond Purchase and Loan Agreement and the Loan Documents. Prior to the purchase of the Bonds, it has been provided with the opportunity to ask questions of and receive answers from the representatives of the Issuer and the Borrower concerning the terms and conditions of the Bonds, the tax status of the Bonds, legal opinions and enforceability of remedies and the security therefor, and to obtain any additional information needed in order to verify the accuracy of the information obtained to the extent that the Issuer and the Borrower possess such information or can acquire it without unreasonable effort or expense. It is not relying on for information concerning the financial status of the Issuer or the Borrower or the ability of the Issuer or the Borrower to honor its financial obligations or other covenants under the Bonds,the Bond Purchase and Loan Agreement or the Loan Documents. 3. It is acquiring the Bonds for its own account with no present intent to resell; and will not sell, convey,pledge or otherwise transfer the Bonds without prior compliance with applicable registration and disclosure requirements of state and federal securities laws. 4. It understands that the Bonds have not been registered under the 1933 Act and,unless so registered,may not be sold without registration under the 1933 Act or an exemption therefrom. It is aware that it may transfer or sell the Bonds only if the Trustee shall first have received(i) a satisfactory opinion of counsel that the sale or transfer will not violate the 1933 Act, the Securities Exchange Act of 1934, as amended, or the Investment Company Act of 1940, as amended, or regulations issued pursuant to such Acts, or(ii) a no-action letter of the staff of the Securities and Exchange Commission that the staff will recommend that no action be taken with respect to such sale or transfer, or(iii) a certificate stating that it reasonably believes that the transferee is a "Qualified Institutional Buyer" within the meaning of Section (a)of Rule 144A("Rule 144A")promulgated by the Securities and Exchange Commission pursuant to the 1933 Act and has informed the transferee of the transfer restrictions applicable to the Bonds and that the transferor may be relying upon Rule 144A with respect to the transfer of the Bonds. 5. It understands that the sale or transfer of the Bonds in principal amounts less than $100,000 is prohibited other than through a primary offering. 6. It has investigated the security for the Bonds to its satisfaction,and it understands that the Bonds are payable from loan repayments from the Borrower under the Loan Documents. It further understands that the Issuer does not have the power or the authority to levy a tax to pay the principal of or interest on the Bonds. 7. It recognizes that the opinions it has received express the professional judgment of the attorneys participating in the transaction as to the legal issues addressed herein. It also recognizes that,by rendering such opinions, the attorneys do not become insurers or guarantors of that expression of professional judgment, of the transaction opined upon, or of the future performance of parties to such transaction, nor does the rendering of the opinions guarantee the outcome of any legal dispute that may arise out of the transaction. The Bonds are issuable in registered form without coupons in the denominations of$100,000 and any$1 integral in excess thereof.The sale or transfer of this Bond in principal amounts of less than$100,000 is prohibited other than through a primary offering.This Bond is transferable by the registered holder hereof in person or by its attorney duly authorized in writing at the office of the Controller of the Issuer,but only in the manner, subject to the limitations and upon payment of the charges provided in the Bond Purchase and Loan Agreement and upon surrender and cancellation of this Bond.Upon such transfer a new registered Bond will be issued to the transferee in exchange therefor. The Issuer and the Paying Agent may deem and treat the Registered Owner hereof as the absolute owner hereof for the purpose of receiving payment of or on account of principal hereof and premium, if any,hereon and interest due hereon and for all other purposes,and neither the Trustee nor the Paying Agent shall be affected by any notice to the contrary. If sufficient funds are on deposit in the Bond Fund, pursuant to the Bond Purchase and Loan Agreement,the Bonds shall be subject to redemption prior to maturity at the option of the Issuer and at the direction of the Borrower, on any date,upon 30 days' notice, in whole or in part in such order of maturity as the Issuer shall direct and by lot within maturities on any date, from any moneys made available for that purpose, at face value without premium,plus accrued interest to the date fixed for redemption. The Bonds shall be redeemed upon the occurrence of certain events described in the Bond Purchase and Loan Agreement, if sufficient funds for such redemption are on deposit with MBI. When called for redemption as a result of any such event, the Bonds shall be subject to redemption by the Issuer in whole on any date at a redemption price of 100% of the principal amount of the Bonds being redeemed plus accrued interest to the redemption date and without premium. If any of the Bonds are called for redemption as aforesaid,notice thereof identifying the Bonds to be redeemed will be given by mailing a copy of the redemption notice by first class mail not less than 30 days nor more than 60 days prior to the date fixed for redemption to the Registered Owner of the Bonds to be redeemed at the address shown on the registration books; provided, however, that failure to give such notice by mailing,or any defect therein with respect to any registered Bond, shall not affect the validity of any proceedings for the redemption of other Bonds. All Bonds so called for redemption will cease to bear interest on the specified redemption date, provided funds for their redemption are on deposit at the place of payment at that time,and shall no longer be protected by the Bond Purchase and Loan Agreement and shall not be deemed to be outstanding under the provisions of the Bond Purchase and Loan Agreement. This Bond is transferable by the Registered Owner hereof at the office of the Controller of the Issuer upon surrender and cancellation of this Bond and on presentation of a duly executed written instrument of transfer, and thereupon a new Bond or Bonds of the same aggregate principal amount and maturity and in authorized denominations will be issued to the transferee or transferees in exchange therefor. The Bonds, and the interest payable thereon, do not and shall not represent or constitute a debt of the Issuer within the meaning of the provisions of the constitution or statutes of the State of Indiana or a pledge of the faith and credit of the Issuer.The Bonds,as to both principal and interest, are not an obligation or liability of the State of Indiana, or of any political subdivision or taxing authority thereof,but are a special and limited obligation of the Issuer payable solely and only from the funds and accounts held under the Bond Purchase and Loan Agreement and payments to be made on the Note issued under the Bond Purchase and Loan Agreement pledged and assigned for their payment in accordance with the Bond Purchase and Loan Agreement("Trust Estate").Neither the faith and credit nor the taxing power of the Issuer,the State of Indiana or any political subdivision or taxing authority thereof is pledged to the payment of the principal of or premium,if any,or interest on the Bonds.The Bonds do not grant the owners or holders thereof any right to have the Issuer,the State of Indiana or its General Assembly,or any political subdivision or taxing authority of the State of Indiana,levy any taxes or appropriate any funds for the payment of the principal of or premium, if any, or interest on the Bonds. No covenant or agreement contained in the Bonds or the Bond Purchase and Loan Agreement shall be deemed to be a covenant or agreement of the Indianapolis Economic Development Commission (the "Economic Development Commission"), the Issuer or of any member, director, officer, agent, attorney or employee of the Economic Development Commission or the Issuer in his or her individual capacity, and neither the Economic Development Commission, the Issuer nor any member, director, officer, agent, attorney or employee of the Economic Development Commission or the Issuer executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance of the Bonds. The holder of this Bond shall have no right to enforce the provisions of the Bond Purchase and Loan Agreement or to institute action to enforce the covenants therein,or to take any action with respect to any event of default under the Bond Purchase and Loan Agreement,or to institute,appear in or defend any suit or other proceedings with respect thereto, except as provided in the Bond Purchase and Loan Agreement. In certain events, on the conditions, in the manner and with the effect set forth in the Bond Purchase and Loan Agreement, the principal of all the Bonds issued under the Bond Purchase and Loan Agreement and then outstanding may become or may be declared due and payable before the stated maturity thereof,together with interest accrued thereon.Modifications or alterations of the Bond Purchase and Loan Agreement, or of any supplements thereto, may be made to the extent and in the circumstances permitted by the Bond Purchase and Loan Agreement. It is hereby certified that all conditions,acts and things required to exist,happen and be performed under the laws of the State of Indiana and under the Bond Purchase and Loan Agreement precedent to and in the issuance of this Bond exist, have happened and have been performed, and that the issuance, authentication and delivery of this Bond have been duly authorized by the Issuer. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Bond Purchase and Loan Agreement until the certificate of authentication hereon shall have been duly authenticated by the execution by the City Clerk of the Issuer. IN WITNESS WHEREOF,the City of South Bend, Indiana,has caused this Bond to be executed in its name and on its behalf by the manual or facsimile signature of its Mayor and its corporate seal to be hereunto affixed manually or by facsimile and attested to by the manual or facsimile signature of its City Clerk, all as of the Original Date set forth above. CITY OF SOUTH BEND, INDIANA By: Name: Its: (FORM OF CITY CLERK'S CERTIFICATE OF AUTHENTICATION) This Bond is one of the Bonds described in the within-mentioned Bond Purchase and Loan Agreement. CITY OF SOUTH BEND, INDIANA By: Name: Its: - ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto (Please Print or Typewrite Name and Address)the within Bond and all rights, title and interest thereon, and hereby irrevocably constitutes and appoints attorney to transfer the within Bond on the books kept for registration thereof,with full power of substitution in the premises. NOTICE: The signature to this assignment must Dated: correspond with the name of the registered owner as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatever. SIGNATURE GUARANTEED: NOTICE: Signature(s) must be guaranteed by an eligible guarantor institution participating in a Securities Transfer Association recognized signature guarantee program. The followingabbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written outin full according to applicable laws or regulations: UNIF TRAN MIN ACT— Custodian (Cust) (Minor) under Uniform Transfers to Minors Act (State) TEN COM— as tenants in common JT TEN— as joint tenants with right of survivorship and not as tenants in common Additional abbreviations may also be used though not in the above list. 2788466-1(6300-2641) rr�►.a�' i. `"k'F> Office MAR 1 i 2020 LOAN AGREEMENT DAWN M.JONES CITY CLERK,SOUTH SEND,IN between CITY OF SOUTH BEND, INDIANA, as Issuer and MAH CEDAR GLEN,LP, as Borrower $4,100,000 CITY OF SOUTH BEND, INDIANA, MULTIFAMILY HOUSING REVENUE BONDS, SERIES 2020A (CEDAR GLEN APARTMENTS PROJECT) Dated as of: April 1, 2020 FAEGRE DRINKER BIDDLE & REATH LLP Bond Counsel INDEX (This Index is not a part of the Agreement but rather is for convenience of reference only.) Page ARTICLE I DEFINITIONS 1 Section 1.1. Use of Defined Terms. 1 Section 1.2. Interpretation. 1 Section 1.3. Captions and Headings. 2 ARTICLE II REPRESENTATIONS 3 Section 2.1. Representations of the Issuer 3 Section 2.2. Representations and Covenants of the Borrower. 4 ARTICLE III COMPLETION OF THE PROJECT; ISSUANCE OF THE BONDS 7 Section 3.1. Acquisition, Construction, Rehabilitation, Installation, Equipment and Improvement. 7 Section 3.2. Plans and Specifications 7 Section 3.3. Issuance of the Bonds; Application of Proceeds. 8 Section 3.4. Disbursements from the Project Fund. 8 Section 3.5. Borrower Required to Pay Costs in Event Project Fund Insufficient. 9 Section 3.6. Completion Date. 9 Section 3.7. Investment of Fund Moneys 9 Section 3.8. Rebate Fund 9 Section 3.9. [Reserved]. 10 Section 3.10. Remarketing of Bonds 10 ARTICLE IV LOAN BY ISSUER; REPAYMENT OF THE LOAN; LOAN PAYMENTS AND ADDITIONAL PAYMENTS 11 Section 4.1. Loan Repayment; Delivery of Note. 11 Section 4.2. Additional Payments. 11 Section 4.3. Place of Payments. 12 Section 4.4. Obligations Unconditional. 13 Section 4.5. Assignment of Agreement and Pledged Revenues. 13 ARTICLE V ADDITIONAL AGREEMENTS AND COVENANTS 14 Section 5.1. Right of Inspection. 14 Section 5.2. Borrower to Maintain its Existence; Sales of Assets or Mergers 14 Section 5.3. Indemnification. 15 Section 5.4. Borrower Not to Adversely Affect Exclusion from Gross Income of Interest on Bonds. 16 Section 5.5. Affirmative Covenants. 16 Section 5.6. Negative Covenants 19 ARTICLE VI PREPAYMENT, TENDER AND TERMINATION 20 Section 6.1. Borrower's Obligations Upon Tender of Bonds. 20 Section 6.2. Option to Terminate. 20 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES 1 Section 7.1. Events of Default 1 Section 7.2. Remedies on Default. 2 Section 7.3. No Remedy Exclusive. 3 Section 7.4. Agreement to Pay Attorneys' Fees and Expenses 3 Section 7.5. No Waiver. 3 Section 7.6. Notice of Default. 3 Section 7.7. Investor Member's Cure Rights. 4 ARTICLE VIII MISCELLANEOUS 5 Section 8.1. Term of Agreement. 5 Section 8.2. Amounts Remaining in Funds 5 Section 8.3. Notices 5 Section 8.4. Extent of Covenants of the Issuer; No Personal Liability. 5 Section 8.5. Binding Effect. 6 Section 8.6. Amendments and Supplements. 6 Section 8.7. Execution Counterparts. 6 Section 8.8. Severability 6 Section 8.9. Governing Law 6 Section 8.10. Non-Recourse Obligations. 6 Signatures S-1 ii Exhibit A - FORM OF NOTE A-1 Exhibit B - FORM OF COMPLETION CERTIFICATE B-1 Exhibit C - FORM OF REQUISITION C-1 Exhibit D - FHA LENDER'S CERTIFICATE TO TRUSTEE D-1 Exhibit E - BORROWER'S CERTIFICATE TO TRUSTEE E-1 Exhibit F - BORROWER'S CERTIFICATE TO FHA LENDER AND TRUSTEE F-1 iii Filed in C lork'h Office MAR 1 8 2020 1 � I LOAN AGREEMENT DAWN M.JONES CITY CLERK,SOUTH BEND,IN THIS LOAN AGREEMENT is made and entered into as of April 1, 2020 between the CITY OF SOUTH BEND, INDIANA, a municipal corporation duly organized and validly existing under the laws of the State of Indiana (the "Issuer"), and MAH CEDAR GLEN, LP, a limited partnership duly organized and validly existing under the laws of the State of Indiana(the "Borrower"), under the following circumstances summarized in the following recitals (the capitalized terms not defined in the recitals being used therein as defined in Article I hereof): A. Pursuant to the Act, the Issuer has determined to issue, sell and deliver its Bonds and to loan the proceeds derived from the sale thereof to the Borrower to assist in the financing of the Project to be undertaken by the Borrower. B. The Borrower and the Issuer each have full right and lawful authority to enter into this Agreement and to perform and observe the provisions hereof on their respective parts to be performed and observed. NOW THEREFORE, in consideration of the premises and the mutual representations and agreements hereinafter contained, the Issuer and the Borrower agree as follows (provided that any obligation of the Issuer created by or arising out of this Agreement shall never constitute a general debt of the Issuer or give rise to any pecuniary liability of the Issuer but shall be payable solely from the Trust Estate): ARTICLE I DEFINITIONS Section 1.1. Use of Defined Terms. In addition to the words and terms defined elsewhere in this Agreement, the words and terms in this Agreement shall have the meanings set forth in the Trust Indenture (the "Indenture"), dated as of the date of this Agreement between the Issuer and The Huntington National Bank, as Trustee. Section 1.2. Interpretation. Any reference herein to the Issuer, to the Board or to any member or officer of either includes entities or officials succeeding to their respective functions, duties or responsibilities pursuant to or by operation of law or lawfully performing their functions. Any reference to a section or provision of the Constitution of the State or the Act, or to a section, provision or chapter of the Indiana Code or to any statute of the United States of America, includes that section, provision or chapter as amended, modified, revised, supplemented or superseded from time to time; provided, that no amendment, modification, revision, supplement or superseding section, provision or chapter shall be applicable solely by reason of this provision, if it constitutes in any way an impairment of the rights or obligations of the Issuer, the Holders, the Trustee or the Borrower under this Agreement. Unless the context indicates otherwise, importing singular im ortin the sin lar number include the plural number, and vice versa; the terms "hereof', "hereby", "herein", "hereto", "hereunder" and similar terms refer to this Agreement; and the term "hereafter" means after, and the term "heretofore" means before, the date of delivery of the Bonds. Words of any gender include the correlative words of the other genders, unless the sense indicates otherwise. Section 1.3. Captions and Headings. The captions and headings in this Agreement are solely for convenience of reference and in no way define, limit or describe the scope or intent of any Articles, Sections, subsections, paragraphs, subparagraphs or clauses hereof. (End of Article I) 2 ARTICLE II REPRESENTATIONS Section 2.1. Representations of the Issuer. The Issuer represents and warrants and agrees that: (a) It is validly existing as a municipal corporation of the State pursuant to the Act, and has full legal right, power and authority (i) to enter into this Agreement; (ii) to adopt the Bond Resolution and cause the delivery of the Bonds pursuant to the Bond Resolution and this Agreement as provided herein; (iii) to loan the proceeds of the Bonds in thisAgreement; and (iv) to carryout and to the Borrower for the purpose set forth gr consummate the transactions contemplated by this Agreement, the Indenture and the Regulatory Agreement(collectively, the"Issuer Documents"). (b) The Issuer, with respect to the Bonds, as advised by Bond Counsel, has complied, and will at the Closing Date be in compliance in all material respects with the Issuer Documents and the relevant laws of the State; (c) (i) At or prior to the Closing, the Issuer will have taken all action required to be taken by it to authorize the issuance and sale of the Bonds and the performance of its obligations under the Issuer Documents; (ii) the Issuer has full legal right, power and authority to enter into the Issuer Documents, will have full legal right, power and authority to deliver the Bonds to the Holder and to perform its obligations hereunder as provided in this Agreement, the Bonds and the Issuer Documents, and all other documents to be executed by the Issuer in accordance with the issuance of the Bonds, and to carry out and effectuate the transactions contemplated by this Agreement and the Issuer Documents; (iii) on or prior to the Closing Date, the execution and delivery of, and the performance by the Issuer of the obligations contained in the Bonds, this Agreement and the Issuer Documents shall have been duly authorized, and when executed this Agreement, and the Issuer Documents will constitute valid and legally binding limited obligations of the Issuer enforceable against the Issuer in accordance with their respective terms, subject to any applicable bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditors' rights generally and the application of equitable principles where equitable remedies are sought and limitations on the enforcement of judgments against public bodies; (iv) the Issuer has duly authorized the consummation by it of all transactions contemplated by this Agreement; and (v) the Issuer Documents have been duly and validly adopted by the Issuer and are at the time of acceptance hereof in full force and effect; (d) The Issuer, with respect to the Bonds, has not received notice that it is in material breach of or default under any applicable law or administrative regulation of the State, any department, division, agency or instrumentality thereof, or the United States or any applicable judgment or decree or any loan agreement, note, resolution, certificate, agreement or other instrument to which the Issuer is a party or is otherwise subject; and the adoption of the Bond Resolution and the execution and delivery of this Agreement, the Bonds, the other Issuer Documents and all other documents to be executed by the 3 Issuer in connection with the issuance of the Bonds, and compliance with the provisions of each thereof do not, to the Issuer's knowledge, conflict with or constitute a material breach of or default under any applicable law or administrative regulation of the State, any department, division, agency or instrumentality thereof, or the United States or any applicable judgment or decree, or any loan agreement, note, resolution, certificate, agreement or other instrument to which the Issuer is a party or is otherwise subject; (e) All approvals, consents, and orders of any governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to the performance by the Issuer, of its obligations hereunder and under the Bond Resolution, the Issuer Documents and the Bonds and all other documents to be executed by the Issuer in connection with the issuance of the Bonds have been obtained; (f) The Issuer will not take or omit to take any action, which action or omission will adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Bonds under the Code. (g) The Bonds, when delivered and sold to the Holder as provided herein, will have been duly authorized and executed and will constitute validly issued and binding limited obligations of the Issuer in conformity with, and entitled to the benefit and security of, the Act and the Issuer Documents; and (h) The Issuer agrees that all representations, warranties and covenants made by it herein, and in certificates, agreements or other instruments delivered pursuant hereto or in connection herewith, shall be deemed to have been relied upon by the Holders, and that all representations, warranties and covenants made by the Issuer herein and therein and all the Holders' rights hereunder and thereunder shall survive the delivery of the Bonds. Section 2.2. Representations and Covenants of the Borrower. The Borrower represents and covenants that: (a) It is a limited liability company duly formed and validly existing under the laws of the State. (b) It has full power and authority to execute, deliver and perform this Agreement, the Note and the Regulatory Agreement and to enter into and carry out the transactions contemplated by those documents. That execution, delivery and performance do not, and will not, violate any provision of law applicable to the Borrower and do not, and will not, conflict with or result in a default under any agreement or instrument to which the Borrower is a party or by which it is bound. This Agreement, the Note and the Regulatory Agreement have, by proper action, been duly authorized, executed and delivered by the Borrower and all steps necessary have been taken to constitute this Agreement, the Note and the Regulatory Agreement valid and binding obligations of the Borrower. 4 (c) The provision of financial assistance to be made available to it under this Agreement and the commitments therefor made by the Issuer have induced the Borrower to undertake the transactions contemplated by this Agreement. (d) It presently intends to use or operate the Project in a manner consistent with the Act and in accordance with the Regulatory Agreement for the life of the Bonds, or for such longer period as may be required by the Regulatory Agreement and knows of no reason why the Project will not be so operated. If, in the future, there is a cessation of that operation, it will use its best efforts to resume that operation or accomplish an alternate use by the Borrower or others approved by the Issuer which will be consistent with the Act and the Regulatory Agreement. (e) The Project will be completed substantially in accordance with the Plans and Specifications and the portion of the Project funded with the proceeds of the Bonds will constitute a qualified residential rental project within the meaning of Section 142(d) of the Code and will be operated and maintained in such manner as to conform in all material respects with all applicable zoning, planning, building, environmental and other applicable Governmental regulations and as to be consistent with the Act. (f) The Project will be located entirely within the boundaries of the Issuer's jurisdiction. (g) At least 95% of the net proceeds of the Bonds (as defined in Section 150 of the Code) will be used to provide a qualified residential rental project (as defined in Section 142(d) of the Code), and the Borrower will not request or authorize any 3.4 hereof, which, if paid, would result in less than 95% disbursement pursuant to Section of the net proceeds of the Bonds being so used. (h) The costs of issuance financed by the Bonds will not exceed 2% of the proceeds of the Bonds (within the meaning of Section 147(g) of the Code), and the Borrower will not request or authorize any disbursement pursuant to Section 3.4 hereof or otherwise, which, if paid, would result in more than 2% of the proceeds of the Bonds being so used. (i) At least 95% of the proceeds of the Bonds shall be used or deemed used exclusively to pay costs that are (A) capital expenditures (as defined in Section 1.150- 1(a) of the Code's regulations) and (B) not made for the acquisition of existing property, to the extent prohibited in Section 147(d) of the Code, (j) The proceeds of the Bonds shall be used or deemed used exclusively to pay costs that are made exclusively with respect to a"qualified residential rental project" within the meaning of Section 142(d) of the Code and that for the greatest number of buildings the proceeds of the Bonds shall be deemed allocated on a pro rata basis to each building in the Project and the land on which it is located so that each building and the land on which it is located will have been financed fifty percent (50%) or more by the proceeds of the Bonds for the purpose of complying with Section 42(h)(4)(B) of the Code; provided, however, the foregoing representation, covenant and warranty is made 5 for the benefit of the Borrower and its members and neither the Trustee nor the Issuer shall have any obligation to enforce this covenant nor shall they incur any liability to any person, including without limitation, the Borrower, the members of the Borrower, any other affiliate of the Borrower or the holders of the Bonds for any failure to meet the intent expressed in the foregoing representation, covenant and warranty; and provided further, failure to comply with this representation, covenant and warranty shall not constitute a default or event of default under this Agreement or the Indenture. (k) The Borrower has received and reviewed a copy of the Indenture and approves the terms and conditions thereof and agrees to the terms thereof. (1) Neither the Borrower nor any related Person thereto shall acquire any Bonds in any amount. (m) The Borrower understands the nature and structure of the transactions relating to the financing of the Project; it is familiar with the provisions of all of the documents and instruments relating to such financing to which it, the Lender, the Issuer or the Trustee is a party or of which it is a beneficiary; it understands the risks inherent in such transactions, including, without limitation, the risk of loss of the Project; and it has not relied on the Lender, the Issuer, the Trustee or their counsel for any guidance or expertise in analyzing the financial or other consequences of the transactions contemplated by this Agreement and the Indenture or otherwise relied on the Lender, the Issuer, the Trustee or their counsel in any manner. (n) The Project is, as of the Closing Date, in compliance with all requirements of the Regulatory Agreement, including all applicable requirements of the Act and Code. The residential units in the Project are to and will be rented or available for rental on a basis which satisfies the requirements of the Regulatory Agreement, including all applicable requirements of the Act and the Code. All current leases comply, and all future leases will comply, with all applicable laws and the Regulatory Agreement. The Project meets the requirements of this Agreement, the Regulatory Agreement, the Act and the Code with respect to multifamily rental housing. The Borrower acknowledges that the representations and covenants herein made by the Borrower have been expressly and specifically relied upon by the Issuer in determining to make the Loan to the Borrower and the Loan would not have been made but for such representations and covenants. (End of Article II) 6 ARTICLE III COMPLETION OF THE PROJECT; ISSUANCE OF THE BONDS Section 3.1. Acquisition, Construction, Rehabilitation, Installation, Equipment and Improvement. The Borrower (a) has acquired the Project site and shall construct, improve and equip the Project with all reasonable dispatch and in accordance with the Plans and Specifications, (b) shall pay when due all fees, costs and expenses incurred in connection with that acquisition, construction, rehabilitation, installation, equipment and improvement from funds made available therefor in accordance with this Agreement or otherwise, except to the extent being contested in good faith, and (c) shall ask, demand, sue for, levy, recover and receive all those sums of money, debts and other demands whatsoever which may be due, owing and payable under the terms of any contract, order, receipt, writing and instruction in connection with the acquisition, construction, rehabilitation, improvement and equipping of the Project, and shall enforce the provisions of any contract, agreement, obligation, bond or other performance security with respect thereto, it being understood that the Borrower shall not be required to take any of the foregoing actions if it would be commercially unreasonable to do so. It is understood that the Project will be owned by the Borrower and any contracts made by the Borrower with respect thereto, whether acquisition contracts, construction contracts or otherwise, or any work to be done by the Borrower on the Project are made or done by the Borrower in its own behalf and not as agent or contractor for the Issuer and each such contract shall so state. The Borrower agrees that it will compensate all workers employed in the construction, rehabilitation, equipping and improvement of the Project as required by law. Section 3.2. Plans and Specifications. The Plans and Specifications have been or, upon request, shall be filed with the Issuer. The Borrower may revise the Plans and Specifications from time to time, provided that no revision shall be made which would change the Project Purposes to other than purposes permitted by the Act and the Regulatory Agreement. The Borrower shall provide to the Issuer evidence acceptable to the Issuer, in its sole discretion, of the availability of all financing contemplated by the plan of financing for the Project including, without limitation (and without regard to whether the immediate availability of such financing is a condition to undertaking the Project), the equity portion of the financing and all other public and private financing and any interim or bridge financing to be provided in anticipation of the closing of any of the foregoing aspects of the financing therefor. Any material changes in the plan of financing shall be communicated promptly to the Issuer. Copies of all documents evidencing that financing, and the security therefor, all in form reasonably acceptable to the Issuer, shall have been provided to the Issuer. No material revision of the Plans and Specifications shall be made unless the Borrower has first delivered to the Issuer a narrative description of the proposed revision accompanied by a certificate of the Authorized Borrower Representative certifying the change in Project Costs resulting from the revision and that the moneys then on deposit in the Project Fund together with investment earnings thereon at the rate of return stated in the certificate together with other 7 identified available moneys will be sufficient to pay in full the Project Costs including the change in Project Costs resulting from such revision. Section 3.3. Issuance of the Bonds; Application of Proceeds. To provide funds to make the Loan for purposes of assisting in paying the Project Costs, the Issuer will issue, sell and deliver the Bonds to the Underwriter. The Bonds will be issued pursuant to the Indenture in the aggregate principal amount, will bear interest and will mature as set forth therein. The Borrower hereby approves the terms and conditions of the Indenture and the Bonds, and of the terms and conditions under which the Bonds will be issued, sold and delivered. The proceeds from the sale of the Bonds shall be loaned to the Borrower and paid over to the Trustee for the benefit of the Borrower and the Holders of the Bonds and deposited as follows: (a) a sum equal to any accrued interest and negative arbitrage deposit paid by the Underwriter shall be deposited in the Bond Fund, and (b) the balance of the proceeds shall be deposited in the Project Fund. Pending disbursement pursuant to Section 3.4 hereof, the proceeds so deposited in the Project Fund, together with any investment earnings thereon, shall constitute a part of the Pledged Revenues assigned by the Issuer to the Trustee as security for the payment of Bond Service Charges as provided in the Indenture. Section 3.4. Disbursements from the Project Fund. Subject to the disbursement requirements of HUD and so long as no Event of Default hereunder has occurred and is continuing for which the principal amount of the Bonds has been declared to be immediately due and payable pursuant to Section 7.2 hereof and Section 7.03 of the Indenture, disbursements from the Project Fund shall be made upon the receipt by the Trustee of(i) a written request from the Borrower in substantially the form of the request attached hereto as Exhibit C and (ii) Collateral Funds in the amount of the disbursement request. Upon receipt of the Collateral Funds, the Trustee shall transfer funds as set forth in Section 5.03 of the Indenture. Proceeds of the Bonds disbursed pursuant to the provisions of this Agreement may only be used to pay Project Costs. The Borrower acknowledges that all Collateral Funds requested shall be wired from or at the direction of the Senior Lender to the Trustee and disbursed and invested and applied by the Trustee in accordance with the provisions of Section 5.03 of the Indenture; provided, however, that if an Event of Default occurs that results in an acceleration of the Bonds, any Collateral Funds to be provided after the Bonds have been paid in full shall be wired directly to the Borrower. Any disbursement for any item that is not described in, or the cost for which item is other than as described in, the information statement filed by the Issuer in connection with the issuance of the Bonds as required by Section 149(e) of the Code and in the Notice of Public Hearing pertaining to the Bonds, shall be accompanied by an Opinion of Bond Counsel to the effect that such disbursement will not cause the interest on the Bonds to be included in the gross income of the Holders for federal income tax purposes. Any moneys in the Project Fund remaining after the Completion Date and payment, or provision for payment, in full of the Project Costs, promptly shall be paid into the Bond Fund for 8 payment of Bond Service Charges, and the Borrower shall have no residual interest in any amounts on deposit in the Project Fund; provided, however, that if an Event of Default occurs that results in acceleration of the Bonds, Collateral Funds shall be wired directly to the Borrower. Section 3.5. Borrower Required to Pay Costs in Event Project Fund Insufficient. If moneys in the Project Fund are not sufficient to pay all Project Costs, the Borrower, nonetheless, will complete the Project substantially in accordance with the Plans and Specifications and shall pay all such additional Project Costs from its own funds. The Borrower shall pay all costs of issuing the Bonds in excess of the amount permitted by paragraph (h) of Section 2.2 hereof. The Borrower shall not be entitled to any reimbursement for any such additional Project Costs or payment of issuance costs from the Issuer, the Trustee or any Holder; nor shall it be entitled to any abatement, diminution or postponement of the Loan Payments. Section 3.6. Completion Date. The Borrower shall notify the Issuer and the Trustee of the Completion Date by the delivery of a Completion Certificate signed by the Authorized Borrower Representative substantially in the form of Exhibit B attached hereto. The Completion Certificate shall be delivered as promptly as practicable after the occurrence of the events and conditions referred to in the Completion Certificate. Section 3.7. Investment of Fund Moneys. Any moneys held as part of the Bond Fund, the Project Fund, the Assignment Fund and the Rebate Fund shall be invested or reinvested by the Trustee in Eligible Investments as provided in the Indenture. The Issuer shall not direct the Trustee to invest or reinvest in investments other than Eligible Investments, and the Borrower covenants that it will restrict that investment and reinvestment and the use of theP roceeds of the Bonds in such manner and to such extent, if may as any, Y be necessary, after taking into account reasonable expectations at the time of delivery of and payment for the Bonds or subsequent intentional acts, so that the Bonds will not constitute arbitrage bonds under Section 148 of the Code. No provision of this Agreement shall be construed to impose upon the Trustee any obligation or responsibility for compliance with arbitrage regulations except as provided for in the Indenture. The Borrower shall provide the Issuer with, and the Issuer may base its certifications as authorized bythe Bond Resolution on, a certificate of an appropriate em to employee or agent officer, P Y g for inclusion in the transcript of proceedings for the of or consultant to the Borrower oBonds, P P g setting forth the reasonable expectations of the Borrower on the date of delivery of and payment for the Bonds regarding the amount and use of the proceeds of the Bonds and the facts, estimates and circumstances on which those expectations are based. Section 3.8. Rebate Fund. The Borrower agrees to make such payments to the Trustee as are required of it under Section 5.10 of the Indenture as well as to pay the expenses of any Independent certified public accounting firm or qualified rebate analyst engaged in accordance with that Section. The 9 obligation of the Borrower to make such payments shall remain in effect and be binding upon the Borrower notwithstanding the release and discharge of the Indenture. Section 3.9. [Reserved]. Section 3.10. Remarketing of Bonds. The Authorized Borrower Representative, with the written consent of the Remarketing Agent is hereby granted the right to (a) request a remarketing of the Bonds in the manner and to the extent set forth in Section 4.01 of the Indenture and (ii) designate the length of the Remarketing Period and the related Mandatory Tender Date in the manner and to the extent set forth in Sections 4.01 and 4.03 of the Indenture. (End of Article III) 10 ARTICLE IV LOAN BY ISSUER; REPAYMENT OF THE LOAN; LOAN PAYMENTS AND ADDITIONAL PAYMENTS Section 4.1. Loan Repayment; Delivery of Note. Upon the terms and conditions of this Agreement, the Issuer will make the Loan to the Borrower. In consideration of and in repayment of the Loan, the Borrower shall deliver or cause to be delivered to the Trustee on or before each Loan Payment Date, Loan Payments, equal to the amount necessary to pay interest on and principal of the Bonds due on the next Interest Payment Date. All such Loan Payments shall be paid to the Trustee in accordance with the terms of the Note for the account of the Issuer and shall be held and disbursed in accordance with the provisions of the Indenture and this Agreement. To the extent that amounts are in the Assignment Fund and the Bond Fund for the payment of all Bond Service Charges on the Bonds, the Borrower shall be entitled to a credit against the Loan Payments required to be made with respect to the Bonds on any date equal to the amount withdrawn from the Assignment Fund for the payment of Bond Service Charges on the Bonds on that date. To secure the Borrower's performance of its obligations under this Agreement, the Borrower shall execute and deliver, concurrently with the issuance and delivery of the Bonds,the Note and the Regulatory Agreement. Upon payment in full, in accordance with the Indenture, of the Bond Service Charges on any or all Bonds, whether at maturity or otherwise, or upon provision for the payment thereof having been made in accordance with the provisions of the Indenture, (i) the Note shall be deemed fully paid, the obligations of the Borrower thereunder shall be terminated, and the Note shall be surrendered by the Trustee to the Borrower, and shall be canceled by the Borrower, or (ii) an appropriate notation shall be endorsed thereon evidencing the date and amount of the principal payment(or prepayment) equal to the Bonds so paid, or with respect to which provision for payment has been made, and the Note shall be surrendered by the Trustee to the Borrower for cancellation if all Bonds shall have been paid (or provision made therefor) and canceled as aforesaid. Unless the Borrower is entitled to a credit under express terms of this Agreement or the Note, all payments on the Note shall be in the full amount required thereunder. The Borrower and the Issuer each acknowledge that neither the Borrower nor the Issuer has any interest in the Bond Fund or the Assignment Fund and any moneys deposited therein shall be in the custody of and held by the Trustee in trust for the benefit of the Holders. Section 4.2. Additional Payments. The Borrower shall pay to the Issuer or the Trustee, as the case may be, as Additional Payments hereunder the following: (a) To the Issuer or the Trustee, as the case may be, whether or not an Event of Default has occurred hereunder, as payment for or reimbursement or prepayment of any and all costs, expenses, and liabilities (i) incurred or paid by the Issuer or the Trustee, 11 as the case may be, in satisfaction of any obligations of the Borrower hereunder not performed by the Borrower in accordance with the provisions hereof, or(ii) incurred as a result of a request by the Borrower or of a requirement of this Agreement or the Indenture and not otherwise required to be paid by the Borrower under this Agreement, or (iii) incurred in the defense of any action or proceeding with respect to the Project or this Agreement, or in enforcing this Agreement, or arising out of or based upon any other document related to the issuance of the Bonds; and (b) To the applicable party, as payment for or reimbursement or prepayment of any Ordinary Services and Ordinary Expenses and Extraordinary Services and Extraordinary Expenses of the Trustee as trustee, registrar, authenticating agent and paying agent, and of any other paying agent, authenticating agent, and registrar on the Bonds under the Indenture, all as provided in the Indenture, as and when the same become due; provided that the Borrower may, without creating an Event of Default hereunder, contest in good faith the necessity for any Extraordinary Services and Extraordinary Expenses and the amount of any such Ordinary Services, Ordinary Expenses, Extraordinary Services or Extraordinary Expenses; provided that fees for Ordinary Services provided for by the respective letter agreements agreed to by the Borrower and the Trustee, the Registrar, and any Paying Agents and Authenticating Agents,respectively, shall be considered to be customary. (c) To the applicable party, all Extension Payments and other sums required under Section 4.01 of the Indenture in order to revise or extend the Mandatory Tender Date or remarket the Bonds, and the Borrower further agrees to execute any and all certificates required by the Issuer, the Trustee or the Remarketing Agent in order to effectuate such revision, extension or remarketing. Upon the payment, prepayment, or incurrence of any such cost, expense, or liability described in this Section by any such party, the Additional Payments in respect thereof shall be payable upon written demand to the Borrower, which demand shall be accompanied by invoices or other appropriate documentation concerning the nature, amount and incurrence of such cost, expense or liability. If the Additional Payments payable under this Section are not paid upon such demand, such Additional Payments shall bear interest from the date of such payment or the incurrence thereof at the Interest Rate for Advances until the amount due shall have been fully paid. The Borrower shall not make Additional Payments from any amounts on deposit in the Project Fund or the Assignment Fund except pursuant to Section 8.2 hereof or Section 5.09 of the Indenture. Section 4.3. Place of Payments. The Borrower shall make all Loan Payments directly to the Trustee at its designated corporate trust office. Additional Payments shall be made directly to the person or entity to whom or to which they are due. 12 Section 4.4. Obligations Unconditional. The obligations of the Borrower to make Loan Payments, Additional Payments and any payments required of the Borrower under Sections 5.10 and 6.03 of the Indenture shall be absolute and unconditional, and the Borrower shall make such payments without abatement, diminution or deduction regardless of any cause or circumstances whatsoever including, without limitation, any defense (other than actual payment or performance), set-off, recoupment or counterclaim which the Borrower may have or assert against the Issuer, the Trustee or any other Person. The Borrower maycontest or dispute the amount of anysuch obligation arisingunder P g Section 6.03 of the Indenture so long as such dispute or contest does not result in an Event of Default under the Indenture. Section 4.5. Assignment of Agreement and Pledged Revenues. To secure the payment of Bond Service Charges, the Issuer shall assign to the Trustee,by the Indenture, its rights under and interest in this Agreement (except for the Unassigned Issuer's Rights) and the Note. The Borrower hereby agrees and consents to those assignments. The Issuer shall not attempt to further assign, transfer or convey its interest in the Pledged Revenues or this Agreement or create any pledge or Lien of any form or nature with respect to the Pledged Revenues or Loan Payments hereunder. (End of Article IV) 13 ARTICLE V ADDITIONAL AGREEMENTS AND COVENANTS Section 5.1. Right of Inspection. At all reasonable times and upon reasonable notice, the Borrower shall allow any duly authorized representative of the Issuer or the Trustee to visit and inspect the Project, to examine and make copies of and from its books of record and account, and to discuss its affairs, finances, and accounts with its officers, and shall furnish to the Issuer and the Trustee any information reasonably required regarding its business affairs and financial condition within a reasonable time after receipt of written request therefor. Section 5.2. Borrower to Maintain its Existence; Sales of Assets or Mergers. The Borrower shall maintain its existence, not dissolve or sell, transfer or otherwise dispose of all or substantially all of its assets and not consolidate with or merge into another entity or permit one or more other entities to consolidate with or merge into it; provided, that it may do so if the surviving, resulting or transferee entity is other than the Borrower, it assumes in writing all of the obligations of the Borrower under this Agreement and the Regulatory Agreement and it has a net worth equal to or greater than that of the Borrower immediately prior to such consolidation, merger, sale or transfer. The Borrower shall not peniiit one or more other entities to consolidate with or merge into it, without the prior written consent of the Trustee; or take any action or allow any action to be taken to terminate the existence of the Borrower except as provided herein. Nothing herein contained shall limit the rights of(i) any direct or indirect owners of interests in the Borrower to (a) transfer, convey, sell or otherwise dispose (a "Transfer") their ownership interests to any Affiliate, or in connection with any estate planning, or by operation of law, or(b) make Transfers among and between themselves, or(ii) Borrower to make Transfers as otherwise permitted by (or subject to the terms and conditions set forth in) the Regulatory Agreement. Notwithstanding anything to the contrary contained herein or in any other Subordinate Bond Document (as defined in Section 13.12 of the Indenture), and subject to the consent of HUD (as defined in Section 1.01 of the Indenture) prior to each occurrence in accordance with the FHA Loan Documents (as defined in Section 1.01 of the Indenture), the following shall be permitted and shall not require the prior written approval of Issuer, FHA Lender or Trustee, (a) the transfer by the Investor Member of its interest in Borrower in accordance with the terms of Borrower's Amended and Restated Operating Agreement, as it may be amended from time to time (the "Operating Agreement"), (b) the removal of the managing member of Borrower in accordance with the Operating Agreement and the replacement thereof with the Investor Member, or any of its affiliates, (c) the transfer of ownership interests in the Investor Member, (d) the transfer of the interests of the Investor Member in Borrower to Borrower's managing member or any of its affiliates, and (e) any amendment to the Operating Agreement to memorialize the transfers or removal described above. The parties agree that this section shall control to the extent of any conflict in any Subordinate Bond Documents. 14 Section 5.3. Indemnification. The Borrower releases the Issuer and the Trustee from, agrees that the Issuer and the Trustee shall not be liable for, and indemnifies, defends and holds the Issuer and the Trustee harmless against, all liabilities, claims, costs and expenses and attorneys' fees imposed upon, incurred or asserted against the Issuer or the Trustee on account of: (i) any loss or damage to property or injury to or death of or loss by any person that may be occasioned by any cause whatsoever pertaining to the acquisition, financing, construction, occupation, possession, management, equipping, furnishing, maintenance, operation and use of the Project or from any work or thing done in or about the Project site, or any sidewalks, passageways, driveways, curbs, vaults and vault space, streets or parking areas on the Project site or adjacent thereto; (ii) any breach or default on the part of the Borrower in the performance of any covenant or agreement of the Borrower under this Agreement, the Regulatory Agreement, or any related document, or arising from any act or failure to act by the Borrower, or any of its agents, contractors, servants, employees or licensees; (iii) the Borrower's failure to comply with any of the covenants contained in this Agreement, including, without limitation, the covenant in Section 5.4 hereof; (iv) any action taken or omitted to be taken by the Issuer or the Trustee at the request of or with the consent of the Borrower including, without limitation, filing any required forms with the IRS or other governmental agencies; (v) the issuance, sale or delivery of the Bonds and the Borrower's furnishing information concerning the Project, the Borrower, its financial status or other matters relating to the Borrower; and (vi) any claim, action or proceeding brought with respect to any matter set forth in clause (i), (ii), (iii), (iv) or (v) above; provided, however, that the indemnification provided in this Section shall not apply with regard to the Trustee to any matter arising or resulting from the gross negligence or willful misconduct of the Trustee or to any information provided by the Trustee in writing for use in connection with the offering and sale of the Bonds and shall be limited to Surplus Cash. The Borrower agrees to indemnify the Trustee for and to hold it harmless against all liabilities, claims, costs and expenses incurred without negligence or willful misconduct on the part of the Trustee, on account of any action taken or omitted to be taken by the Trustee in accordance with the terms of this Agreement, the Bonds, the Regulatory Agreement, the Note or the Indenture or any action taken at the request of or with the consent of the Borrower, including the costs and expenses of the Trustee in defending itself against any such claim, action or proceeding brought in connection with the exercise or performance of any of its powers or duties under this Agreement, the Bonds,the Indenture, the Regulatory Agreement or the Note. In case any action or proceeding is brought against the Issuer or the Trustee in respect of which indemnity may be sought hereunder, the party seeking indemnity promptly shall give notice of that action or proceeding to the Borrower, and the Borrower upon receipt of that notice shall have the obligation and the right to assume the defense of the action or proceeding; provided, that failure of a party to give that notice shall not relieve the Borrower from any of its obligations under this Section unless that failure materially prejudices the defense of the action or proceeding by the Borrower. At the Borrower's expense, an indemnified party may employ separate counsel and participate in the defense; provided, however, that the indemnified parties, as a group, may only retain one separate counsel in any action or proceeding (or series of related actions or proceedings) at the expense of the Borrower, unless the interests of the indemnified parties are not aligned with one another. The Borrower shall not be liable for any settlement 15 made without its consent, which consent shall not be unreasonably conditioned, withheld or delayed. The indemnification set forth above is intended to and shall include the indemnification of all affected officials, directors, officers, agents and employees of the Issuer and the Trustee, respectively. That indemnification is intended to and shall be enforceable by the Issuer and the Trustee, respectively, to the full extent permitted by law. Section 5.4. Borrower Not to Adversely Affect Exclusion from Gross Income of Interest on Bonds. The Borrower hereby represents that it has taken and caused to be taken, and covenants that it will take and cause to be taken, all actions that may be required of it, alone or in conjunction with the Issuer, for the interest on the Bonds to be and to remain excluded from gross income for federal income tax purposes, and represents that it has not taken or permitted to be taken on its behalf, and covenants that it will not take or permit to be taken on its behalf, any actions that would adversely affect such exclusion under the provisions of the Code. Section 5.5. Affirmative Covenants. Unless the Trustee (and, where applicable, the Issuer) otherwise consents in writing: (a) Maintenance of Properties. The Borrower shall maintain and preserve in good working order and condition, ordinary wear and tear excepted, all of its properties which are necessary in the proper conduct of its business, and shall from time to time make all necessary repairs, renewals, replacements, additions and improvements to said properties. All damage to apartment units shall be repaired promptly and apartment units shall be maintained so as to be available at all times for habitation. (b) Keeping of Records and Books of Account. The Borrower shall keep g adequate records and books of account in which complete entries will be made in accordance with GAAP or indicating deviations therefrom, reflecting all financial transactions. (c) Payment of Taxes, Etc. The Borrower shall promptly pay and discharge: all taxes, assessments, fees, and other Governmental charges or levies or imposed upon it or upon any of its properties, income or profits, before the same shall become delinquent; all lawful claims of materialmen, mechanics, carriers, warehousemen, landlords and other similar Persons for labor, materials, supplies and rentals, which if unpaid might by law become a Lien upon its properties; any Indebtedness heretofore or hereafter incurred by it when due, and discharge, perform and observe covenants, provisions and conditions to be discharged, performed and observed by it in connection therewith, or in connection with any agreement or other instrument relating thereto or in connection with any Lien existing at any time upon any of its properties; provided, however, that the Borrower shall not be required to pay any of the foregoing if(i) the amount, applicability or validity thereof shall currently be contested in good faith by appropriate proceedings, (ii) the Borrower shall have set aside on its books adequate reserves with respect thereto and (iii) 16 the title of the Borrower to, and its right to use, its properties is not materially and adversely affected thereby. (d) Insurance. The Borrower shall at all times: (i) Maintain or cause to be maintained insurance of such types and in such amounts (including without limitation, builder's risk insurance and insurance against loss by fire, hazards included within the term "extended coverage," and such other hazards, contingencies or casualties and liabilities on the Project, liability insurance with respect to the Project, and flood insurance on any portion of the Project which lies in a federally identified flood hazard zone) upon its property with responsible and reputable insurers of such character and in such amounts, with respect to such risks, as are usually maintained by Persons engaged in a like business under similar circumstances, and, with respect to casualty insurance on the Project equal to the original amount of the Loan and with an insurer qualified to write such insurance in the State, subject to ordinary and reasonable deductibles. (ii) Furnish to the Trustee, upon request, certified copies of its insurance policies or certificates of insurance showing its insurance coverage. (iii) Require each policy of insurance covering the Project to contain a provision whereby it cannot be canceled or substantially modified except after not less than 30 days' written notice to the Trustee. (e) The Borrower hereby agrees that, in the event it fails to pay or cause to be paid taxes, assessments, fees and other Governmental charges or levies or the premium on any required insurance, the Trustee may make such payment, but is not obligated to do so, and the Trustee shall be reimbursed by the Borrower therefor with interest on the amount so advanced at the Interest Rate for Advances. (f) Notice of Material Litigation. The Borrower shall promptly notify the Trustee and the Issuer in writing of any litigation, arbitration proceeding or administrative investigation, inquiry or other proceeding to which it may hereafter become a party or be subject to which may involve any material risk of any material judgment or liability(unless fully covered by insurance) or which may otherwise result in any material adverse change in the business or assets or in the condition, financial or otherwise, of the Borrower or which may materially impair the ability of the Borrower to perform this Agreement, the Regulatory Agreement or the Note, or any other agreement or instrument herein or therein contemplated. (g) Notice of Default. In the event that any Event of Default occurs of which the Borrower is aware, the Borrower shall give prompt notice in writing of such happening to the Trustee and Issuer. (h) Performance of Contracts, Etc. Except to the extent contested in good faith, the Borrower shall perform according to and shall comply with all of its contractual obligations and all requirements of law if nonperformance thereof would materially and 17 adversely affect the business or credit of the Borrower on an individual basis or would materially impair the ability of the Borrower to perform this Agreement, the Regulatory Agreement or the Note or any other agreement or instrument herein or therein contemplated. (i) Notice of Other Matters. The Borrower shall promptly notify the Trustee in writing of any of the following events: (1) Any material change with respect to the business, assets, liabilities, financial condition, results of operations or business prospects of the Borrower other than changes in the ordinary course of business the effects of which have not been materially adverse. (2) A default by the Borrower in any material respect under any material agreement to which the Borrower is a party or by which the Borrower or its properties or assets may be bound, giving in each case the details thereof and specifying the action proposed to be taken with respect thereto. (j) Cooperation in Perfecting Security Interests, Etc. The Borrower shall promptly perform, upon request of the Trustee, such acts as may be necessary or advisable to perfect and maintain any Permitted Lien provided for in this Agreement or in any agreement or document contemplated herein or therein, or otherwise to carry out the intent of this Agreement. The Borrower shall, and shall promptly execute, deliver and perform or cause to be done, executed, delivered and performed, on request of the Trustee, all such documents, instruments, agreements, things and acts, including, without limitation, financing statements, continuation statements and mortgages as may be necessary or advisable to perfect or maintain a Permitted Lien on any and all assets or rights owned by the Borrower, or any interest of the Borrower therein, and the Trustee and its officers, employees and authorized agents, or any of them, are hereby irrevocably appointed the attorneys-in-fact of the Borrower to do all acts and things which the Trustee may deem necessary or advisable to preserve, perfect and continue perfected any Permitted Lien in favor of the Trustee. (k) Environmental Matters. The Borrower will take and continue to take prompt action to remedy all environmental pollution and contamination, hazardous waste disposal and other environmental cleanup problems, if any, whether or not such cleanup problems have resulted from the order or request of a municipal, state, federal, administrative or judicial authority, or otherwise. (1) Non-discrimination. The Borrower will not and will require each contractor, subcontractor and commercial tenant of the Project to covenant that it will not discriminate by reason of race, creed, color, handicap, national origin or sex in the employment of any Person employed by it in connection with the Project or working in or on the Project. The Borrower will require each manager of the Project to covenant that in the leasing of the Project it will not discriminate by reason of race, creed, color, handicap, national origin or sex. 18 Section 5.6. Negative Covenants. (a) Limitation on Liens. The Borrower shall not create, assume, incur or permit to exist or to be created, assumed or incurred, directly or indirectly, any Lien on any of the properties or assets of the Borrower whether now owned or hereafter acquired, except Permitted Liens. (b) Indebtedness. So long as no Event of Default or Default hereunder shall have occurred and be continuing, the Borrower shall be permitted to incur any Indebtedness for any Project Cost or other obligation or payment due under this Agreement, the Indenture or the Regulatory Agreement. (End of Article V) 19 ARTICLE VI PREPAYMENT,TENDER AND TERMINATION Section 6.1. Borrower's Obligations Upon Tender of Bonds. If Bonds are not remarketed on any Mandatory Tender Date and a sufficient amount is not available in the Special Funds as provided in Section 4.01(b) of the Indenture for the purpose of paying the redemption price of such Bond, the Borrower will cause to be paid to the Trustee by the Mandatory Tender Date, an amount equal to the amount by which the redemption price of the Bonds exceeds the amount otherwise available pursuant to the Indenture. Section 6.2. Option to Terminate. The Borrower shall have the option to cancel or terminate this Agreement at any time when (a) the Indenture shall have been released in accordance with its provisions, and (b) sufficient money or security acceptable to the Issuer and the Trustee are on deposit with the Trustee or the Issuer, or both, to meet all Loan Payments and Additional Payments due or to become due through the date on which the last of the Bonds is then scheduled to be retired or redeemed, or, with respect to Additional Payments to become due, provisions satisfactory to the Trustee and the Issuer are made for paying such amounts as they come due. Such option shall be exercised by the Authorized Borrower Representative, on behalf of the Borrower, giving the Issuer and the Trustee five days' notice in writing of such cancellation or termination and such cancellation or termination shall become effective at the end of such notice period. The provisions of this Section shall not be deemed to permit a prepayment of the Note other than in accordance with its terms. (End of Article VI) 20 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES Section 7.1. Events of Default. Each of the following shall be an Event of Default: (a) The Borrower shall fail to pay any Loan Payment on or prior to the date on which that Loan Payment is due and payable or within the Loan Payment Cure Period; (b) The Borrower shall fail to observe and perform any other agreement, term or condition contained in this Agreement and the continuation of such failure for a period of 30 days after written notice thereof shall have been given to the Borrower by the Issuer or the Trustee, or for such longer period as the Issuer and the Trustee may agree to in writing; provided, that if the failure is other than the payment of money and is of such nature that it can be corrected but not within the applicable period, that failure shall not constitute an Event of Default so long as the Borrower institutes curative action within the applicable period and diligently pursues that action to completion, which must be resolved within 180 days after the aforementioned notice; (c) The Borrower shall: (i) admit in writing its inability to pay its debts generally as they become due; (ii) have an order for relief entered in any case commenced by or against it under the federal bankruptcy laws, as now or hereafter in effect, which is not dismissed within 90 days; (iii) commence a proceeding under any other federal or state bankruptcy, insolvency, reorganization or similar law, or have such a proceeding commenced against it and either have an order of insolvency or reorganization entered against it or have the proceeding remain undismissed and unstayed for 90 days; (iv) make an assignment for the benefit of creditors; or(v)have a receiver or trustee appointed for it or for the whole or any substantial part of its property which appointment is not vacated within a period of 90 days; (d) Any representation or warranty made by the Borrower herein or any statement in any report, certificate, financial statement or other instrument furnished in connection with this Agreement or with the purchase of the Bonds shall at any time prove to have been false or misleading in any adverse material respect when made or given; and (e) There shall occur an "Event of Default" as defined in the Indenture or the Regulatory Agreement. Notwithstanding the foregoing, if, by reason of Force Majeure, the Borrower is unable to perform or observe any agreement, term or condition hereof which would give rise to an Event of Default under subsection (b) hereof, the Borrower shall not be deemed in default during the continuance of such inability. However, the Borrower shall promptly give notice to the Trustee and the Issuer of the existence of an event of Force Majeure and shall use its best efforts to remove the effects thereof; provided that the settlement of strikes or other industrial disturbances shall be entirely within its discretion. The term Force Majeure shall mean, without limitation, the following: (i) acts of God; strikes, lockouts or other industrial disturbances; acts of terrorism or of public enemies; orders or restraints of any kind of the government of the United States of America or of the State or any of their departments, agencies, political subdivisions or officials, or any civil or military authority; insurrections; civil disturbances; riots; epidemics; landslides; lightning; earthquakes; fires; hurricanes; tornados; storms; droughts; floods; arrests; restraint of government and people; explosions; breakage, malfunction or accident to facilities, machinery, transmission pipes or canals; partial or entire failure of utilities; shortages of labor,materials, supplies or transportation; or (ii) any cause, circumstance or event not reasonably within the control of the Borrower. The declaration of an Event of Default under subsection (c) above, and the exercise of remedies upon any such declaration, shall be subject to any applicable limitations of federal bankruptcy law affecting or precluding that declaration or exercise during the pendency of or immediately following any bankruptcy, liquidation or reorganization proceedings. Section 7.2. Remedies on Default. Whenever an Event of Default shall have happened and be subsisting, anyone or more of pp g the following remedial steps may be taken: (a) If acceleration of the principal amount of the Bonds has been declared pursuant to Section 7.03 of the Indenture, the Trustee shall declare all Loan Payments to be immediately due and payable together with any other amounts payable by the Borrower under this Agreement and the Note whereupon the same shall become immediately due and payable; (b) The Trustee may exercise any or all or any combination of the remedies specified in this Agreement; (c) The Issuer or the Trustee may have access to, inspect, examine and make copies of the books, records, accounts and financial data of the Borrower pertaining to the Project; or (d) The Issuer or the Trustee may pursue all remedies now or hereafter existing at law or in equity to collect all amounts then due and thereafter to become due under this Agreement, the Regulatory Agreement and the Note or to enforce the performance and observance of any other obligation or agreement of the Borrower under those instruments. Notwithstanding the foregoing, the Issuer shall not be obligated to take any step which in its opinion will or might cause it to expend time or money or otherwise incur liability unless and until a satisfactory indemnity bond has been furnished to the Issuer at no cost or expense to the Issuer. Any amounts collected as Loan Payments or applicable to Loan Payments and any other 2 amounts which would be applicable to payment of Bond Service Charges collected pursuant to action taken under this Section shall be paid into the Bond Fund and applied in accordance with the provisions of the Indenture or, if the Outstanding Bonds have been paid and discharged in accordance with the provisions of the Indenture, shall be paid as provided in Section 5.09 of the Indenture for transfers of remaining amounts in the Bond Fund. The provisions of this Section are subject to the further limitation that the rescission by the Trustee of its declaration that all of the Bonds are immediately due and payable also shall constitute an annulment of any corresponding declaration made pursuant to paragraph (a) of this Section and a waiver and rescission of the consequences of that declaration and of the Event of Default with respect to which that declaration has been made, provided that no such waiver or rescission shall extend to or affect any subsequent or other default or impair any right consequent thereon. Section 7.3. No Remedy Exclusive. No remedy conferred upon or reserved to the Issuer or the Trustee by this Agreement is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement, the Regulatory Agreement or the Note, or now or hereafter existing at law, in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair that right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Issuer or the Trustee to exercise any remedy reserved to it in this Article, it shall not be necessary to give any notice, other than any notice required by law or for which express provision is made herein. Section 7.4. Agreement to Pay Attorneys' Fees and Expenses. If an Event of Default should occur and the Issuer or the Trustee should incur expenses, including attorneys' fees, in connection with the enforcement of this Agreement, the Regulatory Agreement or the Note or the collection of sums due thereunder, the Borrower shall reimburse the Issuer and the Trustee, as applicable, for the expenses so incurred upon demand. Section 7.5. No Waiver. No failure by the Issuer or the Trustee to insist upon the strict performance by the Borrower of any provision hereof shall constitute a waiver of their right to strict performance and no express waiver shall be deemed to apply to any other existing or subsequent right to remedy the failure by the Borrower to observe or comply with any provision hereof. Section 7.6. Notice of Default. The Borrower shall notify the Trustee immediately if it becomes aware of the occurrence of any Event of Default hereunder or of any fact, condition or event which, with the giving of notice or passage of time or both, would become an Event of Default. 3 Section 7.7. Investor Member's Cure Rights. The Issuer hereby agrees that any cure of any Event of Default hereunder made or tendered by the Investor Member shall be deemed to be a cure by the Borrower and shall be accepted or rejected by the Issuer on the same basis as if made or tendered by the Borrower. (End of Article VII) 4 ARTICLE VIII MISCELLANEOUS Section 8.1. Term of Agreement. This Agreement shall be and remain in full force and effect from the date of delivery of the Bonds to the Underwriter until such time as all of the Bonds shall have been fully paid (or provision made for such payment) pursuant to the Indenture and all other sums payable by the Borrower under this Agreement and the Note shall have been paid, except for obligations of the Borrower under Sections 3.8, 4.2 and 5.3 hereof, which shall survive any termination of this Agreement. Section 8.2. Amounts Remaining in Funds. Any amounts in the Bond Fund remaining unclaimed by the Holders of Bonds for four years after the due date thereof (whether at stated maturity or otherwise), at the option of the Borrower, shall be deemed to belong to and shall be paid, at the written request of the Borrower, to the Borrower by the Trustee as overpayment of Loan Payments. With respect to that principal of and interest on the Bonds to be paid from moneys paid to the Borrower pursuant to the preceding sentence, the Holders of the Bonds entitled to those moneys shall look solely to the Borrower for the payment of those moneys. Further, any amounts remaining in the Project Fund and any other Special Funds or accounts created under this Agreement, the Regulatory Agreement or the Indenture after all of the Outstanding Bonds shall be deemed to have been paid and discharged under the provisions of the Indenture and all other amounts required to be paid under this Agreement, the Note, the Regulatory Agreement and the Indenture have been paid, shall be transferred to the Residual Fund and applied in accordance with the provisions of the Indenture. Section 8.3. Notices. All notices, certificates, requests or other communications hereunder shall be in writing and shall be deemed to be sufficiently given when mailed by registered or certified mail, postage prepaid, or forwarded by overnight courier service, delivery charges prepaid, and addressed to the appropriate Notice Address. Any notice given pursuant to Article V or Article VII shall be simultaneously given to the Rating Agency. A duplicate copy of each notice, certificate, request or other communication given hereunder to the Issuer, the Borrower or the Trustee shall also be given to the others. The Borrower, the Issuer, and the Trustee, by notice given hereunder, may designate any further or different addresses to which subsequent notices, certificates, requests or other communications shall be sent. Section 8.4. Extent of Covenants of the Issuer; No Personal Liability. All covenants, obligations and agreements of the Issuer contained in this Agreement and the Indenture shall be effective to the extent authorized and permitted by applicable law. No such covenant, obligation or agreement shall be deemed to be a covenant, obligation or agreement of any present or future member, officer, agent or employee of the Issuer in other than his official capacity, and no official executing the Bonds shall be liable personally on the Bonds 5 or be subject to any personal liability or accountability by reason of the issuance thereof or by reason of the covenants, obligations or agreements of the Issuer contained in this Agreement or in the Indenture. Section 8.5. Binding Effect. This Agreement shall inure to the benefit of and shall be binding in accordance with its terms upon the Issuer, the Borrower and their respective permitted successors and assigns provided that this Agreement may not be assigned by the Borrower (except in connection with a sale or transfer of assets pursuant to Section 5.2 hereof) and may not be assigned by the Issuer except to the Trustee pursuant to the Indenture or as otherwise may be necessary to enforce or secure payment of Bond Service Charges. This Agreement may be enforced only by the parties, their assignees and others who may, by law, stand in their respective places. Section 8.6. Amendments and Supplements. Except as otherwise expressly provided in this Agreement or the Indenture, subsequent to the issuance of the Bonds and prior to all conditions provided for in the Indenture for release of the Indenture having been met, this Agreement, the Regulatory Agreement and the Note may not be effectively amended, changed, modified, altered or terminated except in accordance with the provisions of Article XI of the Indenture, as applicable. Section 8.7. Execution Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be regarded as an original and all of which shall constitute but one and the same instrument. Section 8.8. Severability. If any provision of this Agreement, or any covenant, obligation or agreement contained herein is determined by a court to be invalid or unenforceable, that determination shall not affect any other provision, covenant, obligation or agreement, each of which shall be construed and enforced as if the invalid or unenforceable portion were not contained herein. That invalidity or unenforceability shall not affect any valid and enforceable application thereof, and each such provision, covenant, obligation or agreement shall be deemed to be effective, operative, made, entered into or taken in the manner and to the full extent permitted by law. Section 8.9. Governing Law. This Agreement shall be deemed to be a contract made under the laws of the State and for all purposes shall be governed by and construed in accordance with the laws of the State. Section 8.10. Non-Recourse Obligations. Except with respect to the Borrower's obligations under Section 5.3 hereof, it is hereby expressly agreed and understood that the obligations of Borrower hereunder, under the Note and under every document executed and delivered in connection herewith, are non-recourse to any member, officer, director or employee of the Borrower (each, a "Related Party") or to any asset 6 of the Borrower or any Related Party other than the Pledged Revenues. In furtherance thereof but subordinate to the rights of the Senior Lender in the same, the Issuer and the Trustee shall be entitled to look solely and exclusively to the Pledged Revenues for the payment and other obligations of Borrower hereunder, under the Note and all evidences of indebtedness secured hereby, and shall not seek a personal judgment against any member, officer, director, member or stockholder of the Borrower, provided that nothing herein shall relieve any such Related Party from liability for any of the following: (a) rent collected for more than one month in advance and received by a Related Party and not applied to the payment of costs and expenses of the operation of the Project; (b) misappropriation or misapplication by a Related Party of insurance or eminent domain proceeds; (c) fraud or material misrepresentation by a Related Party against the Issuer or the Holder; (d) conversion by a Related Party of all or a material portion of the Project; or (e) gross negligence, willful misconduct or intentional torts relating to the Project or the revenues therefrom. Section 8.11. Conflict With HUD-Insured Loan and HUD Regulations; Supremacy of Senior Lender Mortgage and HUD Regulatory Agreement. Notwithstanding anything in this Agreement to the contrary: (a) The provisions hereof (other than any provisions relating to the limited liability, or indemnification, of the Issuer) are subordinate and subject to the National Housing Act, HUD and GNMA regulations, related administrative requirements, and the Senior Lender Mortgage, Mortgage Note, the HUD Regulatory Agreement and other loan documents executed in connection with the HUD-Insured Loan (as defined below) (the "HUD Loan Documents"). In the event of any conflict between the provisions of this Agreement (other than provisions relating to the limited liability, or indemnification, of the Issuer) and the provisions of any applicable HUD regulations, related administrative requirements, or the HUD Loan Documents, the HUD regulations, related administrative requirements or HUD Loan Documents shall control. Any ambiguity or inconsistency will be resolved in favor of, and pursuant to, the HUD mortgage insurance requirements, HUD and GNMA statutory, regulatory and administrative requirements and the terms of the HUD Loan Documents. (b) Enforcement of this Agreement will not result in any claim against the Project, the undisbursed proceeds of the Senior Lender's loan (the"HUD-Insured Loan"), any reserve or deposit required by HUD in connection with the HUD-Insured Loan or the 7 rents or income from the Project (other than available Surplus Cash, as such term is defined in the HUD Regulatory Agreement or as otherwise permitted by HUD). (c) The Borrower shall not be deemed to be in violation of this Agreement if it shall take (or refrain from taking) any actions required (or prohibited) by HUD pursuant to the National Housing Act, applicable HUD (and Section 8, if applicable) Regulations and related administrative requirements or the HUD Loan Documents. (d) Any Project funds held by the Senior Lender for or on behalf of the Borrower shall be maintained separate and apart from the funds established and held by the Trustee and the various escrows and funds, if any,under the Indenture. (e) No amendment to this Agreement shall conflict with the provisions of the National Housing Act, any applicable HUD regulations, related administrative requirements, the HUD Loan Documents, or any applicable GNMA regulations and related administrative requirements. (f) This Agreement shall not be construed to restrict or adversely affect the duties and obligations of the Senior Lender under the contract of mortgage insurance between HUD and the Senior Lender with respect to the Project. (g) Neither the Issuer, the Trustee nor any bondholder has or shall be entitled to assert any claim against the Project, the undisbursed HUD-Insured Loan proceeds, any reserves or deposits required by HUD in connection with the HUD-Insured Loan or the rents or deposits or other income of the property other than "Surplus Cash" as defined in the HUD Regulatory Agreement. (h) Nothing herein is intended to alter or conflict with the terms, conditions, and provisions of the HUD regulations, handbooks, administrative requirements, and lender notices in effect at the time of HUD's endorsement of the Mortgage Note, or the documents required to be executed by the Borrower in connection with the endorsement of the Mortgage Note; and to the extent that they do so, the HUD regulations, administrative requirements, handbooks, lender notices and documents shall control and this Agreement shall be amended or deemed amended so as not to alter or conflict with the aforesaid regulations, documents, administrative requirements, handbooks or notices. This provision shall terminate and be void upon termination of HUD-Insured Loan. (End of Article VIII) US.126411073 05 8 IN WITNESS WHEREOF, the Issuer and the Borrower have caused this Agreement to be duly executed in their respective names, all as of the date hereinbefore written. CITY OF SOUTH BEND, INDIANA, as Issuer By: James Mueller, Mayor ATTEST: Dawn Jones,Clerk Signature Page of City of South Bend, Indiana to Loan Agreement MAH CEDAR GLEN,LP an Indiana limited partnership, as Borrower By: MAH Cedar Glen GP, LLC, an Indiana limited liability company, its general partner By: Merchants Affordable Housing Corp., an Indiana nonprofit corporation, its sole member By: Janine Betsey, President Signature Page of MAH Cedar Glen, LP to Loan Agreement EXHIBIT A FORM OF NOTE This Note has not been registered under the Securities Act of 1933. Its transferability is restricted by the Trust Indenture and the Loan Agreement referred to herein. $4,100,000 [April , 2020] MAH Cedar Glen, LP, a limited partnership duly organized and validly existing under the laws of the State of Indiana (the "Borrower"), for value received, promises to pay in installments to The Huntington National Bank, as Trustee (the "Trustee") under the Indenture hereinafter referred to, the principal sum of Four Million One Hundred Thousand Dollars ($4,100,000) and to pay interest on the unpaid balance of such principal sum from and after the date hereof at the rate of [ Vol per annum through and including the initial Mandatory Tender Date (as defined in the Indenture described below), and thereafter at the applicable Remarketing Rate (as defined in the Indenture) until the payment of such principal sum has been made or provided for. The principal sum stated above shall be paid on or before the fifth Business Day (as defined in the Indenture defined herein) immediately preceding November 1, 2022. Interest shall be calculated on the basis of a 360-day year of 12 equal months. Interest on this Note shall be paid in Federal Reserve funds on (a) the fifth Business Day next preceding May 1 and November 1, commencing November 1, 2020, (b) each Mandatory Tender Date, (c) the Maturity Date, and (d) the date of acceleration of the Bonds (the"Interest Payment Dates"). This Note has been executed and delivered by the Borrower to the Trustee pursuant to a certain Loan Agreement (the "Agreement") dated as of April 1, 2020, between the City of South Bend, Indiana (the "Issuer") and the Borrower. Terms used but not defined herein shall have the meanings ascribed to such terms in the Agreement and the Indenture, as defined below. Under the Agreement, the Issuer has loaned the Borrower the principal proceeds received from the sale of the Issuer's $4,100,000 Multifamily Housing Revenue Bonds, Series 2020A (Cedar Glen Apartments Project) dated as of April 1, 2020 (the "Bonds") to assist in the financing of the Project (as defined in the Agreement), and the Borrower has agreed to repay such loan by making payments ("Loan Payments") at the times and in the amounts set forth in this Note for application to the payment of Bond Service Charges on the Bonds as and when due. The Bonds have been issued, concurrently with the execution and delivery of this Note, pursuant to, and are secured by, the Trust Indenture (the "Indenture"), dated as of April 1, 2020, between the Issuer and the Trustee. To provide funds to pay the principal of and interest on the Bonds as and when due as specified herein, the Borrower hereby a ees to and shall make Loan Payments in Federal Reserve funds on the 5th Business Day immediately preceding each Interest Payment Date in an amount equal to the Bond Service Charges on the Bonds payable on the next succeeding Interest Payment Date. In addition, to provide funds to pay the Bond Service Charges on the Bonds as and when due at any other time, the Borrower hereby agrees to and shall make Loan Payments in A-1 Federal Reserve funds on the fifth Business Day immediately preceding any other date on which any Bond Service Charges on the Bonds shall be due and payable, whether at maturity, upon acceleration or otherwise, in an amount equal to those Bond Service Charges. If payment or provision for payment in accordance with the Indenture is made in respect of the Bond Service Charges on the Bonds from moneys other than Loan Payments, this Note shall be deemed paid to the extent such payments or provision for payment of Bonds has been made. Consistent with the provisions of the immediately preceding sentence, the Borrower shall have credited against its obligation to make Loan Payments any amounts transferred from the Project Fund or the Assignment Fund to the Bond Fund. Subject to the foregoing, all Loan Payments shall be in the full amount required hereunder. All Loan Payments shall be made to the Trustee at its corporate trust office for the account of the Issuer and deposited in the Bond Fund created by the Indenture. Except as otherwise provided in the Indenture, the Loan Payments shall be used by the Trustee to pay the Bond Service Charges on the Bonds as and when due. The obligation of the Borrower to make the payments required hereunder shall be absolute and unconditional and the Borrower shall make such payments without abatement, diminution or deduction regardless of any cause or circumstances whatsoever including, without limitation, any defense (other than actual payment or performance), set-off, recoupment or counterclaim which the Borrower may have or assert against the Issuer, the Trustee or any other person. The Borrower hereby waives the right to presentment, demand, protest, and notice of demand and protest. This Note is subject to prepayment in accordance with the terms and provisions of Section 6.1 of the Loan Agreement. Whenever an event of default under Section 7.01 of the Indenture shall have occurred and, as a result thereof, the principal of and any premium on all Bonds then outstanding, and interest accrued thereon, shall have been declared to be immediately due and payable pursuant to Section 7.03 of the Indenture, the unpaid principal amount of and any premium and accrued interest on this Note shall also be due and payable in Federal Reserve funds on the date on which the principal of and premium and interest on the Bonds shall have been declared due and payable; provided that the annulment of a declaration of acceleration with respect to the Bonds shall also constitute an annulment of any corresponding declaration with respect to this Note. The payment obligations of this Note are non-recourse to the Borrower and its members to the extent set forth in Section 8.10 of the Loan Agreement. The Borrower authorizes any attorney at law to appear in any court of record, state or federal, in any county of Indiana where Borrower maintains its principal place of business or in the county where this Note was signed, at any time or times after default in the payment of any installment due on the above obligations, whether by lapse of time or by acceleration or otherwise, and waive the issuance and service of process and confess judgment against Borrower in favor of any holder of this Note for the amount then appearing due, together with the costs of A-2 suit, and thereupon to release all errors and waive all rights of appeal and stay of execution. The foregoing warrant of attorney shall survive any judgments, and should any judgment be vacated for any reason the holder hereof shall be restored to the same rights, and Borrower subjected to the same obligations as existed hereunder prior to the rendition of such vacated judgment. IN WITNESS WHEREOF, the Borrower has caused this Note to be executed in its name as of the date first above written. WARNING--BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE. MAH CEDAR GLEN,LP an Indiana limited partnership, as Borrower By: MAH Cedar Glen GP, LLC, an Indiana limited liability company, its general partner By: Merchants Affordable Housing Corp., an Indiana nonprofit corporation, its sole member By: Janine Betsey, President A-3 EXHIBIT B COMPLETION CERTIFICATE To: THE HUNTINGTON NATIONAL BANK CITY OF SOUTH BEND, INDIANA Pursuant to Section 3.6 of the Loan Agreement (the "Agreement") between the The Huntington National Bank (the "Issuer") and MAH Cedar Glen, LP (the "Borrower"), dated as of April 1, 2020, and relating to the captioned Bonds, the undersigned Authorized Borrower Representative hereby certifies to that(with capitalized words and terms used and not defined in this Certificate having the meanings assigned in the Agreement): (a) The Project was substantially completed and available and suitable for use as multifamily housing on (b) All other facilities necessary in connection with the Project have been acquired, constructed, equipped and improved, (c) The acquisition, construction, renovation, equipping and improvement of the Project and those other facilities have been accomplished in such a manner as to conform in all material respects with all applicable zoning, planning, building, environmental and other similar governmental regulations. (d) Except as provided in subsection (e) of this Certificate, all costs of that acquisition and installation due on or after the date of this Certificate and now payable have been paid. [(e) The Trustee shall retain $ in the Project Fund for the payment of costs of the Project not yet due or for liabilities which the Borrower is contesting or which otherwise should be retained, for the following reasons] (f) This Certificate is given without prejudice to any rights against third parties that now exist or subsequently may come into being. IN WITNESS WHEREOF, the Authorized Borrower Representative has set his or her hand as ofthedayof Authorized Borrower Representative B-1 EXHIBIT C FORM OF WRITTEN REQUEST STATEMENT NO. REQUESTING DISBURSEMENT OF FUNDS FROM THE DISBURSEMENT ACCOUNT OF THE PROJECT FUND PURSUANT TO SECTION 3.4 OF THE LOAN AGREEMENT DATED AS OF APRIL 1, 2020 BETWEEN CITY OF SOUTH BEND AND MAH CEDAR GLEN, LP Pursuant to Section 3.4 of the Loan Agreement (the "Agreement") between the City of South Bend (the "Issuer") and MAH Cedar Glen, LP (the"Borrower") dated as of April 1, 2020, the undersigned Authorized Borrower Representative hereby requests and authorizes The Huntington National Bank, as trustee (the "Trustee"), as depository of the Project Fund created by the Indenture, to pay the costs of the items listed on the copy of the HUD Disbursement Request to the Senior Lender that is attached hereto as Attachment 1. This statement constitutes the approval of the Borrower of each disbursement hereby requested and authorized. This day of , 20 . Authorized Borrower Representative C-1 ATTACHMENT 1 C-2 EXHIBIT D FHA LENDER'S CERTIFICATE TO TRUSTEE Pursuant to Section 3.4 of the Loan Agreement (the "Agreement") between the City South Bend, Indiana (the "Issuer") and MAH Cedar Glen, LP (the "Borrower"), dated as of April 1, 2020, the undersigned Authorized Lender Representative hereby certifies that the deposit of $ into the Collateral Fund on , 20_ was fully derived from FHA Lender Funds or other Available Moneys. Capitalized terms used herein and not otherwise defined herein shall have the meanings given them in the Indenture referenced in the Agreement. This day of , 20_. By: Authorized Lender Representative [Name/Title] D-1 EXHIBIT E BORROWER'S CERTIFICATE TO TRUSTEE Pursuant to Section 3.4 of the Loan Agreement (the "Agreement") between the City of South Bend, Indiana (the "Issuer") and MAH Cedar Glen, LP (the "Borrower"), dated as of April 1, 2020, the undersigned Authorized Borrower Representative hereby certifies that the deposit of $ into the Collateral Fund on , 20 was fully derived from Available Moneys. Capitalized terms used herein and not otherwise defined herein shall have the meanings given them in the Indenture referenced in the Agreement. This day of , 20_. By: Authorized Borrower Representative [Name/Title] E-1 EXHIBIT F BORROWER'S CERTIFICATE TO FHA LENDER AND TRUSTEE STATEMENT NO. REQUESTING DISBURSEMENT OF FUNDS FROM PROJECT FUND PURSUANT TO SECTION 3.4 OF THE LOAN AGREEMENT DATED AS OF APRIL 1, 2020 BETWEEN SOUTH BEND, INDIANA AND MAH CEDAR GLEN, LP Pursuant to Section 3.4 of the Loan Agreement (the "Agreement") between the City of South Bend, Indiana (the "Issuer") and MAH Cedar Glen, LP (the "Borrower"), dated as of April 1, 2020 the undersigned Authorized Borrower Representative hereby requests and authorizes The Huntington National Bank, as trustee (the "Trustee"), as depository of the Project Fund created by the Trust Indenture (the "Indenture") between the Trustee and the Issuer, dated as of April 1, 2020, to disburse out of the moneys deposited in the Project Fund in the amount(s) and to the person(s) set forth in this certificate immediately upon a corresponding amount of FHA Lender Funds or other Available Moneys being deposited by the FHA Lender or the Borrower into the Collateral Fund. Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in the Indenture referenced in the Agreement. To induce the Trustee to release moneys deposited in the Project Fund pursuant to the terms of the Indenture and the Agreement in the amounts(s) and to the person(s) set forth herein and in the Disbursement Schedule attached hereto, the undersigned Borrower represents, warrants and certifies to the Issuer and the Trustee: (a) Each item for which disbursement is requested hereunder either (i) are presently due and payable, constitute Project Costs properly incurred by the Borrower in connection with the Project being financed with the proceeds of the Loan, or are reimbursable Project Costs properly chargeable against the Loan; or (ii) are to be deposited to an escrow fund to be disbursed therefrom solely for Project Costs properly incurred by the Borrower in connection with the Project; and in each case none of the items for which disbursement is requested has formed the basis for any disbursement heretofore made from said Project Fund. The amount or amounts and the party or parties to whom the disbursements shall be made are specified in the Disbursement Schedule attached hereto (and may be the undersigned in the case of reimbursement for advances and payments made or cost incurred for work done by the undersigned). (b) Each such item is or was necessary in connection with the acquisition, construction, installation and equipping of the Units of the Project. (c) The costs specified in the Disbursement Schedule attached hereto, when added to all previous disbursements under the Loan, will result in at least 95% of the aggregate amount of all disbursements having been used to pay or reimburse the Borrower for amounts which are Good Costs (as defined in the Section 3.2 of the Tax Agreement referred to in the Indenture). F-1 (d) To the knowledge of the undersigned, there is no current or existing event of default pursuant to the terms of the Agreement or the Regulatory Agreement and no event exists which by notice or passage of time or both would constitute an event of default under any of the foregoing documents. (e) No representation or warranty of the Borrower contained in the Agreement or the Regulatory Agreement is materially incorrect or inaccurate, except as the Borrower has set forth in writing, and there has been no event of default under the terms of any of those documents and which is continuing and no event shall exist which by notice, passage of time or both would constitute an event of default under any of those documents. (f) This statement and all exhibits hereto, including the Disbursement Schedule attached hereto, shall be conclusive evidence of the facts and statements set forth herein and shall constitute full warrant, protection and authority to the Trustee for its actions taken pursuant hereto. This statement constitutes the approval of the Borrower of the disbursement hereby requested and authorized. This day of , 20 . By: Authorized Borrower Representative [Name/Title] Approval of this request for disbursement by FHA Lender does not constitute a representation or acknowledgement that the proceeds disbursed from the Project Fund will be used for Qualified Project Costs, which FHA Lender expressly hereby disclaims. Schedule 1 Attached Hereto is Hereby Approved by Authorized Lender Representative: By: [Name/Title] F-2 DISBURSEMENT SCHEDULE 1 TO STATEMENT NO. _ REQUESTING AND AUTHORIZING DISBURSEMENT OF FUNDS FROM PROJECT FUND PURSUANT TO SECTION 3.4 OF THE LOAN AGREEMENT DATED AS OF APRIL 1, 2020 BETWEEN THE CITY OF SOUTH BEND, INDIANA AND MAH CEDAR GLEN, LP PAYEE AMOUNT PURPOSE F-3 PRELIMINARY OFFICIAL STATEMENT DATED _ ,2020 NEW ISSUE-BOOK-ENTRY ONLY RATING:Moody's:" " c d (See"RATING"herein) L d O -10 F, In the opinion of Faegre Drinker Biddle & Reath LLP, Bond Counsel, under existing law and assuming continuing compliance by the ▪H Issuer and Borrower(each hereinafter defined)with certain tax covenants, interest on the Bonds(hereinafter defined)is excludable from wgross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended and in effect on the date of issuance of the Bonds(the "Code"), except for interest on any Bond for any period during which such Bond is held by a person E'- who is a "substantial user"of the Project(hereinafter defined)or a "related person"within the meaning of Section 147(a)of the Code,and F 2 except as set forth under the heading "TAX MATTERS" herein. Further, under existing law, interest on the Bonds is not an item of tax ▪q preference for purposes of the federal alternative minimum tax imposed on individuals under the Code. In the opinion of Bond Counsel, 5 t under existing law, interest on the Bonds is exempt from taxation in the State of Indiana for all purposes except for the Indiana financial c-;> institutions tax. See "TAX MATTERS"herein for a discussion of the opinion of Bond Counsel. Gr.W O..=_ e d $4,100,000* r CITY OF SOUTH BEND,INDIANA z d MULTIFAMILY HOUSING REVENUE BONDS,SERIES 2020A Fo (CEDAR GLEN APARTMENTS PROJECT) z41 ,_,4 A Dated as of:April 1,2020 CUSIP' : [ ) Maturity Date:November 1,2022* o m y Initial Interest Rate: % Offering Price: 100% Initial Mandatory Tender Date:November 1,2021* ,, Authority for Issuance.The City of South Bend,Indiana(the"Issuer")is issuing its$4,100,000 Multifamily Housing Revenue c h Bonds(Cedar Glen Apartments Project) Series 2020A(the"Bonds")pursuant to a Trust Indenture(the"Indenture"), dated as of April 1, e g 2020,by and between the Issuer and The Huntington National Bank,as trustee(the"Trustee"). z' C.8 Denominations and Interest. The Bonds are issuable only as fully registered bonds without coupons in the denomination of E=,c $5,000 principal amount or any greater integral multiple of$5,000. Interest on the Bonds will be payable on each May 1 and November 1, 0.q commencing November 1,2020*. G L UBook-Entry Only.Purchasers of the Bonds will not receive certificates representing their interests in the Bonds. Bonds will be v F2 9 c registered in the name of Cede & Co., as registered owner and nominee of The Depository Trust Company, New York, New York. ,7,-.7. Principal of and interest on the Bonds is payable by the Trustee to Cede&Co.,which is to remit such payments to the Direct Participants w 0 (as defined herein)for subsequent disbursement to the purchasers of the Bonds. See"APPENDIX B- BOOK-ENTRY ONLY SYSTEM" -°i herein. La w . Use of Proceeds.The Bonds are being issued to provide financing to MAH Cedar Glen,LP,an Indiana limited partnership (the Q.c "Borrower"),for the acquisition,construction, improvement and equipping of a 179-unit affordable rental housing project(the"Project") F o W located in the City of South Bend,Indiana.See"THE PROJECT'herein. O— WE Security for the Bonds.At all times the Bonds will be secured by and payable from the Trust Estate(as defined herein). See 1.=17 "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS"herein. t Ha; Limited Obligations. THE BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE ISSUER PAYABLE SOLELY z s r FROM THE TRUST ESTATE (AS DEFINED HEREIN) PLEDGED UNDER THE INDENTURE AND NOT FROM ANY OTHER z°0 REVENUES, FUNDS OR ASSETS OF THE ISSUER. THE BONDS ARE NOT A GENERAL OBLIGATION, DEBT OR BONDED 0 y= INDEBTEDNESS OF THE ISSUER, OR A PLEDGE OF THE MONEYS, FAITH AND CREDIT OF THE ISSUER, AND THE • L HOLDERS OF THE BONDS HAVE NOT BEEN GIVEN AND DO NOT HAVE ANY RIGHT TO HAVE EXCISES OR TAXES o� LEVIED BY THE ISSUER FOR THE PAYMENT OF BOND SERVICE CHARGES THEREON. 0 c 1 z::Q Mandatory Tender.The Bonds are subject to mandatory tender for purchase on the Initial Mandatory Tender Date, subject to 3 o satisfaction of the applicable terms and conditions of remarketing set forth in the Indenture,or mandatory redemption,if the conditions to F z o remarketing the Bonds are not met on or before the Initial Mandatory Tender Date. All Bondholders must tender their Bonds for purchase c E 1.4 on the Initial Mandatory Tender Date. The Bonds may be remarketed and a new interest rate for the Bonds may be determined on the Q 5 Initial Mandatory Tender Date in accordance with the terms of the Indenture,or the Bonds may be redeemed and cancelled on the Initial z v d Mandatory Tender Date. If the Bonds are remarketed on the Initial Mandatory Tender Date,the terms of the Bonds after such date may 1 L4 = differ materially from the description provided in this Official Statement. Therefore,prospective purchasers of the Bonds on and after the • o w W Initial Mandatory Tender Date cannot rely on this Official Statement, but rather must rely upon any disclosure documents prepared in L w� connection with such remarketing. z0 0. ,,,4 t'a The Bonds are offered when, as and if issued and received by the Underwriter, subject to the legal opinion of Faegre Drinker • W Biddle&Reath LLP, Indianapolis, Indiana, Bond Counsel. Certain legal matters will be passed upon for the Underwriter by its counsel, d Squire Patton Boggs (US) LLP, Cleveland, Ohio, and for the Owner by its counsel Kuhl & Grant, LLP, Indianapolis, Indiana. It is '847- expected that the Bonds will be available for delivery to The Depository Trust Company in New York, New York, on or about April[ 1, a=0 2020. File' ;r C!prk'S Office z= THE STURGES COMPANY o [April_],2020 MAR 18 2020 i� (a) Copyright©,CUSIP Global Services(see"IMPORTANT NOTICES"). ( i F•�h DAWN M,JONES *Preliminary,subject to change. I CITY CLERK,SOUTH BEND, IN IMPORTANT NOTICES No Offering May be Made Except by this Official Statement. This Official Statement does not constitute an offering of any security other than the original offering of the Bonds identified on the cover hereof. No person has been authorized to give any information or to make any representations other than those contained in this Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized. No Unlawful Offer, Solicitation or Sale. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, and there shall not be any sale of the Bonds by any person, in any jurisdiction in which it is unlawful to make such offer, solicitation or sale. The information and expression of opinions herein are subject to change without notice and neither the delivery of this Official Statement nor the sale of any of the Bonds shall, under any circumstances, create any implication that the information herein is correct as of any time subsequent to the date hereof. Preparation of this Official Statement. Information contained in this Official Statement has been obtained from the Issuer (only as to the Sections labeled "THE ISSUER" and "ABSENCE OF LITIGATION" as it relates to the Issuer) and the Borrower and other sources believed to be reliable, but it is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by, the Underwriter. Other than in the Sections labeled"THE ISSUER"and"ABSENCE OF LITIGATION" as it relates to the Issuer, the Issuer has not confirmed, and assumes no responsibility for, the accuracy, completeness, sufficiency or fairness of any statements in this Official Statement or any amendments thereof or supplements thereto, or in any reports, financial information, offering or disclosure documents or other information relating to the Underwriter, the Project, the Borrower, or the history, businesses, properties, organization, management, financial condition, market area or any other matter relating to the Borrower or contained otherwise in this Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. No Registration or Approval. Upon issuance, the Bonds will not be registered by the Issuer under the Securities Act of 1933, as amended, or any state securities law, and will not be listed on any stock or other securities exchange. Neither the Securities and Exchange Commission nor any other federal, state or other governmental entity or agency will have passed upon the accuracy or adequacy of this Official Statement or, other than the Issuer (to the extent described herein) approved the Bonds for sale. Public Offering Prices. In connection with this offering, the Underwriter may overallot or effect transactions that tend to stabilize or maintain the market price for the Bonds above the levels that would otherwise prevail. Such activities,if commenced,may be discontinued at any time. CUSIP. CUSIP®is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by S&P Global Market Intelligence. Copyright(c) 2019 CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. None of the Issuer, the Borrower, the Underwriter or their agents or counsel assume responsibility for the accuracy of such numbers. TABLE OF CONTENTS Page INTRODUCTION 1 THE ISSUER 2 THE BONDS 2 SECURITY AND SOURCES OF PAYMENT FOR THE BONDS 5 THE BORROWER 6 THE PROJECT 6 THE TRUSTEE 7 ESTIMATED SOURCES AND USES OF FUNDS 8 CERTAIN BONDHOLDERS' RISKS 9 THE INDENTURE 11 THE LOAN AGREEMENT 25 TAX MATTERS 30 UNDERWRITING 31 RATING 32 CERTAIN LEGAL MATTERS 32 ABSENCE OF LITIGATION 32 CONTINUING DISCLOSURE 32 MISCELLANEOUS 33 APPENDIX A-FORM OF OPINION OF BOND COUNSEL APPENDIX B-BOOK-ENTRY ONLY SYSTEM APPENDIX C-PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT i $4,100,000* CITY OF SOUTH BEND,INDIANA MULTIFAMILY HOUSING REVENUE BONDS,SERIES 2020A (CEDAR GLEN APARTMENTS PROJECT) INTRODUCTION This Official Statement sets forth certain information concerning the issuance and sale by the City of South Bend, Indiana (the "Issuer"), a municipal corporation of the State of Indiana (the "State"), of $4,100,000* aggregate principal amount of Multifamily Housing Revenue Bonds, Series 2020A (Cedar Glen Apartments Project)(the"Bonds"). The Bonds will be issued pursuant to Indiana Code, Title 36, Article 7, Chapters 11.9 and 12, as amended(collectively, the"Act"), and Ordinance No. [ ]-20 of the Issuer adopted by the City Council on April [ ], 2020 (the "Bond Resolution") and secured by a Trust Indenture, dated as of April 1, 2020 (the"Indenture"),between the Issuer and The Huntington National Bank, as trustee(in such capacity, the "Trustee"). The Bonds are being issued to make a loan(the"Loan")to MAH Cedar Glen, LP, an Indiana limited partnership (the "Borrower"), for the acquisition, rehabilitation, improvement and equipping of a 179-unit affordable rental housing project located in the City of South Bend, Indiana(the"Project"). The terms of the financing are to be as set forth in the Loan Agreement, dated as of April 1,2020,between the Issuer and the Borrower (the "Loan Agreement"). The obligation of the Borrower to repay the Loan pursuant to the Loan Agreement will be evidenced by a promissory note(the"Note"). Under the terms of the Indenture, an amount equal to the par amount of the Bonds is to be deposited in the Project Fund and amounts received as accrued interest plus the negative arbitrage deposit are to be deposited in the Interest Payment Account of the Bond Fund established under the Indenture and invested in Eligible Investments, as defined below. See "THE INDENTURE—Investment of Funds" herein. The principal of and interest on the Bonds are payable from the security pledged under the Indenture, including the payments on the investment of funds under the Indenture. Under the Indenture, the Trustee is to invest amounts held under the Indenture in Eligible Investments (as defined below). At all times, the Bonds will be secured by amounts on deposit under the Indenture, which shall constitute Eligible Funds and shall be invested in Eligible Investments and such amounts will be sufficient, along with investment earnings thereon, without the need for reinvestment, to pay all of the interest on the Bonds when due and to pay the principal of the Bonds at the earlier of any Redemption Date or any Mandatory Tender Date, as further described herein. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS" herein. The Issuer has determined to simultaneously issue and sell its Multifamily Housing Revenue Bonds, Series 2020B (Cedar Glen Apartments Project), in the principal amount of $[ ]* (the "Series 2020B Bonds") to fund one or more loans in the aggregate principal amount of the Series 2020B Bonds (the"Series 2020B Loan") to the Borrower, which Series 2020B Loan shall be advanced pursuant to the terms of a Construction Loan Agreement dated as of April 1, 2020 among the Issuer, the Borrower and Merchants Bank of Indiana (the"Series 2020B Bondholder"), as the purchaser, to provide additional funds to finance the Project. The Series 2020B Bonds are not secured by the Trust Estate created under the Indenture. *Preliminary,subject to change. 1 Brief descriptions of the Issuer, the Bonds, the security for the Bonds, the Borrower, the Project, the Indenture and the Loan Agreement, are included in this Official Statement. All references herein to the Indenture, the Loan Agreement and other documents and agreements are qualified in their entirety by reference to such documents and agreements, copies of which are available for inspection at the offices of the Trustee. THE ISSUER The Issuer is a municipal corporation organized and validly existing under the laws of the State. The Issuer is empowered to issue its bonds to provide funds to finance multifamily housing developments, as described in the Act. The Issuer adopted an ordinance authorizing the issuance of the Bonds (the"Bond Ordinance"). The responsibility for the operation of the Project will rest entirely with the Borrower and not with the Issuer. The Issuer acts as a conduit issuer and also issues obligations for its own purposes. Each bond issue or note issue the Issuer issues as a conduit issuer is an independent and separate obligation of the Issuer secured solely by the amounts pledged under the related trust indenture. THE BONDS ARE NOT A GENERAL OBLIGATION, DEBT OR BONDED INDEBTEDNESS OF THE ISSUER, OR A PLEDGE OF THE MONEYS, FAITH AND CREDIT OF THE ISSUER, AND THE HOLDERS OF THE BONDS HAVE NOT BEEN GIVEN AND DO NOT HAVE ANY RIGHT TO HAVE EXCISES OR TAXES LEVIED BY THE ISSUER FOR THE PAYMENT OF BOND SERVICE CHARGES THEREON. No agreement or obligation contained in the Indenture shall be deemed to be an agreement or obligation of any officer, employee, servant or agent of the Issuer in his or her individual capacity, and neither the directors of the Issuer nor any officer thereof executing any Bond shall be liable personally on such Bond or be subject to any personal liability or accountability by reason of the issuance thereof. No member, officer, employee, commissioner, servant or agent of the Issuer shall incur any personal liability with respect to any other action taken by him or her pursuant to the Indenture. EXCEPT FOR INFORMATION CONCERNING THE ISSUER IN THIS SECTION AND "ABSENCE OF LITIGATION" (WITH RESPECT TO THE ISSUER), NONE OF THE INFORMATION IN THIS OFFICIAL STATEMENT HAS BEEN SUPPLIED OR VERIFIED BY THE ISSUER, AND THE ISSUER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,AS TO THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION. THE BONDS Denominations,Maturity and Interest The Bonds are issuable in the denomination of$5,000 principal amount or any greater integral multiple thereof. The Bonds will be dated as of April 1, 2020* will initially bear interest at the rate set forth on the cover page hereof until November 1, 2021 (the "Initial Mandatory Tender Date"), will mature on November 1, 2022 (the"Maturity Date"), and are subject to mandatory tender for purchase or mandatory redemption on the Initial Mandatory Tender Date. Interest will be payable on each May 1 and November 1, commencing November 1, 2020* (each, an "Interest Payment Date"), each mandatory tender date(each, together with the Initial Mandatory Tender Date, a"Mandatory Tender Date") after the Initial Mandatory Tender Date, and the Maturity Date (the Maturity Date, each Mandatory Tender Date, *Preliminary,subject to change. -2- and each Interest Payment Date, a "Payment Date") in accordance with the provisions of the Indenture. Interest will be calculated and be due on the basis of a 360-day year consisting of twelve 30-day months. So long as the Bonds are in book-entry form,principal of and interest on the Bonds will be payable by the Trustee to Cede&Co. See"Book-Entry Only System"below. Book-Entry Only System Beneficial ownership interests in the Bonds will be available in book-entry-only form. The Bonds will be issued as fully-registered bonds, registered in the name of Cede& Co., as registered owner and nominee for The Depository Trust Company("DTC"), New York, New York. See"APPENDIX B - BOOK-ENTRY ONLY SYSTEM". So long as Cede & Co. is the registered owner of the Bonds, references herein to the Bondholders or holders or registered owner or owners of the Bonds mean Cede& Co. and not the beneficial owners of the Bonds. None of the Issuer, the Underwriter, the Borrower or the Trustee has any responsibility or obligation to any Beneficial Owner (as defined in APPENDIX B) with respect to (1)the accuracy of any records maintained by DTC or any DTC participant, (2) the distribution by DTC or any DTC participant of any notice that is permitted or required to be given to the owners of the Bonds, (3) the payment by DTC or any DTC participant of any amount received with respect to the Bonds, (4)any consent given or other action taken by DTC or its nominee as the owner of the Bonds, or(5)any other related matter. Special Obligations The Bonds are special, limited obligations of the Issuer payable solely from the Trust Estate (as defined herein) pledged under the Indenture and not from any other revenues, funds or assets of the Issuer. The Bonds are not general obligations, debt or bonded indebtedness of the Issuer or of the State or any political subdivision thereof, and the holder thereof does not have the right to have excises or taxes levied by the Issuer or by the State or any political subdivision thereof for the payment of the principal and premium, if any, and interest on the Bonds. Mandatory Tender Purchase of Bonds on Mandatory Tender Dates. All Outstanding Bonds shall be subject to Mandatory Tender by the Holders for purchase in whole and not in part on each Mandatory Tender Date. The purchase price for each such Bond shall be payable in lawful money of the United States of America by wire, check or draft, shall equal 100% of the principal amount to be purchased and accrued interest, if any,to the Mandatory Tender Date, and shall be paid in full on the applicable Mandatory Tender Date. Holding of Tendered Bonds. While tendered Bonds are in the custody of the Trustee pending purchase pursuant to the Indenture, the tendering Holders thereof shall be deemed the owners thereof for all purposes, and interest accruing on tendered Bonds through the day preceding the applicable Mandatory Tender Date is to be paid as if such Bonds had not been tendered for purchase. Purchase of Tendered Bonds. The Trustee shall utilize amounts representing proceeds of remarketed Bonds on deposit in the Remarketing Proceeds Account to pay the principal amount, plus accrued interest, of Bonds tendered for purchase not later than 11:30 a.m. Local Time on the Mandatory Tender Date. Undelivered Bonds. Bonds shall be deemed to have been tendered for purposes of the Indenture whether or not the Holders shall have delivered such Undelivered Bonds to the Trustee, and subject to the right of the Holders of such Undelivered Bonds to receive the purchase price of such Bonds on the - 3 - Mandatory Tender Date, such Undelivered Bonds shall be null and void. If such Undelivered Bonds are to be remarketed,the Trustee shall authenticate and deliver new Bonds in replacement thereof pursuant to the remarketing of such Undelivered Bonds. Notice of Mandatory Tender Notice to Holders. Not later than the 20th day prior to a Mandatory Tender Date, the Trustee shall give written notice of a mandatory tender on the Mandatory Tender Date to the Holders of the Bonds then Outstanding (with a copy to the Borrower, the Issuer, the Investor Member (as defined below), and the Remarketing Agent) by first class mail, postage prepaid, at their respective addresses appearing on the Register stating: (i) the Mandatory Tender Date and that (A) if certain conditions are met, all Outstanding Bonds are subject to Mandatory Tender for purchase on the Mandatory Tender Date, (B) all Outstanding Bonds must be tendered for purchase no later than 9:00 a.m. Local Time, on the Mandatory Tender Date and(C) Holders will not have the right to elect to retain their Bonds; (ii) the address of the Designated Office of the Trustee at which Holders should deliver their Bonds for purchase and the date of the required delivery; (iii) that all Outstanding Bonds will be purchased on the Mandatory Tender Date at a price equal to the principal amount of the Outstanding Bonds plus interest accrued to the Mandatory Tender Date; (iv) that if, in the event that the conditions to remarketing set forth in the Indenture are not met as set forth therein, or, if proceeds from the remarketing are insufficient to pay the purchase price of the Bonds on the Mandatory Tender Date, all of the Bonds will be redeemed, without further notice, on the Mandatory Tender Date; and (v) that any Bonds not tendered will nevertheless be deemed to have been tendered and will cease to bear interest from and after the Mandatory Tender Date. Failure to Give Notice. Neither failure to give or receive any notice described in this heading,nor the lack of timeliness of such notice or any defect in any notice(or in its content) shall affect the validity or sufficiency of any action required or provided for in this heading. Mandatory Redemption On each Mandatory Tender Date, the Bonds shall be redeemed in whole at a redemption price of 100% of the principal amount of such Bonds, plus accrued interest to the Mandatory Tender Date, upon the occurrence of any of the following events: (i) the Borrower has previously elected not to cause the remarketing of the Bonds, (ii) the conditions to remarketing set forth in the Indenture have not been met by the dates and times set forth therein, or (iii) the proceeds of a remarketing on deposit in the Remarketing Proceeds Account at 11:00 a.m. Local Time on the Mandatory Tender Date are insufficient to pay the purchase price of the Outstanding Bonds on such Mandatory Tender Date. Bonds subject to redemption in accordance with this paragraph shall be redeemed from (i) amounts on deposit in the Assignment Fund, (ii)amounts on deposit in the Bond Fund, (iii) amounts on deposit in the Project Fund, and(iv)any other Available Money made available for such purpose at the direction of the Borrower. "Available Money"means, as of any date of determination, any of(i) the proceeds of the Bonds, (ii)the proceeds of draws by the Trustee on any letters of credit provided to the Trustee for the benefit of -4- the Borrower, (iii) any other amounts, including the proceeds of refunding bonds, for which, in each case, the Trustee has received an opinion of counsel acceptable to the Rating Agency(as defined below) to the effect that the use of such amounts to make payments on the Bonds would not violate Section 362(a) of the Bankruptcy Code (or that relief from the automatic stay provisions of such Section 362(a) would be available from the bankruptcy court) or be avoidable as preferential payments under Section 544, 547 or 550 of the Bankruptcy Code should the Issuer or the Borrower become a debtor in proceedings commenced under the Bankruptcy Code, (iv) any payments made by the Borrower and held by the Trustee for a period of 123 days, provided that no Act of Bankruptcy with respect to the Borrower has occurred during such period, (v) the Collateral Funds, and (vi) investment income derived from the investment of money described in clause(i),(ii), (iii), (iv)or(v). "Rating Agency"means Moody's Investor Services, Inc.,or any successor thereto. No Additional Parity Bonds The Indenture does not permit the Issuer to issue additional indebtedness prior to or on a parity with the Bonds. SECURITY AND SOURCES OF PAYMENT FOR THE BONDS The Bonds are special, limited obligations of the Issuer payable from the Trust Estate (as defined below). The Bonds and the interest thereon do not represent or constitute a general obligation, debt or bonded indebtedness or a pledge of the faith and credit,moneys or taxing power of the Issuer, the State, or any political subdivision of the State within the meaning of any constitutional or statutory limitations. Neither the Issuer nor the State nor any political subdivision of the State will be obligated to paythe principal of and the interest on the Bonds or other costs g P P incident thereto except from revenues pledged therefor and received under the Indenture, all as more fully set forth in the Indenture. The Bonds will be secured under the Indenture by all right,title and interest of the Issuer in and to (i) the Pledged Revenues, as defined below, including, without limitation, all payments by the Borrower pursuant to the Note (the "Loan Payments") and other amounts receivable by or on behalf of the Issuer under the Loan Agreement in respect of repayment of the Loan, (ii)the Special Funds, as defined below, including all accounts in those Funds and all money deposited therein and the investment earnings on such money, (iii) subject to the provisions of the Bond Resolution, all right,title and interest of the Issuer in the proceeds derived from the sale of the Bonds, and any securities in which money in the Special Funds are invested, and (except for money required to be rebated to the United States of America under the Code) the proceeds derived therefrom, and any and all other real or personal property of every name and nature from time to time pledged, assigned or transferred, as and for additional security under the Indenture by the Issuer or by anyone in its behalf, or with its written consent, to the Trustee, and (iv) the Loan Agreement and Note, except for certain unassigned rights of the Issuer. Such assets are referred to herein as the"Trust Estate." "Pledged Revenues"means(a)the Loan Payments, (b)all other money received or to be received by the Issuer or the Trustee in respect of repayment of the Loan, including without limitation, all money and investments in the Bond Fund, (c) any money and investments in the Project Fund and the Assignment Fund, and (d)all income and profit from the investment of the foregoing money. The term "Pledged Revenues"does not include any money or investments in the Rebate Fund or the Residual Fund. -5 - "Special Funds"means, collectively, the Bond Fund, the Project Fund and the Assignment Fund, and any accounts therein, all as created in the Indenture. Amounts deposited in the Special Funds are to be invested in Eligible Investments. See"THE INDENTURE—Investment of Funds"herein. All Loan Payments will consist of Available Money and will be paid directly to the Trustee in amounts sufficient, without need for reinvestment, to pay all of the interest on the Bonds when due and to pay the principal of the Bonds on the earlier of any Mandatory Tender Date or any Redemption Date, as further described herein. Available Money will be invested in Eligible Investments under the Indenture. See"THE INDENTURE–Investment of Funds"herein. THE BORROWER The Borrower is MAH Cedar Glen, LP, an Indiana limited partnership. The managing member of the Borrower is Merchants Affordable Housing Corp., an Indiana corporation. The Borrower does not intend to acquire any substantial assets or engage in any substantial business activities other than those related to the ownership of the Project. However, the Borrower's members and affiliates may engage in the acquisition, development, ownership and management of similar types of housing projects. Neither the Borrower nor its members or affiliates will be personally liable to pay the principal of and interest on the Bonds. Furthermore,no representation is made that the Borrower will have substantial funds available for the Project. Accordingly, neither the Borrower's financial statements nor those of its affiliates or members are included in this Official Statement. THE PROJECT The Project, known as Cedar Glen Apartments Project, consists of acquiring, constructing, equipping and improving privately owned real and personal property into a multifamily housing complex, containing 179 affordable living units located in South Bend, Indiana. The Project will not be pledged as security for the Bonds. The Borrower anticipates that construction of the Project will take approximately 12 months. The unit mix of the Project is as follows: Unit Type Number Approximate Square Feet 1BR 39 2BR 140 Regulatory Restrictions The Borrower's operation of the will be subject to the terms of a Regulatory Agreement P Project and Declaration of Restrictive Covenants,dated as of April 1,2020(the"Regulatory Agreement"),among the Borrower, the Trustee and the Issuer, which contains covenants required to maintain the exclusion of interest on the Bonds from gross income for federal income tax purposes, in accordance with Section 142(d) of the Code. The Regulatory Agreement will require that for the Qualified Project Period (as defined therein), not less than 40% of the dwelling units in the Project be occupied by families or individuals of low or moderate income, defined as families or individuals whose income does not exceed 60%(adjusted for family size)of the median gross income for the area in which the Project is located. -6- In addition to the tenant income limits imposed upon the Project by the Regulatory Agreement, the Project will be further encumbered by a tax credit restrictive covenant,to be executed by the Borrower in connection with the low-income housing tax credits anticipated to be granted for the Project and in compliance with the requirements of Section 42 of the Code. Under the tax credit restrictive covenant, the Borrower will agree to restrict the income levels of tenants in 100% of the units in the Project (the "Tax Credit Units"). All of the Tax Credit Units shall be held available for rental to persons whose adjusted family income is equal to or less than 60% of the AMI adjusted for family size and the rents which may be charged for occupancy of units in the Project will be restricted to not more than 30% of 60%of AMI, adjusted for family size. The Property Manager The Project will be managed by [ ] or its affiliates (the "Property Manager"). The Property Manager has been involved in the management of apartment complexes since [ The Property Manager currently manages more than [ ] units throughout [locations]. The Property Manager is [un]affiliated with the Borrower. The Borrower has entered into a Management Agreement with the Property Manager to engage the Property Manager to manage the Project. Under the Management Agreement, the Property Manager will manage the day-to- day operations of the Project. The General Contractor The general contractor for the Project will be [ ] (the"General Contractor"). The General Contractor has been constructing and rehabilitating multifamily rental housing developments for more than [ ] years. The General Contractor is [un]affiliated with the Borrower. The Architect The architect for the Project is [ ] (the "Architect"). The Architect has been a licensed architect since [ ] and has been the principal architect for a substantial number of multifamily developments throughout [locations]. The Architect is [un]affiliated with the Borrower. THE TRUSTEE The Huntington National Bank will serve as Trustee under the Indenture. The Trustee is a national banking association organized under the laws of the United States of America. - 7- ESTIMATED SOURCES AND USES OF FUNDS* The proceeds of the Bonds expected to be deposited under the Indenture upon closing(excluding the accrued interest on the Bonds, which is to be deposited in the Interest Payment Account of the Bond Fund) are to be applied as follows: Sources of Funds* Bond Proceeds $4,100,000.00 Negative Arbitrage Deposit .00 Total $.00 Uses of Funds* Project Fund $.00 Bond Fund—Interest Payment Account .00 Total $ The following table sets forth the estimated sources and uses of certain funds to be available upon the issuance and delivery of the Bonds (excluding the accrued interest on the Bonds, which is to be deposited in the Interest Payment Account of the Bond Fund): Sources of Funds* Bond Proceeds $4,100,000 FHA-Insured Loan 8,482,500 Tax Credit Equity+GP Equity 3,843,778 Deferred Developer Fee 1,146,804 Deferred Loan 290,000 AHP Grant 500,000 Income from operations 42,044 Total Sources $18,405,126 Uses of Funds* Pay off Bonds $4,100,000 Acquisition Cost 5,580,000 Hard Construction Costs 5,606,741 Soft Costs& Soft Cost contingency 89,030 Loan&Financing Fees 622,395 Construction Period Interests 284,934 Developer's Fees 1,637,276 Reserves& Deposits 484,750 Total Uses $18.405.126 In addition to the Bond proceeds, the following additional sources of funds will be available to pay costs of the Project. Tax Credit Equity The Project will be financed in part with tax credit equity,which will pay for the costs of issuance of the Bonds and a portion of the other costs including construction costs. Merchants Affordable Housing *Preliminary,subject to change. - 8 - Corp., or one of its affiliates (the "Investor Member"), will own a 99.99% interest in the Borrower. In connection with this interest, the tax credit equity to be contributed by the Investor is expected to be approximately$3,843,678,*which is expected to be funded pursuant to the terms of Borrower's Amended and Restated Operating Agreement. FHA-Insured Loan In connection with the development of the Project, the Merchants Capital Corp., (the "FHA Lender") has received a commitment from the Federal Housing Administration ("FHA") pursuant to Section 223(f)of the National Housing Act in the approximate amount of$8,482,500,* that enables, upon compliance with the terms and conditions thereof, the FHA Lender to make an FHA-insured loan in that amount to the Borrower (the "FHA-Insured Loan"), evidenced by a nonrecourse mortgage note secured by a first lien mortgage on the Project. The FHA-Insured Loan will be fully disbursed at closing and a portion thereof will be held in an escrow account held by the FHA Lender. As construction costs are incurred, the Borrower will request construction advances from the escrow held by the FHA Lender and the FHA Lender will make, or caused to be made, deposits with the Trustee and the Trustee will simultaneously disburse a like amount of Bond proceeds from the Project Fund to pay Project costs. None of the owners of the Bonds, the Trustee or the Issuer will have rights with respect to the FHA Insured Mortgage Loan or under the FHA Loan Documents. Furthermore, none of the owners of the Bonds, the Trustee or the Issuer will have a lien on any funds, accounts or reserves established, maintained and/or collected by the FHA Lender in connection with the FHA Insured Mortgage Loan. FHA does not provide enhancement with respect to the Bonds. The advances from the FHA Lender, in an amount not to exceed the principal amount of the Bonds (the "Collateral Funds") are to be deposited in the Assignment Fund by the Trustee, upon receipt thereof, pursuant to the Indenture. The Borrower has collaterally assigned its right to receive the Collateral Funds to the Trustee. CERTAIN BONDHOLDERS'RISKS The purchase of the Bonds will involve a number of risks. The following is a summary, which does not purport to be comprehensive or definitive, of some of such risk factors. Limited Security; Investment of Funds The Bonds are special obligations of the Issuer payable solely from the Trust Estate, which includes certain funds pledged to and held by the Trustee pursuant to the Indenture. The Bonds are offered solely on the basis of the amounts held under the Indenture and are not offered on the basis of the credit of the Borrower,the feasibility of the Project or any other security. As a consequence, limited information about the Project and no information about the financial condition or results of operations of the Borrower is included in this Official Statement. The Bonds are offered only to investors who, in making their investment decision, rely solely on the amounts held under the Indenture and not on the credit of the Borrower,the feasibility of the Project or any other security. The principal of and interest on the Bonds are payable solely from and secured exclusively by the Trust Estate. The Project will not be subject to any mortgage for the benefit of the holders of the Bonds. An amount equal to the proceeds from sale of the Bonds is to be deposited in the Interest Payment *Preliminary,subject to change. -9- Account of the Bond Fund and the Project Fund and invested in Eligible Investments pursuant to the Indenture until requisitioned in accordance therewith and in accordance with the Loan Agreement. The Trustee is required to invest amounts held in the Special Funds in Eligible Investments, as defined in the Indenture. See "THE INDENTURE—Investment of Funds." In the event the Trustee is forced for any reason to liquidate the Eligible Investments prior to their stated maturity date, no assurance can be given, however, that the Trustee will be able to reinvest such amounts at a rate equal to the rate earned on the redeemed Eligible Investments. Failure to receive such a rate of return or a return of the amounts so invested could affect the ability to pay the principal of and interest on the Bonds. Taxability The Bonds are not subject to redemption, and the rate of interest on the Bonds is not subject to adjustment,by reason of the interest on the Bonds being included in gross income for purposes of federal income taxation. Such event could occur if the Borrower(or any subsequent owner of the Project) does not comply with the provisions of the Indenture, the Regulatory Agreement or the Loan Agreement that are designed, if complied with,to satisfy the continuing compliance requirements of the Code in order for the interest on the Bonds to be excludable from gross income for purposes of federal income tax. Enforceability of Remedies The remedies available to the Trustee and the owners of the Bonds upon an event of default under the Loan Agreement or the Indenture are in many respects dependent upon regulatory and judicial actions which are often subject to discretion and delay. Under existing law and judicial decisions, the remedies provided for under the Loan Agreement or the Indenture may not be readily available, and the Borrower will have no personal liability for the satisfaction of any obligation of the Borrower under such agreements or of any claim against the Borrower arising out of such agreements or the Indenture. The various legal opinions to be delivered concurrently with the delivery of the Bonds will be qualified to the extent that the enforceability of certain legal rights related to the Bonds and the documents described above is subject to limitations imposed by such things as the exercise of judicial discretion in accordance with general principles of equity(whether applied by a court of law or a court of equity), including judicial limitations on rights to specific performance and bankruptcy, insolvency, reorganization, moratorium or other similar laws heretofore or hereafter in effect affecting creditors' rights,to the extent constitutionally applicable. No Personal Liability of Borrower The Borrower has not been and will not be personally liable for payments on the Bonds, nor will the Borrower be personally liable under the other documents executed in connection with the issuance of the Bonds. Secondary Markets and Prices The Underwriter will not be obligated to repurchase any of the Bonds, and no representation is made concerning the existence of any secondary market for the Bonds. No assurance can be given that any secondary market will develop following the completion of the offering of the Bonds contemplated by this Official Statement, and no assurance can be given that the Bonds can be resold at their initial offering prices for any period of time. - 10- Eligible Investments Proceeds of the Bonds deposited into the Project Fund and the Bond Fund, and money received by the Trustee for deposit into the Assignment Fund are required to be invested in Eligible Investments. See "THE INDENTURE—Investment of Funds" herein. Although the Eligible Investments will be guaranteed by the full faith and credit of the United States,there can be no assurance that there will not be a loss resulting from any investment held for the credit of the Project Fund, the Bond Fund or the Assignment Fund, and any failure to receive a return of the amounts so invested could affect the ability to pay the principal of and interest on the Bonds. Rating Based on Eligible Investments The ratingon the Bonds is based on the amounts in the Fund and the Assignment Fund Project � being invested in Eligible Investments. If one or more of such investments fail to meet the rating standards for Eligible Investments after their acquisition and prior to maturity, such a change may result in a downgrade or withdrawal of the rating on the Bonds. Future Legislation; IRS Examination The Project, its operation and the treatment of interest on the Bonds are subject to various laws, rules and regulations adopted by the local, State and federal governments and their agencies. There can be no assurance that relevant local, State or federal laws, rules and regulations may not be amended or modified or interpreted in the future in a manner that could adversely affect the Bonds, the Trust Estate created under the Indenture, the Project, or the financial condition of or ability of the Borrower to comply with its obligations under the various transaction documents. In recent years,the Internal Revenue Service("IRS")has increased the frequency and scope of its examination and other enforcement activity regarding tax exempt bonds. Currently, the primary penalty available to the IRS under the Code is a determination that interest on bonds is subject to federal income taxation. Such event could occur for a variety of reasons, including, without limitation, failure to comply with certain requirements imposed by the Code relating to investment restrictions, periodic payments of arbitrage profits to the United States of America, the timely and proper use of Bond proceeds and the facilities financed therewith and certain other matters. See"TAX MATTERS"herein. No assurance can be given that the IRS will not examine the Issuer, the Borrower, the Project or the Bonds. If the Bonds are examined, it may have an adverse impact on their price and marketability. Summary The foregoing is intended only as a summary of certain risk factors attendant to an investment in the Bonds. In order for potential investors to identify risk factors and make an informed investment decision, potential investors should be thoroughly familiar with this entire Official Statement, including the Appendices hereto. THE INDENTURE The following is a brief summary of certain provisions of the Indenture. The summary does not purport to be complete or definitive and is qualified in its entirety by reference to the Indenture, copies of which are on file with the Issuer and the Trustee. - 11 - Authorized Amount of Bonds No Bonds may be issued under the Indenture except in accordance with the Indenture. The total authorized principal amount of Bonds to be issued under the provisions of the Indenture is $4,100,000*. The Indenture does not contemplate or authorize the issuance of additional series of parity bonds. Payment and Ownership of Bonds Principal and interest on the Bonds("Bond Service Charges") will be payable in lawful money of the United States of America without deduction for the services of the Trustee or any Paying Agent. Subject to the provisions of the Indenture with respect to the book-entry only system, (i) the principal of any Bond will be payable when due to a Holder upon presentation and surrender of such Bond at the designated corporate trust office of the Trustee or at the office, designated by the Trustee, of any Paying Agent, and (ii) interest on any Bond will be paid on each Interest Payment Date by check or draft which the Trustee will cause to be mailed on that date to the Person in whose name the Bond (or one or more Predecessor Bonds) is registered at the close of business on the 15t calendar day of the month immediately preceding that Interest Payment Date or 45 days before any Mandatory Tender Date (the "Regular Record Date") on the Register at the address appearing therein; or, at the option of any Holder of not less than $1,000,000 principal amount of Bonds, by wire transfer to any address in the United States of America on such Payment Date to such Holder as of such Regular Record Date, if such Holder provides the Bond Registrar with written notice of such wire transfer address not later than the Regular Record Date (which notice may provide that it will remain in effect with respect to subsequent Payment Dates unless and until changed or revoked by subsequent notice). If and to the extent, however, that the Trustee fails to make payment or provision for payment of interest on any Bond on any Interest Payment Date, that interest shall cease to be payable to the Person who was the Holder of that Bond (or of any previous Bond or Bonds evidencing all or a portion of the same debt as that evidenced by the particular Bond or Bonds ("Predecessor Bonds")) as of the applicable Regular Record Date. In that event, except as described below under this caption, when moneys become available for payment of the interest, (x) the Trustee shall, pursuant to the Indenture, establish a Special Record Date for the payment of that interest which shall be not more than 15 nor fewer than 10 days prior to the date of the proposed payment, and (y) the Trustee shall cause notice of the proposed payment and of the Special Record Date to be mailed by first-class mail,postage prepaid,to each Holder at its address as it appears on the Register not fewer than 10 days prior to the Special Record Date and, thereafter, such interest will be payable to the persons who are the Holders of the Bonds (or their respective Predecessor Bonds)at the close of business on the Special Record Date. Subject to the foregoing, each Bond delivered under the Indenture upon transfer thereof, or in exchange for or in replacement of any other Bond,will carry the rights to interest accrued and unpaid, and to accrue on that Bond,or which were carried by that Bond. Establishment of Funds The following funds are to be established and maintained by the Trustee under the Indenture: • the Bond Fund,including a separate Principal Payment Account, Interest Payment Account,and Remarketing Proceeds Account therein; • the Project Fund; *Preliminary,subject to change. - 12 - • the Assignment Fund; • the Residual Fund; and • the Rebate Fund. Amounts held in the Rebate Fund and the Residual Fund are not security for the Bonds and therefore are not available to pay the amounts due on the Bonds. Application of Loan Payments All payments under the Loan Agreement and paid to the Trustee are to be deposited by the Trustee under the Indenture as follows: (1) into the Interest Payment Account, at least the amount necessary to pay the interest on the Bonds on the next succeeding Interest Payment Date; and(2) into the Principal Payment Account, at least the amount necessary to pay the principal due on the Bonds on the next succeeding Interest Payment Date; provided that the amounts required to be deposited into the Interest Payment Account and the Principal Payment ent Account may be deposited in the form of either or P both moneyor direct obligations of the United States of America or obligations the full and prompt g g P P payment of which is secured by the pledge of the full faith and credit of the United States of America of those maturities and bearing the rate or rates of interest which will be sufficient, without further investment or reinvestment of either the principal amount thereof or the interest earnings thereon, to produce the amounts required to be on deposit on the next succeeding Interest Payment Date. Project Fund and Assignment Fund On the Closing Date, the Trustee is to use money in the Project Fund and the Interest Payment Account of the Bond Fund to purchase Eligible Investments. To the extent money is not otherwise provided to the Trustee, including money deposited into the Bond Fund or the Assignment Fund, the Trustee is to transfer from the Project Fund to the Bond Fund sufficient Available Money to make the necessary interest and principal payments on each Interest Payment Date without further written direction. Upon receipt of installments of Collateral Funds, the Trustee is to deposit such Collateral Funds in the Assignment Fund. Amounts on deposit in the Assignment Fund shall be invested in Eligible Investments that can be liquidated at or prior to the Initial Mandatory Tender Date at a price sufficient to pay Bond Service Charges on the Bonds as they become due. Each deposit into the Assignment Fund shall constitute an irrevocable deposit solely for the benefit of the Holders, subject to the provisions of the Indenture. To the extent money on deposit in the Project Fund is invested in Eligible Investments at the time of any requested and permitted disbursement under the Indenture, the Trustee is authorized to exchange an amount of such Eligible Investments in the Project Fund for a like amount of Collateral Funds on g J deposit in the Assignment Fund and then disburse such amount of Bond proceeds from the Project Fund without the need to sell or terminate such Eligible Investments prior to their stated maturity date; provided, however,that any such exchange must be accompanied by a requisition in the form attached to the Loan Agreement signed by the Authorized Borrower Representative that designates the Project costs to which amounts withdrawn from the Project Fund are allocated. Upon the maturity of the Bonds,the Trustee will redeem any investments in the Assignment Fund and deposit the proceeds thereof, and any other amounts then on deposit in the Assignment Fund, into the Bond Fund to pay Bond Service Charges on the Bonds, in accordance with the provisions of the Indenture. - 13 - The Trustee shall cause to be kept and maintained adequate records pertaining to the Project Fund and the Assignment Fund and all disbursements therefrom. If requested by the Issuer or the Borrower, after the Project has been completed and a certificate of payment of all costs is filed in accordance with the Indenture the Trustee shall file copies of the records pertainingto the Project Fund and disbursements P J therefrom with the Issuer and the Borrower. When the aggregate principal amount on deposit in the Assignment Fund, together with the scheduled investment earnings thereon, equals the expected Bond Service Charges to be paid on the Bonds to and including the Maturity Date, the excess amounts shall be transferred upon receipt to the Residual Fund and used to pay Project Costs in accordance with the Loan Agreement. Notwithstanding any provision of the Loan Agreement or any other provision of the Indenture to the contrary, the Trustee is not to disburse money from the Project Fund other than to pay Bond Service Charges unless and until the Trustee receives satisfactory evidence that Collateral Funds or other Available Money (or any combination of the foregoing) in an amount equal to or greater than the requested disbursement amount has been deposited in the Assignment Fund. Prior to making any disbursement, the Trustee is to verify that, upon making the disbursement, the aggregate amount held in the Assignment Fund, the Bond Fund and the Project Fund, together with projected investment earnings thereon,will be sufficient to pay Bond Services Charges as and when they become due. The proceeds of the Bonds shall be used exclusively to pay costs that (i) are (A) capital expenditures (as defined in Section 1.150-1(a) of the Code's regulations) and (B) not made for the acquisition of existing property, to the extent prohibited in Section 147(d) of the Code, and (ii) are made exclusively with respect to a"qualified residential rental project"within the meaning of Section 142(d) of the Code and that for the greatest number of buildings the proceeds of the Bonds shall be deemed allocated on a pro rata basis to each building in the Project and the land on which it is located so that each building and the land on which it is located will have been financed fifty percent (50%) or more by the proceeds of the Bonds for the purpose of complying with Section 42(h)(4)(B) of the Code; provided, however,the foregoing representation, covenant and warranty is made for the benefit of the Borrower and its members and neither the Trustee nor the Issuer shall have any obligation to enforce this covenant nor shall they incur any liability to any person, including without limitation, the Borrower, the members of the Borrower, any other affiliate of the Borrower or the holders of the Bonds for any failure to meet the intent expressed in the foregoing representation, covenant and warranty; and provided further, failure to comply with this representation, covenant and warranty shall not constitute a default or Event of Default under the Indenture. Upon the occurrence and continuance of an Event of Default under the Indenture because of which the principal amount of the Bonds has been declared to be due and immediately payable pursuant to the Indenture, any moneys remaining in the Project Fund shall be promptly transferred by the Trustee to the Bond Fund for payment of Bond Service Charges. Bond Fund As provided in the Loan Agreement, and as evidenced by the Note, Bond Service Charges are to be paid, as they become due, (i) in the first instance from the money on deposit in the Interest Payment Account and Principal Payment Account of the Bond Fund, (ii) next from amounts on deposit in the Assignment Fund and transferred as necessary to the Bond Fund, and (iii) thereafter, from amounts on deposit in the Project Fund and transferred as necessary to the Bond Fund. - 14- Investment of Funds Except as otherwise set forth below, money in the Special Funds and the Rebate Fund is to be invested and reinvested by the Trustee in Eligible Investments at the oral or written direction (promptly confirmed in writing, if oral) of the Borrower. At no time is the Borrower to direct that any funds constituting gross proceeds of the Bonds be used in any manner as would constitute failure of compliance with Section 148 of the Code. Investments of moneys in the Bond Fund, the Project Fund and the Assignment Fund are to mature or be redeemable at the times and in the amounts, and are to pay interest at the times and at the rates, necessary to provide money to pay Project costs or to pay Bond Service Charges on the Bonds, as the case may be, as they become due. The amount deposited at closing into the Bond Fund will be invested in Eligible Investments that have a maturity date(or are redeemable at par) not later than the date when such funds are needed to pay Bond Service Charges on the Bonds. Amounts on deposit in the Project Fund on the Closing Date will be invested in Eligible Investments. Investment earnings from the Eligible Investments shall be invested in Eligible Investments that have a maturity date(or are redeemable at par)not later than the date when such funds are needed to pay Bond Service Charges on the Bonds. The amounts invested in Eligible Investments shall be invested at fair market value at a yield less than the yield on the Bonds. "Eligible Investments"means any of the following investments, to the extent permitted under the Act and other applicable law, that mature(or are redeemable at the option of the Trustee) at such time or times as to enable disbursements to be made from the fund in which such investment is held in accordance with the applicable terms: (a) Direct obligations of the United States of America or obligations the full and prompt payment of which is secured by the pledge of the full faith and credit of the United States of America, provided that the obligation has an interest accrual period and interest payment dates that provide for timely payments in amounts sufficient to meet the payment obligations under the Indenture; (b) Non-callable, non-prepayable obligations of the following federal government agencies: Federal Home Loan Bank, Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, Tennessee Valley Authority, Farm Credit System, Washington Metropolitan Area Transit Authority, United States Import-Export Bank, United States Department of Housing and Urban Development, Farmers Home Administration, General Services Administration and United States Maritime Administration, provided the entity maintains a rating of"Aaa" from the Rating Agency and provided, further,that the obligation has an interest accrual period and interest payment dates that provide for timely payments in amounts sufficient to meet the payment obligations under the Indenture; (c) Obligations of any state or any political subdivision of any state, which are rated in the highest category for long-term debt by the Rating Agency, the interest on which is excluded from gross income for federal income tax purposes and the full and timely payment of the principal of and any premium and the interest on which is fully and unconditionally payable from obligations of the character described in (a) or (b) above, provided that the obligation has an interest accrual period and interest payment dates that provide for timely payments in amounts sufficient to meet the payment obligations under the Indenture; and (d) (1) the following money market funds, so long as they invest solely in direct obligations issued by the U.S. Treasury or repurchase agreements backed by those obligations: First American U.S. Treasury Money Market Fund; Wells Fargo Advantage 100% Treasury Money Market Funds; Federated - 15 - U.S. Treasury Cash Reserves (Fund 125); and Federated Treasury Obligations Fund(Fund 68); or, in the event those funds cease to exist or no longer have a rating of the highest category (without regard to gradation within a category) by the Rating Agency, (2) money market funds conforming to Rule 2a-7 of the Federal Investment Company Act of 1940, including any money market fund the investment advisor of which is the Trustee or an affiliate of the Trustee, (i) whose shares are registered under the Federal Securities Act of 1933 that invest solely in direct obligations issued by the U.S. Treasury and repurchase agreements backed by those obligations, (ii) which have a rating of the highest category (without regard to gradation within a category)by the Rating Agency and(iii) which are acceptable to the Rating Agency and the Underwriter. Investments of moneys in the Bond Fund, the Project Fund and the Assignment Fund will mature or be redeemable at the times and in the amounts, and will pay interest at the times and at the rates, necessary to provide moneys to pay Bond Service Charges on the Bonds as they become due. All investment earnings from the Special Funds will be credited to and become part of the Bond Fund and be used, without further direction,to payinterest on the Bonds on each Interest Payment Date. Ym Final Balances Except as provided in the Indenture, any amounts remaining in the Bond Fund, the Project Fund or the Assignment Fund(i) after all of the outstanding Bonds shall be deemed paid and discharged under the provisions of the Indenture, and (ii) after payment of any Rebate Amount, all fees, charges and expenses of the Trustee, the Registrar and any Paying Agents or Authenticating Agents, the Issuer and of all other amounts required to be paid under the Indenture, the Loan Agreement, the Regulatory a Project and the Note, shall be transferred to the Residual Fund and (x) used to pay Costs and (y)thereafter,paid to the Borrower. Events of Default Each of the following is an"event of default"under the Indenture: (a) Payment of any interest on any Bond is not made when and as that interest becomes due and payable; (b) Payment of the principal of any Bond is not made when and as that principal becomes due and payable,whether at stated maturity,upon acceleration or otherwise; (c) Failure by the Issuer to observe or perform any other covenant, agreement or obligation on its part to be observed or performed contained in the Indenture or in the Bonds, which failure has continued for a period of 30 days after written notice, by registered or certified mail, to the Issuer, the Borrower and the Investor Member specifying the failure and requiring that it be remedied, which notice may be given by the Trustee in its discretion and must be given by the Trustee at the written request of the Holders of not less than 25%in aggregate principal amount of Bonds then outstanding;and (d) The occurrence and continuance of an Event of Default as defined in the Loan Agreement. The term "default" or "failure" as used above means (i) a default or failure by the Issuer in the observance or performance of any of the covenants, agreements or obligations on its part to be observed or performed contained in the Indenture or in the Bonds, or(ii)a default or failure by the Borrower under - 16 - the Loan Agreement, exclusive of any period of grace or notice required to constitute a default or failure in an Event of Default,as provided above or in the Loan Agreement. Notwithstanding anything in the Indenture to the contrary, the Trustee agrees that any cure of any Event of Default under the Indenture made or tendered by the Investor Member will be deemed to be a cure by the Borrower, and will be accepted or rejected by the Trustee on the same basis as if made or tendered by the Borrower. Acceleration Upon the occurrence of an Event of Default described in(a) and (b) under"—Events of Default" above, the Trustee must declare, by a notice in writing delivered to the Borrower, the principal of all Bonds then outstanding (if not then due and payable), and the interest accrued thereon, to be due and payable immediately. For all other Events of Default,the Trustee is to declare upon the written request of the Holders of not less than 25%in aggregate principal amount of Bonds then outstanding the principal of all Bonds then outstanding (if not then due and payable), and the interest accrued thereon, to be due and payable immediately. The provisions described in the preceding paragraph are subject, however, to the condition that if, at any time after declaration of acceleration and prior to the entry of a judgment in a court for enforcement under the Indenture(after an opportunity for hearing by the Issuer and the Borrower), (a) all sums payable under the Indenture (except the principal of and interest on Bonds that have not reached the Maturity Date but which are due and payable solely by reason of that declaration of acceleration), plus interest to the extent permitted by law on any overdue installments of interest at the rate borne by the Bonds in respect of which the default has occurred, have been duly paid or provision have been duly made therefor by deposit with the Trustee,and (b) all existing Events of Default have been cured, then and in every case, the Trustee is to waive the Event of Default and its consequences and rescind and annul that declaration. No waiver or rescission and annulment will extend to or affect any subsequent Event of Default or will impair any rights consequent thereon. Other Remedies; Rights of Holders With or without taking action described under "—Acceleration" above, upon the occurrence and continuance of an Event of Default, the Trustee may pursue any available remedy, including without limitation actions at law or equity to enforce the payment of Bond Service Charges or the observance and performance of any other covenant, agreement or obligation under the Indenture, the Loan Agreement, the Regulatory Agreement or the Note or any other instrument providing security, directly or indirectly, for the Bonds. If, upon the occurrence and continuance of an Event of Default, the Trustee is requested so to do by the Holders of at least 25% in aggregate principal amount of Bonds outstanding, the Trustee(subject to the provisions of the Indenture), is to exercise any rights and powers conferred by the Indenture. No remedy conferred upon or reserved to the Trustee (or to the Holders) by the Indenture is intended to be exclusive of any other remedy. Each remedy is to be cumulative and in addition to every other remedy given under the Indenture or otherwise to the Trustee or to the Holders. No delay in - 17- exercising or omission to exercise any remedy, right or power accruing upon any default or Event of Default is to impair that remedy, right or power or is to be construed to be a waiver of any default or Event of Default or acquiescence therein. Every remedy, right and power may be exercised from time to time and as often as may be deemed to be expedient. No waiver of any default or Event of Default under the Indenture, whether by the Trustee or by the Holders, is to extend to or is to affect any subsequent default or Event of Default or is to impair any remedy,right or power consequent thereon. Right of Holders to Direct Proceedings Anything to the contrary in the Indenture notwithstanding, the Holders of a majority in aggregate principal amount of Bonds then outstanding will have the right at any time to direct, by an instrument or document in writing executed and delivered to the Trustee, the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of the Indenture or any other proceedings thereunder; provided, that(i) any direction is not to be other than in accordance with the provisions of law and of the Indenture, (ii) the Trustee is indemnified as provided in the Indenture, and (iii) the Trustee may take any other action that it deems to be proper and that is not inconsistent with the direction. Application of Money All money received by the Trustee is to be applied as follows, subject to the Indenture: (a) Unless the principal of all of the Bonds has become, or has been declared to be, due and payable,all of such money is to be deposited in the Bond Fund and applied: First -- To the payment to the Holders entitled thereto of all installments of interest then due on the Bonds, in the order of the dates of maturity of the installments of that interest, beginning with the earliest date of maturity and, if the amount available is not sufficient to pay in full any particular installment,then to the payment thereof ratably, according to the amounts due on that installment, to the Holders entitled thereto, without any discrimination or privilege; and Second -- To the payment to the Holders entitled thereto of the unpaid principal of any of the Bonds that has become due, in the order of their due dates, beginning with the earliest due date, with interest on those Bonds from the respective dates upon which they became due at the rates specified in those Bonds, and if the amount available is not sufficient to pay in full all Bonds due on any particular date, together with that interest, then to the payment thereof ratably, according to the amounts of principal due on that date,to the Holders entitled thereto,without any discrimination or privilege. (b) If the principal of all of the Bonds has become due or has been declared to be due and payable pursuant to the Indenture, all of such money is to be deposited into the Bond Fund and applied to the payment of the principal and interest then due and unpaid upon the Bonds, without preference or priority of principal over interest, of interest over principal, of any installment of interest over any other installment of interest, or of any Bond over any other Bond, ratably, according to the amounts due respectively for principal and interest, to the Holders entitled thereto,without any discrimination or privilege. - 18 - (c) If the principal of all of the Bonds has been declared to be due and payable, and if that declaration thereafter has been rescinded and annulled, subject to the provisions of paragraph (b) above in the event that the principal of all of the Bonds becomes due and payable later, such money is to be deposited in the Bond Fund and applied in accordance with the provisions of the Indenture. (d) After payments have been made as set forth in paragraphs (a) — (c) above, any remaining balance shall be used for payment of any costs, expenses, liabilities and advances paid, incurred or made by the Trustee in the collection of moneys and to all fees of the Trustee for Ordinary and Extraordinary Expenses pursuant to any right given or action taken under the provisions of the Indenture or the provisions of the Loan Agreement, the Regulatory Agreement or the Note (including without limitation, reasonable attorneys' fees and expenses, except as limited by law or judicial order or decision entered in any action taken under the Indenture). Whenever money is to be applied pursuant to the provisions described under this subcaption, such money is to be applied at such times, and from time to time, as the Trustee determines, having due regard to the amount of money available for application and the likelihood of additional money becoming available for application in the future. Whenever the Trustee is to direct the application of such money, it is to fix the date upon which the application is to be made, and upon that date, interest is to cease to accrue on the amounts of principal, if any, to be paid on that date, provided the money is available therefor. The Trustee is to give notice of the deposit with it of any money and of the fixing of that date, all consistent with the requirements of the Indenture for the establishment of, and for giving notice with respect to, a Special Record Date for the payment of overdue interest. The Trustee will not be required to make payment of principal of a Bond to the Holder thereof until the Bond is presented to the Trustee for appropriate endorsement or for cancellation if it is paid fully. Rights and Remedies of Holders A Holder will not have any right to institute any suit, action or proceeding for the enforcement of the Indenture, for the execution of any trust under the Indenture, or for the exercise of any other remedy under the Indenture,unless: (a) there has occurred and is continuing an Event of Default of which the Trustee has been notified, as provided in the Indenture, or of which it is deemed to have notice under the Indenture, (b) the Holders of at least 25% in aggregate principal amount of Bonds then outstanding have made written request to the Trustee and have afforded the Trustee reasonable opportunity to proceed to exercise the remedies,rights and powers granted under the Indenture or to institute the suit, action or proceeding in its own name, and have offered indemnity to the Trustee as provided in the Indenture,and (c) the Trustee thereafter has failed or refused to exercise the remedies, rights and powers granted under the Indenture or to institute the suit, action or proceeding in its own name. At the option of the Trustee, that notification (or notice), request, opportunity and offer of indemnity are conditions precedent in every case,to the institution of any suit,action or proceeding described above. No one or more Holders of the Bonds will have any right to affect, disturb or prejudice in any manner whatsoever the security or benefit of the Indenture by its or their action, or to enforce, except in the manner provided therein, any remedy, right or power under the Indenture. Any suit, action or - 19 - proceeding is to be instituted, had and maintained in the manner provided in the Indenture for the benefit of the Holders of all Bonds then outstanding. Nothing in the Indenture is to affect or impair, however, the right of any Holder to enforce the payment of the Bond Service Charges on any Bond owned by that Holder at and after the maturity thereof,at the place, from the sources and in the manner expressed in that Bond. Any action or suit for recovery brought pursuant to the Indenture will be against the Borrower or its assets only, and neither the Trustee or the Holders will have any right to proceed against any assets of the Issuer other than the amounts pledged under the Indenture.No recourse will be had for the payment of the Bonds against any elected or appointed officer, official, employee or agent of the Issuer or any person executing the Bonds. Waivers of Events of Default Except as described below, at any time, in its discretion, the Trustee may waive any Event of Default and its consequences and may rescind and annul any declaration of maturity of principal of or interest on,the Bonds. The Trustee must do so upon the written request of the Holders of (a) at least a majority in aggregate principal amount of all Bonds then outstanding in respect of which an Event of Default in the payment of Bond Service Charges exists, or (b) at least 25% in aggregate principal amount of all Bonds then outstanding, in the case of any other Event of Default. There is not to be so waived, however, any Event of Default described in (a) or (b) under "— Events of Default" above or any declaration of acceleration in connection therewith rescinded or annulled,unless at the time of that waiver or rescission and annulment payments of the amounts provided in the Indenture for waiver and rescission and annulment in connection with acceleration of maturity have been made or provision has been made therefor. In the case of the waiver or rescission and annulment, or in case any suit, action or proceedings taken by the Trustee on account of any Event of Default have been discontinued, abandoned or determined adversely to it, the Issuer, the Trustee and the Holders are to be restored to their former positions and rights under the Indenture, respectively. No waiver or rescission is to extend to any subsequent or other Event of Default or impair any right consequent thereon. Supplemental Indentures Without the consent of, or notice to, any of the Holders, the Issuer and the Trustee may enter into indentures supplemental to the Indenture that are not, in the opinion of the Issuer and the Trustee, inconsistent with the terms and provisions of the Indenture for any one or more of the following purposes: (a) To cure any ambiguity, inconsistency or formal defect or omission in the Indenture; (b) To grant to or confer upon the Trustee for the benefit of the Holders any additional rights,remedies,powers or authority that lawfully may be granted to or conferred upon the Holders or the Trustee; (c) To assign additional revenues under the Indenture; (d) To accept additional security and instruments and documents of further assurance with respect to the Project; -20- (e) To add to the covenants, agreements, obligations and rights of the Issuer under the Indenture, other covenants, agreements and obligations to be observed or rights to be exercised for the protection of the Holders, or to surrender or limit any right, power or authority reserved to or conferred upon the Issuer in the Indenture; (f) To evidence any succession to the Issuer and the assumption by its successor of the covenants, agreements and obligations of the Issuer under the Indenture, the Loan Agreement and the Bonds; (g) To facilitate(i)the transfer of Bonds issued by the Issuer under the Indenture and held in Book Entry Form from one Depository to another and the succession of Depositories, or (ii) the withdrawal of Bonds issued by the Issuer under the Indenture and delivered to a Depository for use in a Book Entry System and the issuance of replacement Bonds in fully registered form and in the form of physical certificates to others than a Depository; (h) To permit the Trustee to comply with any obligations imposed upon it by law; (i) To specify further the duties and responsibilities of, and to define further the relationship among,the Trustee,the registrar and any authenticating agents or paying agents; (j) To achieve compliance of the Indenture with any applicable federal securities or tax law; (k) To make amendments to the provisions of the Indenture relating to arbitrage matters under Section 148 of the Code, if, in the opinion of Bond Counsel, those amendments would not cause the interest on the Bonds outstandingto be included in gross income of the Holders for federal income tax purposes which amendments may, among other things, change the responsibility for making the relevant calculations, provided that in no event is such amendment to delegate to the Trustee, without its consent, in its sole discretion the obligation to make or perform the calculations required under Section 148 of the Code; and (1) To permit any other amendment that, in the judgment of the Trustee, is not to the prejudice of the Trustee or the Holders. Supplemental Indentures Requiring Consent of Holders Exclusive of Supplemental Indentures described above and subject to the terms, provisions and limitations described below, and not otherwise, with the consent of the Holders of not less than a majority of the principal amount of the Bonds, and with the consent of the Borrower(if required by the Indenture), the Issuer and the Trustee may execute and deliver Supplemental Indentures adding any provisions to, changing in any manner or eliminating any of the provisions of the Indenture or any Supplemental Indenture or restricting in any manner the rights of the Holders. Nothing in the Indenture is to permit, however, or be construed as permitting, without the consent of the Holders of the Bonds: (i)an extension of the maturity of the principal of or the interest on the Bonds, (ii) a reduction in the principal amount of the Bonds or the rate of interest thereon, (iii) the creation of a privilege or priority of any Bond or Bonds over any other Bond or Bonds,or(iv)a reduction in the aggregate principal amount of the Bonds required for consent to a Supplemental Indenture. If the Issuer requests that the Trustee execute and deliver any Supplemental Indenture for any of the purposes described in the preceding paragraph, upon (i) being satisfactorily indemnified with respect to its expenses in connection therewith, and (ii) if required by the Indenture, receipt of the Borrower's -21 - consent to the proposed execution and delivery of the Supplemental Indenture, the Trustee is to cause notice of the proposed execution and delivery of the Supplemental Indenture to be mailed by first-class mail, postage prepaid, to the Holders of Bonds at their addresses as they appear on the Register at the close of business on the fifteenth day preceding that mailing. The Trustee will not be subject to any liability to any Holder by reason of the Trustee's failure to mail, or the failure of any Holder to receive, the notice described above. Any failure of that nature will not affect the validity of the Supplemental Indenture when there has been consent thereto as described above. The notice is to set forth briefly the nature of the proposed Supplemental Indenture and state that copies thereof are on file at the principal corporate trust office of the Trustee for inspection by all Holders. If the Trustee receives, within a period prescribed by the Borrower, of not less than 60 days, but not exceeding one year, following the mailing of the notice, an instrument or document or instruments or documents, in form to which the Trustee does not reasonably object, purporting to be executed by the Holders of not less than a majority in aggregate principal amount of the Bonds then outstanding (which instrument or document or instruments or documents refer to the proposed Supplemental Indenture in the form described in the notice and specifically consent to the Supplemental Indenture in substantially that form),the Trustee is to execute and deliver the Supplemental Indenture in substantially the form to which reference is made in the notice as being on file with the Trustee, without liability or responsibility to any Holder,regardless of whether that Holder has consented thereto. Any consent will be binding upon the Holder giving the consent and, anything in the Indenture to the contrary notwithstanding, upon any subsequent Holder of that Bond and of any Bond issued in exchange therefor (regardless of whether the subsequent Holder has notice of the consent to the Supplemental Indenture). A consent may be revoked in writing, however, by the Holder who gave the consent or by a subsequent Holder of the Bond by a revocation of such consent received by the Trustee prior to the execution and delivery by the Trustee of the Supplemental Indenture. At any time after the Holders of the required percentage of Bonds have filed their consents to the Supplemental Indenture, the Trustee is to make and file with the Issuer a written statement that the Holders of the required percentage of Bonds have filed those consents. That written statement will be conclusive evidence that the consents have been so filed. If the Holders of the required percentage in aggregate principal amount of Bonds outstanding have consented to the Supplemental Indenture, as described above, no Holder will have any right (a) to object to (i) the execution or delivery of the Supplemental Indenture, (ii) any of the terms and provisions contained therein, or(iii)the operation thereof, (b)to question the propriety of the execution and delivery thereof, or(c)to enjoin or restrain the Trustee or the Issuer from that execution or delivery or from taking any action pursuant to the provisions thereof. Consent of Borrower Anything contained in the Indenture to the contrary notwithstanding, a Supplemental Indenture that affects any rights or obligations of the Borrower will not become effective unless and until the Borrower has consented in writing to the execution and delivery of that Supplemental Indenture. The Trustee Prior to an event of default under the Indenture and after the curing of any such event of default, the Trustee undertakes to perform such duties and only such duties as are specifically set forth in the Indenture. In case an event of default has occurred that has not been cured(of which the Trustee has been -22 - notified or is deemed to have notice), the Trustee is to exercise such rights and powers vested in it by the Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. Before taking any action under the Indenture, the Trustee may require that a satisfactory indemnity bond be furnished to the Trustee for the reimbursements of all expenses that it may incur and to protect it against all liability by reason of any action so taken, except liability that is adjudicated to have resulted from its negligence or willful default. The Trustee may become the owner or pledgee of the Bonds and otherwise deal with the Issuer and the Borrower with the same rights it would have if it were not the Trustee. The Trustee may at any time resign from the trusts created by the Indenture by giving written notice to the Issuer, the Borrower and to each registered owner of the Bonds then outstanding; provided that no such resignation will take effect until a successor has been appointed and has accepted such appointment as provided in the Indenture or an order of a court of competent jurisdiction allowing the Trustee to resign. Satisfaction and Discharge of the Indenture The lien of the Indenture will be discharged if the Issuer pays or causes to be paid and discharged all the outstanding Bonds, or there are otherwise paid to the Holders of the outstanding Bonds all the Bond Service Charges due or to become due thereon, and provisions are also made for paying all other amounts payable under the Indenture by the Issuer, or under the Loan Agreement, the Regulatory Agreement and the Note by the Borrower. All or any part of the outstanding Bonds will be deemed to have been paid and discharged within the meaning of the Indenture if(a) the Trustee has received in trust and irrevocably committed for such payment, sufficient money, or (b) the Trustee has received, in trust and irrevocably committed for such payment, noncallable direct obligations of or obligations guaranteed as to full and timely payment by the United States of America certified by an independent public accounting firm of national reputation to be of such maturities and interest payment dates and to bear such interest as will, without further investment or reinvestment of either the principal amount thereof or the interest earnings therefrom, be sufficient together with moneyreferred to in(a)above, for the payment, at their maturities, of all payments of Bond g PYm pYm Service Charges on the Bonds to the date of maturity. Any money so held by the Trustee may be invested by the Trustee, but only in noncallable direct obligations of or obligations guaranteed as to full and timely payment by the United States of America having maturities of which, at the option of the Holder, will not be later than,the time or times at which such money will be required for the aforesaid purposes. Covenants and Agreements of the Issuer In addition to any other covenants and agreements of the Issuer contained in the Indenture or the Bond Resolution,the Issuer further covenants and agrees with the Holders and the Trustee as follows: (a) Payment of Bond Service Charges. The Issuer will cause the Bond Service Charges to be paid by the Trustee, solely from the Pledged Revenues received on the dates, at the places and in the manner provided in the Indenture. (b) Pledged Revenues and Assignment of Pledged Revenues. The Issuer will not assign the Pledged Revenues or create or authorize to be created any debt, lien or charge thereon, other than the assignment thereof under the Indenture. -23 - (c) Recordings and Filings. At the expense of the Borrower, the Issuer will cause the Indenture, and any related instruments or documents relating to the assignment made by it under the Indenture to secure the Bonds, to be recorded and filed in the manner and in the places which may be required by law in order to preserve and protect fully the security of the Holders and the rights of the Trustee under the Indenture. (d) Inspection of Project Books. All books, instruments and documents in the Issuer's possession relating to the Project and the Pledged Revenues to the extent they are public under applicable Public Records laws, will be open to inspection and copying at all times during the Issuer's regular business hours by any accountants or other agents of the Trustee which the Trustee may designate from time to time. (e) Register. At reasonable times and under reasonable regulations established by the Registrar,the Register may be inspected and copied(at the expense of the person making such copies)by the Borrower,the Trustee,by Holders of 25%or more in principal amount of the Bonds then outstanding, or a designated representative thereof. (f) Rights and Enforcement of the Loan Agreement. The Trustee may enforce, in its name or in the name of the Issuer, all rights of the Issuer for and on behalf of the Holders, except for Unassigned Issuer's Rights, and may enforce all covenants, agreements and obligations of the Borrower under and pursuant to the Loan Agreement, regardless of whether the Issuer is in default in the pursuit or enforcement of those rights, covenants,agreements or obligations. The Issuer,however,will do all things and take all actions on its part necessary to the extent of its legal authority and control, to comply with covenants, agreements, obligations, duties and responsibilities on its part to be observed or performed under the Loan Agreement, and will take all actions within its authority to keep the Loan Agreement in effect in accordance with the terms thereof. "Unassigned Issuer's Rights"means all of the rights of the Issuer to receive Additional Payments under the Loan Agreement, to be held harmless and indemnified under the Loan Agreement, and as provided in the other Bond Documents, to be an insured under the Loan Agreement, to determine if satisfactory arrangements for Additional Payments as required under the Loan Agreement have been made, to be reimbursed for attorney's fees and expenses resulting from the enforcement of its remedies upon an Event of Default under the Loan Agreement,to receive notices pursuant the Loan Agreement, to give or withhold consent to amendments, changes, modifications, alterations and termination of the Loan Agreement, and to enforce its remedies under the Loan Agreement and the other Bond Documents. (g) Issuer Not to Adversely Affect Exclusion from Gross Income of Interest on Bonds. The Issuer covenants that it (i) will take, or require to be taken, all actions that may be required of the Issuer for the interest on the Bonds to be and remain excluded from the gross income for federal income tax purposes, and (ii) will not take or require to be taken any actions that to Issuer's knowledge would adversely affect that exclusion under the provisions of the Code. Observance and Performance of Covenants,Agreements, Authority and Actions The Issuer will observe and perform at all times all covenants, agreements, authority, actions, undertakings, stipulations and provisions to be observed or performed on its part under the Loan Agreement, the Indenture, the Bond Resolution, the Regulatory Agreement and the Bonds that are executed, authenticated and delivered under the Indenture, and under all proceedings of its Board pertaining thereto. -24- The Issuer represents and warrants that: (a) It is duly authorized by the Constitution and laws of the State, including particularly and without limitation the Act, to issue the Bonds, to execute and deliver the Indenture, the Loan Agreement and the Regulatory Agreement and to provide the security for payment of the Bond Service Charges in the manner and to the extent set forth in the Indenture. (b) All actions required on its part to be performed for the issuance, sale and delivery of the Bonds and for the execution and delivery of the Indenture and the Loan Agreement have been taken duly and effectively, as advised by Bond Counsel. (c) The Bonds will be valid and enforceable special obligations of the Issuer according to their terms. THE LOAN AGREEMENT The following is a summary of certain provisions of the Loan Agreement. The summary does not purport to be complete or definitive and is qualified in its entirety by reference to the Loan Agreement, a copy of which is on file with the Issuer and the Trustee. Representations of the Issuer In the Loan Agreement,the Issuer represents and warrants that: (a) It is validly existing as a municipal corporation of the State pursuant to the Act, and has full legal right, power and authority (i) to enter into the Loan Agreement; (ii) to adopt the Bond Resolution and cause the delivery of the Bonds to the Bondholders pursuant to the Bond Resolution and the Loan Agreement as provided therein; (iii) to lend the proceeds of the Bonds to the Borrower for the purpose set forth in the Loan Agreement; and (iv) to carry out and consummate the transactions contemplated by the Loan Agreement, the Indenture and the Regulatory Agreement (collectively, the "Issuer Documents"); (b) The Issuer, with respect to the Bonds, as advised by Bond Counsel, has complied, and will at the Closing Date be in compliance in all material respects with the Issuer Documents and the relevant laws of the State; (c) (i) At or prior to the Closing Date, the Issuer will have taken all action required to be taken by it to authorize the issuance and sale of the Bonds and the performance of its obligations under the Issuer Documents; (ii) the Issuer has full legal right, power and authority to enter into the Issuer Documents, will have full legal right, power and authority to deliver the Bonds to the Bondholders and to perform its obligations under the Bonds and the Issuer Documents, and all other documents to be executed by the Issuer in accordance with the issuance of the Bonds, and to carry out and effectuate the transactions contemplated by the Issuer Documents; (iii) on or prior to the Closing Date, the execution and delivery of, and the performance by the Issuer of the obligations contained in the Bonds and the Issuer Documents will have been duly authorized, and, when executed, the Issuer Documents will constitute valid and legally binding limited obligations of the Issuer enforceable against the Issuer in accordance with their respective terms, subject to any applicable bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditors' rights generally and the application of equitable principles where equitable remedies are sought and limitations on the enforcement of judgments against public bodies; (iv)the Issuer has duly authorized the consummation by it of all transactions contemplated -25 - by the Loan Agreement; and (v) the Issuer Documents have been duly and validly adopted by the Issuer and are at the time of acceptance thereof in full force and effect; (d) The Issuer, with respect to the Bonds, has not received notice that it is in material breach of or default under any applicable law or administrative regulation of the State, any department, division, agency or instrumentality thereof, or the United States or any applicable judgment or decree or any loan agreement, note, resolution, certificate, agreement or other instrument to which the Issuer is a party or is otherwise subject; and the adoption of the Bond Resolution and the execution and delivery of the Loan Agreement, the Bonds, the other Issuer Documents and all other documents to be executed by the Issuer in connection with the issuance of the Bonds, and compliance with the provisions of each thereof do not, to the Issuer's knowledge, conflict with or constitute a material breach of or default under any applicable law or administrative regulation of the State, any department, division, agency or instrumentality thereof, or the United States or any applicable judgment or decree, or any loan agreement, note, resolution, certificate,agreement or other instrument to which the Issuer is a party or is otherwise subject; (e) All approvals, consents, and orders of any governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to the performance by the Issuer,of its obligations under the Loan Agreement and under the Bond Resolution, the Issuer Documents and the Bonds and all other documents to be executed by the Issuer in connection with the issuance of the Bonds have been obtained; (f) The Issuer will not take or omit to take any action, which action or omission will adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Bonds under the Code; (g) The Bonds, when delivered and sold to the Bondholders as provided in the Loan Agreement, will have been duly authorized and executed and will constitute validly issued and binding limited obligations of the Issuer in conformity with,and entitled to the benefit and security of,the Act and the Issuer Documents; and (h) The Issuer agrees that all representations, warranties and covenants made by it in the Loan Agreement, and in certificates, agreements or other instruments delivered pursuant thereto or in connection therewith, shall be deemed to have been relied upon by the Holders, and that all representations, warranties and covenants made by the Issuer therein and all the Holders' rights thereunder shall survive the delivery of the Bonds. Representations and Covenants of the Borrower In the Loan Agreement,the Borrower represents and covenants that: (a) It is a limited liability company duly formed and validly existing under the laws of the State of Indiana; (b) It has full power and authority to execute, deliver and perform the Loan Agreement, the Note and the Regulatory Agreement and to enter into and carry out the transactions contemplated by those documents. That execution, delivery and performance do not, and will not, violate any provision of law applicable to the Borrower and do not, and will not, conflict with or result in a default under any agreement or instrument to which the Borrower is a party or by which it is bound. The Loan Agreement, the Note and the Regulatory Agreement have, by proper action, been duly authorized, executed and delivered by the Borrower and all steps necessary have been taken to constitute the Loan Agreement, the Note and the Regulatory Agreement valid and binding obligations of the Borrower; -26- (c) The provision of financial assistance to be made available to it under the Loan Agreement and the commitments therefor made by the Issuer have induced the Borrower to undertake the transactions contemplated by the Loan Agreement; (d) It presently intends to use or operate the Project in a manner consistent with the Act and in accordance with the Regulatory Agreement for the life of the Bonds or for such longer period as may be required by the Regulatory Agreement and knows of no reason why the Project will not be so operated. If, in the future, while the Bonds are outstanding, there is a cessation of that operation, it will use its best efforts to resume that operation or accomplish an alternate use by the Borrower or others approved by the Issuer which will be consistent with the Act and the Regulatory Agreement; (e) The Project will be completed in accordance with the Plans and Specifications (as defmed in the Indenture) and the portion of the Project funded with the proceeds of the Bonds will constitute a qualified residential rental project within the meaning of Section 142(d) of the Code and will be operated and maintained in such manner as to conform in all material respects with all applicable zoning, planning, building, environmental and other applicable Governmental regulations and as to be consistent with the Act; (f) The Project will be located entirely within the boundaries of the Issuer's jurisdiction; (g) At least 95% of the net proceeds of the Bonds (as defined in Section 150 of the Code) will be used to provide a qualified residential rental project (as defmed in Section 142(d) of the Code), and the Borrower will not request or authorize any disbursement pursuant to the Loan Agreement, which, if paid,would result in less than 95%of the net proceeds of the Bonds being so used; (h) The costs of issuance financed by the Bonds will not exceed 2% of the proceeds of the Bonds (within the meaning of Section 147(g)of the Code), and the Borrower will not request or authorize any disbursement pursuant to the Loan Agreement or otherwise, which, if paid, would result in more than 2% of the proceeds of the Bonds being so used. Except as permitted by Treasury Regulations 1.148- 6(d)(3)(ii),none of the proceeds of the Bonds will be used for working capital purposes; and (i) The proceeds of the Bonds will be used exclusively to pay costs that (i) are (A) capital expenditures (as defined in Section 1.150-1(a) of the Code's regulations) and (B) not made for the acquisition of existing property, to the extent prohibited in Section 147(d) of the Code, and (ii) are made exclusively with respect to a"qualified residential rental project"within the meaning of Section 142(d) of the Code and that for the greatest number of buildings the proceeds of the Bonds will be deemed allocated on a pro rata basis to each building in the Project and the land on which it is located so that each building and the land on which it is located will have been financed fifty percent(50%) or more by the proceeds of the Bonds for the purpose of complying with Section 42(h)(4)(B) of the Code; provided, however, the foregoing representation, covenant and warranty is made for the benefit of the Borrower and its members and neither the Trustee nor the Issuer will have any obligation to enforce this covenant nor will they incur any liability to any person, including without limitation, the Borrower, the members of the Borrower, any other affiliate of the Borrower or the holders of the Bonds for any failure to meet the intent expressed in the foregoing representation, covenant and warranty; and provided further, failure to comply with this representation, covenant and warranty will not constitute a default or event of default under the Loan Agreement or the Indenture. The Borrower acknowledges that the representations and covenants in the Loan Agreement made by the Borrower have been expressly and specifically relied upon by the Issuer in determining to make the Loan to the Borrower and the Loan would not have been made but for such representations and covenants. -27- General Terms of the Financing To provide funds to make the Loan for purposes of assisting in paying the Project Costs, the Issuer will issue, sell and deliver the Bonds to the Underwriter. The Bonds will be issued pursuant to the Indenture in the aggregate principal amount, will bear interest and will mature as set forth therein. In the Loan Agreement, the Borrower approves the terms and conditions of the Indenture and the Bonds, and of the terms and conditions under which the Bonds will be issued, sold and delivered. The proceeds from the sale of the Bonds will be loaned to the Borrower and paid over to the Trustee for the benefit of the Borrower and the Holders of the Bonds and deposited as follows: (a) a sum equal to the negative arbitrage deposit and any accrued interest paid by the Underwriter will be deposited in the Bond Fund, and (b) the balance of the proceeds will be deposited in the Project Fund. Pending disbursement pursuant to the provisions of the Loan Agreement, the proceeds deposited in the Project Fund, together with any investment earnings thereon, will constitute a part of the Pledged Revenues assigned by the Issuer to the Trustee as security for the payment of Bond Service Charges as provided in the Indenture. Disbursements from the Project Fund So long as no Event of Default under the Loan Agreement has occurred and is continuing for which the principal amount of the Bonds has been declared to be immediately due and payable pursuant to the Loan Agreement and the Indenture, disbursements from the Project Fund will be made only (i) upon the receipt by the Trustee of(A)a written request from the Borrower in substantially the form of the request attached to the Loan Agreement, and (B) Collateral Funds in the amount of the disbursement request and the transfer of funds as set forth in the Indenture. Proceeds of the Bonds disbursed pursuant to the Loan Agreement may only be used to pay those Project Costs identified in the Sources and Uses of Funds attached to the Loan Agreement, as it may be amended pursuant to the agreement of the FHA Lender and the Borrower. Any disbursement for any item not described in, or the cost for which item is other than as described in the Loan Agreement, is to be accompanied by an Opinion of Bond Counsel to the effect that such disbursement will not cause the interest on the Bonds to be included in the gross income of the Holders for federal income tax purposes. Assignment of Agreement and Pledged Revenues To secure the payment of Bond Service Charges, the Issuer will assign to the Trustee, by the Indenture, its rights under and interest in the Loan Agreement(except for the Unassigned Issuer's Rights) and the Note. In the Loan Agreement, the Borrower agrees and consents to those assignments. The Issuer has agreed in the Loan Agreement that it will not attempt to further assign, transfer or convey its interest in the Pledged Revenues or the Loan Agreement or create any pledge or Lien of any form or nature with respect to the Pledged Revenues, including Loan Payments under the Loan Agreement. Borrower Not to Adversely Affect Tax-Exempt Status of Interest on the Bonds The Borrower, for the benefit of the Issuer, the Trustee and each holder of Bonds, represents in the Loan Agreement that it has not taken, or permitted to be taken on its behalf, and agrees that it will not take, or permit to be taken on its behalf, any action that would adversely affect the exclusion of the interest paid on the Bonds from gross income for federal income tax purposes, and that it will make and take, or require to be made and taken, such acts and filings as may from time to time be required under the Code to maintain such exclusion. -28 - Events of Default Each of the following is an"Event of Default"under the Loan Agreement: (a) The Borrower fails to pay any Loan Payment on or prior to the date on which that Loan Payment is due and payable or within the cure period; (b) The Borrower fails to observe and perform any other agreement, term or condition contained in the Loan Agreement and such failure continues for a period of 30 days after the Borrower has been provided written notice thereof by the Issuer or the Trustee, or for such longer period as the Issuer and the Trustee may agree to in writing; provided, that if the failure is other than the payment of money and is of such nature that it can be corrected but not within the applicable period, that failure will not constitute an Event of Default so long as the Borrower institutes curative action within the applicable period and diligently pursues that action to completion, which must be resolved within 180 days after the aforementioned notice; (c) The Borrower: (i)admits in writing its inability to pay its debts generally as they become due; (ii) has an order for relief entered in any case commenced by or against it under the federal bankruptcy laws, as now or hereafter in effect, which is not dismissed within 90 days; (iii) commences a proceeding under any other federal or state bankruptcy, insolvency, reorganization or similar law, or has such a proceeding commenced against it and either has an order of insolvency or reorganization entered against it or has the proceeding remain undismissed and unstayed for 90 days; (iv) makes an assignment for the benefit of creditors; or (v)has a receiver or trustee appointed for it or for the whole or any substantial part of its property which appointment is not vacated within a period of 90 days; (d) Any representation or warranty made by the Borrower in the Loan Agreement or any statement in any report, certificate, financial statement or other instrument furnished in connection with the Loan Agreement or with the purchase of the Bonds shall at any time prove to have been false or misleading in any adverse material respect when made or given; and (e) Upon the occurrence of an "Event of Default" as defined in the Indenture or the Regulatory Agreement. Notwithstanding the foregoing, if, by reason of Force Majeure (as defined in the Loan Agreement), the Borrower is unable to perform or observe any agreement, term or condition of the Loan Agreement which would give rise to an Event of Default under the Loan Agreement, the Borrower will not be deemed in default during the continuance of such inability. However, the Borrower is required to promptly give notice to the Trustee and the Issuer of the existence of an event of Force Majeure and shall use its best efforts to remove the effects thereof; provided that the settlement of strikes or other industrial disturbances shall be entirely within its discretion. The declaration of an Event of Default under subsection (c) above and the exercise of remedies upon any such declaration are subject to any applicable limitations of federal bankruptcy law affecting or precluding that declaration or exercise during the pendency of or immediately following any bankruptcy, liquidation or reorganization proceedings. Amendments, Changes and Modifications Except as otherwise provided in the Indenture, the Loan Agreement may not be amended, changed,modified,altered or terminated without the prior written consent of the parties thereto. -29 - TAX MATTERS Opinion of Bond Counsel In the opinion of Faegre Drinker Biddle & Reath LLP, Bond Counsel, under existing law and assuming continuing compliance by the Issuer and Borrower with certain tax covenants, interest on the Bonds is excludable from gross income for federal income tax purposes under Section 103 of the Code, except for interest on any Bond for any period during which such Bond is held by a person who is a "substantial user" of the Project or a "related person" within the meaning of Section 147(a) of the Code. Further, under existing law, interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals under the Code. In rendering its opinion, Bond Counsel has relied on certain representations, certifications of fact, and statements of reasonable expectations made by the Issuer, the Borrower, and others, in connection with the Bonds, and Bond Counsel has assumed compliance by the Issuer and the Borrower with certain ongoing covenants to comply with applicable requirements of the Code to assure the exclusion of interest on the Bonds from gross income under Section 103 of the Code. In the opinion of Bond Counsel,under existing law, interest on the Bonds is exempt from taxation in the State of Indiana for all purposes except for the Indiana financial institutions tax. The Code imposes certain requirements that must be met subsequent to the issuance of the Bonds as a condition for the interest on state and local government obligations to be and remain excludable from gross income for federal income tax purposes. The Issuer and the Borrower, respectively, have made in the Indenture, certifications, covenants and representations (collectively, the "Tax Covenants") , the Loan Agreement, the Regulatory Agreement and certain certificates and agreements delivered on the date of delivery of the Bonds that: (i) the Issuer and the Borrower will not to take any action nor fail to take any action, within their respective power and control, with respect to the Bonds, if such action or omission would cause the interest on the Bonds to cease to be excludable from gross income for federal tax purposes pursuant to Section 103 of the Code; (ii) the Issuer and the Borrower will not make any investment or do any other act or thing during the period that the Bonds are outstanding which would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code; and (iii) the Issuer and the Borrower will comply with the arbitrage rebate requirements under Section 148 of the Code to the extent applicable(collectively,the "Tax Covenants"). Noncompliance with such requirements may cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issue, regardless of the date on which noncompliance occurs. Should the Bonds bear interest that is not excluded from gross income for federal income tax purposes, the market value of the Bonds would be materially and adversely affected. Indiana Code 6-5.5 imposes a franchise tax on certain taxpayers (as defined in Indiana Code 6- 5.5)which,in general, include all corporations which are transacting the business of a financial institution in the State. The franchise tax is measured in part by interest excluded from gross income under Section 103 of the Code minus associated expenses disallowed under Section 265 of the Code. Although Bond Counsel will render an opinion in the form attached as APPENDIX A hereto, the accrual or receipt of interest on the Bonds may otherwise affect a Bondholder's federal income tax or state tax liability with respect to the Bonds. The nature and extent of these other tax consequences will depend upon the Bondholder's particular tax status and a Bondholder's other items of income or deduction. Taxpayers who may be affected by such other tax consequences include, without limitation, financial institutions, certain insurance companies, S corporations, certain foreign corporations, individual recipients of Social Security or railroad retirement benefits and taxpayers who may be deemed to have -30- incurred (or continued) indebtedness to purchase or carry the Bonds. Bond Counsel expresses no opinion regarding any other tax consequences. Original Issue Discount The initial public offering price of certain Bonds may be less than the stated redemption price thereof at maturity. The difference between the initial public offering price for any such Bond and the stated redemption price at maturity is "original issue discount." For federal income tax purposes, original issue discount on any Bond accrues to original holders of the Bond over the period of its maturity based on the constant yield method compounded annually as interest with the same tax exemption and alternative minimum tax status as regular interest. The accrual of original issue discount increases the holder's tax basis in any Bond for determining taxable gain or loss on the maturity, redemption,prior sale or other disposition of such Bond. Purchasers of the Bonds should consult their tax advisors for an explanation of the accrual rules for original issue discount and any other federal, state or local tax consequences of the purchase of any Bonds with original issue discount Original Issue Premium The initial public offering price of certain Bonds may be greater than the stated redemption price thereof at maturity. The difference between the initial public offering price for any such Bond and the stated redemption price at maturity is "original issue premium." For federal income tax purposes, original issue premium is amortizable periodically over the term of a Bond through reductions in the holder's tax basis for such Bond for determining taxable gain or loss from sale or from redemption prior to maturity. Amortizable premium is accounted for as reducing the tax-exempt interest on the Bond rather than creating a deductible expense or loss. Purchasers of the Bonds should consult their tax advisors for an explanation of the accrual rules for original issue premium and any other federal, state or local tax consequences of the purchase of any Bonds with original issue premium. Miscellaneous Tax legislation, administrative actions taken by tax authorities, or court decisions, whether at the federal or state level, could adversely affect the tax-exempt status of interest on the Bonds under federal or state law or otherwise prevent beneficial owners of the Bonds from realizing the full current benefit of the tax status of such interest. In addition, such legislation or actions (whether currently proposed, proposed in the future, or enacted) or such decisions could affect the market price or marketability of the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding the foregoing matters. UNDERWRITING The Sturges Company (the "Underwriter") is offering the Bonds at the price set forth on the cover hereof. The initial offering price may be changed from time to time and concessions from the offering price may be allowed to dealers, banks and others. Pursuant and subject to the terms and conditions set forth in a Bond Purchase Agreement, among the Underwriter, the Issuer and the Borrower, the Underwriter has agreed to purchase the Bonds at price equal to the principal amount thereof plus the accrued interest on the Bonds to the Closing Date. For its services relating to the transaction, the Underwriter will receive a fee of $ , from which the Underwriter will pay certain fees and expenses relating to the issuance of the Bonds. -31 - The Underwriter does not guarantee a secondary market for the Bonds and is not obligated to make any such market in the Bonds. No assurance can be made that such a market will develop or continue. Consequently, investors may not be able to resell Bonds should they need or wish to do so for emergency or other purposes. RATING It is a condition to the Underwriter's acceptance of the Bonds on the Closing Date that Moody's has assigned a rating of "MIG-1" to the Bonds up to the Initial Mandatory Tender Date. The rating reflects only the view of Moody's at the time the rating was issued and an explanation of the significance of such rating may be obtained from Moody's. The rating is not a recommendation to buy, sell or hold the Bonds. There is no assurance that any such rating will continue for any given period of time or that it will not be revised downward or withdrawn entirely by such rating agency if, in its judgment, circumstances so warrant. Any such downward revision or withdrawal of such rating can be expected to have an adverse effect on the market price of the Bonds. CERTAIN LEGAL MATTERS Certain legal matters relating to the authorization and validity of the Bonds will be subject to the approving opinion of Faegre Drinker Biddle & Reath LLP, Bond Counsel. Certain legal matters will be passed upon for the Underwriter by its counsel, Squire Patton Boggs (US) LLP, Cleveland, Ohio, and for the Borrower by its counsel, Kuhl & Grant, LLP. Compensation for certain of such counsel is contingent upon the issuance of the Bonds. ABSENCE OF LITIGATION It is a condition to the Underwriter's acceptance of the Bonds on the Closing Date that the Issuer and the Borrower deliver a certificate to the effect that, with regard to the Issuer, that its principal executive officer has received no notice of legal proceedings pending or threatened as described herein, - and to the Borrower's knowledge, there are no legal proceedings pending or threatened to restrain or enjoin the issuance, sale or delivery of the Bonds or the payment,collection or application of the proceeds thereof or of the revenues and other money and securities pledged or to be pledged under the Indenture or in any way contesting or affecting any authority for or the validity of the Bonds or the Indenture. CONTINUING DISCLOSURE The Borrower has undertaken responsibility for any continuing disclosure to Bondholders as described below, and the Issuer will have no liability to the Holders of the Bonds or any other person with respect to such disclosures. The Borrower will undertake, pursuant to the Continuing Disclosure Agreement by and between the Borrower and the Trustee(the"Continuing Disclosure Agreement"),to comply with the provisions of Rule 15c2-12 (the"Rule"), promulgated by the U.S. Securities and Exchange Commission, by providing certain financial information and operating data relating to the Project and event notices required by the Rule. See Appendix C for the proposed form of the Continuing Disclosure Agreement. In the event of any failure by the Borrower to provide the required continuing disclosure with respect to the Project or the Bonds, any Bondholder may bring an action seeking specific performance of the Borrower's obligations to provide continuing disclosure. No assurance can be given as to the outcome of any such proceeding. -32 - MISCELLANEOUS The foregoing summaries and explanations do not purport to be comprehensive, and are expressly made subject to the exact provisions of documents referred to herein. Copies of the Indenture and the Loan Agreement may be obtained from the Trustee or, during the initial marketing of the Bonds, the Underwriter. Any statements in this Official Statement involving matters of opinion or forecast, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement among the Issuer, the Borrower, or the Underwriter and the purchasers or holders of any Bonds. The execution and delivery of this Official Statement have been duly authorized by the Issuer and the Borrower. MAH CEDAR GLEN,LP, an Indiana limited partnership, By: MAH Cedar Glen GP,LLC, an Indiana limited liability company, its general partner By: Merchants Affordable Housing Corp., an Indiana nonprofit corporation, its sole member By: Janine Betsey, President -33 - APPENDIX A FORM OF OPINION OF BOND COUNSEL [CLOSING DATE] The Sturges Company Naples,Florida The Huntington National Bank, as trustee Indianapolis,Indiana Re: $4,100,000 City of South Bend, Indiana Multifamily Housing Revenue Bonds, Series 2020A(Cedar Glen Apartments Project) Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance and sale by City of South Bend, Indiana (the "Issuer") of its $4,100,000 aggregate principal amount of Multifamily Housing Revenue Bonds, Series 2020A (Cedar Glen Apartments Project) (the `Bonds"). The Bonds are being issued pursuant to IC 36-7-11.9 and 12, as supplemented and amended (together, the "Act"), and pursuant to a Trust Indenture, dated as of April 1, 2020 (the "Trust Indenture"), between the Issuer and The Huntington National Bank, as trustee (the"Trustee"), as authorized by Ordinance No. 2020-_, adopted by the Common Council of the Issuer on April _, 2020. The proceeds of the Bonds are being loaned to MAH Cedar Glen, LP (the "Borrower") pursuant to the terms of a Loan Agreement, dated as of April 1, 2020 (the "Loan Agreement"), between the Issuer and Borrower, which Loan Agreement is being assigned (excepting for the Unassigned Issuer's Rights, as defined in the Indenture) to the Trustee. In connection with the issuance of the Bonds, the Issuer, the Borrower and the Trustee have entered into a Regulatory Agreement and Declaration of Restrictive Covenants, dated as of April 1, 2020 (the "Regulatory Agreement") setting forth certain restrictions on the use and occupancy of the Project(as defined in the Indenture). We have examined the law, such certified proceedings and such other certificates, instruments and documents as we have deemed necessary or appropriate for purposes of rendering this opinion. As to questions of fact material to our opinion, we have relied upon representations, covenants, and certifications of public officials and representations, covenants, and certifications by or on behalf of the Borrower contained in the certificates, instruments and documents and certified proceedings described above. Based upon the foregoing, we are of the opinion, under existing law, as follows: The Trust Indenture, the Loan Agreement and the Regulatory Agreement have been duly authorized, executed and delivered by the Issuer and constitute valid and binding obligations of the Issuer enforceable against the Issuer in accordance with their respective terms. A-1 The Bonds have been duly authorized, executed and issued by the Issuer and constitute valid and binding special and limited obligations of the Issuer enforceable in accordance with their terms. The interest on the Bonds is excludable from the gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended and in effect on the date hereof(the "Code"). Under Section 147(a) of the Code, interest on a Bond will not be excludable from gross income for federal income tax purposes during the time such Bond is held by a person who is a "substantial user" of the facilities financed by the Bond or a "related person" thereto within the meaning of Section 147(a) of the Code and the regulations promulgated pursuant thereto. Interest on the Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals under the Code. The opinions set forth in this paragraph 3 are subject to the condition that the Issuer and the Borrower comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excludable from gross income for federal income tax purposes. Failure to comply with certain of such requirements may cause the interest on the Bonds to cease to be excludable from gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The Issuer and the Borrower have covenanted to comply with all such requirements. We express no opinion regarding any other federal tax consequences arising with respect to the Bonds. The interest on the Bonds is exempt from taxation in the State of Indiana for all purposes except the Indiana financial institutions tax. It is to be understood that the enforcement of certain rights and remedies provided in the Bonds, the Trust Indenture, the Loan Agreement and the Regulatory Agreement may be limited by the laws of the State of Indiana, but such laws of the State of Indiana do not prevent the practical realization of the principal benefits or the security provided by the Bonds, the Trust Indenture, the Loan Agreement and the Regulatory Agreement. It is further understood that the rights of the holders of the Bonds, the Issuer and the Borrower and the enforceability of the Bonds, the Trust Indenture, the Loan Agreement and the Regulatory Agreement may be subject to bankruptcy, insolvency, reorganization, rearrangement, receivership, moratorium and other laws and matters of public policy affecting creditors' rights heretofore or hereafter enacted and that their enforcement may also be subject to the exercise of judicial discretion and general principles of equity in appropriate cases. Very truly yours, FAEGRE DRINKER BIDDLE&REATH LLP -2- APPENDIX B BOOK-ENTRY ONLY SYSTEM The information in this APPENDIX B concerning DTC and DTC's book-entry system has been obtained from sources that the Issuer believes to be reliable, but the Issuer takes no responsibility for the accuracy thereof The Depository Trust Company("DTC'),New York,NY,will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity,and will be deposited with DTC or its agent. DTC, the world's largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC'). DTCC is the holding company for DTC, National Securities Clearing Corporation, and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has a Standard & Poor's rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are,however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds,except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede&Co., or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the B-1 identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative,Beneficial Owners may wish to provide their names and addresses to the Trustee and request that copies of the notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions and dividend payments on the Bonds will be made to Cede& Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Issuer or Trustee on the payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Trustee, or the Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions and dividend payments to Cede& Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Issuer, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. A Beneficial Owner shall give notice to elect to have its Bonds purchased or tendered,through its Participant, to the Trustee, and shall effect delivery of such Bonds by causing the Direct Participant to transfer the Participant's interest in the Bonds, on DTC's records, to the Trustee. The requirement for physical delivery of the Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Bonds are transferred by Direct Participants on DTC's records and followed by a book-entry credit of tendered Securities to the Trustee's DTC account. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Issuer or the Trustee. Under such circumstances, in the event that a successor depository is not obtained,Bond certificates are required to be printed and delivered. B-2 The Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC. B-3 APPENDIX C PROPOSED FORM OF CONTINUING DISCLOSURE AGREEMENT $4,100,000' CITY OF SOUTH BEND,INDIANA MULTIFAMILY HOUSING REVENUE BONDS,SERIES 2020A (CEDAR GLEN APARTMENTS PROJECT) This Continuing Disclosure Agreement (the "Disclosure Agreement"), dated as of April 1, 2020, is executed and delivered by MAH Cedar Glen, LP, an Indiana limited partnership (the "Owner"), The Huntington National Bank, in its capacity as trustee(in such capacity, the"Trustee"),and The Huntington National Bank, as dissemination agent (in such capacity, the"Dissemination Agent"), in connection with the issuance and sale of the above-captioned bonds (the "Bonds"). The Bonds are being issued pursuant to a Trust Indenture, dated as of April 1,2020 (the"Indenture"),between the City of South Bend, Indiana (the"Issuer") and the Trustee. The Bonds are being issued by the Issuer to provide money to make a loan (the "Loan") to the Owner, to finance the acquisition, rehabilitation, improvement and equipping of a multifamily rental housing facility(the"Project")located in the City of South Bend, Indiana. Section 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Owner, the Trustee and the Dissemination Agent for the benefit of the Holders of the Bonds and in order to assist the Participating Underwriter(as defined below) in complying with the Rule(defined below). The Owner and the Dissemination Agent acknowledge that the Issuer has undertaken no responsibility with respect to any reports, notices or disclosures provided or required under this Disclosure Agreement, and has no liability to any person, including any Holder of the Bonds, with respect to any such reports,notices or disclosures. Section 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined herein or in this Section, the following capitalized terms shall have the following meanings: "Annual Report"means any Annual Report provided by the Owner pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. "Disclosure Representative" means the managing member of the Owner or its designee, or such other person as the Owner shall designate in writing to the Dissemination Agent from time to time. "Dissemination Agent" means The Huntington National Bank, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Owner and which has filed with the Trustee a written acceptance of such designation. "Listed Events"means any of the events listed in Section 5(a) of this Disclosure Agreement. "Participating Underwriter"means The Sturges Company and its successors and assigns. "Repository" means the Municipal Securities Rulemaking Board ("MSRB") through its Electronic Municipal Market Access("EMMA") system(http://emma.msrb.org/). "Rule"means Rule 15c2 12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. *Preliminary,subject to change. C-1 "Tax exempt" means that interest on the Bonds is excludable from gross income for federal income tax purposes, whether or not such interest is includable as an item of tax preference or otherwise includable directly or indirectly for purposes of calculating any other tax liability, including any alternative minimum tax or environmental tax. Section 3. Provision of Annual Reports. (a) The Owner shall, or shall cause the Dissemination Agent to, not later than May 1 of each year, commencing May 1, 2021, provide to the Repository an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Agreement. If the Dissemination Agent is to provide such Annual Report to the Repository, not later than five Business Days prior to said date, the Owner shall provide the Annual Report to the Dissemination Agent. The Owner shall provide a written certification with the Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the Owner hereunder. The Dissemination Agent may conclusively rely upon such certification of the Owner. In each case, the Annual Report shall be submitted through the EMMA system and to the Trustee in an electronic format and contain such identifying information as is prescribed by the MSRB, and may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4; provided that the audited financial statements of the Owner may be submitted separately from the balance of the Annual Report if they are not available by that date. The Dissemination Agent's obligation to deliver the information at the times and with the contents described above shall be limited to the extent the Owner has provided such information to the Dissemination Agent as required hereby. (b) If by five Business Days prior to the date specified in subsection (a) for providing the Annual Report to the Repository, the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the Owner to inquire if the Owner is in compliance with subsection (a). (c) If the Owner does not provide a written certification to the Dissemination Agent to the effect that an Annual Report has been provided to the Repository by the date required in subsection (a), the Dissemination Agent shall,in a timely manner, send a notice to the Repository in an electronic format in substantially the form attached as Exhibit A. (d) The Dissemination Agent shall, to the extent the Owner has provided the Annual Report to the Dissemination Agent, file a report with the Owner certifying that the information represented to the Dissemination Agent by the Owner as the Annual Report has been provided pursuant to this Disclosure Agreement and stating the date it was provided to the Repository. (e) The Owner shall either make Annual Reports required by this Section 3 to the MSRB through its EMMA system (provided the Disclosure Representative shall have set up an account on the EMMA system) or shall make such Annual Reports available to the Dissemination Agent in an electronic format that meets the requirements prescribed by the MSRB. Section 4. Content of Annual Reports. The Owner's Annual Report shall be substantially in the form attached hereto as Exhibit B and include the following information and, if available, shall contain or incorporate by reference audited financial statements for the year ended December 31: 1. the category of information being provided; 2. the period covered by any annual financial information/financial statements or operating data; C-2 3. the issues or specific securities to which such document is related (including CUSIP number,Issuer name, state, issue description,dated date,maturity date and coupon rate); 4. the name of the Owner and any other obligated person other than the Issuer; 5. the name and date of the documents; and 6. contact information for the Disclosure Representative. Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues with respect to which the Owner is an "obligated person" (as defined by the Rule), which have been filed with the Repository. If the document incorporated by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The Owner will clearly identify each such other document so incorporated by reference.] Section 5. Reporting of Significant Events. (a) This Section 5 shall govern the giving of notices of the occurrence of any of the following events(each,a"Listed Event"): (1) Principal and interest payment delinquencies on the Bonds; (2) Non-payment related defaults on the Bonds, if material; (3) Unscheduled draws on debt service reserves relating to the Bonds reflecting financial difficulties; (4) Unscheduled draws on credit enhancements relating to the Bonds reflecting financial difficulties; (5) Substitution of credit or liquidity providers,or their failure to perform; (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or fmal determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; (7) Modifications to rights of Holders of the Bonds, if material; (8) Bond calls, if material (except for mandatory scheduled redemptions not otherwise contingent upon the occurrence of an event); (9) Tender offers; (10) Defeasance of the Bonds; (11) Release, substitution, or sale of property securing repayment of the Bonds, if material; (12) Rating changes on the Bonds; (13) Bankruptcy, insolvency, receivership or similar event of the Owner or the Issuer; which event is considered to occur when any of the following occur: the appointment of a C-3 receiver, fiscal agent or similar officer for the Owner or the Issuer in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Owner or the Issuer, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Owner or the Issuer; (14) The consummation of a merger, consolidation, or acquisition involving the Owner or the sale of all or substantially all of the assets of the Owner, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (15) Appointment of a successor or additional trustee or the change of name of a trustee, if material; (16) Incurrence of a financial obligation of the issuer or obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the issuer or obligated person, any of which affect security holders, if material; and (17) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of the financial obligation of the issuer or obligated person, any of which reflect financial difficulties. For purposes of the above, "financial obligation" means: (i) a debt obligation; (ii) a derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or(iii)a guarantee of(i)or(ii). (b) The Trustee shall, within two business days after obtaining actual knowledge of the occurrence of any of the Listed Events (except events listed in clauses (a)(1),(8), (10) or (15) — (17) in which case the Trustee shall notify the Dissemination Agent and the Owner) contact the Disclosure Representative, inform such person of the event, and request that the Owner promptly notify the Dissemination Agent in writing to report the event pursuant to subsection (f). For purposes of this Disclosure Agreement, "actual knowledge" of such Listed Events shall mean knowledge by an officer of the Trustee at its designated office with responsibility for matters related to the Indenture. (c) Whenever the Owner obtains knowledge of the occurrence of a Listed Event in clauses (a)(2), (6), (7), (9), (11), (14), or(15)—(17), because of a notice from the Trustee pursuant to subsection (b) or otherwise, the Owner shall within five business days determine if such event would constitute material information, within the meaning of such term under federal securities laws, for Holders of Bonds,provided, however,that any other Listed Event will always be deemed to be material. (d) If the Owner has determined that knowledge of the occurrence of a Listed Event would be material, or if such Listed Event is otherwise deemed to be material pursuant to subsection (c) above (in each case, a "Material Listed Event"), the Owner shall promptly notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection(f). C-4 (e) If in response to a request under subsection (b), the Owner determines that the Listed Event (other than a Material Listed Event) would not be material, the Owner shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence pursuant to subsection(f). (f) If the Dissemination Agent has been instructed by the Owner to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the Repository with a copyto the Owner. Notwithstandingthe foregoing, notice of the occurrence of a Material Listed Event shall be given by the Dissemination Agent within 10 business days of the occurrence thereof. (g) Each notice filed with the Repository pursuant to this Section 5 shall set forth the following information: (1) the category of information being provided; (2) the period covered by any annual financial information/financial statements or operating data; (3) the issues or specific securities to which such document is related (including CUSIP number, Issuer name, state, issue description, dated date,maturity date and coupon rate); (4) the name of the Owner and any other obligated person other than the Issuer; (5) the name and date of the documents; and (6) contact information for the Disclosure Representative. Section 6. Termination of Reporting Obligation. The obligations of the Owner, the Dissemination Agent and the Trustee under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds (after giving any required notice of such event hereunder). If the Owner's obligations under the Note (as defined in the Indenture) are assumed in full by some other entity, such person shall be responsible for compliance with this Disclosure Agreement in the same manner as if it were the Owner, and the original Owner shall have no further responsibility hereunder. Section 7. Dissemination Agent. The Owner may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign at any time by providing thirty days' written notice to the Owner. Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Owner, the Trustee and the Dissemination Agent may amend this Disclosure Agreement (and the Dissemination Agent shall agree to any amendment so requested by the Owner) and any provision of this Disclosure Agreement may be waived, if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws acceptable to both the Owner and the Dissemination Agent to the effect that such amendment or waiver does not materially impair the interests of Holders of the Bonds and would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule; provided neither the Trustee or the Dissemination Agent shall be obligated to agree to any amendment modifying their respective duties or obligations without their consent thereto. C-5 Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Owner from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication,or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the Owner chooses to include any information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is specifically required by this Disclosure Agreement, the Owner shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 10. Default. In the event of a failure of the Owner or the Dissemination Agent to comply with any provision of this Disclosure Agreement, the Trustee at the written direction of the Participating Underwriter or the Holders of at least 25% in aggregate principal amount of Outstanding Bonds, shall, solely to the extent indemnified to its satisfaction (including attorney's fees and expenses), or any Holder of the Bonds may take such actions as may be necessary and appropriate, including seeking mandamus or specific performance by court order,to cause the Owner or the Dissemination Agent, as the case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture or the Note and the sole remedy under this Disclosure Agreement in the event of any failure of the Owner or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance. Section 11. Duties, Immunities and Liabilities of Trustee and Dissemination Agent. Article VI of the Indenture is hereby made applicable to this Disclosure Agreement as if this Disclosure Agreement were (solely for this purpose) contained in the Indenture. The Dissemination Agent (if other than the Trustee or the Trustee in its capacity as Dissemination Agent) shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Owner agree to indemnify and save the Dissemination Agent and the Trustee and their respective officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of their powers and duties hereunder, including the costs and expenses (including attorney's fees) of defending against any claim of liability, but excluding liabilities due to the Trustee's or Dissemination Agent's gross negligence or willful misconduct. The Dissemination Agent shall have no duty or obligation to review or verify any information provided to it by the Owner or to determine the materiality of a Listed Event and shall not be deemed to be acting in any fiduciary capacity for the Owner, the Holders of the Bonds or any other party. The Dissemination Agent shall have no responsibility for the Owner's failure to report to the Dissemination Agent a Listed Event. The obligations of the Owner under this Section shall survive resignation or removal of the Dissemination Agent or Trustee and payment of the Bonds. Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Issuer, the Owner, the Trustee, the Dissemination Agent, the Participating Underwriter and the Holders from time to time of the Bonds, and shall not create any rights in any other person or entity. Section 13. Governing Law. This Disclosure Agreement shall be governed by the laws of the State of Indiana. [Balance of Page Intentionally Left Blank.] C-6 Section 14. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. THE HUNTINGTON NATIONAL BANK, as Dissemination Agent By: Authorized Agent THE HUNTINGTON NATIONAL BANK, as Trustee By: Authorized Agent MAH CEDAR GLEN,LP, an Indiana limited partnership By: MAH Cedar Glen GP,LLC, an Indiana limited liability company, its general partner By: Merchants Affordable Housing Corp., an Indiana nonprofit corporation, its sole member By: Janine Betsey,President C-7 EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: City of South Bend,Indiana State: Indiana Name of Bond Issue: Multifamily Housing Revenue Bonds, Series 2020A (Cedar Glen Apartments Project) CUSIP Number: Name of Owner/ MAH Cedar Glen,LLC, Obligated Person: Contact Information: Date of Issuance: April [ ], 2020 Maturity Date: November 1,2022 NOTICE IS HEREBY GIVEN that the Owner has not provided an Annual Filing for the period ending December 31, 20_ with respect to the above-named Bonds as required by the Continuing Disclosure Agreement, dated as of April 1, 2020, among the Owner and The Huntington National Bank, as Trustee and as Dissemination Agent. The Owner has notified the Dissemination Agent that it anticipates that the Annual Report will be filed by Dated: The Huntington National Bank, as Dissemination Agent, on behalf of the Owner By: Authorized Agent cc: Owner C-8 EXHIBIT B ANNUAL REPORT FOR YEAR ENDED DECEMBER 31,20_ Name of Issuer: City of South Bend, Indiana State: Indiana Name of Bond Issue: Multifamily Housing Revenue Bonds, Series 2020A(Cedar Glen Apartments Project) CUSIP Number: Name of Owner/ MAH Cedar Glen, LLC Obligated Person: Contact Information: Date of Issuance: April [ ],2020 Maturity Date: November 1,2022 Period Covered: Year ended: December 31,20_ Physical Occupancy: _%as of . Average Economic Occupancy: _%for the year ended December 31, 20 Summary of Funds created under the Indenture as of December 31, 20 : Project Fund Assignment Fund Bond Fund Total Dollar Amount on Deposit Type of Investment Audited Financial Statements (check one): Attached. Audited financial statements of the Owner for the period ended December 31, 20_are not yet completed; therefore, no audited financial statements of the Owner are being filed herewith. Such financial statements will be filed when available. _ No audited financial statements of the Owner were prepared for the period ended December 31, 20 ;therefore,no audited financial statements of the Owner are being filed herewith. The Borrower hereby certifies to The Huntington National Bank as Trustee and as Dissemination Agent that the information contained herein constitutes the Annual Report required to be furnished pursuant to Section 3 of the Continuing Disclosure Agreement dated as of April [ ],2020. C-9 MAH CEDAR GLEN,LP, an Indiana limited partnership, By: MAH Cedar Glen GP,LLC, an Indiana limited liability company, its general partner By: Merchants Affordable Housing Corp., an Indiana nonprofit corporation, its sole member By: Janine Betsey,President C-10 File'-i 't" Cllerrk'ss Office MAR 1 8 2020 PROMISSORY NOTE DAWN M, CITY CLERK,SOUOTHBEND, IN $3,081,732.00 , 2020 FOR VALUE RECEIVED, MAH CEDAR GLEN, LP, an Indiana limited partnership having a mailing address of (hereinafter referred to as "Borrower") and MERCHANTS AFFORDABLE HOUSING CORP., an Indiana nonprofit corporation (hereinafter collectively referred to as "Co-Maker", and together with Borrower, hereinafter referred to collectively as "Maker"), unconditionally promises to pay to the order of CITY OF SOUTH BEND, INDIANA (hereinafter referred to as "Issuer"), at its offices or at such other place or to such other party as Issuer may from time to time designate, the principal sum of Three Million Eighty-One Thousand Seven Hundred Thirty-Two and 00/100 Dollars ($3,081,732.00), or so much thereof as shall be advanced to or for the benefit of Maker, with interest on the principal balance from time to time remaining unpaid as provided for in this Promissory Note(hereinafter referred to as this "Note"). TERMS, PROVISIONS AND CONDITIONS 1. Definitions. In addition to the words and phrases defined elsewhere in this Note, the following terms shall have the meaning indicated when capitalized and used herein: "Adjusted LIBOR" shall mean, for each LIBOR Interest Period, a rate per annum determined by Issuer to be equal to a fraction, (a) the numerator of which is equal to LIBOR for such LIBOR Interest Period, and (b) the denominator of which is equal to the sum of(i) 1 minus (ii) the Reserve Requirement (if any) for such LIBOR Interest Period. Notwithstanding anything expressed or implied herein to the contrary, the Adjusted LIBOR shall never be deemed to be less than three and 25/100 percent(3.25%) per annum. "Applicable Rate" shall mean the rate of interest which the terms of this Note expressly provide shall be in effect from time to time with respect to the principal outstanding under this Note. "BasisPoints" shall mean an arithmetic expression of a percentage measured in p p g hundredths of a percent(i.e. 50 Basis Points equals one half of one percent). "Bondholder" shall mean Merchants Bank of Indiana. "Business Day" shall mean any day of the week (but not a Saturday, Sunday or holiday) on which the offices of Issuer are open to the public for carrying on substantially all of Issuer's business functions and on which banks in London, England settle payments and on which banks in London, England settle payments. Unless specifically referenced in this Note as a Business Day, all references to "days" shall be to calendar days. "Consequential Loss" shall mean, with respect to the termination or cancellation of the LIBOR-Based Rate in effect for the principal balance outstanding under this Note pursuant to the provisions of this Note earlier than the last applicable Eurodollar Business Day of the LIBOR Interest Period, any loss, expense, penalty or premium incurred by Issuer on account of such premature termination or cancellation of such LIBOR-Based Rate. "Construction Loan Agreement" shall mean that certain Bond Purchase and Loan Agreement dated of even date herewith, executed by and among Borrower, Issuer and Bondholder, and/or any direct or remote agreement amending or restating such Bond Purchase and Loan Agreement, as from time to time amended or modified. "Construction Rate" shall mean the LIBOR-Based Rate. "Default Rate" shall mean the rate of interest to take effect under this Note during any period in which an Event of Default exists hereunder, such rate of interest shall be equal to a rate or rates per annum which is Four percent (4%) above the interest rate or rates otherwise applicable under this Note, not to exceed, however,the Maximum Rate. "Event of Default" shall mean the occurrence of any event or condition under Section 11 of this Note and the expiration of any applicable cure period specified therein. "Eurodollar Business Day" shall mean a day on which transactions in U.S. dollars are conducted in the Interbank Eurodollar market in London, England at 11:00 o'clock a.m. London time and on which Issuer is open to conduct normal banking business in Carmel, Indiana. "Governmental Authority" shall mean any foreign governmental authority, the United States of America, any State of the United States and any political subdivision of any of the foregoing and any agency, department, commission, board or bureau or court which has jurisdiction over Issuer or Maker or their respective assets or property, including the loan evidenced hereby, or is charged with the interpretation or administration of any law, rule, regulation or treaty which affects the ability of Issuer to establish a loan. "HUD Loan" shall mean that certain loan in the amount of and 00/100 Dollars ($ ) from Merchants Capital to Borrower and insured by the Secretary of Housing and Urban Development under Section 223(f) of the National Housing Act of 1934, as amended. "HUD Mortgage" shall mean that certain Multifamily Mortgage, Assignment of Leases and Rents and Security Agreement dated as of and executed by Borrower in favor of Merchants Capital Corp. "Investor Limited Partner" shall mean . "LIBOR" shall mean for each LIBOR Interest Period, as of the applicable date and time for determination provided herein, a per annum rate of interest equal to the rate which Issuer determines, in its sole discretion, is generally the market rate offered by leading banks in the London interbank market as of 11:00 a.m., London time, two (2) Eurodollar Business Days prior to the first day of the applicable LIBOR Interest Period, for United States dollar deposits in the 2 amount of the stated principal amount of this Note having a term coinciding with such LIBOR Interest Period, adjusted for any reserve requirements and any subsequent costs arising from a change in government regulation [such rate shall be expressed as a percentage rounded, if necessary, to the next highest multiple of 1/100 of a percent if the rate is not such a multiple]. Issuer may make such determination based on the rate reported by any publicly available source of market data selected by Issuer that, in its sole judgment, accurately reflects such rate offered by leading banks in the London interbank market, including without limitation any of the following sources which Issuer may select to use in its sole discretion: (i) Reuters Screen LIBOR01 Page, (ii) the Wall Street Journal, "Money Rates" table (and currently defined as the British Bankers' Association average of interbank offered rates for dollar deposits in the London market), (iii) Bloomberg Financial Markets, (iv) such other comparable financial information reporting service used by Issuer at the time such rate is determined, or(v) in the event (i) through (iv) are not available or in effect at any point in time, a comparable rate selected by the holder of this Note. "LIBOR-Based Rate" shall mean, for each LIBOR Interest Period, a per annum rate of interest equal to the sum of(a) Adjusted LIBOR, plus (b) the LIBOR Margin. "LIBOR Interest Period" shall mean a period extending from (and including) the tenth (10th) day of each calendar month during which any portion of the principal balance of this Note is outstanding and ending on (and including) the ninth (9th) day of the following calendar month, provided however, if the effective date of this Note occurs other than on the tenth (10th) day of a calendar month, then the initial LIBOR Interest Period shall be the period which begins with the effective date of this Note and ends on (and including) the ninth (9th) day of the calendar month following the month in which the effective date of this Note occurs. "LIBOR Margin" shall mean two hundred seventy-five(275) Basis Points. "Loan Document" and "Loan Documents" shall have the meaning set forth in the Construction Loan Agreement. "Maturity Date" shall mean the earliest to occur of(i) the Original Maturity Date, or (ii) the date on which the Borrower achieves completion of the Repairs, or(iii) the date on which the outstanding principal balance of this Note otherwise becomes due and payable, whether by declaration or acceleration upon the occurrence of an Event of Default or by other circumstances. "Maximum Rate" shall mean the maximum rate of interest permitted by applicable law to be in effect from time to time under this Note. "Merchants Capital" shall mean Merchants Capital Corp., an Indiana corporation. "Original Maturity Date" shall mean "Partnership Agreement" shall mean the Amended and Restated Agreement of Limited Partnership of Borrower by and among the Investor Limited Partner, and dated as of "Project" shall have the meaning set forth in the Construction Loan Agreement. 3 Prime Base Rate" shall mean the Prime Rate as of the date Issuer elects to replace the LIBOR-Based Rate with the Prime Equivalent Rate in accordance with Section 2.5 of this Note. "Prime Differential Amount" shall mean the positive difference between the Prime Base Rate and the Prime Rate, as of the date of any change in the Prime Rate. "Prime Equivalent Rate" shall mean, as of any date of determination of a Prime Differential Amount, (i) in the event that the Prime Rate is equal to or greater than the Prime Base Rate, the Prime Equivalent Rate shall equal the Last LIBOR-Based Rate plus the Prime Differential Amount, or (ii) in the event that the Prime Rate is less than the Prime Base Rate, the Prime Equivalent Rate shall equal the Last LIBOR-Based Rate minus the Prime Differential Amount. "Prime Rate" shall mean a per annum rate of interest equal to the rate which Issuer determines, in its sole discretion, is approximately the average base rate charged by large U.S. money center commercial banks on corporate loans. Issuer may make such determination based on the rate reported by any publicly available source of market data selected by Issuer that, in its sole judgment, accurately reflects the approximate average base rate charged by large U.S. money center commercial banks on corporate loans, including without limitation any of the following sources which Issuer may select to use in its sole discretion: (i) the Wall Street Journal, "Money Rates" table, (ii) Bloomberg Financial Markets, or (iii) such other comparable financial information reporting service used by Issuer at the time such rate is determined. "Regulatory Change" shall mean, with respect to Issuer, any change after the effective date of this Note in federal, state or foreign law or regulations (including Regulation D) or the adoption or making after such date of any interpretation, directive or request applying to a class of banks including Issuer of or under any federal, state or foreign law or regulations (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) by any Governmental Authority or monetary authority charged with the interpretation or administration thereof. "Regulation D" shall mean Regulation D of the Board of Governors of the Federal Reserve System from time to time in effect and shall include any successor or other regulation relating to reserve requirements applicable to member banks of the Federal Reserve System. "Regulation K" shall mean Regulation K of the Board of Governors of the Federal Reserve System from time to time in effect and shall include any successor or other regulation relating to reserve requirements applicable to member banks of the Federal Reserve System. "Reserve Requirement shall mean, for any LIBOR Interest Period, the average maximum rate (expressed as a percentage) at which reserves (including, without limitation, any basic, marginal, supplemental or emergency reserves) are required by the Board of Governors of the Federal Reserve System (or any successor) to be maintained by Issuer during such LIBOR Interest Period under Regulation D with respect to "Eurocurrency liabilities" (as such term is used in Regulation D). Without limiting the effect of the foregoing, the Reserve Requirement shall include any other reserves required to be maintained by Issuer by reason of any Regulatory Change with respect to (i) any category of liabilities that includes deposits by reference to which 4 LIBOR is to be determined as provided in the definition of "LIBOR" in this Note or (ii) any category of extensions of credit or other assets that includes loans accruing interest at a LIBOR- Based rate. Each determination by Issuer of a Reserve Requirement, in the absence of manifest error, shall be conclusive and binding. "Repairs" shall mean the non-critical repairs and critical repairs required to be completed pursuant to that certain Escrow Agreement for Deferred Repairs dated 20 , executed by and between Borrower and Merchants Capital. The meanings given to a term defined herein shall apply equally to the singular and plural forms thereof 2. Interest Rate. 2.1 Computation of Interest. The principal balance of this Note from time to time outstanding shall bear interest at the Construction Rate unless and except to the extent that the Default Rate is applicable in accordance with the terms and provisions of this Note. 2.2 Application of Default Rate of Interest. Notwithstanding anything expressed or implied herein to the contrary, the principal balance of this Note from time to time outstanding shall bear interest at the Default Rate during the following times: (i) during any period in which an Event of Default exists hereunder, and (ii) from and after the Maturity Date. 2.3 360 Day Year. Interest shall be calculated daily on the basis of a 360-day year applied to the actual number of days in each interest-payment period. 2.4 Limited to Maximum Rate. Notwithstanding anything expressed or implied herein to the contrary, if at any time the Applicable Rate exceeds the Maximum Rate, then the rate of interest on this Note shall be limited to the Maximum Rate, but any subsequent reduction in the Applicable Rate shall not reduce the rate of interest on this Note below the Maximum Rate until the total amount of interest accrued on this Note equals the amount of interest which would have accrued if the Applicable Rate had at all times been in effect. 2.5 Use of Prime Equivalent Rate. If, with respect to any LIBOR Interest Period, Issuer determines (which determination, in the absence of manifest error, shall be conclusive and binding) that: (a) for any reason, Issuer is unable, through its customary general practices, to obtain a quote offered by prime banks in the Interbank Eurodollar market in London, England, for deposits in U.S. dollars in the appropriate amounts for the appropriate period; or (b) for any reason, it is impracticable, unlawful or impossible for Issuer to utilize LIBOR for setting the interest rate from time to time in effect under this Note; 5 and Issuer gives notice thereof to Borrower, then the obligation of Issuer to accept or implement the LIBOR-Based Rate shall be automatically canceled and terminated with respect to any new LIBOR Interest Period and the principal balance of this Note from time to time outstanding shall bear interest at the Prime Equivalent Rate, unless and except to the extent that the Default Rate is applicable in accordance with the terms and provisions of this Note. 2.6 If any applicable law, treaty, rule or regulation (whether domestic or foreign) now or hereafter in effect, or any Regulatory Change therein, or any interpretation or change in interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof, or compliance by Issuer with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority shall: (a) subject Issuer (or makes it apparent that it is subject) to any tax (including without limitation any U.S. interest equalization or other tax, however named), levy, impost, duty, charge, fee (collectively "Taxes"), or any deduction or withholding for any Taxes on or from any payment due from Borrower with respect to any portion of this Note, other than income and franchise taxes of the United States and its political subdivisions imposed on Issuer; (b) change the basis of taxation of payments due from Borrower to Issuer under any portion of this Note (other than by a change in the rate of taxation of the overall net income of Issuer or franchise taxes imposed on Issuer); (c) impose, modify, increase or deem applicable any reserve requirement (but excluding that portion of any reserve requirement included in the calculation of the Reserve Requirement), special deposit requirement or similar requirement (including, but not limited to, state law requirements, Regulation D and Regulation K) imposed or deemed applicable by any Governmental Authority charged with the interpretation or administration of such requirements or deemed applicable against foreign assets held by or against loans made by Issuer or against any other funds, obligations or other property owned or held by Issuer; (d) affect the amount of capital required or expected to be maintained by Issuer or any corporation controlling Issuer and Issuer determines the amount of capital required is increased by or based upon the existence of this Note or its obligation to make the loans evidenced hereby; or (e) impose on Issuer any other condition regarding any portion of this Note; and the result of any of the foregoing is to increase (by an amount deemed by Issuer to be material) the cost to Issuer of having the LIBOR-Based Rate applicable to any portion of this Note(or in the case of any capital adequacy or similar requirement, to have the effect of reducing the rate of return on Issuer's capital taking into account Issuer's customary policies with respect to capital adequacy), or to reduce the amount of principal or interest or other sum received or receivable by Issuer (by an amount deemed by Issuer to be material), then upon five (5) days' 6 written notice from Issuer to Borrower, Borrower shall pay to Issuer, from time to time as specified by Issuer, such additional amount or amounts as will compensate Issuer for such increased cost or reduced receipts or receivables. Issuer's determination of the amount of any such increase in cost or reduction in amounts received or receivable, in the absence of manifest error, shall be conclusive and binding. Any certificate of Issuer delivered to Borrower setting forth the determination of any additional amounts payable pursuant to this Section shall be conclusive and binding, absent manifest error, as to such determination and amount. The obligations, agreements and covenants of Borrower contained in this Section shall survive the termination of this Note and the payment in full of all indebtedness evidenced by this Note. 3. Payments. Principal and interest shall be payable as follows: (a) Interest Payments. Interest accruing from the effective date of this Note, through and including the ninth (9th) day of the calendar month following the effective date hereof shall be payable in advance on the effective date of this Note; thereafter accrued and unpaid interest shall be payable commencing on the tenth (10th) day of the second calendar month following the effective date of this Note and continuing on the tenth(10th) day of each calendar month thereafter until this Note is paid in full; and (b) Principal Payments. Principal payments shall be made as follows: (i) Within ten (10) days of Limited Partner's payment of its second capital contribution pursuant to of the Partnership Agreement, Maker shall make a principal payment in the amount of the outstanding principal balance of this Note on the date of such payment; and (c) Payment on Maturity. The entire unpaid principal balance and all accrued interest shall be due and payable on the Maturity Date. If the due date of any payment under this Note shall be a day that is not a Business Day, then the due date shall be extended to the next succeeding Business Day and such extended time shall be included in the computation of interest. All amounts payable from time to time under this Note, including without limitation principal and interest payments, shall be due and payable in immediately available funds on the date each such payment is due at the principal office of Issuer before the time of day which Issuer from time to time designates as its cut-off time for considering deposits received as being received on such date (hereinafter referred to as the "Cut- Off Time"). In the event any payment is received by Issuer after the Cut-Off Time on any day, such payment shall be deemed to be received as of the start of business on the next Business Day and, to the extent interest accrues on such amounts paid, interest shall continue to accrue until the next Business Day. 4. Prepayments. Provided Maker has paid in full all accrued interest, fees and other amounts then due and payable to Issuer, Maker shall have the privilege of prepaying this Note in full on any Business Day, after at least fifteen (15) Business Days prior written notice to Issuer. In order to exercise such option to prepay this Note, in whole or in part, Borrower must cause funds to be deposited with Issuer to pay the principal of and premium, if any, and accrued 7 interest on the portion of the Note to be prepaid and the corollary redemption of the Bonds (as such term is defined in the Construction Loan Agreement). Any amount so paid which is less than the full unpaid principal amount of the Bonds shall be credited against the installment or installments of principal due on the Note corresponding to the maturity of the Bonds being redeemed. 5. Cost of Collection and Additional Default Rate Interest. In addition to all other sums payable under this Note, Maker shall pay to Issuer (a) reasonable attorneys' fees incurred by Issuer in connection with (i) the protection of any security for or rights arising in connection with this Note, (ii) the enforcement of any provision contained in this Note or in any document executed in connection herewith, or (iii) the collection of any indebtedness evidenced hereby or arising in connection herewith (including without limitation reasonable attorneys' fees incurred by Issuer in connection with any bankruptcy, reorganization, receivership or other proceeding affecting creditor's rights and involving a claim under this Note or any document executed in connection herewith), (b) costs of collection, (c) interest at the Default Rate on all accrued interest which is not paid when due, and (d) interest at the Default Rate on all fees, costs and expenses incurred by Issuer which are to be reimbursed by Maker pursuant to this section, from the date demand for payment is made by Issuer. If, after the occurrence of an Event of Default hereunder, Issuer employs an attorney or attorneys to protect Issuer's rights or remedies arising in connection with this Note or any security for this Note, then Maker shall pay to Issuer upon demand all reasonable attorneys' fees and expenses incurred by Issuer in connection with such Event of Default, regardless of whether any action is actually commenced against Maker by reason of any such Event of Default. 6. Valuation and Appraisement Laws. All principal, interest and other amounts payable under or with respect to this Note shall be payable without relief from valuation and appraisement laws. 7. Late Charge. Maker shall pay a "late charge" for the purpose of defraying expense incident to handling with respect to any monthly installment of interest and/or principal, or portion thereof, payable hereunder not paid within ten (10) days after the date when first due, at the rate of five cents (50) for each One and 00/100 Dollar($1.00) so overdue, with a minimum charge of Twenty-Five and 00/100 Dollars ($25.00) and an additional "late charge" for purposes of defraying expense incident to handling on the first day of each successive calendar month thereafter at the rate of five cents (50) for each One and 00/100 Dollar($1.00) so overdue, with a minimum charge of Twenty-Five and 00/100 Dollars ($25.00) per month until any such installment, or portion thereof, has been paid in full. Maker acknowledges and agrees that any expenses and damages that Issuer might incur as a result of any payment not paid within ten (10) days after the date when first due will be extremely difficult and impractical to ascertain and agrees that the late charge imposed by this section is a reasonable estimate of such expenses and damages and shall not be deemed to be a penalty. Notwithstanding anything contained herein to the contrary, no "late charge" shall be payable with respect to the final payment due upon the maturity, or the early acceleration, of this Note. Provided, however, nothing herein contained shall be construed as a waiver by Issuer of its option to declare a default if any payment of any monthly installment of interest and/or principal, or portion thereof, is not made when due, and the assessment of a late charge shall not affect the right of Issuer to increase the rate of interest as herein provided on all amounts not paid when due. 8 8. Security. This Note is given to evidence indebtedness of Maker arising in connection with the terms, provisions and conditions of the Construction Loan Agreement. This Note shall be entitled to the benefits of and is secured by (a) a certain Assignment of Capital Contributions of even date herewith executed by Borrower to Bondholder, as from time to time amended or modified, (b) any other security agreements or documents, as from time to time amended or modified, executed in connection with the Construction Loan Agreement, and (c) any funds of Maker on deposit with Bondholder. Notwithstanding anything contained herein to the contrary, until such time as the HUD Loan is paid in full, the Loan shall be non-recourse against the Project and Borrower, and Issuer shall have no claim against the Project, proceeds of the HUD Loan or any reserve or deposit made with Merchants Capital in connection with the HUD Loan. 9. Application of Payments. Each payment hereunder shall be applied to the payment of accrued and unpaid interest, the principal balance outstanding under this Note and any other sums payable to Issuer in connection with this Note or any documents entered into by Maker in connection herewith, in such order and in such amounts as Issuer shall determine in its sole discretion. Such order may include, without limitation, the application first to any advance made by Issuer under the terms of any instruments securing this Note which has not been repaid, then to any costs of collection or other costs or expenses for which Maker is obligated to reimburse Issuer pursuant to this Note or pursuant to any document executed in connection with this Note, then to any late charges due and owing under this Note, then to any accrued and unpaid interest, and then to the principal balance outstanding. All amounts advanced by Issuer (in addition to the principal advanced under this Note) pursuant to applicable provisions of the Construction Loan Agreement or any other document entered into by Maker in connection with this Note, together with interest at the Default Rate or other charges as provided therein, shall be added to and immediately due and payable under this Note. In the event any such advance is not so repaid by Maker, Issuer may, at its option, first apply any payments received hereunder to repay such advances together with any interest thereon or other charges, and the balance, if any, shall be applied toward the payment of interest and principal then due hereunder in such order as Issuer shall determine, in its sole discretion. 10. Advancements. All advancements of the indebtedness evidenced by this Note shall be subject to and governed by the terms and provisions of the Construction Loan Agreement and other Loan Documents. 11. Events of Default. The occurrence of an "Event of Default" under the Loan Agreement shall constitute an event of default under this Note and each such occurrence is herein referred to as an "Event of Default". Accordingly, the provisions of the Loan Agreement are by reference incorporated herein and made a part hereof. For purposes of clarification, an "Event of Default" under the Loan Agreement shall mean the occurrence of any event or circumstance that would constitute an "Event of Default" as that term is defined in the Loan Agreement. 12. Remedies. Upon the occurrence of an Event of Default, all of the indebtedness evidenced by this Note and remaining unpaid, including without limitation the entire unpaid principal balance, any accrued and unpaid interest, all prepayment premiums payable hereunder, if any, and all other amounts payable under this Note, shall, at the option of Issuer and without 9 demand or notice, become immediately due and payable, anything contained in this Note to the contrary notwithstanding. Issuer may exercise this option to accelerate regardless of any prior forbearance. Issuer, at its option, shall have the right to perform all acts necessary for the performance, sale, collection and enforcement of any collateral securing this Note and/or any other agreement or document executed in connection herewith. Enforcement by Issuer of any security for Maker's obligations under this Note shall not constitute an election by Issuer of remedies so as to preclude the exercise of any other right or remedy available to Issuer. In addition to all other remedies available to Issuer after an Event of Default hereunder, Issuer may, without demand or notice of any kind, apply any funds of Maker on deposit with or in the possession of Issuer toward the payment of any indebtedness outstanding under this Note, in such manner of application as Issuer may choose. All rights and remedies of Issuer herein specified are cumulative and in addition to, not in limitation of, any rights and remedies which Issuer may have by law or at equity. 13. [This section is intentionally left blank]. 14. [This section is intentionally left blank]. 15. Waiver and Consent. Presentment, notice of intent to accelerate, notice of acceleration, notice of dishonor and demand, valuation and appraisement, protest and diligence in collection and bringing suit are hereby severally waived by Maker and each endorser or guarantor, each of whom further consents that the time for the payment of this Note, or of any installment hereunder, may be extended from time to time without notice by Issuer. All guarantors, sureties and accommodation parties of this Note hereby waive generally and specifically, to the extent waivable, any and all rights that they may have, by contract, at equity or under any state or federal law, to any defense, offset, claim in recoupment or counterclaim not specifically set forth herein or in the Loan Documents. 16. No Waiver. No waiver of any default or failure or delay to exercise any right or remedy by Issuer shall operate as a waiver of any other default or of the same default in the future or as a waiver of any right or remedy with respect to the same or any other occurrence. The acceptance by Issuer of any payment after the due date of such payment, or in an amount which is less than the required payment, shall not be a waiver of Issuer's right to require prompt payment when due of all other payments or to exercise any right or remedy with respect to any failure to make prompt payment. 17. Usury Laws. It is the intention of the parties hereto to comply strictly with all applicable usury laws. All agreements between Maker and Issuer, whether now existing or hereafter arising and whether written or oral, are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of the maturity hereof, or otherwise, shall the amount paid, or agreed to be paid to Issuer for the use, forbearance, or detention of the money to be loaned hereunder or otherwise or for the payment or performance of any covenant or obligation contained herein or in any other document evidencing, securing, or pertaining to the indebtedness evidenced hereby, exceed the maximum amount permissible under applicable law. If from any circumstance whatsoever fulfillment of any provision hereof or of such other documents, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, then ipso facto, the obligation to be fulfilled 10 shall be reduced to the limit of such validity, and if from any such circumstance Issuer shall ever receive as interest or otherwise an amount which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of the principal indebtedness of Maker to Issuer, and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal hereof, such excess shall be refunded to Maker. All sums paid or agreed to be paid by Maker for the use, forbearance or detention of the indebtedness of Maker to Issuer hereunder shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full in such manner that there will be no violation of applicable laws pertaining to the Maximum Rate or amount of interest which may be contracted for, charged or received with respect to such indebtedness. Maker shall not institute any action or file any defense based upon the charging or collecting of usurious interest hereunder unless (i) Maker shall give Issuer written notice of an intent to do so and (ii) Issuer shall fail to comply with the terms hereof by making necessary adjustments as required by this section, and notify Maker of such compliance within fifteen (15) days after receipt by Issuer of such written notice from Maker. The provisions of this section shall be given precedence over any other provision contained herein or in any other agreement between the parties hereto that is in conflict with the provisions of this section. 18. Payment on Bonds. Any and all payments of interest or principal hereunder shall be deemed a payment on the Bonds (as such term is defined in the Construction Loan Agreement). 19. Waiver of Trial by Jury. Maker hereby agrees that any suit, action or proceeding, whether a claim or counterclaim, brought or instituted by any party on or with respect to this Note or any other document executed in connection herewith or which in any way relates, directly or indirectly to the Construction Loan Agreement or any event, transaction or occurrence arising out of or in any way connected with this Note or the dealings of the parties with respect thereto, shall be tried only by a court and not by a jury. MAKER, AND ISSUER BY ACCEPTANCE OF THIS NOTE, HEREBY EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING. Maker acknowledges that Maker may have a right to a trial by jury in any such suit, action or proceeding and that Maker hereby is knowingly, intentionally and voluntarily waiving any such right. Maker further acknowledges and agrees that this section is material to this Note and that adequate consideration has been given by Issuer and received by Maker in exchange for the waiver made by Maker pursuant to this section. 20. Waiver of Special Damages. Maker waives, to the extent waivable, any right Maker may have to claim or recover from Issuer any special, exemplary, punitive or consequential damages in any legal action or proceeding related in any way to this Note or any of the Loan Documents. 21. Notices. Any written notice required or permitted to be given to Issuer, MBI, Co- Maker or Borrower hereunder shall be deemed effective when given in the manner as provided for in the Co-Borrower Agreement of even date herewith for the sending of notices to Issuer, MBI, Co-maker and Borrower. 11 22. Legal Tender. This Note is negotiable and is payable in lawful money of the United States of America which shall be legal tender in payment of all debts and dues, public and private, at the time of payment. 23. Successors and Assigns. The obligations of Maker hereunder shall be binding upon Maker and Maker's successors, assigns and legal representatives (the reference to "Maker" in this Note shall be deemed to include, without limitation, such successors, assigns and legal representatives) and shall inure to the benefit of Issuer and Issuer's successors, assigns and legal representatives (the reference to "Issuer" in this Note shall be deemed to include, without limitation, such successors, assigns and legal representatives, including, without limitation, any subsequent holder of this Note); provided however, that this Note cannot be assigned by Maker without the prior written consent of Issuer, and any such assignment or attempted assignment by Maker shall be void and of no effect with respect to Issuer. 24. Joint and Several Obligations. The obligations, agreements and covenants of the persons or entities constituting Maker hereunder are joint and several and unconditional. 25. Governing Law. This Note is delivered to Issuer in the State of Indiana and is executed under and shall be governed by and construed in accordance with the laws of the State of Indiana, notwithstanding that Indiana conflicts of law rules might otherwise require the substantive rules of law of another jurisdiction to apply. 26. Time of the Essence. Time is of the essence with respect to each obligation and agreement of Maker under this Note. 27. Invalidity of Any Provision. If any provision (or portion thereof) of this Note or the application thereof to any person or circumstance shall to any extent be invalid or unenforceable, then the remainder of this Note or the application of such provision (or portion thereof) to any other person or circumstance shall be valid and enforceable to the fullest extent permitted by law. 28. Commercial Purpose. Maker represents that the indebtedness evidenced by this Note is being incurred by Maker solely for the purpose of carrying on a business or commercial enterprise, and not for personal, family or household purposes. Maker represents to Issuer that this Note evidences a business loan exempt from the Federal Truth in Lending Act (15 USC 1601, et seq.), and Regulations G, U, X and Z of the Board of Governors of the Federal Reserve System. 29. Continuing Enforcement. If, after receipt of any payment of all or any part of this Note, Issuer is compelled or agrees, for settlement purposes, to surrender such payment to any person or entity for any reason (including, without limitation, a determination that such payment is void or voidable as a preference or fraudulent conveyance, an impermissible setoff, or a diversion of trust funds), then this Note and the other Loan Documents shall continue in full force and effect or be reinstated, as the case may be, and Maker shall be liable for, and shall indemnify, defend and hold harmless Issuer with respect to, the full amount so surrendered. The provisions of this section shall survive the cancellation or termination of this Note and shall remain effective notwithstanding the payment of the obligations evidenced hereby, the release of 12 any security interest, lien or encumbrance securing this Note or any other action which Issuer may have taken in reliance upon its receipt of such payment. Any cancellation, release or other such action shall be deemed to have been conditioned upon any payment of the obligations evidenced hereby having become final and irrevocable. 30. Captions. The captions or headings herein have been inserted solely for the convenience of reference and in no way define or limit the scope, intent or substance of any provision of this Note. Whenever the context requires or permits the singular shall include the plural, the plural shall include the singular and the masculine, feminine and neuter shall be freely interchangeable. 31. Issuer Determinations. Issuer, pursuant to the terms and provisions of the Construction Loan Agreement, shall assign its rights and title to the loan evidenced by this Note to Bondholder who will administer such loan. Notwithstanding anything contained in any Loan Document to the contrary and by acceptance of this Note, Issuer acknowledges and agrees that any determinations, discretionary actions, approvals, consents, discretionary decisions or waivers to be made by Issuer pursuant to the Loan Documents shall not be made without written direction from Bondholder. Notwithstanding anything contained in any Loan Document to the contrary, Borrower hereby acknowledges and agrees that any determinations, discretionary actions, approvals, consents, discretionary decisions or waivers made by Issuer that are not accompanied by a written direction from Bondholder shall be void and have no force and effect unless and until accompanied by a written direction from Bondholder. [the remainder of this page is intentionally left blank, see following page for signatures of parties] 13 SIGNATURE PAGE FOR PROMISSORY NOTE IN WITNESS WHEREOF, Borrower has caused this Note to be executed effective as of the day and the year first above written. MAH CEDAR GLEN, LP, an Indiana limited partnership, By: MAH Cedar Glen GP, LLC, an Indiana limited liability company, its General Partner By: Merchants Affordable Housing Corp., an Indiana nonprofit corporation, its Sole Member By: Janine Betsey,President STATE OF ) ) SS: COUNTY OF ) Before me, a Notary Public in and for said County and State, personally appeared Janine Betsey, the President of Merchants Affordable Housing Corp., an Indiana nonprofit corporation, which is the Sole Member of MAH Cedar Glen GP, LLC, an Indiana limited liability company, which is the General Partner of MAH Cedar Glen, LP, an Indiana limited partnership , who, after having been duly sworn, acknowledged the execution of the foregoing Promissory Note for and on behalf of such limited partnership. Witness my hand and Notarial Seal this day of , 2020. ( ) Notary Public My Commission Expires: My County of Residence: 14 SIGNATURE PAGE FOR PROMISSORY NOTE IN WITNESS WHEREOF, Co-Maker has caused this Note to be executed effective as of the day and the year first above written. MERCHANTS AFFORDABLE HOUSING CORP., an Indiana nonprofit corporation By: Janine Betsey, President STATE OF ) ) SS: COUNTY OF ) Before me, a Notary Public in and for said County and State, personally appeared Janine Betsey, the President of Merchants Affordable Housing Corp., an Indiana nonprofit corporation, who, after having been duly sworn, acknowledged the execution of the foregoing Promissory Note, on behalf of such nonprofit corporation. Witness my hand and Notarial Seal this day of , 2020. ( ) Notary Public My Commission Expires: My County of Residence: 15 Fi k'S Office MAR 18 2020 DAWN M.JONES CITY CLERK,SOUTH BEND,IN REGULATORY AGREEMENT AND DECLARAT OF RESTRICTIVE COVENANTS by and among CITY OF SOUTH BEND, INDIANA, as Issuer and THE HUNTINGTON NATIONAL BANK, as Trustee for the referenced Series 2020A Bonds and MERCHANTS BANK OF INDIANA, as purchaser of the referenced Series 2020B Bonds and MAH CEDAR GLEN, LP, as Borrower Relating to: [$7,181,732] CITY OF SOUTH BEND, INDIANA MULTIFAMILY HOUSING REVENUE BONDS, SERIES 2020A and B (CEDAR GLEN APARTMENTS PROJECT) Dated as of:April 1, 2020 This instrument prepared by and upon recordation, return to: John R. Kirkwood Faegre Drinker Biddle & Reath LLP 600 E. 96th Street, Suite 600 Indianapolis, IN 46240 TABLE OF CONTENTS (This Table of Contents is not a part of the Agreement but rather is for convenience of reference only.) Page SECTION 1. Definitions 1 SECTION 2. Rules of Construction 3 SECTION 3. Project Restrictions 4 SECTION 4. Rental Restrictions Regarding Affordable Units 5 SECTION 5. Transfer Restrictions: Covenants to Run with the Land; Duration of Regulatory Agreement 7 SECTION 6. Reliance 8 SECTION 7. Access to Development and to Books and Records 8 SECTION 8. Term 8 SECTION 9. Enforcement 9 SECTION 10. Governing Law 10 SECTION 11. Amendments 10 SECTION 12. Notices 10 SECTION 13. Severability 11 SECTION 14. Multiple Counterparts 11 SECTION 15. Limitation of Liability 1 1 SECTION 16. Change in Use 1 1 SECTION 17. Monitoring Requirements 12 SECTION 18. Right to Cure 12 SECTION 19. Trustee 12 SECTION 20. Incorporation of Rider 12 EXHIBIT A - LEGAL DESCRIPTION OF PROJECT A-1 EXHIBIT B - INCOME COMPUTATION AND CERTIFICATION B-1 EXHIBIT C - CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE C- EXHIBIT D - REQUIRED LEASE OR RESIDENCY AGREEMENT PROVISIONS FOR PROJECT D-1 EXHIBIT E - HUD RIDER E-1 REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS THIS REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS (as supplemented and amended from time to time, this "Agreement" or this "Regulatory Agreement"), is made and entered into as of April 1, 2020, by and among the CITY OF SOUTH BEND, INDIANA, a municipal corporation of the State of Indiana (together with any successor to its rights, duties and obligations, the "Issuer"), THE HUNTINGTON NATIONAL BANK, a national banking association, as trustee for the herein referenced Series 2020A Bonds (the "Trustee"), MERCHANTS BANK OF INDIANA, an Indiana banking and financial institution, as purchaser of the herein referenced Series 2020B Bonds (the "Series 2020B Bond Purchaser") and MAH CEDAR GLEN, LP, an Indiana limited partnership (together with any successor to its rights, duties and obligations hereunder and as owner of the Project identified herein, the"Borrower"). WITNESSETH: WHEREAS, in order to provide moneys to finance the Project, the governing body of the Issuer adopted an ordinance on April , 2020 (the "Bond Ordinance") authorizing the issuance and sale of its Bonds (as defined herein), in the aggregate principal amount not to exceed $7,300,000 pursuant to and in compliance with Indiana Code Title 36, Article 7, Chapters 11.9 and 12, as now in effect and as it may from time to time be amended or supplemented (the "Act") and pursuant to (a) a Trust Indenture, dated as of April 1, 2020 (the"Indenture"), between the Issuer and the Trustee with respect to the Series 2020A Bonds, and (b) a Bond Purchase and Loan Agreement, dated as of April _, 2020 (the"Bond Purchase and Loan Agreement"), among the Issuer, the Borrower and the Series 2020B Bond Purchaser with respect to the Series 202B Bonds; and WHEREAS, the Issuer is issuing the Bonds in multiple series designated as (a) Multifamily Housing Revenue Bonds, Series 2020A (Cedar Glen Apartments Project) (the "Series 2020A Bonds") under the Indenture for the purpose of lending the proceeds thereof to the Borrower pursuant to a Loan Agreement, dated as of April 1, 2020 (the "Loan Agreement"), and (b) Multifamily Housing Revenue Bonds, Series 2020B (Cedar Glen Apartments Project) (the "Series 2020B Bonds," and together with the Series 2020A Bonds, the "Bonds") under the Bond Purchase and Loan Agreement for the purpose of lending the proceeds thereof to the Borrower pursuant to such Agreement, to pay a portion of the costs of financing the acquisition, construction, rehabilitation, installation and equipping, on the real property described on Exhibit A attached hereto, of a 179-unit multifamily residential development known as Cedar Glen Apartments, and located at 425 S. 25th Street in the City of South Bend, St. Joseph County, Indiana to be used for rental to low and moderate income families, as more specifically described herein(the "Project"); and WHEREAS, in order to assure the Issuer and the owners of the Bonds (the "Bondholders") that interest on the Bonds will be excluded from gross income for federal income tax purposes under the Internal Revenue Code of 1986 (the "Code"), and to further the public purposes of the Issuer, certain restrictions on the use and occupancy of the Project under the Code must be established; NOW, THEREFORE, in consideration of the mutual promises and covenants hereinafter set forth, and of other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower, the Issuer and the Trustee agree as follows: SECTION 1. Definitions. In addition to terms defined elsewhere in this Agreement, unless otherwise expressly provided herein or unless the context clearly requires otherwise, the following terms shall have the respective meanings set forth below for all purposes of this Agreement: "Actually Outstanding" shall mean, with respect to the Bonds, those Bonds the principal and interest on which has not yet been fully paid, whether or not such Bonds are deemed to be outstanding under the Indenture, the Loan Agreement or the Bond Purchaser and Loan Agreement, as applicable. "Adjusted Family Income" shall mean the adjusted gross income of all persons who reside in a single residential rental unit, calculated in the manner prescribed in Section 142(d)(2)(B) of the Code, and determined in accordance with Exhibit B attached hereto. "Affordable Units" shall mean those units in the Project set aside for occupancy by Lower-Income Tenants. "Agreement" or "Regulatory Agreement" means this Regulatory Agreement and Declaration of Restrictive Covenants, as it may be supplemented and amended from time to time. "Area" shall mean the Metropolitan Statistical Area in which the Project is located, as determined from time to time by HUD. "Available Units" shall mean residential units in the Project that are actually occupied and residential units in the Project that are unoccupied and have been leased at least once after becoming available for occupancy, provided that (i) a residential unit that is unoccupied on the later of(a) the date the Project is acquired or (b) the date of issuance of the Bonds, is not an Available Unit and does not become an Available Unit until it has been leased for the first time after such date, and (ii) a residential unit that is not available for occupancy due to renovations is not an Available Unit and does not become an Available Unit until it has been leased for the first time after the renovations are completed. "Bonds" means the City of South Bend, Indiana Multifamily Housing Revenue Bonds, Series 2020A and B (Cedar Glen Apartments Project). "Certificate of Continuing Program Compliance" means the certificate to be filed by the Borrower with the Issuer and the Trustee pursuant to Section 4(a) hereof, which shall be in the form required by the Indiana Housing and Community Development Authority or the Internal Revenue Service. 2 "Closing Date' means the date of the issuance and delivery of Bonds, being April _, 2020. "Code" shall mean the Internal Revenue Code of 1986, as amended, and any final, temporary or proposed regulations applicable thereto or promulgated thereunder. "Housing Act" means the United States Housing Act of 1937, as amended, codified as 42 U.S.C. 1437 et., al), as amended. "HUD" shall mean the United States Department of Housing and Urban Development. "Income Certification" means a Verification of Income in the form of Exhibit B and a Certificate of Continuing Program Compliance in the form attached as Exhibit C hereof or in such other form as may be provided by the Issuer to the Borrower. "Lower-Income Tenants" shall mean and include individuals or families with Adjusted Family Income that does not exceed sixty percent (60%) of Median Income, adjusted for family i size; provided that Adjusted Family Income shall be determined in a manner consistent with determinations of lower income families and area median gross income made under the Section 8 Program. "Median Income" shall mean the median gross income for the Area, as determined from time to time by HUD. For purposes of determining whether Adjusted Family Income qualifies a tenant for treatment as a Lower-Income Tenant, the Median Income shall be adjusted for family size. "Qualified Project Period" shall mean the period beginning on the first day on which at least ten percent(10%) of the residential units in the Project are first occupied, and ending on the latest of(i) the date which is fifteen (15) years after the date on which at least fifty percent(50%) of the residential units in the Project are first occupied; (ii) the first day on which no Bonds are Actually Outstanding; and (iii) the date on which any assistance provided with respect to the Project under the Section 8 Program terminates. "Related Person" shall mean a person whose relationship to such other person is such that (i) the relationship between such persons would result in a disallowance of losses under Sections 267 or 707(b) of the Code, or (ii) such persons are members of the same controlled group of corporations (as defined in Section 1563(a) of the Code, except that "more than 50 percent" shall be substituted for"at least 80 percent" each place it appears therein). "Section 8 Program" shall mean the program of assistance under Section 8 of the United States Housing Act of 1937, as amended, and the regulations promulgated thereunder. "Student" shall mean an individual who during each of five (5) calendar months during the calendar year in which occupancy of a residential unit begins is a full-time student at an educational organization that normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance or an individual pursuing a full-time course of institutional on-farm training under the supervision of an accredited agent of such an educational organization or of a state or political subdivision thereof. 3 SECTION 2. Rules of Construction. Unless the context clearly requires otherwise, words of the masculine gender shall be construed to include correlative words of the feminine and neuter genders and vice versa, the words of the singular number shall be construed to include correlative words of the plural number and vice versa. This Agreement and all the terms and provisions hereof shall be construed to effectuate the purposes set forth herein and to sustain the validity hereof. The titles and headings of the sections of this Agreement have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict any of the terms or provisions hereof and shall never be considered or given any effect in construing this Agreement or any provision hereof or in ascertaining intent, if any question of intent shall arise. Terms and phrases used in this Agreement and not defined herein shall have the meanings assigned to those terms in the Indenture and the Bond Purchase and Loan Agreement. SECTION 3. Project Restrictions. The Borrower represents, warrants and agrees that, until the expiration of the Qualified Project Period: (a) At no time will either the Borrower or any Related Person occupy a unit in the Project other than the unit occupied or to be occupied by agents, employees or representatives of the Borrower reasonably required for the proper maintenance or management of the Project; (b) The Project consists consist of the acquisition, construction, installation and equipping of a 179-unit affordable assisted living multifamily housing project and certain functionally related facilities, for low and moderate income seniors that are to be used on other than a transient basis and any facilities that are functionally related and subordinate to such units within the meaning of Sections 142(a)(7) and 142(d) of the Code, and (ii) each unit of which is to be rented or available for rental (except as permitted to be occupied by Borrower agents, employees or representatives in (a) above) on a continuous basis to members of the general public in accordance with the requirements of Sections 142(a)(7) and 142(d) of the Code; (c) Each dwelling unit in the Project shall consist of separate and complete facilities for living, sleeping, eating, cooking and sanitation for a person, persons or family; (d) Affordable Units will be substantially similar to all other units in the Project, and Lower-Income Tenants will enjoy equal access to all common facilities included in the Project; (e) The Project and the Affordable Units shall, at all times, be suitable for occupancy and in compliance with all applicable laws including, without limitation, health, safety and building codes; (f) Except as provided in Subsection(i)below, the Borrower certifies that none of the Proceeds will be used to acquire any property unless such property was or will be first used by the Borrower. (i) Subsection (0 hereof does not apply to any building included in the Project (and the equipment thereof) if the Rehabilitation Expenditures (as such term is 4 defined in Subsection (f)(ii) below) incurred by the Borrower with respect to the Project (and the equipment thereof) equal or exceed in the aggregate 15% of the cost of acquiring such building and equipment that is financed with the proceeds. The Borrower covenants that the Rehabilitation Expenditures for the building(and the equipment thereof) acquired with proceeds of the Bonds will satisfy the conditions of the preceding sentence. (ii) For purposes hereof, the term "Rehabilitation Expenditures" means any amount properly chargeable to capital account that is incurred by the Borrower in connection with the rehabilitation of a building; in the case of an integrated operation contained in a building prior to its acquisition, such term includes costs of rehabilitating existing equipment in such building or replacing such equipment with equipment having substantially the same function. The term "Rehabilitation Expenditures" does not include (i) any expenditure described in Section 47(c)(2)(B) of the Code, and (ii) any amount incurred more than two (2) years after the later of(A) the date on which the building is acquired by the Borrower, or(B) the date on which the Bonds are issued. SECTION 4. Rental Restrictions Regarding Affordable Units. The Issuer and the Borrower hereby declare their understanding and intent that the Project be a "qualified residential rental project" as described in Sections 142(a)(7) and 142(d) of the Code and agree that: (a) Each Available Unit in the Project will be rented or available for rental to the general public on a continuous basis during the Qualified Project Period and that during such Qualified Project Period: (i) The Borrower will rent the Affordable Units to Lower-Income Tenants such that, at all times during the Qualified Project Period, at least 40% of the Available Units in the Project will be occupied by Lower-Income Tenants (the "Occupancy Restrictions"), and the Issuer elects to apply the requirements of Section 142(d)(1)(B) of the Code to determine the status of the Project as a "qualified residential rental project" within the meaning of Section 142(d) of the Code. Notwithstanding the foregoing, if at all times within 60 days after the later of(a) the date the Project is acquired, or (b) the issue date of the Bonds, occupancy of the Project equals or exceeds ten percent (10%), the failure to satisfy the Occupancy Restrictions during a period of 12 months beginning on the issue date of the Bonds (the "Transition Period") will not cause the Project to fail to be a qualified residential rental project within the meaning of Section 142(d) of the Code. If the Occupancy Restrictions are not satisfied on the last date of the Transition Period, such failure will cause the Project to not be a qualified residential rental project within the meaning of Section 142(d) of the Code as of the issue date of the Bonds unless all Bonds issued to finance the Project are redeemed as soon as possible, but in no event later than 18 months after the issue date of the Bonds. (ii) The Borrower shall submit to the Secretary of the United States Department of the Treasury (at such time and in such manner as the Secretary shall prescribe) an annual certification as to whether the Project continues to meet the requirements of Section 142(d) of the Code, and the Borrower acknowledges that failure to do so will subject the Borrower to penalties under Section 6652(j) of the Code. 5 (iii) On or before the fifteenth day of February, May, August and November of each year during the Qualified Project Period and within thirty (30) days after any change (but only if material to the Borrower's continuing compliance with this Agreement) in occupancy of an Affordable Unit by a Lower-Income Tenant, respectively, the Borrower shall prepare and submit to the Issuer and the Trustee, as applicable, a Certificate of Continuing Compliance in substantially the form attached hereto as Exhibit C, the aforesaid quarterly reporting to commence with the Certificate of Continuing Compliance due on the fifteenth day of the first quarter after the Qualified Project Period commences. (b) The Borrower shall lease or enter into residency agreements for the occupancy of Affordable Units in the Project to Lower-Income Tenants only pursuant to written leases or residency agreements, and each initial lease or residency agreement shall be for a term of at least six months (or the remainder of the tenant's life, if less) in compliance with the requirements of the Code and shall contain a clause or addendum in substantially the form of Exhibit D attached hereto. The Borrower shall, upon initial occupancy and annually thereafter, obtain from each Lower- Income Tenant occupying an Affordable Unit an Income Computation and Certification substantially in the form of Exhibit B hereto and shall obtain and maintain on file from each such Lower-Income Tenant evidence reasonably sufficient to verify the Lower-Income Tenant's income and assets, including as may be necessary (i) a copy of such Lower-Income Tenant's most recently filed Federal income tax return, (ii) a verification from the Lower-Income Tenant's employer, if any, of the Lower-Income Tenant's wages and other compensation, and (iii) verification of other sources of income, if any. (c) For purposes of this Agreement, each Affordable Unit in the Project leased to or occupied by Lower-Income Tenants shall be treated as continuing to be leased to or occupied by Lower-Income Tenants, notwithstanding that the Adjusted Family Income of such Lower- Income Tenants, as of any subsequent determination date, may exceed the applicable limitation; provided however that such Affordable Unit shall no longer be considered leased to or occupied by Lower-Income Tenants if the Adjusted Family Income of such tenants exceeds one hundred forty percent (140%) of the applicable limitation and after such determination, but before the next determination, any residential unit of comparable or smaller size in the Project is occupied by new residents who are not Lower-Income Tenants. In addition, each Affordable Unit in the Project that is leased to or occupied by Lower-Income Tenants shall continue to be considered leased to or occupied by Lower-Income Tenants after such Affordable Unit is vacated by such Lower-Income Tenants until such time as such residential unit is reoccupied, other than for a temporary period not in excess of thirty-one (31) days, at which time a redetermination of whether the Affordable Unit is occupied by Lower-Income Tenants shall be made. (d) The Borrower hereby agrees that the Issuer shall not be liable for any losses, damages, costs, expenses or claims whatsoever arising from receipt or review by them (or by any person or entity acting on their behalf) of any certificates or reports as to compliance with the requirements of this Agreement. The Borrower further agrees that the Issuer (or any person or entity acting on its behalf) shall not be obligated to review any such report or certificate, or to take any action as a result thereof, but without prejudice to the right of the Issuer and the Bondholder to exercise their rights and remedies hereunder if any such report or certificate discloses noncompliance with the requirements hereof, or if such non-compliance is otherwise discovered. If the Borrower becomes aware of non-compliance with the requirements hereof, the 6 notice t Is Borrower shall promptly give writtenof ce ouer and the Trustee.thes (e) The parties to this Agreement shall treat as confidential any of the foregoing information relating to a specific Lower-Income Tenant or Affordable Unit provided by the Borrower in compliance with this Agreement, all applicable state and federal statutes and regulations, and shall implement adequate systems and procedures for maintaining the confidentiality of such information (but may release general statistical and other information about the Project, so long as the privacy rights and interests of the individual residents are protected). The Issuer and the Borrower shall not use any of the information obtained and/or furnished pursuant to Subparagraph (g) for any purpose described in the federal Fair Credit Reporting Act (15 U.S.C. §1681 a(d)(1)) and Section 603(d)(1) of Public Law No. 91-508 or in any manner that would cause a lender or borrower to be considered a "consumer reporting agency" under the federal Fair Credit Reporting Act (15 U.S.C. §1681a(f) and 603(f) of Public Law No. 91-508). (f) The Borrower shall prepare and submit such additional reports as the Issuer may reasonably deem necessary to ensure compliance with the requirements of this Agreement. (g) The Borrower shall maintain as part of its records (i) copies of all leases and residency agreements of Affordable Units; (ii) all initial and annual income certifications by Lower-Income Tenants of Affordable Units and (iii) such additional records as the Issuer may deem necessary to ensure compliance with the requirements of this Agreement. SECTION 5. Transfer Restrictions; Covenants to Run With the Land; Duration of Regulatory Agreement. (a) The Borrower covenants and agrees that the Borrower will cause or require as a condition precedent to any conveyance, transfer, assignment or any other disposition of the Project, prior to the expiration of the Qualified Project Period (a"Transfer") that the transferee of that portion assume in writing, in a form acceptable to the Issuer, all duties and obligations of the Borrower under this Agreement, including this Section 5 in the event of a subsequent Transfer before the expiration of the Qualified Project Period. The Borrower shall deliver such written assumption agreement to the Issuer before the Transfer. Any conveyance, transfer or assignment by the Borrower of the Project not complying with this Section shall be null, void and without effect. Notwithstanding the foregoing, there shall be no Transfer without the prior written consent of the Issuer, which consent shall not be unreasonably withheld or delayed. Upon any sale or other transfer that complies with this Agreement, the Borrower shall be fully and automatically released from its obligations hereunder to the extent such obligations have been assumed by the transferee of the Project. (b) The Borrower shall cause this Agreement and all amendments and supplements hereto to be recorded in the conveyance and real property records of St. Joseph County, Indiana, and in such other places as the Issuer may reasonably request. The Borrower shall pay all fees and charges incurred in connection with any such recording. The covenants contained herein shall run with the land and shall bind the Borrower and its successors and assigns and all subsequent owners of any part of the Project or any interest therein, and the benefits shall inure to the Issuer and the Bondholder and their respective successors and assigns, during the 7 Qualified Project Period. Unless the covenants contained herein have been released by the Issuer in writing, they shall survive and be effective for the term of this Agreement regardless of whether any obligations owed to the Issuer or the Bondholder or to any assignees of the Issuer or the Bondholder have been fully paid and/or performed. SECTION 6. Reliance. In performing their duties and obligations hereunder, the Issuer and the Trustee may conclusively rely upon statements and certificates of the Borrower or Lower-Income Tenants believed to be genuine and to have been executed by the proper person or persons, and upon audits of the books and records of the Borrower pertaining to occupancy of the Project. In addition, the Issuer and the Trustee may consult with counsel of their selection, respectively, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by the Issuer or the Trustee hereunder in good faith and in conformity with the opinion of such counsel. SECTION 7. Access to Development and to Books and Records. The Borrower will, upon reasonable request, permit the Issuer and the Trustee to have access to, and to inspect and copy, the Borrower's books and records with respect to the Project and the incomes of Qualifying Tenants and to have access to the Project during normal business hours. Such rights may be exercised by a representative, employee or agent of, or counsel to, the party making the request. SECTION 8. Term. The terms and provisions of this Agreement shall become effective upon its execution and delivery. Except as otherwise provided in this Section, this Agreement shall remain in full force and effect until the end of the Qualified Project Period. It is expressly agreed and understood that the provisions hereof are intended to survive the payment of the Bonds. The foregoing notwithstanding, this Agreement and all restrictions hereunder may terminate: (A) if there is delivered to the Issuer, the Trustee and the Borrower an opinion of nationally recognized bond or tax counsel acceptable to the Issuer to the effect that failure to comply with this Agreement will not cause interest on the Bonds to become includable in the gross income of the holders thereof for Federal income tax purposes, or (B) in the event of an involuntary noncompliance caused by fire, seizure, requisition, foreclosure, transfer of title by deed in lieu of foreclosure, condemnation or similar event, or a change in a federal law or an action of a federal agency after the date of issuance of the Bonds that prevents the Issuer from enforcing the terms of this Agreement, but only if, within a reasonable period, either the Bonds are repaid or amounts received as a consequence of such event are used to provide a residential rental project that meets the terms of this Agreement. Notwithstanding the foregoing, such requirements shall continue to apply to the Project subsequent to a foreclosure, transfer of title by deed in lieu of foreclosure or similar event if, at any time subsequent to such event, the obligor on the purpose investment (as defined in Section 1.148-1(b) of the Treasury Regulations) or a Related Person obtains an ownership interest in the Project or any part thereof for Federal tax purposes. SECTION 9. Enforcement. (a) In addition to the information provided for in Section 4(i) hereof, the Borrower shall submit any other information, documents or certifications reasonably requested by the Issuer or the Trustee that the Issuer or the Trustee deem reasonably necessary to substantiate continuing compliance with the provisions of this Agreement and Section 142(d) of the Code and the regulations heretofore or hereafter promulgated thereunder. 8 (b) The Issuer and the Borrower each covenant that it will not take or permit to be taken any action within its control that it knows would adversely affect the exclusion of interest on the Bonds from the gross income of the owners thereof for purposes of federal income taxation pursuant to Section 103 of the Code. Moreover, the Issuer and the Borrower covenant to take any lawful action within their control and the Trustee covenants to take any lawful action it is directed to take by the Borrower, the Issuer or nationally recognized bond counsel (including amendment of this Agreement as may be necessary, in the opinion of Bond Counsel (as defined in the Indenture) to comply fully with all applicable rules, rulings, policies, procedures, regulations or other official statements promulgated or proposed by the Department of the Treasury or the Internal Revenue Service from time to time pertaining to obligations issued under Section 142(d) of the Code and affecting the Project. (c) The Borrower covenants and agrees to inform the Issuer and the Trustee by written notice of any violation of its obligations hereunder within five days of first discovering any such violation. If any such violation is not corrected to the satisfaction of the Issuer and the Trustee within the period of time specified by either the Issuer or the Trustee, which shall be (A)45 days after the effective date of any notice to or from the Borrower, or (B) such longer period as is specified in an opinion of Bond Counsel, and as in such opinion will not result in the loss of exclusion of interest on the Bonds, without further notice, the Issuer or the Trustee shall declare a default under this Agreement effective on the date of such declaration of default, and the Issuer or the Trustee shall apply to any court, state or federal, for specific performance of this Agreement or an injunction against any violation of this Agreement, or any other remedies at law or in equity or any such other actions as shall be necessary or desirable so as to correct noncompliance with this Agreement. (d) The Borrower and the Issuer each acknowledges that the primary purpose for requiring compliance with the restrictions provided in this Agreement is to preserve the exclusion of interest on the Bonds from gross income for purposes of federal income taxation, and that the Issuer and the Trustee, on behalf of the owners of the Bonds, who are declared to be third-party beneficiaries of this Agreement, shall be entitled for any breach of the provisions hereof, to all remedies both at law and in equity in the event of any default hereunder, which in the opinion of the Issuer and nationally recognized bond counsel adversely affected the exclusion of interest on the Bonds from gross income for purposes of federal income taxation. (e) In the enforcement of this Agreement, the Issuer and the Trustee may rely on any certificate delivered by or on behalf of the Borrower or any tenant with respect to the Project. (f) Nothing in this Section shall preclude the Issuer, Trustee or the owners of the Bonds from exercising any remedies they might otherwise have, by contract, statute or otherwise, upon the occurrence of any violation hereunder, which in the opinion of the Issuer and Bond Counsel would adversely affect the exclusion of interest on the Bonds from gross income for purposes of federal income taxation. SECTION 10. Governing Law. This Agreement shall be governed by the internal laws of the State of Indiana except to the extent that laws of the United States of America may prevail. 9 SECTION 11. Amendments. This Agreement shall be amended only by a written instrument executed by the parties hereto, and only upon receipt of an opinion of nationally recognized bond or tax counsel acceptable to the Issuer that such amendment or revision will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds. SECTION 12. Notices. Any notice required to be given hereunder shall be given by registered or certified mail at the addresses specified below or at such other addresses as may be specified in writing by the parties hereto: If to the Issuer: City of South Bend, Indiana 227 W. Jefferson Blvd., Suite 12005 South Bend, Indiana 46601 Attention: Corporation Counsel If to the Trustee/Paying Agent: The Huntington National Bank Corporate Trust Department 45 North Pennsylvania Street—INHP61 Indianapolis, Indiana 46204 Attn: John Alexander If to the Series 2020B Bond Purchaser: Merchants Bank of Indiana 410 Monon Blvd. Carmel, Indiana 46032 Attention: Philip Daubenmire If to the Borrower: MAH Cedar Glen, LP c/o Merchants Affordable Housing Corp. 410Monon Blvd., Suite 350 Carmel, Indiana 46032 With a copy to: Merchants Affordable Housing Corp 410Monon Blvd., Suite 350 Carmel, Indiana 46032 SECTION 13. Severability. If any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions shall not in 10 any way be affected or impaired. SECTION 14. Multiple Counterparts. This Agreement may be simultaneously executed in multiple counterparts, all of which shall constitute one and the same instrument and each of which shall be deemed to be an original. SECTION 15. Limitation of Liability. It is understood and agreed by the Borrower that no covenant of the Issuer gives rise to a pecuniary liability of the Issuer or a charge against its general credit. It is further understood and agreed that no covenant or agreement of any member of the Borrower or the Issuer or any director, officer, agent, employee or representative of the Borrower or the Issuer in his or her individual capacity, and none of such persons shall be subject to any personal liability or accountability by reason of the execution hereof, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty, or otherwise. SECTION 16. Change in Use. The Borrower understands and acknowledges that Section 150(b)(2) of the Code provides that if the requirements for a "qualified residential rental project" are not met under Section 142(d) of the Code with respect to the Project, no deduction shall be allowed for interest paid on the Bonds that accrues during the period beginning on the first day of the taxable year in which the Project fails to meet such requirements and ending on the date the Project meets the requirements. SECTION 17. Monitoring Requirements. The Issuer may, from time to time, engage the service of a third-party monitoring agent for purposes of monitoring the Borrower's performance under this Agreement. In such event, such monitoring agent shall have authority to act in all matters relating to the Borrower's obligations under this Agreement. In the event the Issuer engages the service of a monitoring agent, all reasonable fees and expenses of such monitoring agent shall be paid by the Borrower, but shall not exceed $3,000 per year. Further, such monitoring agent shall not be held liable for any action taken or omitted under this Agreement so long as it shall have acted in good faith and without gross negligence. SECTION 18. Right to Cure. This Agreement is a "Borrower Document" as defined in the Loan Agreement. Section 2.2 of the Loan Agreement grants to the Investor Member (as defined in the Indenture) the right to cure any default or event of default on the part of the Borrower. Reference is hereby made to said Section 7.7 of the Loan Agreement for a full statement of said cure right. SECTION 19. Trustee. (a) The Trustee is executing and delivering this Agreement solely for the purposes of acknowledging the matters set forth herein, and being bound to undertake only those duties and responsibilities specifically set forth with respect to the Trustee. With respect to matters set forth in the remaining Sections of this Agreement, the Trustee has made no investigation, makes no representation and undertakes no duties or responsibilities. No implied duties or responsibilities may be read into this Agreement against the Trustee, and the Trustee shall be entitled to the protections, privileges, exculpation and indemnities contemplated under the Indenture. Except pursuant to Section 19(e), after the date on which no Bonds remain outstanding as provided in the Loan Agreement, the Trustee shall have no duties or responsibilities under this Agreement, and all references herein to the Trustee 11 shall be deemed references to the Issuer. (b) In determining whether any default or lack of compliance by the Borrower exists under this Agreement, the Trustee shall not be required to conduct any investigation into or review the operations or records of the Borrower and, absent actual knowledge of any default or noncompliance, may assume compliance by the Borrower with this Agreement unless otherwise specifically notified in writing. (c) The permissive right of the Trustee to take actions permitted by this Agreement shall not be construed as an obligation or duty to do so. (d) The Trustee shall be under no duty to confirm or verify any financial or other statements, reports or certificates furnished pursuant to any provisions hereof, and shall be under no other duty in respect of same except to retain the same in its files and permit the inspection of same at reasonable times by the Issuer. (e) The Trustee has the right to appoint agents to carry out any of its duties and obligations hereunder, and shall, upon request, certify in writing to the other parties hereto any such agency appointment. SECTION 20. Incorporation of Rider. The HUD Rider attached hereto as Exhibit E is hereby incorporated into this Agreement as if set forth at this place. IN WITNESS WHEREOF, the Issuer and the Borrower have caused this Agreement to be signed and sealed by their duly authorized representatives, all as of the date first written hereinabove. I AFFIRM UNDER THE PENALTIES FOR PERJURY, THAT I HAVE TAKEN REASONABLE CARE TO REDACT EACH SOCIAL SECURITY NUMBER IN THIS DOCUMENT UNLESS REQUIRED BY LAW(IC36-2-11-15). [Signatures appear on following pages.] US 126943736 02 12 EXHIBIT A LEGAL DESCRIPTION OF PROJECT A-1 EXHIBIT B: INCOME COMPUTATION AND CERTIFICATION' NOTE TO APARTMENT OWNER: This form is designed to assist you in computing Annual Income in accordance with the method set forth in the Department of Housing and Urban Development ("HUD") Regulations (24 CFR Part 5). You should make certain that this form is at all times up to date with HUD Regulations. All capitalized terms used herein shall have the meanings set forth in (or incorporated by reference in) the Regulatory Agreement and Declaration of Restrictive Covenants, dated as of April 1, 2020, between MAH CEDAR GLEN, LP ("Cedar Glen Apartments") and the City of South Bend. Re: Cedar Glen Apartments South Bend, Indiana I/We, the undersigned, being first duly sworn, state that I/we have read and answered fully and truthfully each of the following questions for all persons who are to occupy the unit in the above apartment project for which application is made. Listed below are the names of all persons who intend to reside in the unit: 1. 2. 3. 4. 5. Name of Relationship to Members of the Head of Social Security Place of Household Household Age Number Employment HEAD SPOUSE 6. Total Anticipated Income. The total anticipated income, calculated in accordance with this paragraph 6, of all persons listed above for the 12-month period beginning the date that I/we plan to move into a unit(i.e., ) is $ Included in the total anticipated income listed above are: (a) the full amount, before payroll deductions, of wages and salaries, overtime pay, commissions, fees, tips and bonuses, and other compensation for personal services; (b) the net income from operation of a business or profession or net income from real or personal property (without deducting expenditures for business expansion or amortization or capital indebtedness); an allowance for depreciation of capital assets used in a business or profession may be deducted, based on straight line depreciation, as provided in Internal Revenue Service regulations; include any withdrawal of cash or assets from the operation of a business or profession, except to the extent the withdrawal is reimbursement of cash or assets invested in the operation by the above persons; t The form of Income Computation and Certification shall be conformed to any amendments made to 24 CFR Part 5, or any Regulatory Agreement promulgated in substitution therefore. B-1 (c) interest and dividends (see 7(C) below); (d) the full amount of periodic payments received from social security, annuities, insurance policies, retirement funds, pensions, disability or death benefits, and other similar types of periodic receipts, including a lump sum payment for the delayed start of a periodic payment; (e) payments in lieu of earnings, such as unemployment and disability compensation, workers' compensation and severance pay; (f) the amount of any public welfare assistance payment; if the welfare assistance payment includes any amount specifically designated for shelter and utilities that is subject to adjustment by the welfare assistance agency in accordance with the actual cost of shelter and utilities, the amount of welfare assistance income to be included as income shall consist of: (i) the amount of the allowance or grant exclusive of the amount specifically designated for shelter or utilities,plus (ii) the maximum amount that the welfare assistance agency could in fact allow the family for shelter and utilities (if the family's welfare assistance is ratably reduced from the standard of need by applying a percentage, the amount calculated under this paragraph 6(f)(ii) shall be the amount resulting from one application of the percentage); (g) periodic and determinable allowances, such as alimony and child support payments, and regular contributions or gifts received from persons not residing in the dwelling; and (h) all regular pay, special pay and allowances of a member of the Armed Forces. Excluded from such anticipated total income are: (a) income from employment of children (including foster children) under the age of 18 years; (b) payments received for the care of foster children or foster adults; (c) lump-sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and workers' compensation), capital gains and settlement for personal or property losses; (d) amounts received by the family that are specifically for, or in reimbursement of, the cost of medical expenses for any family member; (e) income of a live-in aide; B-2 (f) the full amount of student financial assistance paid directly to the student or to the educational institution; (g) special pay to a family member serving in the Armed Forces who is exposed to hostile fire; (h) amounts received under training programs funded by the Department of Housing and Urban Development ("HUD"); (i) amounts received by a disabled person that are disregarded for a limited time for purposes of Supplemental Security Income eligibility and benefits because they are set aside for use under a Plan to Attain Self-Sufficiency (PASS); (j) amounts received by a participant in other publicly assisted programs which are specifically for or in reimbursement of out-of-pocket expenses incurred (special equipment, clothing, transportation, child care, etc.) and which are made solely to allow participation in a specific program; (k) a resident service stipend in a modest amount (not to exceed $200 per month) received by a resident for performing a service for Cedar Glen Apartments, on a part-time basis, that enhances the quality of life in the Project, including, but not limited to, fire patrol, hall monitoring, lawn maintenance and resident initiatives coordination (no resident may receive more than one stipend during the same period of time); (1) compensation from state or local employment training programs and training of a family member as resident management staff, which compensation is received under employment training programs (including training programs not affiliated with a local government) with clearly defined goals and objectives, and which compensation is excluded only for the period during which the family member participates in the employment training program; (m) reparation payments paid by a foreign government pursuant to claims filed under the laws of that government by persons who were persecuted during the Nazi era; (n) earnings in excess of $480 for each full-time student, 18 years or older, but excluding the head of household and spouse; (o) adoption assistance payments in excess of$480 per adopted child; (p) deferred periodic payments of supplemental security income and social security benefits that are received in a lump sum payment; (q) amounts received by the family in the form of refunds or rebates under state or local law for property taxes paid on the dwelling unit; (r) amounts paid by a state agency to a family with a developmentally disabled family member living at home to offset the cost of services and equipment needed to keep the developmentally disabled family member at home; B-3 (s) temporary, nonrecurring or sporadic income (including gifts); and (t) amounts specifically excluded by any other federal statute from consideration as income for purposes of determining eligibility or benefits under a category of assistance programs that includes assistance under any program to which the exclusions set forth in 24 CFR 5.609(c) apply. 7. Assets. (A) Do the persons whose income or contributions are included in Item 6 above: (i) have savings, stocks, bonds, equity in real property or other forms of capital investment (excluding the values of necessary items of personal property such as furniture and automobiles, equity in HUD homeownership programs, and interests in Indian trust land)? Yes No. (ii) have theydisposed of anyassets (other than at a foreclosure or p bankruptcy sale) during the last two years at less than fair market value? Yes No. (B) If the answer to (i) or(ii) above is yes, does the combined total value of all such assets owned or disposed of by all such persons total more than$5,000? Yes No. (C) If the answer to (B) above is yes, state: (i) the total value of all such assets: $ (ii) the amount of income expected to be derived from such assets in the 12-month period beginning on the date of initial occupancy of the unit that you propose to rent: $ , and income, if any,the amount of such co that was included in Item 6 above: $ 8. Full-Time Students. (a) Are all of the individuals who propose to reside in the unit full-time students? Yes No. A full-time student is an individual who during each of 5 calendar months during the calendar year in which occupancy of the unit begins is a full-time student at an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance or an individual pursuing a full-time course of institutional on-farm training under the supervision of an accredited agent of such an educational organization or of a state or political subdivision thereof. A residential unit will not satisfy the income tests if all the occupants are students (as defined above) unless each of those students is (1) a single parent and children; (2) a student receiving assistance under title IV of the Social Security Act (Temporary Assistance for Needy Families); (3) a student enrolled in a job training program receiving assistance under the Job B-4 Training Partnership Act or under other similar Federal, State, or local laws; (4) a student who was previously under the care and placement responsibility of a foster care program (under part B or E of title IV of the Social Security Act) or (5) a student who is married and files a joint return. The single parents may not be dependents of another individual and the children may not be dependents of another individual other than of their parents. (b) If the answer to 8(a) is yes, are each of the students (1) a single parent and children; (2) a student receiving assistance under title IV of the Social Security Act (Temporary Assistance for Needy Families); (3) a student enrolled in a job training program receiving assistance under the Job Training Partnership Act or under other similar Federal, State, or local laws; (4) a student who was previously under the care and placement responsibility of a foster care program (under part B or E of title IV of the Social Security Act) or (5) a student who is married and files a joint return? Yes No. (c) If the answer to 8(b) is yes, and if any of the students is a single parent with children, is such single parent not a dependent of another individual and are the children not dependents of another individual other than parent? Yes No 9. Relationship to Project Owner. The unit I/we propose to rent is part of a rental housing project owned by MAH Cedar Glen, LP ("Cedar Glen Apartments"). Neither myself, nor any other occupant of the unit I/we propose to rent has any ownership interest in the rental housing project in which the unit is located, has any family relationship to any partner (or direct or indirect owner of any partner) in Cedar Glen Apartments, or owns directly or indirectly any interest in Cedar Glen Apartments. For purposes of this paragraph, indirect ownership by an individual shall mean ownership by a family member; ownership by a corporation, partnership, estate or trust in proportion to the ownership or beneficial interest in such corporation, partnership, estate or trust held by the individual or a family member; and ownership, direct or indirect,by a partner of the individual. 10. Reliance. This certificate is made with the knowledge that it will be relied upon by the Borrower to determine maximum income for eligibility to occupy the unit and is relevant to the status under federal income tax law of the interest on bonds issued to provide financing for the apartment development for which application is being made. I/We consent to the disclosure of such information to the City of South Bend, Indiana (the issuer of such bonds), the holders of such bonds, any trustee acting on their behalf and any authorized agent of the Treasury Department or the Internal Revenue Service. I/We declare that all information set forth herein is true, correct and complete and based upon information I/we deem reliable, and that the statement of total anticipated income contained in paragraph 6 is reasonable and based upon such investigation as the undersigned deemed necessary. 11. Further Assistance. I/We will assist the Borrower in obtaining any information or documents required to verify the statements made herein, including, but not limited to, either an income verification from my/our present employer(s) or copies of federal tax returns for the immediately preceding two calendar years. 12. Misrepresentation. I/We acknowledge that I/we have been advised that the making of any misrepresentation or misstatement in this declaration will constitute a material B-5 breach of my/our agreement with the Borrower to lease the unit, and may entitle the Borrower to prevent or terminate my/our occupancy of the unit by institution of an action for ejection or other appropriate proceedings. [Signatures Appear on Following Page] B-6 I/We declare under penalty of perjury that the foregoing is true and correct. Executed this day of in , Indiana. Applicant Applicant Applicant Applicant [Signature of all persons over the age of 17 years listed in number 2 above required.] SUBSCRIBED AND SWORN to before me this day of , 20_ (NOTARY SEAL) Notary Public in and for the State of My Commission Expires: FOR COMPLETION BY APARTMENT OWNER ONLY: 1. Calculation of eligible income: a. Enter amount entered for entire household in 6 above: $ b. (1) if the amount entered in 7(C)(i) above is greater than $5,000, enter the total amount entered in 7(C)(ii), subtract from that figure the amount entered in 7(C)(iii) and enter the remaining balance($ ); (2) multiply the amount entered in 7(C)(i) times the current passbook savings rate as determined by HUD to determine what the total annual earnings on the amount in 7(C)(i) would be if invested in passbook savings ($ ), subtract from that figure the amount entered in 7(C)(iii) and enter the remaining balance($ ); and B-7 (3) enter at right the greater of the amount calculated under(1) or(2) above: $ c. TOTAL ELIGIBLE INCOME .a Line l plus ( line 1.b(3)): $ 2. The amount entered in 1.c is: Less than 50% of Median Gross Income for Area.2 More than 50%of Median Gross Income for the Area.3 3. Number of apartment unit assigned: Bedroom Size: Rent: $ 4. The last tenants of this apartment unit for a period of at least 30 consecutive days [had/did not have] aggregate anticipated annual income, as certified in the above manner upon their initial occupancy of the apartment unit, of less than 50% of Median Gross Income for the Area. 5. Method used to verify applicant(s) income: Employer income verification. Copies of tax returns. Other( ) 2 "Median Gross Income for the Area" means the median income for the area where the Project is located as determined by the Secretary of Housing and Urban Development under Section 8 of the United States Housing Act of 1937, as amended, or if programs under Section 8 are terminated, median income determined under the method used by the Secretary prior to the termination. "Median Gross Income for the Area" shall be adjusted for family size. "Median Gross Income for the Area"shall not be reduced for any calendar year to which Section 3009 of the Housing and Economic Recovery Act of 2010 applies. 3 See Footnote 2. B-8 OWNER'S STATEMENT: Based on the representations herein and upon the proofs and documentation submitted pursuant to this certification, the family or individual(s) names in paragraph 1 of this Income Certification is/are eligible under the provisions of this Agreement to live in a unit in the Project. MAH CEDAR GLEN,LP an Indiana limited partnership, as Borrower By: MAH Cedar Glen GP, LLC, an Indiana limited liability company, its general partner By: Merchants Affordable Housing Corp., an Indiana nonprofit corporation, its sole member By: — Janine Betsey, President B-9 INCOME VERIFICATION (for employed persons) The undersigned employee has applied for a rental unit located in a project financed by City of South Bend. Every income statement of a prospective tenant must be stringently verified. Please indicate below the employee's current annual income from wages, overtime, bonuses, commissions or any other form of compensation received on a regular basis. Annual wages Overtime Bonuses Commissions Total current income I hereby certify that the statements above are true and complete to the best of my knowledge. Signature Date Title I hereby grant you permission to disclose my income to MAH Cedar Glen, LP, an Indiana limited partnership, in order that it may determine my income eligibility for rental of an apartment located in its project which has been financed by the county of City of South Bend. Signature Date Please send to: B-10 INCOME VERIFICATION (for self-employed persons) I hereby attach copies of my individual federal and state income tax returns for the immediately preceding two calendar years and certify that the information shown in such income tax returns is true and complete to the best of my knowledge. Signature Date B-11 EXHIBIT C: CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE The undersigned, Authorized Borrower Representative of MAH Cedar Glen, LP., an Indiana limitedartnershiherebycertifies as follows: P P (the"Borrower"), 1. The undersigned has read and is thoroughly familiar with the provisions of the Regulatory Agreement and Declaration of Restrictive Covenants, dated as of April 1, 2020, among the Borrower and the City of South Bend, Indiana (the "Agreement" or "Regulatory Agreement"). 2. Based on Income Computations and Certifications on file with the Borrower, as of the date of this Certificate the following number of completed residential units in the Project (i) are occupied by Qualifying Tenants (as such term is defined in the Agreement), or (ii) were previously occupied by Qualifying Tenants and have been vacant and not reoccupied except for a temporary period of no more than 31 days: Occupied by Qualifying Tenants: No. of Units Previously occupied by Qualifying Tenants (vacant and not reoccupied except for a temporary period of no more than 31 days) No. of Units 3. The total number of completed residential units in the Project is 4. No default has occurred and is continuing under the Agreement. MAH CEDAR GLEN,LP an Indiana limited partnership, as Borrower By: MAH Cedar Glen GP, LLC, an Indiana limited liability company, its general partner By: Merchants Affordable Housing Corp., an Indiana nonprofit corporation, its sole member By: Janine Betsey, President C-1 EXHIBIT D REQUIRED LEASE OR RESIDENCY AGREEMENT PROVISIONS FOR PROJECT Section . TENANT TO FURNISH INFORMATION ABOUT INCOME. A. Information to be Furnished. Tenant agrees to provide to Landlord an annual certificate regarding Tenant's income. The certificate shall be provided each year and shall be on a form provided by Landlord. Tenant also agrees, at the request of the Landlord, to provide to Landlord copies of Tenant's federal income tax returns and any other information or certificates requested by Landlord. Landlord agrees to request the income tax returns and information only for the purpose of complying with the rules and regulations of the Department of Treasury or the Internal Revenue Service relating to tax-exempt financing of qualified residential rental housing projects. B. Landlord May Disclose Financial Information. Tenant agrees that the certificates, income tax returns and other information provided by Tenant may be disclosed by Landlord to the Department of Treasury, the Internal Revenue Service or any other person as may be required to satisfy Landlord's obligations relating to the tax-exempt financing for the [leased] [occupied] premises. C. Failure to Provide Information is Default by Tenant. Tenant agrees that any failure to provide information which Tenant is required to provide under Section A above shall be a default by Tenant of its agreements under the [Lease] [Residency Agreement]. Tenant also agrees that if any of the certificates, tax returns, or information provided by Tenant are untrue, Tenant shall be in default under this [Lease] [Residency Agreement]. In the event of any such default, Landlord shall have the right to exercise any right or remedy described in Section of this [Lease] [Residency Agreement]. D-1 EXHIBIT E HUD RIDER TO RESTRICTIVE COVENANTS THIS RIDER TO REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS ("Regulatory Agreement") is made as of April 1, 2020, by MAH CEDAR GLEN, LP ("Borrower"), CITY OF SOUTH BEND, INDIANA ("Issuer"), THE HUNTINGTON NATIONAL BANK, as trustee for the referenced Series 2020A Bonds ("Trustee") and MERCHANTS BANK OF INDIANA, an Indiana banking and financial institution, as purchaser of the referenced Series 2020B Bonds (the "Series 2020B Bond Purchaser") (Issuer, Trustee and the Series 2020B Bond Purchaser are hereinafter referred to collectively as the"Agency"). WHEREAS, Borrower has obtained financing from MERCHANTS CAPITAL CORP. (the "Lender") for the benefit of the project known as Cedar Glen Apartments, FHA Project No. (the "Project"), which loan is secured by a Mortgage, Assignment of Leases, Rents and Revenue and Security Agreement ("Security Instrument") dated effective as of April 1, 2020, to be recorded in the Office of the Recorder of St. Joseph County, Indiana (the "Records") and will be insured by the United States Department of Housing and Urban Development("HUD"); WHEREAS, Borrower has received tax-exempt bond financing from the Issuer, which Issuer has required certain restrictions be recorded against the Project; and WHEREAS, Borrower entered into that certain Regulatory Agreement and Declaration of Restrictive Covenants (as amended, "Restrictive Covenants") with respect to the Project, the legal description for which is more particularly described in Schedule 1 attached hereto. WHEREAS, HUD requires as a condition of its insuring Lender's financing to the Project that the lien and covenants of the Restrictive Covenants be subordinated to the lien, covenants, and enforcement of the Security Instrument; and WHEREAS, the Agency has agreed to subordinate the Restrictive Covenants to the lien of the Mortgage Loan(as defined herein) in accordance with the terms of this Rider. NOW, THEREFORE, in consideration of the foregoing and for other consideration the receipt and sufficiency of which are hereby acknowledged,the parties hereby agree as follows: (a) In the event of any conflict between any provision contained elsewhere in the Restrictive Covenants and any provision contained in this Rider, the provision contained in this Rider shall govern and be controlling in all respects as set forth more fully herein. (b) The following terms shall have the following definitions: "Code"means the Internal Revenue Code of 1986, as amended. E-1 "HUD"means the United States Department of Housing and Urban Development. "HUD Regulatory Agreement" means collectively, the [Regulatory Agreement-Borrower between Borrower and HUD with respect to the Project, and the Regulatory Agreement-Operator between Borrower and HUD] with respect to the Project, as the same may be supplemented, amended or modified from time to time. "Lender"means Merchants Capital Corp., its successors and assigns. "Mortgage Loan" means the mortgage loan made by Lender to the Borrower pursuant to the Mortgage Loan Documents with respect to the Project. "Mortgage Loan Documents" means the Security Instrument, the HUD Regulatory Agreement and all other documents required by HUD or Lender in connection with the Mortgage Loan. "National Housing Act"means the National Housing Act, as amended. "Program Obligations"has the meaning set forth in the Security Instrument. "Residual Receipts"has the meaning specified in the HUD Regulatory Agreement. "Security Instrument" means the mortgage or deed of trust from Borrower in favor of Lender, as the same may be supplemented, amended or modified. "Surplus Cash"has the meaning specified in the HUD Regulatory Agreement. (c) Notwithstanding anything in the Restrictive Covenants to the contrary, the provisions hereof are expressly subordinate to (i) the Mortgage Loan Documents, including without limitation, the Security Instrument, and (ii) Program Obligations (the Mortgage Loan Documents and Program Obligations are collectively referred to herein as the "HUD Requirements"). Borrower covenants that it will not take or permit any action that would result in a violation of the Code, HUD Requirements or Restrictive Covenants. In the event of any conflict between the provisions of the Restrictive Covenants and the provisions of the HUD Requirements, HUD shall be and remains entitled to enforce the HUD Requirements. Notwithstanding the foregoing, nothing herein limits the Agency's ability to enforce the terms of the Restrictive Covenants, provided such terms do not conflict with statutory provisions of the National Housing Act or the regulations related thereto. The Borrower represents and warrants that to the best of Borrower's knowledge the Restrictive Covenants impose no terms or requirements that conflict with the National Housing Act and related regulations. (d) In the event of foreclosure (or deed in lieu of foreclosure), the Restrictive Covenants (including without limitation, any and all land use covenants and/or restrictions contained herein) shall automatically terminate. E-2 (e) Borrower and the Agency acknowledge that Borrower's failure to comply with the covenants provided in the Restrictive Covenants does not and shall not serve as a basis for default under the HUD Requirements, unless a default also arises under the HUD Requirements. (f) Except for the Agency's reporting requirement, in enforcing the Restrictive Covenants the Agency will not file any claim against the Project, the Mortgage Loan proceeds, any reserve or deposit required by HUD in connection with the Security Instrument or HUD Regulatory Agreement, or the rents or other income from the property other than a claim against: (i) Available Surplus Cash, if the Borrower is a for-profit entity; (ii) Available distributions and Residual Receipts authorized for release by HUD, if the Borrower is a limited distribution entity; (iii) Available Residual Receipts authorized by HUD, if the Borrower is a non-profit entity; or (iv) A HUD-approved collateral assignment of any HAP contract. (g) For so long as the Mortgage Loan is outstanding, Borrower and Agency shall not further amend the Restrictive Covenants, with the exception of clerical errors or administrative correction of non-substantive matters, without HUD's prior written consent. (h) Subject to the HUD Regulatory Agreement, the Agency may require the Borrower to indemnify and hold the Agency harmless from all loss, cost, damage and expense arising from any claim or proceeding instituted against the Agency relating to the subordination and covenants set forth in the Restrictive Covenants, provided, however, that Borrower's obligation to indemnify and hold Agency harmless shall be limited to available Surplus Cash and/or Residual Receipts of the Borrower. (i) No action shall be taken in accordance with the rights granted herein to preserve the tax exemption of the interest on the notes or bonds, or prohibiting the owner from taking any action that might jeopardize the tax-exemption, except in strict accord with Program Obligations. (j) This Rider may be executed in several counterparts, which shall be treated as originals for all purposes, and all so executed shall constitute one agreement, binding on all of the parties, notwithstanding that all parties are signatory to the original or the same counterpart. Any such counterpart shall be admissible into evidence as an original hereof against the party who executed it. [The remainder of this page is intentionally left blank- Signatures follow] E-3 MAH CEDAR GLEN,LP an Indiana limited partnership, as Borrower By: MAH Cedar Glen GP, LLC, an Indiana limited liability company, its general partner By: Merchants Affordable Housing Corp., an Indiana nonprofit corporation, its sole member By: Janine Betsey, President STATE OF INDIANA ) ) SS: COUNTY OF ) On this day of , 2020, before me appeared Janine Betsey, to me personally known, who being by me duly sworn acknowledged the execution of the foregoing HUD Rider to Regulatory Agreement and Declaration of Restrictive Covenants, who did say that she is the President of Merchants Affordable Housing Corp., the sole member of MAH Cedar Glen, GP, LLC, an Indiana limited liability company, in its capacity as general partner of MAH Cedar Glen, LP, an Indiana limited partnership and that she is the person who executed the foregoing instrument as such person acting for and on behalf of said limited partnership in the foregoing capacity, and acknowledged that she executed the same as her free act and deed. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial seal, the day and year last above written. Notary Public in and for said County and State (SEAL) My Commission expires: My County of Residence: E-4 ISSUER: CITY OF SOUTH BEND, INDIANA, as Issuer By: James Mueller, Mayor STATE OF INDIANA ) SS: COUNTY OF ST. JOSEPH ) On this day of , 2020 before me appeared James Mueller, to me personally known who, being by me sworn acknowledged the execution of the foregoing HUD Rider to Regulatory Agreement and Declaration of Restrictive Covenants, who did say that he is the Mayor of the City of South Bend, Indiana, a municipal corporation of the State of Indiana, and that he is the person who executed the foregoing instrument as such person acting for and on behalf of said municipal corporation, acknowledged said instrument to be the free act and deed of said municipal corporation. IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my official seal, the day and year last above written. Notary Public in and for said County and State (SEAL) My Commission expires: My County of Residence: E-5 TRUSTEE: THE HUNTINGTON NATIONAL BANK, as Trustee By: Name: Title: STATE OF INDIANA ) ) SS: COUNTY OF ) On this day of , 2020, before me appeared , to me personally known, who being by me duly sworn acknowledged the execution of the foregoing HUD Rider to Regulatory Agreement and Declaration of Restrictive Covenants, did say that he/she is an authorized officer of The Huntington National Bank, and that he/she is the person who executed the foregoing instrument as such officer acting for and on behalf of said association, and acknowledged that he/she executed the same as his/her free act and deed as such officer of said association. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial seal, the day and year last above written. Notary Public in and for said County and State (SEAL) My Commission expires: My County of Residence: E-6 MERCHANTS BANK OF INDIANA, as purchaser of the Series 2020B Bonds By: Name: Title: STATE OF INDIANA ) ) SS: COUNTY OF ) On this day of , 2020, before me appeared , to me personally known, who being by me duly sworn acknowledged the execution of the foregoing HUD Rider to Regulatory Agreement and Declaration of Restrictive Covenants, who did say that he/she is an authorized officer of Merchants Bank of Indiana, and that he/she is the person who executed the foregoing instrument as such officer acting for and on behalf of said bank, and acknowledged that he/she executed the same as his/her free act and deed as such officer of said bank. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial seal, the day and year last above written. Notary Public in and for said County and State (SEAL) My Commission expires: My County of Residence: Signature Page for Merchants Bank of Indiana to Regulatory Agreement THE HUNTINGTON NATIONAL BANK, as Trustee By: Name: Title: STATE OF INDIANA ) ) SS: COUNTY OF ) On this day of , 2020, before me appeared , to me personally known, who being by me duly sworn acknowledged the execution of the foregoing HUD Rider to Regulatory Agreement and Declaration of Restrictive Covenants, who did say that he/she is an authorized officer of The Huntington National Bank, and that he/she is the person who executed the foregoing instrument as such officer acting for and on behalf of said association, and acknowledged that he/she executed the same as his/her free act and deed as such officer of said association. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial seal, the day and year last above written. Notary Public in and for said County and State (SEAL) My Commission expires: My County of Residence: Signature Page for The Huntington National Bank to Regulatory Agreement MAH CEDAR GLEN,LP an Indiana limited partnership, as Borrower By: MAH Cedar Glen GP, LLC, an Indiana limited liability company, its general partner By: Merchants Affordable Housing Corp., an Indiana nonprofit corporation, its sole member By: Janine Betsey, President STATE OF INDIANA ) ) SS: COUNTY OF ) On this day of , 2020, before me appeared Janine Betsey, to me personally known, who being by me duly sworn acknowledged the execution of the foregoing HUD Rider to Regulatory Agreement and Declaration of Restrictive Covenants, who did say that she is the President of Merchants Affordable Housing Corp., the sole member of MAH Cedar Glen, GP, LLC, an Indiana limited liability company, in its capacity as general partner of MAH Cedar Glen, LP, an Indiana limited partnership and that she is the person who executed the foregoing instrument as such person acting for and on behalf of said limited partnership in the foregoing capacity, and acknowledged that she executed the same as her free act and deed. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial seal, the day and year last above written. Notary Public in and for said County and State (SEAL) My Commission expires: My County of Residence: Signature Page for MAH Cedar Glen,LP to Regulatory Agreement CITY OF SOUTH BEND, INDIANA, as Issuer By: James Mueller, Mayor STATE OF INDIANA ) ) SS: COUNTY OF ST. JOSEPH ) On this day of , 2020 before me appeared James Mueller, to me personally known who, being by me sworn acknowledged the execution of the foregoing HUD Rider to Regulatory Agreement and Declaration of Restrictive Covenants, who did say that he is the Mayor of the City of South Bend, Indiana, a municipal corporation of the State of Indiana, and that he is the person who executed the foregoing instrument as such person acting for and on behalf of said municipal corporation, acknowledged said instrument to be the free act and deed of said municipal corporation. IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my official seal, the day and year last above written. Notary Public in and for said County and State (SEAL) My Commission expires: My County of Residence: Signature Page for City of South Bend,LLC to Regulatory Agreement SERIES 2020B BOND PURCHASER: Merchants Bank of Indiana, as Trustee By: Name: Title: STATE OF INDIANA ) ) SS: COUNTY OF ) On this day of , 2020, before me appeared , to me personally known, who being by me duly sworn acknowledged the execution of the foregoing HUD Rider to Regulatory Agreement and Declaration of Restrictive Covenants, did say that he/she is an authorized officer of Merchants Bank of Indiana, and that he/she is the person who executed the foregoing instrument as such officer acting for and on behalf of said bank, and acknowledged that he/she executed the same as his/her free act and deed as such officer of said bank. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial seal, the day and year last above written. Notary Public in and for said County and State (SEAL) My Commission expires: My County of Residence: E-7 SCHEDULE 1 LEGAL DESCRIPTION E-8 hilt, - ''rk'S Office MAR 18 2020 DATE* ACTION DAWN M.JONES to City of South Bend. CITY CLERK.SOU 7H BEND, IN March 23, 2020 Special meeting of the EDC at 1:00 p.m. EST to be held in Board (Monday) of Public Works Meeting Room, 13th floor to: (a) conduct public hearing required by Indiana Code 36-7-12-24(a); and (b) adopt resolution approving the project and forms of financing documents. March 23, 2020 Common Council Committee meeting at 3:00 p.m. EST, Council (Monday) Committee Room, Council Chambers, 4th Floor of County-City Building. March 23, 2020 Regular meeting of the Common Council at 7:00 p.m. EST, 4th (Monday) Floor of County-City Building for introduction and initial reading of Bond Ordinance authorizing issuance of the Bonds. March 31, 2020 Receive firm commitment from HUD. (Tuesday) April 1, 2020 Submit near final Bond Documents to Moody's Investors Service, (Wednesday) Inc. ("Rating Agency"). April 6, 2020 Submit final Closing Package to HUD. (Monday) April 13, 2020 Regular meeting of the Common Council at 7:00 p.m. EST, 4th (Monday) Floor of County-City Building for second and final reading of Bond Ordinance authorizing issuance of the Bonds Receive; rating from Rating Agency. April 16, 2020 Pricing of bonds; execute Bond Purchase Agreement. (Wednesday) April 20, 2020 Publish final drafts of Bond Documents and circulate execution (Friday) packages to parties for signature. April 22, 2020 Pre-Closing with HUD, LIHTC Equity and Bonds. (Wednesday) April 23, 2020 Closing and Funding. (Thursday) -2- US.119091290.05 TRANSACTION TIMETABLE CITY OF SOUTH BEND, INDIANA, MULTIFAMILY HOUSING REVENUE BONDS, SERIES 2020A AND B (CEDAR GLEN APARTMENTS PROJECT) Last updated March 16, 2020 DATE* ACTION April 16, 2019 Meeting of the South Bend Economic Development Commission (Tuesday) - to consider adoption of Resolution EDC # 2019-1 inducing and providing preliminary approval to MAH Cedar Glen to proceed with the financing of the Project and for the issuance of economic development revenue bonds and for adoption of a Project Report. April 19, 2019 Project Report delivered to Plan Commission. (Friday) - April 29, 2020 Expiration of comment period by the Plan Commission with (Monday) respect to the report and findings of fact in Project Report. May 13, 2020 Meeting of the South Bend Common Council to consider adoption (Monday) - of Resolution No. 4788-19 inducing and providing preliminary approval to MAH Cedar Glen to proceed with the financing of the Project and for the issuance of economic development revenue bonds. March 4, 2020 Bond Counsel circulates initial drafts of bond documents to (Wednesday) - working group. March 5, 2020 Underwriter's counsel circulates initial drafts of underwriting (Thursday) - documents to working group. March 12, 2020 TEFRA Notice published in South Bend Tribune for EDC Public (Thursday) Hearing on March 23, 2020. March 16, 2020 Bond Counsel and Underwriter's counsel circulate near final drafts (Monday) - of bond and underwriting documents to working group. March 18, 2020 Bond Counsel and Underwriter's counsel submit near final (Wednesday) documents to City of South Bend. Bond Counsel and Issuer's counsel submit draft of final EDC Resolution and Bond Ordinance FiIr d Office MAR 18 2020 DAWN M.JONES CITY CLERK,SOUTH BEND,IN TRUST INDENTURE between CITY OF SOUTH BEND, INDIANA, as Issuer and THE HUNTINGTON NATIONAL BANK, as Trustee $4,100,000 CITY OF SOUTH BEND, INDIANA MULTIFAMILY HOUSING REVENUE BONDS, SERIES 2020A (CEDAR GLEN APARTMENTS PROJECT) Dated as of: April 1, 2020 FAEGRE DRINKER BIDDLE & REATH LLP Bond Counsel INDEX (This Index is not a part of the Indenture but rather is for convenience of reference only) Page ARTICLE I DEFINITIONS 3 Section 1.01. Definitions 3 Section 1.02. Interpretation 15 Section 1.03. Captions and Headings 16 ARTICLE II AUTHORIZATION AND TERMS OF BONDS 17 Section 2.01. Authorized Amount of Bonds 17 Section 2.02. Issuance of Bonds 17 Section 2.03. Delivery of Bonds 18 ARTICLE III TERMS OF BONDS GENERALLY 19 Section 3.01. Form of Bonds 19 Section 3.02. Execution and Authentication of Bonds 19 Section 3.03. Source of Payment of Bonds 19 Section 3.04. Payment and Ownership of Bonds 20 Section 3.05. Transfer and Exchange of Bonds 21 Section 3.06. Mutilated, Lost, Wrongfully Taken or Destroyed Bonds 21 Section 3.07. Cancellation of Bonds 22 Section 3.08. Special Agreement with Holders 22 Section 3.09. Book-Entry Only System 23 ARTICLE IV MANDATORY TENDER OF BONDS 25 Section 4.01. Mandatory Tender of Bonds. 25 Section 4.02. Notice of Mandatory Tender. 25 Section 4.03. Remarketing of Bonds 26 Section 4.04. Redemption and Cancellation of Bonds 29 ARTICLE V PROVISIONS AS TO FUNDS, PAYMENTS, PROJECT AND AGREEMENT30 Section 5.01. Creation of Funds; Allocation of Bond Proceeds 30 Section 5.02. Application of Loan Payments 30 Section 5.03. Deposits to, Disbursements from and Records of Project Fund and Assignment Fund 31 -i - Section 5.04. Completion of the Project 32 Section 5.05. Bond Fund 32 Section 5.06. Investment of Special Funds and Rebate Fund 33 Section 5.07. Moneys to be Held in Trust 33 Section 5.08. Nonpresentment of Bonds 33 Section 5.09. Repayment to the Borrower from Certain Funds and Accounts 34 Section 5.10. Rebate Fund 34 ARTICLE VI THE TRUSTEE, REGISTRAR, PAYING AGENTS AND AUTHENTICATING AGENTS 36 Section 6.01. Trustee's Acceptance and Responsibilities 36 Section 6.02. Certain Rights and Obligations of the Trustee 37 Section 6.03. Fees, Charges and Expenses of Trustee, Registrar, Paying Agents and Authenticating Agents 40 Section 6.04. Intervention by Trustee 41 Section 6.05. Successor Trustee 41 Section 6.06. Appointment of Co-Trustee 41 Section 6.07. Resignation by the Trustee 42 Section 6.08. Removal of the Trustee 42 Section 6.09. Appointment of Successor Trustee 42 Section 6.10. Adoption of Authentication 43 Section 6.11. Registrars 44 Section 6.12. Designation and Succession of Paying Agents 45 Section 6.13. Designation and Succession of Authenticating Agents 46 Section 6.14. Dealing in Bonds 47 Section 6.15. Representations, Agreements and Covenants of Trustee 47 Section 6.16. Right of Trustee to Pay Taxes and Other Charges 47 Section 6.17. Interpleader 47 Section 6.18. Survival of Certain Provisions 48 ARTICLE VII DEFAULT PROVISIONS AND,REMEDIES OF TRUSTEE AND HOLDERS49 Section 7.01. Defaults; Events of Default 49 Section 7.02. Notice of Default 49 Section 7.03. Acceleration 50 Section 7.04. Other Remedies; Rights of Holders 50 -ii - Section 7.05. Right of Holders to Direct Proceedings 51 Section 7.06. Application of Moneys 51 Section 7.07. Remedies Vested in Trustee 52 Section 7.08. Rights and Remedies of Holders 53 Section 7.09. Termination of Proceedings 53 Section 7.10. Waivers of Events of Default 53 ARTICLE VIII SUPPLEMENTAL INDENTURES 55 Section 8.01. Supplemental Indentures Generally 55 Section 8.02. Supplemental Indentures Not Requiring Consent of Holders 55 Section 8.03. Supplemental Indentures Requiring Consent of Holders 56 Section 8.04. Consent of Borrower 57 Section 8.05. Authorization to Trustee; Effect of Supplement 57 Section 8.06. Opinion of Counsel 58 Section 8.07. Modification by Unanimous Consent 58 ARTICLE IX DEFEASANCE 59 Section 9.01. Release of Indenture 59 Section 9.02. Payment and Discharge of Bonds 59 Section 9.03. Survival of Certain Provisions 60 ARTICLE X COVENANTS AND AGREEMENTS OF THE ISSUER 61 Section 10.01. Covenants and Agreements of the Issuer 61 Section 10.02. Observance and Performance of Covenants, Agreements, Authority and Actions 62 Section 10.03. Enforcement of Issuer's Obligations 62 ARTICLE XI AMENDMENTS TO AGREEMENT, REGULATORY AGREEMENT AND NOTE 63 Section 11.01. Amendments Not Requiring Consent of Holders 63 Section 11.02. Amendments Requiring Consent of Holders 63 ARTICLE XII MEETINGS OF HOLDERS 64 Section 12.01. Purposes of Meetings 64 Section 12.02. Call of Meetings 64 Section 12.03. Voting 64 Section 12.04. Meetings 64 Section 12.05. Miscellaneous 65 -iii - ARTICLE XIII MISCELLANEOUS 66 Section 13.01. Limitation of Rights 66 Section 13.02. Severability 66 Section 13.03. Notices 66 Section 13.04. Suspension of Mail and Courier Service 67 Section 13.05. Payments Due on Saturdays, Sundays and Holidays 67 Section 13.06. Instruments of Holders 67 Section 13.07. Priority of this Indenture 68 Section 13.08. Extent of Covenants; No Personal Liability 68 Section 13.09. Binding Effect 68 Section 13.10. Counterparts 68 Section 13.11. Governing Law 68 Section 13.12. FHA Federal Laws and Requirements Control 68 Signatures S-1 Exhibit A- Bond Form -iv- TRUST INDENTURE THIS TRUST INDENTURE dated as of April 1, 2020, is made by and between the CITY OF SOUTH BEND, INDIANA, a municipal corporation duly organized and validly existing under the laws of the State of Indiana (the "Issuer"), and THE HUNTINGTON NATIONAL BANK, a national banking association, with its designated corporate trust office located in Indianapolis, Indiana (the "Trustee"), as trustee under the circumstances summarized in the following recitals (the capitalized terms not defined in the recitals and granting clauses being used therein as defined in Article I hereof): A. Pursuant to and in accordance with the laws of the State, including without limitation, the Act, the Issuer has determined to issue and sell the Bonds in the aggregate principal amount of$4,100,000 and to loan the proceeds to be derived from the sale thereof to the Borrower to assist in the financing of the Project to be undertaken by the Borrower; B. The Bonds will be secured by this Indenture, and the Issuer is authorized to execute and deliver this Indenture and to do or cause to be done all acts provided or required herein to be performed on its part; C. All acts and conditions required to happen, exist and be performed precedent to and in the issuance of the Bonds and the execution and delivery of this Indenture have happened exist and have been performed, or at the delivery of the Bonds will exist, will have happened and will have been performed (i) to make the Bonds, when issued, delivered and authenticated, valid special obligations of the Issuer in accordance with the terms thereof and hereof and (ii) to make this Indenture a valid, binding and legal trust agreement for the security of the Bonds in accordance with its terms; and D. The Trustee has accepted the trusts created by this Indenture, and in evidence thereof has joined in the execution hereof; NOW, THEREFORE, THIS INDENTURE WITNES SETH, that to secure the payment of Bond Service Charges on the Bonds according to their true intent and meaning, to secure the performance and observance of all of the covenants, agreements, obligations and conditions contained therein and herein, and to declare the terms and conditions upon and subject to which the Bonds are and are intended to be issued, held, secured and enforced, and in consideration of the premises and the acceptance by the Trustee of the trusts created herein and of the purchase and acceptance of the Bonds by the Holders, and for other good and valuable consideration, the receipt of which is acknowledged, the Issuer has executed and delivered this Indenture and absolutely assigns hereby to the Trustee, and to its successors in trust, and its and their assigns, all right, title and interest of the Issuer in and to (i) the Pledged Revenues, including, without limitation, all Loan Payments and other amounts receivable by or on behalf of the Issuer under the Agreement in respect of repayment of the Loan, (ii) the Special Funds, including all accounts in the Special Funds and all moneys deposited therein and the investment earnings on such moneys, (iii) subject to the provisions of the Bond Resolution, all right, title and interest of the Issuer in the proceeds derived from the sale of the Bonds, and any securities in which moneys in the Special Funds are invested, and (except for moneys required to be rebated to the United States of America under the Code) the proceeds derived therefrom, and any and all other real or personal property of every name and nature from time to time hereafter by delivery or by writing of any kind pledged, assigned or transferred, as and for additional security hereunder by the Issuer or by anyone on its behalf, or with its written consent, to the Trustee, which is hereby authorized to receive any and all such property at any and all times and to hold and apply the same subject to the terms of the Indenture, and (iv) the Agreement and the Note, excepting from the foregoing the Unassigned Issuer's Rights (the foregoing collectively referred to as the "Trust Estate"), TO HAVE AND TO HOLD unto the Trustee and its successors in that trust and its and their assigns forever; BUT IN TRUST, NEVERTHELESS, and subject to the provisions hereof, (a) except as provided otherwise herein, for the equal and proportionate benefit, security and protection of all present and future Holders of the Bonds issued or to be issued under and secured by this Indenture, (b) for the enforcement of the payment of the principal of and interest on the Bonds, when payable, according to the true intent and meaning thereof and of this Indenture, and (c) to secure the performance and observance of and compliance with the covenants, agreements, obligations,terms and conditions of this Indenture, in each case, without preference, priority or distinction, as to lien or otherwise, of any one Bond over any other by reason of designation, number, date of the Bonds or of authorization, issuance, sale, execution, authentication, delivery or maturity thereof, or otherwise, so that each Bond and all Bonds shall have the same right, lien and privilege under this Indenture and shall be secured equally and ratably hereby; provided, however, that (i) if the principal of the Bonds and the interest due or to become due thereon shall be well and truly paid, at the times and in the manner to which reference is made in the Bonds, according to the true intent and meaning thereof, or the outstanding Bonds shall have been paid and discharged in accordance with Article IX hereof, and (ii) if all of the covenants, agreements, obligations, terms and conditions of the Issuer under this Indenture shall have been kept, performed and observed and there shall have been paid to the Trustee, the Registrar, the Paying Agents and the Authenticating Agents all sums of money due or to become due to them in accordance with the terms and provisions hereof, this Indenture and the rights assigned hereby shall cease, determine and be void, except as provided in Section 9.03 hereof with respect to the survival of certain provisions hereof; otherwise, this Indenture shall be and remain in full force and effect. It is declared that all Bonds issued hereunder and secured hereby are to be issued, authenticated and delivered, and that all Pledged Revenues assigned hereby are to be dealt with and disposed of under, upon and subject to, the terms, conditions, stipulations, covenants, agreements, obligations, trusts, uses and purposes provided in this Indenture. The Issuer has agreed and covenanted, and agrees and covenants with the Trustee and with each and all Holders, as follows: -2 - ARTICLE I DEFINITIONS Section 1.01. Definitions. In addition to the words and terms defined elsewhere in this Indenture or by reference to the Agreement, unless the context or use clearly indicates another meaning or intent: "Act"means Indiana Code 36-7-11.9 and 36-7-12 et seq., as supplemented and amended. "Act of Bankruptcy" means the filing of a petition in bankruptcy (or any other commencement of a bankruptcy or similar proceeding) under any applicable bankruptcy, insolvency, reorganization, or similar law, now or hereafter in effect; provided that, in the case of an involuntary proceeding, such proceeding is not dismissed within 90 days after the commencement thereof. "Additional Payments" means the amounts required to be paid by the Borrower pursuant to the provisions of Section 4.2 of the Agreement. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" when used with respect to any specified Person means the power to direct the policies of such Person, directly or indirectly, whether through the power to appoint and remove its directors, the ownership of voting securities, by contract, or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Agreement" means the Loan Agreement dated as of even date with this Indenture, between the Issuer and the Borrower and assigned by the Issuer, except for Unassigned Issuer's Rights to the Trustee, as amended or supplemented from time to time. "Assignment Fund" means the Assignment Fund created pursuant to Section 5.01 of this Indenture. "Authenticating Agent" means the Trustee and the Registrar for the Bonds and any bank, trust company or other Person designated as an Authenticating Agent for the Bonds by or in accordance with Section 6.13 of this Indenture, each of which shall be a transfer agent registered in accordance with Section 17A(c) of the Securities Exchange Act of 1934 as amended. "Authorized Borrower Representative" means the Person designated at the time pursuant to the Agreement to act on behalf of the Borrower. "Authorized Denomination"means $5,000, or any integral multiple in excess thereof "Authorized Official" means the Mayor of the Issuer, any officer of the Issuer, or any other person at the time designated to act on behalf of the Issuer by written certificate furnished to the Trustee and signed on behalf of the Issuer by one of its authorized signatories, which certificate may designate an alternate or alternates, and, when used with reference to the performance of any act, the discharge of any duty or the execution of any certificate or other - 3 - document, any officer, employee or other person authorized to perform such act, discharge such duty or execute such certificate or other document. "Available Money" means, as of any date of determination, any of(i) the proceeds of the Bonds, (ii) the proceeds of draws by the Trustee on any letters of credit provided to the Trustee for the benefit of the Borrower, (iii) any other amounts, including the proceeds of refunding bonds, for which, in each case, the Trustee has received an Opinion of Counsel acceptable to the Rating Agency to the effect that the use of such amounts to make payments on the Bonds would not violate Section 362(a) of the Bankruptcy Code (or that relief from the automatic stay provisions of such Section 362(a) would be available from the bankruptcy court) or be avoidable as preferential payments under Section 544, 547 or 550 of the Bankruptcy Code should the Issuer or the Borrower become a debtor in proceedings commenced under the Bankruptcy Code, (iv) any payments made by the Borrower and held by the Trustee for a period of 366 days, provided that no Act of Bankruptcy with respect to the Borrower has occurred during such period, (v) the Collateral Funds, and (vi) investment income derived from the investment of moneys described in clause (i), (ii), (iii), (iv) or(v). "Bankruptcy Code" means the United States Bankruptcy Reform Act of 1978, as amended from time to time, or any substitute or replacement legislation. "Bond Documents" means the Bonds, this Indenture, the Agreement, the Bond Purchase Agreement, the Regulatory Agreement, the Tax Agreement and any and all other documents executed in connection with the issuance and delivery of the Bonds. "Bond Fund"means the Bond Fund created in Section 5.01 hereof. "Bond Payment Date" means each Interest Payment Date and any other date Bond Service Charges on the Bonds are due, whether at maturity, upon redemption, Mandatory Tender or acceleration or otherwise. "Bond Purchase Agreement"means the Bond Purchase Agreement dated April -, 2020], among the Issuer, the Borrower and the Underwriter. "Bond Resolution" means Ordinance No. 4788-19, adopted by the Issuer on April _, 2020, authorizing the issuance and delivery of the Bonds and related matters. "Bond Service Charges" means, for any period or payable at any time, the principal of and interest on the Bonds for that period or payable at that time whether due on an Interest Payment Date, at maturity or upon acceleration. "Bond Year" means each annual period of twelve months the first of which commences on the date of the original issuance and delivery of the Bonds and the last of which ends on the maturity of the Bonds, except that the first and last bond year may be less than twelve months. "Bonds" means the $4,100,000 Multifamily Housing Revenue Bonds, Series 2020A (Cedar Glen Apartments Project) of the Issuer authorized in the Bond Resolution and Section 2.02 hereof. -4 - "Book Entry Form" or"Book Entry System" means, with respect to the Bonds, a form or system, as applicable, under which (i) physical Bond certificates in fully registered form are issued only to a Depository or its nominee, with the physical Bond certificates "immobilized" in the custody of the Depository or its custodian and (ii) the ownership of book entry interests in Bonds and Bond Service Charges thereon may be transferred only through a book entry made by others than the Issuer or the Trustee. The records maintained by others than the Issuer or the Trustee constitute the written record that identifies the owners, and records the transfer, of book entry interests in those Bonds and Bond Service Charges thereon. "Borrower" means MAH Cedar Glen, LP, an Indiana limited partnership duly formed and validly existing under the laws of the State, and its lawful successors and assigns to the extent permitted by the Agreement. "Business Day" means a day of the week, other than a Saturday or a Sunday, on which commercial banks located in the city in which the designated corporate trust office of the Trustee is located are not required or authorized to remain closed and on which the United States Government makes payments of principal and interest on its Treasury obligations. "Cash Flow Projection" means a cash flow projection prepared by an independent firm of certified public accountants, a financial advisory firm, a law firm, the Remarketing Agent or any other independent third party qualified and experienced in the preparation of cash flow projections for structured finance transactions similar to the Bonds, designated by the Borrower and acceptable to the Remarketing Agent and the Rating Agency, establishing, to the satisfaction of the Remarketing Agent and the Rating Agency, the sufficiency of(a) the amount on deposit in the Special Funds, (b) projected investment income to accrue on amounts on deposit in the Special Funds during the applicable period and (c) any additional Available Money delivered to the Trustee by or on behalf of the Borrower to pay Bond Service Charges when due and payable, including, but not limited to, any cash flow projection prepared in connection with a proposed remarketing of the Bonds, as provided in Section 4.03 hereof. "Closing Date"means [April_, 2020]. "Code" means the Internal Revenue Code of 1986, as amended, and all applicable regulations (whether proposed, temporary or final) under the Code and the statutory predecessor of the Code, and any official rulings and judicial determinations under the foregoing applicable to the Bonds. "Collateral Funds" means funds advanced by or at the direction of the Senior Lender to the Trustee for deposit in the Assignment Fund in anticipation of FHA insured mortgage loan advances pursuant to Section 223(f) of the National Housing Act. "Completion Date" means the date of completion of the Project evidenced in accordance with the requirements of Section 3.6 of the Agreement. "Computation Date" means the last day of each fifth Bond Year (or such earlier Bond Year or Bond Years selected by the Issuer) and the date on which the final payment in full of all outstanding Bonds is made. - 5 - "Depository" means, with respect to the Bonds, DTC, until a successor Depository shall have become such pursuant to the applicable provisions of this Indenture, and thereafter, Depository shall mean the successor Depository. Any Depository shall be a clearing agency under a federal law operating and maintaining, with its participants or otherwise, a Book Entry System to record ownership of book entry interests in Bonds or Bond Service Charges thereon, and to effect transfers of book entry interests in Bonds. "DTC" means The Depository Trust Company (a limited purpose trust company), New York,New York, and its successors or assigns. "DTC Participant" means any participant contracting with DTC under its book entry system and includes securities brokers and dealers, banks and trust companies and clearing corporations. "Eligible Investments" means any of the following investments which mature (or are redeemable at the option of the Trustee) at such time or times as to enable disbursements to be made from the fund in which such investment is held in accordance with the applicable terms: (i) Direct obligations of the United States of America, or obligations the full and prompt payment of which is secured by the pledge of the full faith and credit of the United States of America, provided that the obligation has an interest accrual period and interest payment dates that provide for timely payments in amounts sufficient to meet the payment obligations under this Indenture; (ii) Non-callable, non-prepayable obligations of the following federal government agencies: Federal Home Loan Bank, Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, Tennessee Valley Authority, Farm Credit System, Washington Metropolitan Area Transit Authority, United States Import-Export Bank, United States Department of Housing and Urban Development, Farmers Home Administration, General Services Administration and United States Maritime Administration, provided the entity maintains a rating of"Aaa" from the Rating Agency and provided, further, that the obligation has an interest accrual period and interest payment dates that provide for timely payments in amounts sufficient to meet the payment obligations under this Indenture; (iii) Obligations of any state or any political subdivision of any state, which are rated in the highest category for long-term debt by the Rating Agency, the interest on which is excluded from gross income for federal income tax purposes and the full and timely payment of the principal of and any premium and the interest on which is fully and unconditionally payable from obligations of the character described in (a) or (b) above, provided that the obligation has an interest accrual period and interest payment dates that provide for timely payments in amounts sufficient to meet the payment obligations under this Indenture; and (iv) (1) the following money market funds, so long as they invest solely in direct obligations issued by the U.S. Treasury or repurchase agreements backed by those obligations: First American U.S. Treasury Money Market Fund; Wells Fargo Advantage - 6 - 100% Treasury Money Market Funds; Federated U.S. Treasury Cash Reserves (Fund 125); and Federated Treasury Obligations Fund (Fund 68); or, in the event those funds cease to exist or no longer have a rating of the highest category (without regard to gradation within a category) by the Rating Agency, (2) money market funds conforming to Rule 2a-7 of the Federal Investment Company Act of 1940, including any money market fund the investment advisor of which is the Trustee or an affiliate of the Trustee, (i) whose shares are registered under the Federal Securities Act of 1933 that invest solely in direct obligations issued by the U.S. Treasury and repurchase agreements backed by those obligations, (ii) which have a rating of the highest category (without regard to gradation within a category) by the Rating Agency and (iii) which are acceptable to the Rating Agency and the Underwriter. "Event of Default" means any of the events described as an Event of Default in Section 7.01 hereof or Section 7.1 of the Agreement. "Extension Payment" means the amount due, if any, to provide adequate additional funds for the payment of Bond Service Charges during a Remarketing Period in connection with the change or extension of the Mandatory Tender Date pursuant to Section 4.03 hereof, and which (a) shall be determined by a Cash Flow Projection approved in writing by the Rating Agency and(b) must consist of Available Money. "Extraordinary Services" and "Extraordinary Expenses" mean all services rendered and all reasonable expenses properly incurred by the Trustee under this Indenture, other than Ordinary Services and Ordinary Expenses. Extraordinary Services and Extraordinary Expenses shall specifically include services rendered or expenses incurred by the Trustee in connection with, or in contemplation of, an Event of Default. "Force Majeure" means any of the causes, circumstances or events described as constituting Force Majeure in Section 7.1 of the Agreement. "GAAP"means generally accepted accounting principles applied on a consistent basis. "Government" means the government of the United States of America, the government of any other nation, any political subdivision of the United States of America or any other nation (including, without limitation, any state, territory, federal district, municipality or possession) and any department, agency or instrumentality thereof; and"Governmental" shall mean of, by, or pertaining to any Government. "Holder" or"Holder of a Bond" means the Person in whose name a Bond is registered on the Register. "HUD"means the United States Department of Housing and Urban Development. "HUD Regulatory Agreement" means the Regulatory Agreement by and between the Borrower and HUD of even date herewith, as amended or supplemented from time to time. "Indebtedness" means for any Person (a) all indebtedness or other obligations of such Person for borrowed money or for the deferred purchase price of property or services, (b) all - 7 - indebtedness or other obligations of any other Person for borrowed money or for the deferred purchase price of property or services, the payment or collection of which such Person has guaranteed (except by reason of endorsement for deposit or collection in the ordinary course of business) or in respect of which such Person is liable, contingently or otherwise, including, without limitation, by way of agreement to purchase, to provide funds for payment, to supply funds to or otherwise to invest in such other Person, or otherwise to assure a creditor against loss, (c) all indebtedness or other obligations of any other Person for borrowed money or for the deferred purchase price of property or services secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien, upon or in property (including, without limitation, accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such indebtedness or other obligations, (d) all direct or contingent obligations of such Person in respect of letters of credit, (e) all lease obligations which have been or should be, in accordance with GAAP, capitalized on the books of such Person as lessee, and (f) guaranties of any of the foregoing; provided that Indebtedness does not include accounts payable and accrued expenses incurred in the ordinary course of business. "Independent" when used with respect to a specified Person means such Person has no specific financial interest direct or indirect in the Borrower or any Affiliate of the Borrower and in the case of an individual is not a director, trustee, officer,partner or employee of the Borrower or any Affiliate of the Borrower and in the case of an entity, does not have a partner, director, trustee, officer, partner or employee who is a director, trustee, officer or employee of any partner of the Borrower or any Affiliate of the Borrower. "Information Services"means Financial Information, Inc.'s "Daily Called Bond Service," One Cragwood Road, 2nd Floor, South Plainfield, New Jersey 07080, Attention: Editor; J. J. Kenny Standard & Poor's Information Services "Called Bond Service," 55 Water Street, 28th Floor, New York, New York 10041; "Moody's Investors Service Municipal Government," 7 World Trade Center, 250 Greenwich Street, New York, New York 10007, Attention: Municipal News Reports; or, in accordance with then-current guidelines of the Securities and Exchange Commission, to such other addresses and/or such other services providing information with respect to called bonds. "Initial Interest Rate"means [ ] %per annum. "Initial Investment" means, a U.S. Treasury Note in the principal amount of [$ ], bearing interest at the rate of[ _ %] per annum and maturing on October 31, 2021. "Initial Mandatory Tender Date"means November 1, 2021. "Initial Remarketing Date" means the Initial Mandatory Tender Date, but only if the conditions for remarketing the Bonds on such date as provided in Section 4.03 hereof are satisfied. "Interest Payment Account" means the Interest Payment Account within the Bond Fund created in Section 5.01 hereof. - 8 - "Interest Payment Date" or "Interest Payment Dates" means (a) each May 1 and November 1, commencing November 1, 2020, (b) each Mandatory Tender Date and (c) the Maturity Date. "Interest Period" means, initially, the period from the Closing Date to and including October 31, 2021, and thereafter, the period commencing on each Mandatory Tender Date and ending on the day preceding the next Mandatory Tender Date or Maturity date, whichever is sooner. "Interest Rate" means the Initial Interest Rate to but not including the Initial Mandatory Tender Date, and thereafter the applicable Remarketing Rate. "Interest Rate for Advances" means the rate of twelve percent per annum (12%) or the rate per annum which is two percent plus that interest rate announced by the Trustee in its lending capacity as a bank as its "Prime Rate" or its "Base Rate", whichever is greater and lawfully chargeable, in whole or in part. "Investor Member" means Merchants Affordable Housing Corp., an Indiana corporation, and its lawful successors and assigns. "Lien" means any mortgage, deed of trust, lien, charge, security interest or encumbrance of any kind upon, or pledge of, any property, whether now owned or hereafter acquired, and includes the acquisition of, or agreement to acquire, any property subject to any conditional sale agreement or other title retention agreement, including a Lease on terms tantamount thereto or on terms otherwise substantially equivalent to a purchase. "Loan" means the loan by the Issuer to the Borrower of the proceeds received from the sale of the Bonds. "Loan Payment Cure Period" means a period of four Business Days following any Loan Payment Date. "Loan Payment Date" means the fifth Business Day preceding each Interest Payment Date. "Loan Payments" means the amounts required to be paid by the Borrower in repayment of the Loan pursuant to the provisions of the Note and Section 4.1 of the Agreement. "Mandatory Tender"means a tender of Bonds required by Section 4.01. "Mandatory Tender Date" means (a) the Initial Mandatory Tender Date and (b) if the Bonds Outstanding on the Initial Mandatory Tender Date or on any subsequent Mandatory Tender Date are remarketed pursuant to Section 4.03 hereof for a Remarketing Period that does not extend to the final maturity of the Bonds, the day after the last day of the Remarketing Period. "Maturity Date"means November 1, 2022. - 9 - "Maximum Interest Rate"means the interest rate equal to the lesser of(a) 12%per annum, or(b) the maximum interest rate per annum permitted by the applicable law of the State. "Note" means the promissory note of the Borrower, dated as of even date with the Bonds initially issued, in the form attached to the Agreement as Exhibit A and in the principal amount of$4,100,000, evidencing the obligation of the Borrower to make Loan Payments. "Notice Address"means: To the Issuer: City of South Bend, Indiana 227 W. Jefferson Blvd., Suite 12005 South Bend. Indiana 46601 Attn: Corporation Counsel To the Trustee: The Huntington National Bank Corporate Trust Department 45 North Pennsylvania Street—INHP61 Indianapolis, Indiana 46204 Attn: John Alexander To the Borrower: MAH Cedar Glen, LP c/o Merchants Affordable Housing Corp. 410 Monon Blvd., Suite 350 Carmel, Indiana 46032 With a copy to: Merchants Affordable Housing Corp 410 Monon Blvd., Suite 350 Carmel, Indiana 46032 To the Rating Agency: Moody's Investors Service, Inc. 7 World Trade Center 250 Greenwich Street, 16th floor New York, New York 10007 Attn: Public Finance Group—Housing Surveillance E-mail: Housing@moodys.com or such additional or different address, notice of which is given under Section 13.03 hereof. "Opinion of Bond Counsel" means an opinion of Faegre Drinker Biddle & Reath LLP or of other counsel nationally recognized as having an expertise in connection with the exclusion of interest on obligations of states and local governmental units from the gross income of holders thereof for federal income tax purposes. "Opinion of Counsel" means an opinion from an attorney or firm of attorneys, acceptable to the Issuer and the Trustee with experience in the matters to be covered in the opinion. - 10 - "Ordinary Services" and "Ordinary Expenses" mean those services normally rendered, and those expenses normally incurred, by a trustee under instruments similar to this Indenture. "Outstanding Bonds", "Bonds outstanding" or "outstanding" as applied to Bonds mean, as of the applicable date, all Bonds which have been authenticated and delivered, or which are being delivered by the Trustee under this Indenture, except: (i) Bonds cancelled upon surrender, exchange or transfer, or cancelled because of payment on or prior to that date; (ii) Bonds, or the portion thereof, for the payment or purchase for cancellation of which sufficient money has been deposited and credited with the Trustee or any Paying Agent on or prior to that date for that purpose (whether upon or prior to the maturity of those Bonds); (iii) Bonds, or the portion thereof, which are deemed to have been paid and discharged or caused to have been paid and discharged pursuant to the provisions of this Indenture; and (iv) Bonds in lieu of which others have been authenticated under Section 3.06 of this Indenture. "Paying Agent" means any bank or trust company designated as a Paying Agent by or in accordance with Section 6.12 of this Indenture. "Permitted Encumbrances"means, as applied to the Project: (i) such conditions, leases, restrictions, covenants, reservations, easements, and other matters of record to which the Project is subject on the Closing Date; (ii) zoning and other ordinances; (iii) liens for taxes and assessments and other governmental charges, both general and special and not yet due and payable; (iv) the Regulatory Agreement; (v) the leases of portions of the Project; and (vi) liens and encumbrances imposed upon the Project by HUD, in connection with the loan of any money or the provision of any other form of housing assistance to the Project by HUD. "Permitted Indebtedness"means, as to the Borrower: (i) The Agreement and the Note; and (ii) Indebtedness incurred in accordance with Section 5.6(b) of the Agreement. - 11 - "Permitted Liens"means, as applied to the Borrower: (i) Liens securing taxes, assessments, fees, or other Governmental charges or levies, or the claims of materialmen, mechanics, carriers, warehousemen, landlords, and other similar Persons, the payment of which is not at the time required by Section 5.5(c) of the Agreement; (ii) Liens incurred or deposits made in the ordinary course of business (a) in connection with workmen's compensation, unemployment insurance, social security and other similar laws, or (b) to secure the performance of bids, tenders, sales, contracts, public or statutory obligations, customs, appeal and performance bonds, and other similar obligations not incurred in connection with the borrowing of money, the obtaining of advances, or the payment of the deferred purchase price of property; (iii) Reservations, exceptions, encroachments, easements, rights of way, covenants, conditions, restrictions, leases, and other similar title exceptions or encumbrances affecting real property, provided they do not in the aggregate materially detract from the value of such properties or materially interfere with their use in the ordinary conduct of the Borrower's business; (iv) Permitted Encumbrances; and (v) Liens securing Permitted Indebtedness. "Person" or words importing persons mean firms, associations, partnerships (including without limitation, general and limited partnerships), joint ventures, societies, estates, trusts, corporations, limited liability companies, public or governmental bodies, other legal entities and natural persons. "Plans and Specifications" means the plans and specifications describing the Project as now prepared and as they may be changed as provided in the Agreement from time to time. "Pledged Revenues"means (a) the Loan Payments, (b) all other moneys received or to be received by the Issuer or the Trustee in respect of repayment of the Loan, including without limitation, all moneys and investments in the Bond Fund, (c) any moneys and investments in the Project Fund and in the Assignment Fund, and (d) all income and profit from the investment of the foregoing moneys. The term "Pledged Revenues" does not include any moneys or investments in the Rebate Fund or the Residual Fund. "Predecessor Bond" of any particular Bond means every previous Bond evidencing all or a portion of the same debt as that evidenced by the particular Bond. For the purposes of this definition, any Bond authenticated and delivered under Section 3.06 of this Indenture in lieu of a lost, stolen or destroyed Bond shall, except as otherwise provided in Section 3.06, be deemed to evidence the same debt as the lost, stolen or destroyed Bond. "Principal Payment Account" means the Principal Payment Account within the Bond Fund created in Section 5.01 hereof. - 12 - "Project" means acquiring, constructing, equipping and improving privately owned real and personal property into a multifamily housing complex, containing 179 affordable living units, or any other use that may be permitted under the Act. "Project Costs"means the costs of the Project specified in Section 3.4 of the Agreement. "Project Fund"means the Project Fund created in Section 5.01 hereof. Purposes""Project means the operation of the Project in accordance with the Act, the p J Code and the Regulatory Agreement. "Rating Agency"means Moody's Investors Service, Inc., or any successor thereto. "Rebate Amount" means as of each Computation Date an amount equal to the sum of(i) plus (ii) where: (i) is the excess of (a) the aggregate amount earned from the date of issuance of the Bonds to such Computation Date on all nonpurpose investments in which gross proceeds of the Bonds are invested (other than investments attributable to excess earnings described in this clause (i)) including any gain or deducting any loss from disposition of nonpurpose investments, over (b) the amount which would have been earned during such period if those nonpurpose investments (other than amounts attributable to an excess described in this clause(i))had been invested at a rate equal to the yield on the Bonds; and (ii) is any income attributable to the excess described in this definition. The foregoing sums shall be determined in accordance with Section 148 of the Code. As used herein, the terms "gross proceeds", "nonpurpose investments" and "yield" have the meanings assigned to them for purposes of Section 148(f) of the Code. "Rebate Fund"means the Rebate Fund created in Section 5.01 hereof. "Register" means the books kept and maintained by the Registrar for registration and transfer of Bonds pursuant to Section 3.05 hereof. "Registrar" means the Trustee, until a successor Registrar shall have become such pursuant to applicable provisions of this Indenture; each Registrar shall be a transfer agent registered in accordance with Section 17A(c) of the Securities Exchange Act of 1934. "Regular » th Record Date means, with respect to any Bond, the 15 day of the calendar month next preceding each Interest Payment Date applicable to that Bond and, with respect to any Mandatory Tender Date, the 45th day preceding such Mandatory Tender Date. - 13 - "Regulatory Agreement" means the Regulatory Agreement and Declaration of Restrictive Covenants, dated as of even date with this Indenture, among the Issuer, the Trustee and the Borrower. "Remarketing Agent"means The Sturges Company. "Remarketing Agent's Fee" means the fee of the Remarketing Agent for its remarketing services. "Remarketing Agreement" means the Remarketing Agreement, dated as of April 1, 2020, by and between the Borrower and the Remarketing Agent, as amended, supplemented or restated from time to time, or any agreement entered into in substitution therefor. "Remarketing Date" means the Initial Remarketing Date and, if the Bonds Outstanding on such date or on any subsequent Remarketing Date are remarketed pursuant to Section 4.03 hereof for a Remarketing Period that does not extend to the final maturity of the Bonds, the day after the last day of the Remarketing Period. "Remarketing Expenses" means the costs and expenses incurred by the Trustee and its counsel, the Remarketing Agent and its counsel, the Issuer and its counsel, and Bond Counsel in connection with the remarketing of the Bonds, including bond printing and registration costs, costs of funds advanced by the Remarketing Agent, registration and filing fees, the cost of any Cash Flow Projections or other verification reports, rating agency fees and other costs and expenses, excluding the Extension Fee, incurred in connection with or properly attributable to the remarketing of Bonds as certified by the Remarketing Agent in writing. "Remarketing Notice Parties" means the Borrower, the Issuer, the Trustee, the Remarketing Agent and the Senior Lender. "Remarketing Period" means the period beginning on a Remarketing Date and ending on the last day of the term for which Bonds are remarketed pursuant to Section 4.03 or the final Maturity Date of the Bonds, as applicable. "Remarketing Proceeds Account" means the Remarketing Proceeds Account of the Bond Fund created in Section 5.01 hereof. "Remarketing Rate"means the interest rate or rates established pursuant to Section 2.02(c) hereof and borne by the Bonds then Outstanding from and including each Remarketing Date to, but not including, the next succeeding Remarketing Date or the final Maturity Date of the Bonds, as applicable. "Residual Fund"means the Residual Fund created in Section 5.01 hereof. "Senior Lender"means Merchants Capital Corp., and its successors and assigns. "Special Funds" means, collectively, the Bond Fund, the Assignment Fund and the Project Fund and any accounts therein all as created in this Indenture. - 14 - "Special Record Date" means, with respect to any Bond, the date established by the Trustee in connection with the payment of overdue interest or principal on that Bond. "State"means the State of Indiana. "Supplemental Indenture" means any indenture supplemental to this Indenture entered into between the Issuer and the Trustee in accordance with Article VIII hereof. "Tax Agreement" means that certain Tax Certificate and Agreement dated the Closing Date,between the Issuer and the Borrower. "Trustee" means The Huntington National Bank, a national banking association, until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter, "Trustee" shall mean the successor Trustee. "Unassigned Issuer's Rights" means all of the rights of the Issuer to receive Additional Payments under Section 4.2 of the Agreement, to be held harmless and indemnified under Section 5.3 of the Agreement and as provided in the other Bond Documents, to be an insured under Section 5.6 of the Agreement, to determine if satisfactory arrangements for Additional Payments as required under Section 4.2 of the Agreement have been made, to be reimbursed for attorney's fees and expenses under Section 7.4 of the Agreement, to receive notices pursuant to Section 8.3 of the Agreement, to give or withhold consent to amendments, changes, modifications, alterations and termination of the Agreement under Section 8.6 of the Agreement, and to enforce its remedies under the Agreement and the other Bond Documents. "Undelivered Bond" means any Bond that is required under this Indenture to be delivered to the Remarketing Agent or the Trustee for purchase on a Mandatory Tender Date but that has not been received on the date such Bond is required to be so delivered. "Underwriter"means The Sturges Company. Section 1.02. Interpretation. Any reference herein to the Issuer, or to any member or officer of the Issuer, includes entities or officials succeeding to their respective functions, duties or responsibilities pursuant to or by operation of law or lawfully performing their functions. Any reference to a section or provision of the Constitution of the State or the Act, or to a section, provision or chapter of the Indiana Code, or to any statute of the United States of America, includes that section, provision or chapter as amended, modified, revised, supplemented or superseded from time to time; provided, that no amendment, modification, revision, supplement or superseding section, provision or chapter shall be applicable solely by reason of this paragraph, if it constitutes in any way an impairment of the rights or obligations of the Issuer, the Holders, the Trustee, the Registrar, any Paying Agent, any Authenticating Agent or the Borrower under this Indenture, the Bond Resolution, the Bonds, the Agreement, the Note, the Regulatory Agreement or any other instrument or document entered into in connection with any of the foregoing, including without limitation, any alteration of the obligation to pay Bond Service Charges in the amount and manner, at the times, and from the sources provided in the Bond Resolution and this Indenture, except as permitted herein. - 15 - Unless the context indicates otherwise, words importing the singular number include the plural number, and vice versa. The terms "hereof', "hereby", "herein", "hereto", "hereunder", "hereinafter" and similar terms refer to this Indenture; and the term "hereafter" means after, and the term "heretofore" means before, the date of this Indenture. Words of any gender include the correlative words of the other genders, unless the sense indicates otherwise. Section 1.03. Captions and Headings. The captions and headings in this Indenture are solely for convenience of reference and in no way define, limit or describe the scope or intent of any Articles, Sections, subsections, paragraphs, subparagraphs or clauses hereof. (End of Article I) - 16 - ARTICLE II AUTHORIZATION AND TERMS OF BONDS Section 2.01. Authorized Amount of Bonds. No Bonds may be issued under the provisions of this Indenture except in accordance with this Article. The total authorized principal amount of Bonds which shall be issued under the provisions of this Indenture is $4,100,000. Section 2.02. Issuance of Bonds. (a) General. It is determined to be necessary to, and the Issuer shall, issue, sell and deliver $4,100,000 principal amount of Bonds for the Project Purposes. The Bonds shall be designated "Multifamily Housing Revenue Bonds, Series 2020A (Cedar Glen Apartments Project)"; shall be issuable only in fully registered form, substantially as set forth in Exhibit A to this Indenture; shall be numbered in such manner as determined by the Trustee in order to distinguish each Bond from any other Bond; shall be in Authorized Denominations; shall be dated as of April 1, 2020 and shall mature on the Maturity Date, subject to Mandatory Tender for purchase as set forth in Section 4.01 hereof. The Bonds shall bear interest on the principal amount Outstanding from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid or provided for, from their dated date,payable on each Interest Payment Date. The Bonds shall bear interest for each Interest Period at the Interest Rate all as more specifically set forth hereinafter. Interest on the Bonds shall be calculated on the basis of a 360-day year consisting of twelve 30-day months. (b) Initial Interest Rate. From their dated date to but not including the Initial Mandatory Tender Date, the interest rate on the Bonds shall be the Initial Interest Rate per annum. On the Initial Mandatory Tender Date, the Bonds shall be subject to Mandatory Tender pursuant to Section 4.01 hereof. (c) Establishment of Remarketing Rate. The Remarketing Agent shall establish the interest rate on the Bonds Outstanding for each Remarketing Period at the Remarketing Rate in accordance with this Section 2.02. Not less than 10 Business Days preceding each Remarketing Date, the Remarketing Agent, taking into consideration prevailing market conditions, shall, using its best professional judgment, determine the minimum rate(s) of interest which, if borne by the Bonds then Outstanding for the Remarketing Period specified by the Remarketing Agent at the direction of the Borrower as provided in Section 4.01 hereof, would enable such Bonds to be remarketed at a price equal to 100% of the principal amount of such Bonds. The rate of interest determined in accordance with the previous sentence shall be the Remarketing Rate for the specified Remarketing Period; provided that if the rate of interest so determined for such period would exceed the Maximum Interest Rate, the Bonds Outstanding shall be remarketed for the longest Remarketing Period for which the minimum rate of interest that would enable such Bonds to be remarketed at a price equal to 100% of the principal amount of such Bonds that would not exceed the Maximum Interest Rate. Notwithstanding the foregoing, if the rate of interest so determined for any Remarketing Period would exceed the Maximum Interest Rate, the Bonds Outstanding shall not be remarketed. - 17 - (d) Notice of Remarketing Rate. The Remarketing Agent shall, upon determination of the Remarketing Rate and Remarketing Period, immediately (and in no event later than the Business Day following the day on which the Remarketing Agent makes its determination of the Remarketing Rate and the Remarketing Period) give notice of its determination by telephone or electronic mail, promptly confirmed in writing, to the Trustee, the Issuer and the Borrower. The Remarketing Rate and the Remarketing Period shall be conclusive and binding upon the Trustee, the Issuer, the Borrower and the Holders for the purposes of this Indenture. Section 2.03. Delivery of Bonds. Upon (i) the execution and delivery of this Indenture, (ii) satisfaction or waiver of the conditions established in the Bond Purchase Agreement for delivery of the Bonds and (iii) confirmation that the Trustee shall be able to purchase the Initial Investment on the Closing Date, the Issuer shall execute the Bonds and deliver them to the Trustee. Thereupon, the Trustee shall authenticate the Bonds and deliver them to, or on the order of, the Underwriter, as directed by the Issuer in accordance with this Section 2.03. Before the Trustee delivers any Bonds, the Trustee shall have received a request and authorization to the Trustee on behalf of the Issuer, signed by an Authorized Official, to authenticate and deliver the Bonds to, or on the order of, the Underwriter upon payment to the Trustee of the amount specified therein (including without limitation, any accrued interest), which amount shall be deposited as provided in Section 5.01 hereof. (End of Article II) - 18 - ARTICLE III TERMS OF BONDS GENERALLY Section 3.01. Form of Bonds. The Bonds, the certificate of authentication and the form of assignment shall be substantially in the respective forms thereof set forth in Exhibit A to this Indenture. All Bonds, unless a Supplemental Indenture shall have been executed and delivered pursuant to Section 8.02 hereof, shall be in fully registered form, and, except as provided in Sections 3.05 and 3.09 hereof, the Holder of a Bond shall be regarded as the absolute owner thereof for all purposes of this Indenture. The Bonds shall be negotiable instruments in accordance with the Act, and shall express the purpose for which they are issued and any other statements or legends which may be required by law. Section 3.02. Execution and Authentication of Bonds. Unless otherwise provided in the applicable Bond Resolution or Supplemental Indenture, each Bond shall be signed by the Authorized Officials (provided that either or both of those signatures may be facsimiles). In case any officer whose signature or a facsimile of whose signature shall appear on any Bond shall cease to be that officer before the issuance of the Bond, his signature or the facsimile thereof nevertheless shall be valid and sufficient for all purposes, the same as if he had remained in office until that time. Any Bond may be executed on behalf of the Issuer by an officer who, on the date of execution is the proper officer, although on the date of the Bond that person was not the proper officer. No Bond shall be valid or become obligatory for any purpose or shall be entitled to any security or benefit under this Indenture unless and until a certificate of authentication, substantially in the form set forth in Exhibit A to this Indenture, has been signed by the Trustee or by any Authenticating Agent on behalf of the Trustee. The authentication by the Trustee or by an Authenticating Agent upon any Bond shall be conclusive evidence that the Bond so authenticated has been duly authenticated and delivered hereunder and is entitled to the security and benefit of this Indenture. The certificate of the Trustee or an Authenticating Agent may be executed by any person authorized by the Trustee or Authenticating Agent, but it shall not be necessary that the same authorized person sign the certificates of authentication on all of the Bonds. Section 3.03. Source of Payment of Bonds. To the extent provided in and except as otherwise permitted by this Indenture, (i) the Bonds shall be special limited obligations of the Issuer and the Bond Service Charges thereon shall be payable equally and ratably solely from the Pledged Revenues, including but not limited to moneys and investments in the Special Funds, (ii) the payment of Bond Service Charges on the Bonds shall be secured by the assignment of Pledged Revenues hereunder and by this Indenture, and (iii) payments due on the Bonds also shall be secured by the Note. Notwithstanding anything to the contrary in the Bond Resolution, the Bonds or this Indenture, the Bonds do not and shall not represent or constitute a debt or - 19 - pledge of the faith and credit, moneys or the taxing power of the Issuer or of the State or of any political subdivision, municipality or other local agency thereof. Section 3.04. Payment and Ownership of Bonds. Bond Service Charges shall be payable in lawful money of the United States of America without deduction for the services of the Trustee or any Paying Agent. Subject to the provisions of Sections 3.08 and 3.09 of this Indenture, (i) the principal of any Bond shall be payable when due to a Holder upon presentation and surrender of such Bond at the designated corporate trust office of the Trustee or at the office, designated by the Trustee, of any Paying Agent, and (ii) interest on any Bond shall be paid on each Interest Payment Date by check or draft which the Trustee shall cause to be mailed on that date to the Person in whose name the Bond (or one or more Predecessor Bonds) is registered at the close of business on the Regular Record Date applicable to that Interest Payment Date on the Register at the address appearing therein; or, at the option of any Holder of not less than $1,000,000 principal amount of the Bonds, by wire transfer to any address in the United States of America on such Interest Payment Date to such Holder as of such Regular Record Date, if such Holder provides the Bond Registrar with written notice of such wire transfer address not later than the Regular Record Date(which notice may provide that it will remain in effect with respect to subsequent Interest Payment Dates unless and until changed or revoked by subsequent notice). If and to the extent, however, that the Trustee shall fail to make payment or provision for payment of interest on any Bond on any Interest Payment Date, that interest shall cease to be payable to the Person who was the Holder of that Bond(or of one or more Predecessor Bonds) as of the applicable Regular Record Date. In that event, except as provided below in this Section, when moneys become available for payment of the interest, (x) the Trustee shall, pursuant to Section 7.06 hereof, establish a Special Record Date for the payment of that interest which shall be not more than 15 nor fewer than 10 days prior to the date of the proposed payment, and (y) the Trustee shall cause notice of the proposed payment and of the Special Record Date to be mailed by first-class mail, postage prepaid, to each Holder at its address as it appears on the Register not fewer than 10 days prior to the Special Record Date and, thereafter, the interest shall be payable to the Persons who are the Holders of the Bonds (or their respective Predecessor Bonds) at the close of business on the Special Record Date. Subject to the foregoing, each Bond delivered under this Indenture upon transfer thereof, or in exchange for or in replacement of any other Bond, shall carry the rights to interest accrued and unpaid, and to accrue on that Bond, or which were carried by that Bond. Except as provided in this Section and the first paragraph of Section 3.06 hereof, (i) the Holder of any Bond shall be deemed and regarded as the absolute owner thereof for all purposes of this Indenture, (ii) payment of or on account of the Bond Service Charges on any Bond shall be made only to or upon the order of that Holder or its duly authorized attorney in the manner permitted by this Indenture, and (iii) neither the Issuer, the Trustee, the Registrar nor any Paying Agent or Authenticating Agent shall, to the extent permitted by law, be affected by notice to the contrary. All of those payments shall be valid and effective to satisfy and discharge the liability upon that Bond, including without limitation, the interest thereon, to the extent of the amount or amounts so paid. -20- Section 3.05. Transfer and Exchange of Bonds. So long as any of the Bonds remain outstanding, the Trustee will cause books for the registration and transfer of Bonds, as provided in this Indenture, to be maintained and kept at the designated office of the Registrar. Subject to the provisions of Section 3.09 hereof, any Bond may be transferred upon the Register, upon presentation and surrender thereof at the designated office of the Registrar or the designated office of any Authenticating Agent, together with an assignment duly executed by the Holder or its duly authorized attorney in any form which shall be satisfactory to the Registrar or the Authenticating Agent, as the case may be. Upon transfer of any Bond and on request of the Registrar or the Authenticating Agent, the Issuer shall execute in the name of the transferee, and the Trustee or the Authenticating Agent, as the case may be, shall authenticate and deliver, a new Bond or Bonds, of any Authorized Denomination in an aggregate principal amount equal to the unmatured and unredeemed principal amount of, and bearing interest at the same rate and maturing on the same date or dates as, the Bonds presented and surrendered for transfer. In all cases in which Bonds shall be exchanged or transferred hereunder, the Issuer shall execute, and the Trustee or any Authenticating Agent, as the case may be, shall authenticate and deliver, Bonds in accordance with the provisions of this Indenture. The exchange or transfer shall be made without charge; provided, that the Issuer and the Registrar, the Trustee or the Authenticating Agent, as the case may be, may make a charge for every exchange or transfer of Bonds sufficient to reimburse them for any tax or excise required to be paid with respect to the exchange or transfer. The charge shall be paid before a new Bond is delivered. All Bonds issued upon any transfer or exchange of Bonds shall be the valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Bonds surrendered upon transfer or exchange. For purposes of this Section the Trustee shall establish the designated office of the Registrar and the Authenticating Agent. Section 3.06. Mutilated, Lost, Wrongfully Taken or Destroyed Bonds. If any Bond is mutilated, lost, wrongfully taken or destroyed, in the absence of written notice to the Issuer or the Registrar that a lost, wrongfully taken or destroyed Bond has been acquired by a bona fide purchaser, the Issuer shall execute, and the Registrar shall authenticate and deliver, a new Bond of like date, maturity and denomination as the Bond mutilated, lost, wrongfully taken or destroyed; provided, that (i) in the case of any mutilated Bond, the mutilated Bond first shall be surrendered to the Registrar, and (ii) in the case of any lost, wrongfully taken or destroyed Bond, there first shall be furnished to the Registrar evidence of the loss, wrongful taking or destruction satisfactory to the Registrar, together with indemnity satisfactory to the Authorized Borrower Representative, the Trustee, the Issuer, the Registrar and an Authorized Official. If any lost, wrongfully taken or destroyed Bond shall have matured, instead of issuing a new Bond, the Authorized Borrower Representative may direct the Trustee to pay that Bond without surrender thereof upon the furnishing of satisfactory evidence and indemnity as in the case of issuance of a new Bond. The Issuer, the Registrar and the Trustee may charge the Holder of a mutilated, lost, wrongfully taken or destroyed Bond their reasonable fees and expenses in connection with their actions pursuant to this Section. -21 - Every new Bond issued pursuant to this Section by reason of any Bond being mutilated, lost, wrongfully taken or destroyed (i) shall constitute, to the extent of the outstanding principal amount of the Bond lost, mutilated, taken or destroyed, an additional contractual obligation of the Issuer, regardless of whether the mutilated, lost, wrongfully taken or destroyed Bond shall be enforceable at any time by anyone and (ii) shall be entitled to all of the benefits of this Indenture equally and proportionately with any and all other Bonds issued and outstanding hereunder. All Bonds shall be held and owned on the express condition that the foregoing provisions of this Section are exclusive with respect to the replacement or payment of mutilated, lost, wrongfully taken or destroyed Bonds and, to the extent permitted by law, shall preclude any and all other rights and remedies with respect to the replacement or payment of negotiable instruments or other investment securities without their surrender, notwithstanding any law or statute to the contrary now existing or enacted hereafter. Section 3.07. Cancellation of Bonds. Any Bond surrendered pursuant to this Article for the purpose of payment or retirement or for exchange, replacement or transfer shall be cancelled upon presentation and surrender thereof to the Registrar, the Trustee or any Paying Agent or Authenticating Agent. Any Bond cancelled by the Trustee or a Paying Agent or Authenticating Agent shall be transmitted promptly to the Registrar by the Trustee, Paying Agent or Authenticating Agent. The Issuer, or the Borrower on behalf of the Issuer, may deliver at any time to the Registrar for cancellation any Bonds previously authenticated and delivered hereunder, which the Issuer or the Borrower may have acquired in any manner whatsoever. All Bonds so delivered shall be cancelled promptly by the Registrar. Certification of the surrender and cancellation shall be made to the Issuer and the Trustee by the Registrar at least once each calendar year. Unless otherwise directed by the Issuer, cancelled Bonds shall be retained and stored by the Registrar for a period of four years after their cancellation. Those cancelled Bonds shall be destroyed by the Registrar by shredding or incineration at that time or at any earlier time directed by the Issuer. The Registrar shall provide certificates describing the destruction of cancelled Bonds to the Issuer and the Trustee. Section 3.08. Special Agreement with Holders. Notwithstanding any provision of this Indenture or of any Bond to the contrary, with the approval of the Borrower, the Trustee may enter into an agreement with any Holder providing for making all payments to that Holder of principal of and interest on that Bond or any part thereof(other than any payment of the entire unpaid principal amount thereof) at a place and in a manner other than as provided in this Indenture and in the Bond, without presentation or surrender of the Bond, upon any conditions which shall be satisfactory to the Trustee and the Borrower; provided, that payment in any event shall be made to the Person in whose name a Bond shall be registered on the Register, with respect to payment of principal, on the date such principal is due, and, with respect to the payment of interest, as of the applicable Regular Record Date or Special Record Date, as the case maybe. The Trustee will furnish a copy of each of those agreements, certified to be correct by an officer of the Trustee, to the Registrar, the Issuer and the Borrower. Any payment of principal or -22 - interest pursuant to such an agreement shall constitute payment thereof pursuant to, and for all purposes of, this Indenture. Section 3.09. Book-Entry Only System. Notwithstanding any provision of this Indenture to the contrary, the Issuer may direct that all Bonds issued hereunder shall be initially issued in a Book Entry System, registered in the name of a Depository or its nominee as registered owner of the Bonds, and held in the custody of that Depository. Unless otherwise requested by a Depository, a single certificate will be issued and delivered to the Depository for each maturity of Bonds. Beneficial owners of Bonds in a Book Entry System will not receive physical delivery of Bond certificates except as provided hereinafter. For so long as a Depository shall continue to serve as Depository for the Bonds as provided herein, all transfers of beneficial ownership interests will be made by book-entry only, and no investor or other party purchasing, selling or otherwise transferring beneficial ownership of Bonds is to receive, hold or deliver any Bond certificate; provided, that, if a Depository fails or refuses to act as Depository for the Bonds, the Issuer shall take the actions necessary to provide for the issuance of Bond certificates to the Holders of such Bonds. With respect to Bonds registered in the name of a Depository or its nominee, the Issuer, the Borrower and the Trustee shall have no responsibility or obligation to any participant therein or to any Person on whose behalf any participant holds an interest in the Bonds. Without limiting the immediately preceding sentence, neither the Issuer, the Borrower nor the Trustee shall have any responsibility or obligation with respect to (i) the accuracy of the records of the Depository or any participant therein or any other Person or (ii) any notice with respect to the Bonds other than to a registered owner of the Bonds, as shown on the registration books or (iii) the payment to any participant in the Depository or any other Person, other than to a registered owner of the Bonds, as shown in the registration books of any amount with respect to principal of or interest on or purchase price of the Bonds or(iv) any consent given or other action taken by the Depository. Replacement Bonds may be issued directly to beneficial owners of Bonds other than a Depository, or its nominee, but only in the event that (i) the Depository determines not to continue to act as Depository for the Bonds (which determination shall become effective no less than 90 days after written notice to such effect to the Issuer and the Trustee); or(ii) the Issuer has advised a Depository of its determination (which determination is conclusive as to the Depository and beneficial owners of the Bonds) that the Depository is incapable of discharging its duties as Depository for the Bonds; or (iii) the Issuer has determined (which determination is conclusive as to the Depository and the beneficial owners of the Bonds) that the interests of the beneficial owners of the Bonds might be adversely affected if such book-entry only system of transfer is continued. Upon occurrence of any of the foregoing events, the Issuer and the Borrower shall use their best efforts to attempt to locate another qualified Depository. If the Issuer and the Borrower fail to locate another qualified Depository to replace the Depository, the Issuer and the Borrower, at the Borrower's expense, shall cause to be authenticated and delivered replacement Bonds, in certificate form, to the beneficial owners of the Bonds. In the event that the Issuer makes the determination noted in(ii) or(iii) above(provided that the Issuer undertakes no obligation to make any investigation to determine the occurrence of any events that would permit the Issuer to make any such determination), and has made provisions to notify the beneficial owners of Bonds of such determination by mailing an appropriate notice to the - 23 - Depository, it and the Borrower shall cause to be issued replacement Bonds in certificate form to beneficial owners of the Bonds as shown on the records of the Depository provided to the Issuer. Upon the written consent of one hundred percent (100%) of the beneficial owners of the Bonds, the Trustee shall withdraw the Bonds from any Depository and authenticate and deliver Bonds fully registered to the assignees of that Depository or its nominee. Such withdrawal, authentication and deliveryshall be at the cost and expense (including costs of printing, preparing and delivering such Bonds) of the persons requesting such withdrawal, authentication and delivery; otherwise such withdrawal, authentication and delivery shall be at the cost and expense of the Borrower. Whenever, during the term of the Bonds, the beneficial ownership thereof is determined by a book entry at a Depository, (i) the requirements in this Indenture of holding, delivering or transferring Bonds shall be deemed modified to require the appropriate Person or entity to meet the requirements of the Depository as to registering or transferring the book entry to produce the same effect and (ii) delivery of the Bonds will be in accordance with arrangements among the Issuer, the Trustee and the Depository notwithstanding any provision of this Indenture to the contrary. The Issuer has entered into or shall enter into a letter of representation with a Depository to implement the Book Entry System of Bond registration described above. (End of Article III) -24 - ARTICLE IV MANDATORY TENDER OF BONDS Section 4.01. Mandatory Tender of Bonds. (a) Purchase of Bonds on Mandatory Tender Dates. All Outstanding Bonds shall be subject to Mandatory Tender by the Holders for purchase in whole and not in part on each Mandatory Tender Date. The purchase price for each such Bond shall be payable in lawful money of the United States of America by wire, check or draft, shall equal 100% of the principal amount to be purchased and accrued interest, if any, to the Mandatory Tender Date, and shall be paid in full on the applicable Mandatory Tender Date. The purchase price shall be paid from remarketing proceeds or, to the extent remarketing proceeds are not available, from amounts on deposit in the Special Funds. (b) Holding of Tendered Bonds. While tendered Bonds are in the custody of the Trustee pending purchase pursuant hereto, the tendering Holders thereof shall be deemed the owners thereof for all purposes, and interest accruing on tendered Bonds through the day preceding the applicable Mandatory Tender Date is to be paid as if such Bonds had not been tendered for purchase. (c) Effect of Prior Redemption. Notwithstanding anything herein to the contrary, any Bond tendered under this Section 4.01 will not be purchased if such Bond matures or is redeemed on or prior to the applicable Mandatory Tender Date. (d) Purchase of Tendered Bonds. The Trustee shall utilize amounts representing proceeds of remarketed Bonds on deposit in the Remarketing Proceeds Account to pay the principal amount, plus accrued interest, of Bonds tendered for purchase not later than 11:30 a.m. Local Time on the Mandatory Tender Date. (e) Undelivered Bonds. Bonds shall be deemed to have been tendered for purposes of this Section 4.01 whether or not the Holders shall have delivered such Undelivered Bonds to the Trustee, and subject to the right of the Holders of such Undelivered Bonds to receive the purchase price of such Bonds on the Mandatory Tender Date, such Undelivered Bonds shall be null and void. If such Undelivered Bonds are to be remarketed, the Trustee shall authenticate and deliver new Bonds in replacement thereof pursuant to the remarketing of such Undelivered Bonds. Section 4.02. Notice of Mandatory Tender. (a) Notice to Holders. No later than the 20th day prior to a Mandatory Tender Date, the Trustee shall give written notice of a mandatory tender on the Mandatory Tender Date to the Holders of the Bonds then Outstanding (with a copy to the Borrower, the Issuer, the Investor Member, and the Remarketing Agent) by first class mail, postage prepaid, at their respective addresses appearing on the Register stating: (i) the Mandatory Tender Date and that (A) if certain conditions are met, all Outstanding Bonds are subject to Mandatory Tender for purchase on the Mandatory -25 - Tender Date, (B) all Outstanding Bonds must be tendered for purchase no later than 9:00 a.m., Local Time, on the Mandatory Tender Date and (C) Holders will not have the right to elect to retain their Bonds; (ii) the address of the Designated Office of the Trustee at which Holders should deliver their Bonds for purchase and the date of the required delivery; (iii) that all Outstanding Bonds will be purchased on the Mandatory Tender Date at a price equal to the principal amount of the Outstanding Bonds plus interest accrued to the Mandatory Tender Date; (iv) that if, in the event that the conditions to remarketing set forth in Section 4.03(b) or Section 4.03(d) hereof are not met as set forth therein, or, if proceeds from the remarketing are insufficient to pay the purchase price of the Bonds on the Mandatory Tender Date, all of the Bonds will be redeemed, without further notice, on the Mandatory Tender Date; and (v) that any Bonds not tendered will nevertheless be deemed to have been tendered and will cease to bear interest from and after the Mandatory Tender Date. (b) Failure to Give Notice. Neither failure to give or receive any notice described in this Section 4.02, nor the lack of timeliness of such notice or any defect in any notice (or in its content) shall affect the validity or sufficiency of any action required or provided for in this Section 4.02. Section 4.03. Remarketing of Bonds. (a) Notice of Mandatory Tender. No later than 11:00 a.m. Local Time on the 35th day prior to each Mandatory Tender Date, the Trustee shall give notice to the Borrower, the Investor Member and the Remarketing Agent by telephone or electronic mail, confirmed on the same day in writing, which states that all Outstanding Bonds shall be tendered or deemed to be tendered pursuant to Section 4.01 hereof. (b) Preliminary Conditions to Remarketing. No later 11:00 a.m. Local Time on the 15th day prior to the Mandatory Tender Date then in effect, the Borrower may give notice to the Remarketing Notice Parties by telephone or electronic mail, confirmed on the same day in writing, that it elects to cause the Bonds to be remarketed. A remarketing of the Bonds shall be permitted only if the following conditions are satisfied no later than the time the foregoing election notice is given: (i) notice by the Borrower to the Remarketing Agent of the Remarketing Period pursuant to the Agreement, approved in writing by the Remarketing Agent; (ii) delivery to the Trustee and the Remarketing Agent of a preliminary Cash Flow Projection with respect to the proposed Remarketing Period; (iii) the Borrower and, if applicable, the Issuer shall each have notified the Trustee in writing that it has approved as to form and substance any disclosure document -26 - or offering materials which, in the Opinion of Counsel to the Remarketing Agent, are necessary to be used in connection with the remarketing of the Outstanding Bonds; and (iv) delivery to the Trustee and the Remarketing Agent of Available Money in the amount of the estimated Extension Payment set forth in the preliminary Cash Flow Projection (which the Trustee has no duty to review or analyze, and shall retain solely as a repository for the Holders). If the foregoing conditions are not satisfied by 11:00 a.m. Local Time on the 15th day prior to the Mandatory Tender Date then in effect, the remarketing shall be cancelled and the Bonds shall be redeemed in accordance with Section 4.04 hereof. (c) Remarketing. No later than the 5th day prior to each Mandatory Tender Date, the Remarketing Agent shall offer for sale and use its best efforts to sell the Bonds Outstanding on the Mandatory Tender Date at a price equal to 100% of the principal amount of such Bonds plus accrued interest on such Bonds. No later than the Business Day following the day on which the Remarketing Agent makes its determination of the Remarketing Rate and the Remarketing Period, the Remarketing Agent shall give notice, by telephone or electronic mail, promptly confirmed in writing, to the Remarketing Notice Parties specifying the principal amount of Bonds, if any, it has remarketed (including Bonds to be purchased on the Mandatory Tender Date for its own account), the Remarketing Rate(s) and the Remarketing Period applicable to the Bonds. The Remarketing Agent shall have the right to remarket the Bonds tendered pursuant to Section 4.01 hereof; provided, however, that no Bond shall be remarketed unless all of the Outstanding Bonds are remarketed and all such Bonds shall be remarketed at a price not less than the amount equal to 100% of the principal amount thereof plus accrued interest (if any). The Remarketing Agent shall have the right to purchase any Bond tendered or deemed tendered pursuant to Section 4.01 hereof at the purchase price thereof, and to thereafter sell such Bond. Any such purchase shall constitute a remarketing hereunder. The Remarketing Agent shall not remarket any Bond to the Issuer, the Borrower, any guarantor of the Bonds or any person that is an "insider" of the Issuer, the Borrower, or any such guarantor within the meaning of the Bankruptcy Code. (d) Final Conditions to Remarketing. If, no later than the 5th day prior to a Mandatory Tender Date: (i) the Remarketing Agent shall have notified the Trustee in writing of the remarketing of the Outstanding Bonds and that the proceeds from the remarketing (including proceeds of remarketing of Outstanding Bonds to be purchased by the Remarketing Agent on the Mandatory Tender Date for its own account) or other funds equal to the amount needed to purchase the remarketed Bonds on the Mandatory Tender Date are expected to be available to the Trustee on the Mandatory Tender Date for deposit into the Remarketing Proceeds Account; (ii) there shall be on deposit with the Trustee, from funds provided by or on behalf of the Borrower, any additional amount required to pay the Extension Payment; -27 - (iii) the Trustee shall have received written confirmation that the Rating Agency shall have received and approved a Cash Flow Projection based on the interest rate(s) to be in effect with respect to the Outstanding Bonds on and after the Mandatory Tender Date; (iv) the Trustee shall have received written notice from the Remarketing Agent that the Remarketing Agent has received written confirmation from the Rating Agency that the then current rating assigned to the Outstanding Bonds will continue to be effective on the Remarketing Date; and (v) the Trustee shall have received an Opinion of Bond Counsel substantially to the effect that the remarketing of the Bonds, in and of itself, will not adversely affect the excludability of interest on the Bonds from gross income for federal income tax purposes; then the Trustee shall immediately give notice, by telephone or electronic mail, which notice shall be immediately confirmed in writing, to the Remarketing Agent, the Borrower and the Investor Member that (a) all conditions precedent to the remarketing of the Outstanding Bonds have been satisfied and (b) the sale and settlement of the Outstanding Bonds is expected to occur on the Mandatory Tender Date. Following the Trustee's notice, the Outstanding Bonds shall be sold to the purchasers identified by the Remarketing Agent for delivery and settlement on the Mandatory Tender Date. (e) Remarketing Proceeds. No later than 10:00 a.m. Local Time on each Mandatory Tender Date, the Remarketing Agent shall pay to the Trustee, in immediately available funds,the proceeds theretofore received by the Remarketing Agent from the remarketing of Bonds tendered for purchase on such Mandatory Tender Date. The proceeds from the remarketing of the Bonds shall be deposited in the Remarketing Proceeds Account, segregated from any funds of the Borrower and the Issuer and shall in no case be considered to be or be assets of the Borrower or the Issuer. Funds representing remarketing proceeds received by the Remarketing Agent after 10:00 a.m. Local Time on each Mandatory Tender Date shall be paid to the Trustee as soon as practicable upon such receipt. The Trustee shall apply the funds in the Remarketing Proceeds Account of the Bond Fund on the Remarketing Date to payment of the purchase price of the Outstanding Bonds. (0 Delivery of Purchased Bonds. No later than the 10th day prior to each Mandatory Tender Date, the Remarketing Agent, by telephonic advice or electronic mail, shall notify the Trustee of(i) the principal amount of Bonds to be sold by the Remarketing Agent pursuant to this Section 4.03 and the purchase price, and, unless the Bonds are then in the Book-Entry System, the names, addresses and social security numbers or other tax identification numbers of the proposed purchasers thereof and (ii) the principal amount of Bonds tendered for purchase on such Mandatory Tender Date which will not be sold by the Remarketing Agent pursuant to this Section 4.03. Such telephonic advice shall be confirmed by written notice delivered or electronically communicated at the same time as the telephonic advice. Bonds purchased by the Trustee on a Mandatory Tender Date that have been remarketed shall be delivered to the purchasers thereof as directed by the Remarketing Agent. Bonds delivered as provided in this Section shall be registered in the manner directed by the recipient thereof. -28 - (g) Remarketing Expenses. The Borrower shall be responsible for paying all Remarketing Expenses incurred in connection with the remarketing of the Bonds from sources other than the Trust Estate. (h) Failure to Give Notice. Neither failure to give or receive any notice described in this Section 4.03, nor the lack of timeliness of such notice or any defect in any notice (or in its content) shall affect the validity or sufficiency of any action required or provided for in this Section 4.03. Section 4.04. Redemption and Cancellation of Bonds. The Bonds shall be redeemed in whole at a redemption price of 100% of the principal amount of such Bonds, plus accrued interest to the Mandatory Tender Date, on any Mandatory Tender Date upon the occurrence of any of the following events: (i) the Borrower has previously elected not to cause the remarketing of the Bonds, (ii) the conditions to remarketing set forth in Section 4.03(b) or Section 4.03(d) hereof have not been met by the dates and times set forth therein, or (iii) the proceeds of a remarketing on deposit in the Remarketing Proceeds Account at 11:00 a.m. on the Mandatory Tender Date are insufficient to pay the purchase price of the Outstanding Bonds on such Mandatory Tender Date. Bonds subject to redemption in accordance with this paragraph shall be redeemed from (i) amounts on deposit in the Assignment Fund, (ii) amounts on deposit in the Bond Fund, (iii) amounts on deposit in the Project Fund, and (iv) any other Available Money made available for such purpose at the direction of the Borrower. The Trustee shall immediately cancel Bonds if the tender price of the Bonds is paid from amounts other than proceeds derived from the remarketing of the Bonds. (End of Article IV) -29 - ARTICLE V PROVISIONS AS TO FUNDS, PAYMENTS, PROJECT AND AGREEMENT Section 5.01. Creation of Funds; Allocation of Bond Proceeds. (a) The funds and accounts described in this Section, designated as indicated are created by this Section 5.01 of this Indenture. Each Fund is to be maintained in the custody of the Trustee as a separate bank account (except when invested in Eligible Investments). The funds and accounts are: (i) the Bond Fund designated "Cedar Glen Apartments -- Bond Fund," and the "Interest Payment Account," "Principal Payment Account" and the "Remarketing Proceeds Account" (but only at such times as money is to be deposited or held in such Account as provided in this Indenture) therein; (ii) the Project Fund designated"Cedar Glen Apartments -- Project Fund"; (iii) the Assignment Fund designated "Cedar Glen Apartments -- Assignment Fund"; and (iv) the Rebate Fund designated"Cedar Glen Apartments-- Rebate Fund;" and (v) the Residual Fund designated "Cedar Glen Apartments Residual Fund." (b) The proceeds of the sale of the Bonds shall be deposited by the Trustee as follows: (i) to the Interest Payment Account of the Bond Fund, proceeds from the sale of the Bonds, representing accrued interest plus the negative arbitrage deposit received by the Issuer from the Underwriter, in the aggregate amount of[$ ]; and (ii) to the Project Fund, the balance of the proceeds from the sale of the Bonds in the amountof[$ 1. Section 5.02. Application of Loan Payments. So long as there are any Outstanding Bonds, all payments under the Agreement shall consist of Available Money and shall be paid on each Loan Payment Date directly to the Trustee, and deposited as follows: (1) into the Interest Payment Account, at least the amount necessary to pay the interest on the Bonds on the next succeeding Interest Payment Date; and (2) into the Principal Payment Account, at least the amount necessary to pay the principal due on the Bonds on the next succeeding Interest Payment Date; provided, that the amounts required to be deposited into the Interest Payment Account and the Principal Payment Account may be deposited in the form of either or both money or direct obligations of the United States of America or obligations the full and prompt payment of which is secured by the pledge of the full faith and credit of the United States of America of those maturities and bearing the rate or rates of interest which will be sufficient, without further investment or reinvestment of either the principal amount thereof or the interest earnings thereon, to produce the amounts required to be on deposit on the next succeeding Interest Payment Date. -30 - Section 5.03. Deposits to, Disbursements from and Records of Project Fund and Assignment Fund. On the Closing Date, the Trustee shall use moneys in the Project Fund and [$ ] of the amount deposited to the Interest Payment Account of the Bond Fund to purchase the Initial Investment and deposit such Initial Investment in the Project Fund. To the extent moneys are not otherwise provided to the Trustee, including moneys deposited into the Bond Fund or the Assignment Fund, the Trustee shall transfer from the Project Fund to the Bond Fund sufficient Available Money to make the necessary interest and principal payments on each Interest Payment Date without further written direction. Upon the receipt of requests for disbursement from the Project Fund and the receipt of installments of Collateral Funds, the Trustee shall concurrently take the following steps: (i) The Trustee shall deposit the Collateral Funds installment into the Assignment Fund; (ii) The Trustee shall allocate a portion of the Initial Investment on deposit in the Project Fund (based on the initial purchase price of the Initial Investment) equal to the amount of the installment of Collateral Funds deposited to the Assignment Fund; (iii) The Trustee shall transfer an amount of cash equal to the installment of Collateral Funds from the Assignment Fund to the Project Fund; and (iv) The Trustee shall disburse Bond proceeds from the Project Fund in an amount equal to the Collateral Funds installment to pay Project Costs in accordance with Section 3.4 of the Agreement. Each deposit into the Assignment Fund shall constitute an irrevocable deposit solely for the benefit of the Holders, subject to the provisions hereof. The Trustee shall cause to be kept and maintained adequate records pertaining to the Project Fund and all disbursements therefrom. If requested by the Issuer or the Borrower, after the Project has been completed and a certificate of payment of all costs is filed as provided in Section 5.04 hereof, the Trustee shall file copies of the records pertaining to the Project Fund and disbursements therefrom with the Issuer and the Borrower. When the aggregate principal amount on deposit in the Assignment Fund, together with the scheduled investment earnings thereon, equals the expected Bond Service Charges to be paid on the Bonds to and including the Maturity Date, the excess amounts shall be transferred upon receipt to the Residual Fund and used to pay Project Costs in accordance with Section 3.4 of the Agreement. Notwithstanding any provision of the Agreement or any other provision of this Indenture to the contrary, after the Closing Date the Trustee shall not disburse moneys from the Project Fund, other than to pay Bond Service Charges on the Bonds, unless and until the Trustee receives satisfactory evidence that Collateral Funds or other Available Money in an amount equal to or greater than the requested disbursement amount has been deposited in the Assignment Fund. Prior to making any disbursement, the Trustee shall verify that upon making the disbursement, the aggregate amount to be held in (i) the Assignment Fund and (ii) the Project - 31 - Fund, taking into account the scheduled investment income on any fixed-yield Eligible Investments, will be sufficient to pay Bond Service Charges on the outstanding Bonds as and when they become due. In the event Trustee determines that it cannot disburse Bond proceeds to or at the direction of the Borrower or the Senior Lender, Trustee shall immediately notify Borrower and Senior Lender of the reason for such determination and shall, immediately upon the request of Borrower or Senior Lender, return the Collateral Funds to the party that deposited that installment of Collateral Funds with the Trustee. The Trustee may rely upon a calculation from the Underwriter, substantially in the form of a Cash Flow Projection, in making the above determination. The proceeds of the Bonds shall be used exclusively to pay costs that (i) are (A) capital expenditures (as defined in Section 1.150-1(a) of the Code's regulations) and (B) not made for the acquisition of existing property, to the extent prohibited in Section 147(d) of the Code, and(ii) are made exclusively with respect to a"qualified residential rental project" within the meaning of Section 142(d) of the Code and that for the greatest number of buildings the proceeds of the Bonds shall be deemed allocated on a pro rata basis to each building in the Project and the land on which it is located so that each building and the land on which it is located will have been financed fifty percent (50%) or more by the proceeds of the Bonds for the purpose of complying with Section 42(h)(4)(B) of the Code; provided, however, the foregoing representation, covenant and warranty is made for the benefit of the Borrower and its partners and neither the Trustee nor the Issuer shall have any obligation to enforce this covenant nor shall they incur any liability to any person, including without limitation, the Borrower, the partners of the Borrower, any other affiliate of the Borrower or the holders of the Bonds for any failure to meet the intent expressed in the foregoing representation, covenant and warranty; and provided further, failure to comply with this representation, covenant and warranty shall not constitute a default or Event of Default under this Indenture. Upon the occurrence and continuance of an Event of Default hereunder because of which the principal amount of the Bonds has been declared to be due and immediately payable pursuant to Section 7.03 hereof, any moneys remaining in the Project Fund shall be promptly transferred by the Trustee to the Bond Fund for payment of Bond Service Charges. Section 5.04. Completion of the Project. The completion of the Project and payment of all costs and expenses incident thereto shall be evidenced by the filing with the Trustee of the Completion Certificate required by Section 3.6 of the Agreement. As soon as practicable after the filing with the Trustee of the Completion Certificate, any balance remaining in the Project Fund shall be promptly paid into the Bond Fund for payment of Bond Service Charges. Section 5.05. Bond Fund. Amounts on deposit in the Bond Fund (and accounts therein for which provision is made in this Indenture or in the Agreement) shall be used solely and exclusively for the payment of Bond Service Charges as they become due at stated maturity, or upon prior redemption or acceleration, all as provided herein and in the Agreement. The Trustee shall transmit to any Paying Agents, as appropriate, from moneys in the Bond Fund, amounts sufficient to make timely payments of Bond Service Charges on the Bonds to be made by those Paying Agents and then due and payable. The Issuer authorizes and directs the Trustee to cause withdrawal of moneys from the Bond Fund which are available for the -32 - purpose of paying, and are sufficient to pay, the principal of the Bonds as they become due and payable(whether at stated maturity or upon prior redemption or acceleration), for the purposes of paying or transferring moneys to the Paying Agents which are necessary to pay such principal. As provided in the Agreement, and as evidenced and to be evidenced by the Note, Bond Service Charges shall be payable, as they become due, (i) in the first instance from the moneys on deposit in the Interest Payment Account and Principal Payment Account of the Bond Fund, (ii) next from amounts on deposit in the Assignment Fund and transferred as necessary to the Bond Fund, and (iii) thereafter from amounts on deposit in the Project Fund and transferred as necessary to the Bond Fund. Section 5.06. Investment of Special Funds and Rebate Fund. Except as otherwise set forth in this Section, moneys in the Special Funds and the Rebate Fund shall be invested and reinvested by the Trustee in Eligible Investments at the oral or written direction (promptly confirmed in writing, if oral) of the Borrower. At no time shall the Borrower direct that any funds constituting gross proceeds of the Bonds be used in any manner as would constitute failure of compliance with Section 148 of the Code. Amounts on deposit in the Bond Fund and the Assignment Fund shall be invested in Eligible Investments that have a maturity date (or are redeemable at par) not later than the date when such funds are needed to pay Bond Service Charges on the Bonds. Amounts on deposit in the Project Fund shall be invested in Eligible Investments. Investment earnings from Eligible Investments shall be invested in Eligible Investments that have a maturity date (or are redeemable at par) not later than the date when such funds are needed to pay Bond Service Charges on the Bonds. All investment earnings and gains resulting from the sale of, or income from, any investment made from moneys credited to the Special Funds shall be credited to and become part of the Bond Fund. Section 5.07. Moneys to be Held in Trust. Except where moneys have been deposited with or paid to the Trustee pursuant to an instrument restricting their application to particular Bonds, all moneys required or permitted to be deposited with or paid to the Trustee or any Paying Agent under any provision of this Indenture or the Note, and any investments thereof, shall be held by the Trustee or that Paying Agent in trust. Except for moneys held by the Trustee pursuant to Section 5.08 hereof, all moneys described in the preceding sentence held by the Trustee or any Paying Agent shall be subject to the lien hereof while so held. Section 5.08. Nonpresentment of Bonds. In the event that any Bond shall not be presented for payment when the principal thereof becomes due, or a check or draft for interest is uncashed, if moneys sufficient to pay the principal then due of that Bond or of such check or draft shall have been made available to the Trustee for the benefit of its Holder, all liability of the Issuer to that Holder for such payment of the principal then due of the Bond or of such check or draft thereupon shall cease and be discharged completely. Thereupon, it shall be the duty of the Trustee to hold those moneys, without liability for interest thereon, in a separate account in the Bond Fund for the exclusive benefit of the Holder, who shall be restricted thereafter exclusively to those moneys for any claim of whatever nature on its part under this Indenture or on, or with - 33 - respect to, the principal then due of that Bond or of such check or draft. The Trustee shall notify the Borrower in writing of any Bond that has not been presented for payment when the principal thereof becomes due. Any of those moneys which shall be so held by the Trustee, and which remain unclaimed by the Holder of a Bond not presented for payment or check or draft not cashed for a period of four years after the due date thereof, shall be paid to the Borrower free of any trust or lien, upon a request in writing by the Borrower. Thereafter, the Holder of that Bond shall look only to the Borrower for payment and then only to the amounts so received by the Borrower without any interest thereon, and the Trustee shall not have any responsibility with respect to those moneys. Section 5.09. Rhe ayment to the Borrower from Certain Funds and Accounts. Any amounts remaining in the Bond Fund, the Project Fund or the Assignment Fund (i) after all of the outstanding Bonds shall be deemed paid and discharged under the provisions of this Indenture, and (ii) after payment of any Rebate Amount, all fees, charges and expenses of the Trustee, the Registrar and any Paying Agents or Authenticating Agents, the Issuer and of all other amounts required to be paid under this Indenture, the Agreement, the Regulatory Agreement and the Note, shall be transferred to the Residual Fund and (x) used to pay Project Costs and (y) thereafter, paid to the Borrower. Section 5.10. Rebate Fund. Any provision hereof to the contrary notwithstanding, amounts credited to the Rebate Fund shall be free and clear of any lien hereunder. Within five days after each Computation Date, the Borrower, or an Independent accounting firm or other firm knowledgeable with regard to the computation of the Rebate Amount engaged by the Borrower, shall calculate the Rebate Amount as of that Computation Date and provide the results of such calculations to the Trustee. If the amount then on deposit in the account in the Rebate Fund is in excess of the Rebate Amount, the Trustee shall forthwith pay that excess amount to the Borrower. If the amount then on deposit in the applicable account in the Rebate Fund is less than the Rebate Amount, the Borrower shall, within five days after receipt of the aforesaid notice from the Trustee, pay to the Trustee for deposit in the Rebate Fund an amount sufficient to cause the applicable account to contain an amount equal to the Rebate Amount. Within 30 days after the initial Computation Date, and every Computation Date thereafter, upon written direction from the Borrower, the Trustee, acting on behalf of the Issuer, shall pay to the United States in accordance with Section 148(f) of the Code from the moneys then on deposit in the Rebate Fund an amount equal to 90% (or such greater percentage not in excess of 100% as the Borrower may direct the Trustee to pay) of the Rebate Amount as of such Computation Date. Within 60 days after the payment in full of all outstanding Bonds, upon written direction from the Borrower, the Trustee shall pay to the United States in accordance with Section 148(f) of the Code from the moneys then on deposit in the Rebate Fund an amount equal to 100% of the Rebate Amount as of such final Computation Date and any moneys remaining in the Rebate Fund following such payment shall be paid to the Borrower. The Trustee shall be entitled to rely on the calculations made pursuant to this Section and shall not be responsible for any loss or damage resulting from any action taken or omitted to be taken in reliance upon those calculations. -34 - The Trustee shall keep such records of the computations made and provided by the Borrower pursuant to this Section as are required under Section 148(f) of the Code. The Trustee shall keep and make available to the Borrower such records concerning the investments of the gross proceeds of the Bonds and the investments of earnings from those investments as may be requested by the Borrower in order to enable the Borrower to make the aforesaid computations as are required under Section 148(f) of the Code. Notwithstanding the foregoing, the computations and payments of Rebate Amounts referred to in this Section and Section 3.8 of the Agreement need not be made to the extent that neither the Issuer nor the Borrower will thereby fail to comply with any requirements of Section 148(f) of the Code based on an Opinion of Bond Counsel. (End of Article V) -35 - ARTICLE VI THE TRUSTEE, REGISTRAR, PAYING AGENTS AND AUTHENTICATING AGENTS Section 6.01. Trustee's Acceptance and Responsibilities. The Trustee accepts the trusts imposed upon it by this Indenture, and agrees to observe and perform those trusts, but only upon and subject to the terms and conditions set forth in this Article, to all of which the parties hereto and the Holders agree. (a) Prior to the occurrence of a default or an Event of Default (as defined in Section 7.01 hereof) of which the Trustee has been notified, as provided in paragraph (f) of Section 6.02 hereof, or of which by that paragraph the Trustee is deemed to have notice, and after the cure or waiver of all defaults or Events of Default which may have occurred, (i) the Trustee undertakes to perform only those duties and obligations which are set forth specifically in this Indenture, and no duties or obligations shall be implied to the Trustee; and (ii) in the absence of bad faith on its part, the Trustee may rely conclusively, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are required specifically to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. (b) In case a default or an Event of Default has occurred and is continuing hereunder (of which the Trustee has been notified, or is deemed to have notice), the Trustee shall exercise those rights and powers vested in it by this Indenture and shall use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of their own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own grossly negligent action, its own grossly negligent failure to act, its own bad faith, or its own willful misconduct, except that (i) this Subsection shall not be construed to affect the limitation of the Trustee's duties and obligations provided in subparagraph (a)(i) of this Section or the Trustee's right to rely on the truth of statements and the correctness of opinions as provided in subparagraph (a)(ii) of this Section; (ii) the Trustee shall not be liable for any error of judgment made in good faith by any one of its officers, unless it shall be established that the Trustee was grossly negligent in ascertaining the pertinent facts; (iii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less - 36 - than a majority in principal amount of the Bonds then outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture; and (iv) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (d) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 6.01. Section 6.02. Certain Rights and Obligations of the Trustee. Except as otherwise provided in Section 6.01 hereof: (a) The Trustee(i) may execute any of the trusts or powers hereof and perform any of its duties by or through attorneys, agents, receivers or employees (but shall be answerable therefor only in accordance with the standard specified above), (ii) shall be entitled to the advice of counsel concerning all matters of trusts hereof and duties hereunder, and (iii) may pay reasonable compensation in all cases to all of those attorneys, agents, receivers and employees reasonably employed by it in connection with the trusts hereof The Trustee may act upon the opinion or advice of any attorney (who may be the attorney or attorneys for the Issuer or the Borrower) approved by the Trustee in the exercise of reasonable care. The Trustee shall not be responsible for any loss or damage resulting from any action taken or omitted to be taken in good faith in reliance upon that opinion or advice. (b) Except for its certificate of authentication on the Bonds, the Trustee shall not be responsible for: (i) any recital in this Indenture or in the Bonds, (ii) the validity, priority, recording, re-recording, filing or re-filing of this Indenture or any Supplemental Indenture or the Regulatory Agreement, (iii) any instrument or document of further assurance or collateral assignment, (iv) any financing statements, amendments thereto or continuation statements, (v) insurance of the Project or collection of insurance moneys, (vi) the validity of the execution by the Issuer of this Indenture, any Supplemental Indenture or instruments or documents of further assurance, (vii) the sufficiency of the security for the Bonds issued hereunder or intended to be secured hereby, - 37- (viii) the value of or title to the Project, or (ix) the maintenance of the security hereof, except that, in the event that the Trustee enters into possession of a part or all of the Project pursuant to any provision of the Regulatory Agreement or any other instrument or document collateral thereto, the Trustee shall use due diligence in preserving that property. The Trustee shall not be bound to ascertain or inquire as to the observance or performance of any covenants, agreements or obligations on the part of the Issuer or the Borrower under the Agreement except as set forth hereinafter; but the Trustee may require of the Issuer or the Borrower full information and advice as to the observance or performance of those covenants, agreements and obligations. Except as otherwise provided in Section 7.04 hereof, the Trustee shall have no obligation to observe or perform any of the duties of the Issuer under the Agreement. (c) The Trustee shall not be accountable for the application by the Borrower or any other Person of the proceeds of any Bonds authenticated or delivered hereunder. (d) The Trustee shall be protected, in the absence of bad faith on its part, in acting upon any notice, request, consent, certificate, order, affidavit, letter, telegram or other paper or document reasonably believed by it, after exercising its duty to examine, to be genuine and correct and to have been signed or sent by the proper Person or Persons. Any action taken by the Trustee pursuant to this Indenture upon the request, authority or consent of any Person who is the Holder of any Bonds at the time of making the request or giving the authority or consent, shall be conclusive and binding upon all future Holders of the same Bond and of Bonds issued in exchange therefor or in place thereof. (e) As to the existence or nonexistence of any fact for which the Issuer or the Borrower may be responsible or as to the sufficiency or validity of any instrument, document, report,paper or proceeding, the Trustee, in the absence of bad faith on its part, shall be entitled to rely upon a certificate signed on behalf of the Issuer or Borrower, as appropriate, by an authorized officer or representative thereof as sufficient evidence of the facts recited therein. Prior to the occurrence of a default or Event of Default hereunder of which the Trustee has been notified, as provided in paragraph (f) of this Section, or of which by that paragraph the Trustee is deemed to have notice, the Trustee may accept a similar certificate to the effect that any particular dealing, transaction or action is necessary or expedient; provided, that the Trustee in its discretion may require and obtain any further evidence which it deems to be necessary or advisable; and, provided further, that the Trustee shall not be bound to secure any further evidence. The Trustee may accept a certificate of the officer, or an assistant thereto, having charge of the appropriate records, to the effect that a resolution has been adopted by the Issuer in the form recited in that certificate, as conclusive evidence that the resolution has been duly adopted and is in full force and effect. (f) The Trustee shall not be required to take notice, and shall not be deemed to have notice, of any default or Event of Default hereunder, except Events of Default described in paragraphs (a) and (b) of Section 7.01 hereof, unless the Trustee shall be notified specifically of the default or Event of Default in a written instrument or document delivered to it by the Issuer or by the Holders of at least 10% of the aggregate principal amount of Bonds then outstanding. - 38 - In the absence of delivery of a notice satisfying those requirements, the Trustee may assume conclusively that there is no default or Event of Default, except as noted above. (g) At any reasonable time, the Trustee and its duly authorized agents, attorneys, experts, engineers, accountants and representatives (i) may inspect and copy fully all books, papers and records of the Issuer pertaining to the Project and the Bonds, which constitute public records under the public records laws of the State, and (ii) may make any memoranda from and in regard thereto as the Trustee may desire. (h) The Trustee shall not be required to give any bond or surety with respect to the execution of these trusts and powers or otherwise in respect of the premises. (i) Notwithstanding anything contained elsewhere in this Indenture, the Trustee may demand any showings, certificates, reports, opinions, appraisals and other information, and any corporate action and evidence thereof, in addition to that required by the terms hereof, as a condition to the authentication of any Bonds or the taking of any action whatsoever within the purview of this Indenture, if the Trustee deems it to be desirable for the purpose of establishing the right of the Issuer to the authentication of any Bonds or the right of any Person to the taking of any other action by the Trustee; provided, that the Trustee shall not be required to make that demand. (j) Before taking action hereunder pursuant to Section 6.04 or Article VII hereof (with the exception of any action required to be taken under Section 7.02 hereof or the acceleration of the Bonds under Section 7.03 hereof), the Trustee may require that a satisfactory indemnity bond be furnished to it for the reimbursement of all expenses which it may incur and to protect it against all liability by reason of any action so taken, except liability which is adjudicated to have resulted from its negligence, misconduct or willful default. The Trustee may take action without that indemnity, and in that case, the Borrower shall reimburse the Trustee for all of the Trustee's expenses pursuant to Section 6.03 hereof. (k) Unless otherwise provided herein, all moneys received by the Trustee under this Indenture shall be held in trust for the purposes for which those moneys were received, until those moneys are used, applied or invested as provided herein; provided, that those moneys need not be segregated from other moneys, except to the extent required by this Indenture or by law. The Trustee shall not have any liability for interest on any moneys received hereunder, except to the extent expressly provided herein. (1) Any resolution adopted by the Issuer, and any opinions, certificates and other instruments and documents for which provision is made in this Indenture, may be accepted by the Trustee, in the absence of bad faith on its part, as conclusive evidence of the facts and conclusions stated therein and shall be full warrant, protection and authority to the Trustee for its actions taken hereunder. (m) The Trustee shall be entitled to file proofs of claim in bankruptcy. Trustee fees and expenses are intended to constitute administrative expenses in bankruptcy. (n) The Trustee agrees to accept and act upon instructions or directions pursuant to this Indenture sent by unsecured e-mail, facsimile transmission or other similar unsecured - 39- electronic methods, provided, however, that (a) the Issuer or the Borrower, as the case may be, subsequent to such transmission of written instructions, shall provide the originally executed instructions or directions to the Trustee in a timely manner, (b) such originally executed instructions or directions shall be signed by a person as may be designated and authorized to sign for the Issuer or Borrower or in the name of the Issuer or Borrower by an authorized representative of the Issuer or Borrower, as applicable, and (c) the Issuer or Borrower shall provide to the Trustee an incumbency certificate listing such designated persons, which incumbency certificate shall be amended whenever a person is to be added or deleted from the listing. If the Issuer or Borrower elects to give the Trustee e-mail or facsimile instructions (or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee's understanding of such instructions shall be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee's reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. The Issuer and Borrower agree to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk or interception and misuse by third parties. Section 6.03. Fees, Charges and Expenses of Trustee, Registrar, Paying Agents and Authenticating Agents. The Trustee, the Registrar and any Paying Agents or Authenticating Agents shall be entitled to payment or reimbursement by the Borrower, as provided in the Agreement, for customary fees for their respective Ordinary Services rendered hereunder and for all advances, counsel fees and other Ordinary Expenses reasonably and necessarily paid or incurred by them in connection with the provision of Ordinary Services. For purposes hereof, fees for Ordinary Services provided for by their respective standard fee schedule shall be considered customary. In the event that it should become necessary for any of them to perform Extraordinary Services, they shall be entitled to customary extra compensation therefor and to reimbursement for reasonable and necessary Extraordinary Expenses incurred in connection therewith. Unless and until such time as the Trustee resigns or is replaced, and a successor Trustee is appointed pursuant to Section 6.09 hereunder, the Trustee shall continue to perform its duties hereunder notwithstanding the Borrower's failure to timely pay such fees. Without creating a default or an Event of Default hereunder, however, the Borrower may contest in good faith the necessity for any Extraordinary Service and Extraordinary Expense and the amount of any fee, charge or expense. The Trustee, the Registrar and any Paying Agents or Authenticating Agents shall not be entitled to compensation or reimbursement for Extraordinary Services or Extraordinary Expenses occasioned by their neglect or misconduct. The customary fees for their respective Ordinary Services and charges of the foregoing shall be entitled to payment and reimbursement only from (i) the Additional Payments made by the Borrower pursuant to the Agreement, or(ii) from other moneys available therefor that are not part of the Trust Estate. Any amounts payable to the Trustee, the Registrar or any Paying Agent or Authenticating Agent pursuant to this Section 6.03 shall be payable upon demand and shall bear interest from the date of demand therefor at the Interest Rate for Advances. -40- Section 6.04. Intervention by Trustee. The Trustee may intervene on behalf of the Holders, and shall intervene if requested to do so in writing by the Holders of at least 25% of the aggregate principal amount of Bonds then outstanding, in any judicial proceeding to which the Issuer or the Borrower is a party and which in the opinion of the Trustee and its counsel has a substantial bearing on the interests of Holders of the Bonds. The rights and obligations of the Trustee under this Section are subject to the approval of that intervention by a court of competent jurisdiction. The Trustee may require that a satisfactory indemnity bond be provided to it in accordance with Sections 6.01 and 6.02 hereof before it takes action hereunder. Section 6.05. Successor Trustee. Anything herein to the contrary notwithstanding, (a) any corporation or association (i) into which the Trustee may be converted or merged, (ii)with which the Trustee or any successor to it may be consolidated, or(iii)to which it may sell or transfer its corporate trust assets and corporate trust business as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, merger, consolidation, sale or transfer, ipso facto, shall be and become successor Trustee hereunder and shall be vested with all of the title to the whole property or Trust Estate hereunder; and (b) that corporation or association shall be vested further, as was its predecessor, with each and every trust, property, remedy, power, right, duty, obligation, discretion, privilege, claim, demand, cause of action, immunity, estate, title, interest and lien expressed or intended by this Indenture to be exercised by, vested in or conveyed to the Trustee, without the execution or filing of any instrument or document or any further act on the part of any of the parties hereto. Any successor Trustee, however, (i) shall be a trust company or a bank having the powers of a trust company, (ii) shall be in good standing within the State, (iii) shall be duly authorized to exercise trust powers within the State, and (iv) shall have a reported capital, surplus and retained earnings of not less than $100,000,000. Section 6.06. Appointment of Co-Trustee. It is the purpose of this Indenture that there shall be no violation of any law of any jurisdiction (including without limitation, the laws of the State) denying or restricting the right of banks or trust companies to transact business as trustees in that jurisdiction. It is recognized that, (a) if there is litigation under this Indenture or other instruments or documents relating to the Bonds and the Project, and in particular, in case of the enforcement hereof or thereof upon a default or an Event of Default, or (b) if the Trustee should deem that, by reason of any present or future law of any jurisdiction, it may not (i) exercise any of the powers, rights or remedies granted herein to the Trustee, (ii) hold title to the properties, in trust, as granted herein, or (iii) take any action which may be desirable or necessary in connection therewith, it may be necessary that the Trustee appoint an individual or additional institution as a co-Trustee. The following provisions of this Section are adopted to these ends. In the event that the Trustee appoints an individual or additional institution as a co-Trustee, each and every trust, property, remedy, power, right, duty, obligation, discretion, privilege, claim, demand, cause of action, immunity, estate, title, interest and lien expressed or intended by this Indenture to be exercised by, vested in or conveyed to the Trustee shall be exercisable by, vest in and be conveyed to that co-Trustee, but only to the extent necessary for it -41 - to be so vested and conveyed and to enable that co-Trustee to exercise it. Every covenant, agreement and obligation necessary to the exercise thereof by that co-Trustee shall run to and be enforceable by it. Should any instrument or document in writing from the Issuer reasonably be required by the co-Trustee so appointed by the Trustee for vesting and conveying more fully and certainly in and to that co-Trustee those trusts, properties, remedies, powers, rights, duties, obligations, discretions, privileges, claims, demands, causes of action, immunities, estates, titles, interests and liens, that instrument or document shall be executed, acknowledged and delivered, but not prepared, by the Issuer, at the Borrower's expense. In case any co-Trustee or a successor to it shall die, become incapable of acting, resign or be removed, all of the trusts, properties, remedies, powers, rights, duties, obligations, discretions, privileges, claims, demands, causes of action, immunities, estates, titles, interests and liens of the co-Trustee shall be exercised by, vest in and be conveyed to the Trustee, to the extent permitted by law, until the appointment of a successor to the co-Trustee. Section 6.07. Resignation by the Trustee. The Trustee may resign at any time from the trusts created hereby by giving written notice of the resignation to the Issuer, the Borrower, the Registrar, any Paying Agents and Authenticating Agents and the Underwriter, and by mailing written notice of the resignation to the Holders as their names and addresses appear on the Register at the close of business 15 days prior to the mailing. The resignation shall take effect upon the appointment of a successor Trustee as provided for in Section 6.09 of this Indenture or an order of a court of competent jurisdiction allowing the Trustee to resign. Section 6.08. Removal of the Trustee. The Trustee may be removed at any time by an instrument or document or concurrent instruments or documents in writing delivered to the Trustee, with copies thereof mailed to the Issuer, the Registrar, any Paying Agents and Authenticating Agents and the Borrower, and signed by or on behalf of the Holders of not less than a majority in aggregate principal amount of the Bonds then outstanding. The Trustee also maybe removed at anytime for anybreach of trust or for acting or proceeding in violation of, or for failing to act or proceed in accordance with, any provision of this Indenture with respect to the duties and obligations of the Trustee by any court of competent jurisdiction upon the application of the Issuer or the Holders of not less than 25% in aggregate principal amount of the Bonds then outstanding under this Indenture. The removal of the Trustee under this Section 6.08 shall take effect upon the appointment of a successor Trustee as provided for in Section 6.09 of this Indenture. Section 6.09. Appointment of Successor Trustee. If(i) the Trustee shall resign, shall be removed, shall be dissolved, or shall become otherwise incapable of acting hereunder, (ii) the Trustee shall be taken under the control of any public officer or officers, or (iii) a receiver shall be appointed for the Trustee by a court, then a successor Trustee shall be appointed by the Issuer, with the written consent of the Borrower or by the Borrower on the Issuer's behalf; provided, that if a successor Trustee is not so appointed within 10 days after (a) a notice of resignation or an instrument or document of removal is received by the Issuer, as provided in Sections 6.07 and 6.08 hereof, respectively, or(b) the Trustee is dissolved, taken under control, becomes otherwise -42 - incapable of acting or a receiver is appointed, in each case, as provided above, then, so long as the Issuer or the Borrower shall not have appointed a successor Trustee, the Holders of a majority in aggregate principal amount of Bonds then outstanding may designate a successor Trustee by an instrument or document or concurrent instruments or documents in writing signed by or on behalf of those Holders. If no appointment of a successor Trustee shall be made pursuant to the foregoing provisions of this Section, the Holder of any Bond outstanding hereunder or any retiring Trustee may apply to any court of competent jurisdiction to appoint a successor Trustee. Such court may thereupon, after such notice, if any, as such court may deem proper and prescribe, appoint a successor Trustee. Every successor Trustee appointed pursuant to this Section (i) shall be a trust company or a bank having the powers of a trust company (ii) shall be in good standing within the State, (iii) shall be duly authorized to exercise trust powers within the State, (iv) shall have a reported capital, surplus and retained earnings of not less than $100,000,000, and (v) shall be willing to accept the trusteeship under the terms and conditions of this Indenture. Every successor Trustee appointed hereunder shall execute and acknowledge, and shall deliver to its predecessor, the Issuer and the Borrower an instrument or document in writing accepting the appointment. Thereupon, without any further act, the successor shall become vested with all of the trusts, properties, remedies, powers, rights, duties, obligations, discretions, privileges, claims, demands, causes of action, immunities, estates, titles, interests and liens of its predecessor. Upon the written request of its successor, the Issuer or the Borrower, and payment of all fees and expenses owed to it, the predecessor Trustee (i) shall execute and deliver an instrument or document transferring to its successor all of the trusts, properties, remedies, powers, rights, duties, obligations, discretions, privileges, claims, demands, causes of action, immunities, estates, titles, interests and liens of the predecessor Trustee hereunder, and (ii) shall take any other action necessary to duly assign, transfer and deliver to its successor all property (including without limitation, all securities and moneys) held by it as Trustee. Should any instrument or document in writing from the Issuer be requested by any successor Trustee for vesting and conveying more fully and certainly in and to that successor the trusts, properties, remedies, powers, rights, duties, obligations, discretions, privileges, claims, demands, causes of action, immunities, estates, titles, interests and liens vested or conveyed or intended to be vested or conveyed hereby in or to the predecessor Trustee, the Issuer shall execute, acknowledge and deliver that instrument or document. In the event of a change in the Trustee, the predecessor Trustee shall cease to be custodian of any moneys which it may hold pursuant to this Indenture and shall cease to be Registrar, Authenticating Agent and a Paying Agent for any of the Bonds, to the extent it served in any of those capacities. Section 6.10. Adoption of Authentication. In case any of the Bonds shall have been authenticated, but shall not have been delivered, any successor Trustee or Authenticating Agent may adopt the certificate of authentication of any predecessor Trustee or Authenticating Agent and may deliver those Bonds so authenticated as provided herein. In case any Bonds shall not have been authenticated, any successor Trustee or Authenticating Agent may authenticate those Bonds either in the name of any predecessor or in its own name. In all cases, the certificate of authentication shall have the same force and effect as provided in the Bonds or in this Indenture -43 - with respect to the certificate of authentication of the predecessor Trustee or Authenticating Agent. Section 6.11. Registrars. (a) Succession. Anything herein to the contrary notwithstanding, any corporation or association (i) into which a Registrar may be converted or merged, (ii) with which a Registrar or anysuccessor to it maybe consolidated, or (iii) to which it maysell or transfer its assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, merger, consolidation, sale or transfer, ipso facto, shall be and become successor Registrar to that Registrar hereunder and shall be vested with each and every power, right, duty, obligation, discretion and privilege expressed or intended by this Indenture to be exercised by or vested in the predecessor Registrar, without the execution or filing of any instrument or document or any further act on the part of any of the parties hereto. (b) Resignation. A Registrar may resign at any time by giving written notice of its resignation to the Issuer, the Borrower, the Trustee, the Underwriter, and to each Paying Agent and Authenticating Agent for the Bonds, at least 60 days before the resignation is to take effect. The resignation shall take effect immediately, however, upon the appointment of a successor Registrar, if the successor Registrar is appointed and accepts that appointment before the time stated in the notice. (c) Removal. The Registrar may be removed at any time by an instrument or document or concurrent instruments or documents in writing delivered to the Registrar, with copies thereof mailed to the Issuer, the Trustee and the Borrower, and signed by or on behalf of the Holders of not less than a majority in aggregate principal amount of the Bonds then outstanding. (d) Appointment of Successors. If(i) a Registrar shall resign, shall be removed, shall be dissolved, or shall become otherwise completely incapable of acting hereunder, (ii) a Registrar shall be taken under the control of any public officer or officers, (iii) a receiver shall be appointed for a Registrar by a court, or (iv) a Registrar shall have an order for relief entered in any case commenced by or against it under the federal bankruptcy laws or commence a proceeding under any federal or state bankruptcy, insolvency, reorganization or similar law, or have such a proceeding commenced against it and either have an order of insolvency or reorganization entered against it or have the proceeding remain undismissed and unstayed for 90 days, then a successor Registrar shall be appointed by the Trustee, with the written consent of the Borrower; provided, that if a successor Registrar is not so appointed within 10 days after (a) a notice of resignation or an instrument or document of removal is received by the Trustee, as provided above, or (b) the Registrar is dissolved, taken under control, becomes otherwise incapable of acting or a receiver is appointed, in each case, as provided above, then, if the Trustee shall not have appointed a successor Registrar, the Holders of a majority in aggregate principal amount of Bonds then outstanding may designate a successor Registrar by an instrument or document or concurrent instruments or documents in writing signed by or on behalf of those Holders. -44 - Every successor Registrar appointed hereunder shall execute and acknowledge, and shall deliver to its predecessor, the Issuer, the Trustee and the Borrower, an instrument or document in writing accepting the appointment. Thereupon, without any further act, the successor shall become vested with all of the properties, remedies, powers, rights, duties, obligations, discretions, privileges, claims, demands, causes of action, immunities, titles and interests of its predecessor. Upon the written request of its successor, the Issuer or the Borrower, a predecessor Registrar (i) shall execute and deliver an instrument or document transferring to its successor all of the properties, remedies, powers, rights, duties, obligations, discretions, privileges, claims, demands, causes of action, immunities, titles and interests of it as predecessor Registrar hereunder, and (ii) shall take any other action necessary to duly assign, transfer and deliver to its successor all property and records (including without limitation, the Register and any cancelled Bonds) held by it as Registrar. Should any instrument or document in writing from the Issuer be requested by any successor Registrar for vesting and conveying more fully and certainly in and to that successor the properties, remedies, powers, rights, duties, obligations, discretions, privileges, claims, demands, causes of action, immunities, titles and interests vested or conveyed or intended to be vested or conveyed hereby in or to a predecessor Registrar, the Issuer shall execute, acknowledge and deliver that instrument or document, subject to the Issuer's approval of the form of the instrument or document. The Trustee shall pay, or cause the Borrower to pay pursuant to Section 4.2 of the Agreement, to any Registrar customary compensation for its services from time to time, as authorized in Section 6.03 hereof, and the Trustee shall be entitled to be reimbursed for such payments paid by it, subject to Section 6.03 hereof. The provisions of Sections 3.05, 3.06 and 6.02(d)hereof shall be applicable to the Registrar. Section 6.12. Designation and Succession of Paying Agents. The Trustee shall be a Paying Agent for the Bonds, and, with the consent of the Borrower, the Trustee may appoint a Paying Agent or Agents with power to act on its behalf and subject to its direction in the payment of Bond Service Charges on the Bonds. It is the responsibility of the Trustee to establish the duties and responsibilities of any Paying Agent for the purposes of this Indenture, to the extent not specified herein. Any corporation or association with or into which any Paying Agent may be merged or converted or with which it may be consolidated, or any corporation or association resulting from any merger, consolidation or conversion to which any Paying Agent shall be a party, or any corporation or association succeeding to the trust business of any Paying Agent, shall be the successor of that Paying Agent hereunder, if that successor corporation or association is otherwise eligible hereunder, without the execution or filing of any paper or any further act on the part of the parties hereto or the Paying Agent or that successor corporation or association. Any Paying Agent may at any time resign by giving written notice of resignation to the Trustee, to the Registrar and to the Borrower. The Trustee or the Borrower may at any time terminate the agency of any Paying Agent by giving written notice of termination to such Paying Agent, to the Registrar and to the Borrower or the Trustee, as applicable. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Paying Agent shall cease to be eligible under this Section, the Trustee may appoint a successor Paying Agent, with the written consent of the Borrower. The Trustee shall give written notice of appointment of a -45 - successor Paying Agent to the Borrower, the Issuer and the Registrar and shall mail, within 10 days after that appointment, notice thereof to all Holders as their names and addresses appear on the Register on the date of that appointment. The Trustee shall pay, or cause the Borrower to pay pursuant to Section 4.2 of the Agreement, to any Paying Agent from time to time customary compensation as authorized in Section 6.03 hereof for its services, and the Trustee shall be entitled to be reimbursed for payments made by it, subject to Section 6.03 hereof The provisions of Section 3.05 and Subsection 6.02(d) shall be applicable to any Paying Agent. Section 6.13. Designation and Succession of AuthenticatingAgents. With the consent � g of the Issuer, the Trustee may appoint an Authenticating Agent or Agents with power to act on its behalf and subject to its direction in the authentication and delivery of Bonds in connection with transfers and exchanges under Sections 3.05 and 3.06 hereof For all purposes of this Indenture, the authentication and delivery of Bonds by an Authenticating Agent pursuant to this Section shall be deemed to be authentication and delivery of those Bonds"by the Trustee". Any corporation or association with or into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation or association resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any corporation or association succeeding to the trust business of any Authenticating Agent, shall be the successor of that Authenticating Agent hereunder, if that successor corporation or association is otherwise eligible hereunder, without the execution or filing of any paper or any further act on the part of the parties hereto or the Authenticating Agent or such successor corporation. Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee, to the Registrar and to the Borrower. The Trustee or the Borrower may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent, to the Registrar and to the Borrower or the Trustee, as applicable. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible under this Section, the Trustee may appoint a successor Authenticating Agent, with the written consent of the Borrower. The Trustee shall give written notice of appointment of a successor Authenticating Agent to the Borrower, the Issuer and the Registrar and shall mail, within 10 days after that appointment, notice thereof to all Holders as their names and addresses appear on the Register on the date of that appointment. The Trustee shall pay, or cause the Borrower to pay pursuant to Section 4.2 of the Agreement, to any Authenticating Agent from time to time customary compensation for its services, and the Trustee shall be entitled to be reimbursed for such payments made by it, subject to Section 6.03 hereof. The provisions of Section 3.05 and Subsections 6.02(b), (c), (d), (h) and (i) shall be applicable to any Authenticating Agent. -46 - Section 6.14. Dealing in Bonds. The Trustee, a Registrar, a Paying Agent and an Authenticating Agent, their Affiliates, and any directors, officers, employees or agents thereof, in good faith, may become the owners of Bonds secured hereby with the same rights which it or they would have hereunder if the Trustee, the Registrar, Paying Agents or Authenticating Agents did not serve in those capacities. Section 6.15. Representations, Agreements and Covenants of Trustee. The Trustee hereby represents that it is a national banking association, in good standing and duly authorized to exercise corporate trust powers in the State, and that it has an unimpaired reported capital, surplus and retained earnings of not less than $100,000,000. The Trustee covenants that it will take such action, if any, as is necessary to remain in good standing and duly authorized to exercise corporate trust powers in the State, and that it will maintain an unimpaired reported capital, surplus and retained earnings of not less than $100,000,000. The Trustee accepts and agrees to observe and perform the duties and obligations of the Trustee to which reference is made in any other instrument or document providing security for any of the Bonds. Section 6.16. Right of Trustee to Pay Taxes and Other Charges. The Trustee is hereby authorized to advance funds from sources other than the Trust Estate (i) to pay taxes, assessments and other governmental charges with respect to the Project, (ii) for the discharge of mechanics' and other liens relating to the Project, (iii) to obtain and maintain insurance for the Project and pay premiums therefor, and (iv) generally, to make payments and incur expenses in the event that the Borrower fails to do so as required by the Agreement. The Trustee may make those advances, but without prejudice to any rights of the Trustee or the Holders against the Borrower for failure of the Borrower to do so. Any amount so paid at any time, with interest thereon at the Interest Rate for Advances from the date of payment, shall be an additional obligation secured by this Indenture and shall be given a preference in payment over any Bond Service Charges, but shall be paid solely from sources other than the Pledged Revenues. The Trustee shall make the advance, if it shall have been requested to do so by the Holders of at least 25% of the aggregate principal amount of Bonds then outstanding and shall have been provided with adequate funds not comprising part of the Trust Estate for the purpose of making the advance. Section 6.17. Interpleader. In the event of a dispute between any of the parties hereto with respect to the disposition of any funds held by the Trustee hereunder, or the Trustee receives conflicting demands made upon the Trustee with respect to the Trustee's duties hereunder or any other document related to the Bonds, the Trustee shall be entitled to file a suit in interpleader in a court of competent jurisdiction seeking to require the parties to interplead and litigate in such court their several claims and rights among themselves. Upon the filing of such a suit and the deposit of the applicable funds to such court, the Trustee will ipso facto be fully released and discharged from all obligations to further perform any and all duties imposed hereunder or any other document related to the Bonds regarding such matter and/or such funds that are the subject of such interpleader suit. In the event that the Trustee remains as Trustee under this Indenture and receives a court order, directive or other request regarding the interpleader suit, the Trustee shall be entitled to rely upon such instruction without incurring any obligation or liability and the parties hereto release, hold harmless and indemnify the Trustee for any obligation or liability for so relying on such court instruction. -47- Section 6.18. Survival of Certain Provisions. The provisions of Sections 6.01 through 6.18 of this Indenture shall survive the release, discharge and satisfaction of this Indenture. (End of Article VI) -48 - ARTICLE VII DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND HOLDERS Section 7.01. Defaults; Events of Default. The occurrence of any of the following events is defined as and declared to be and to constitute an Event of Default hereunder: (a) Payment of any interest on any Bond shall not be made when and as that interest shall become due and payable; (b) Payment of the principal of any Bond shall not be made when and as that principal shall become due and payable, whether at stated maturity, upon acceleration or otherwise; (c) Failure by the Issuer to observe or perform any other covenant, agreement or obligation on its part to be observed or performed contained in this Indenture or in the Bonds, which failure shall have continued for a period of 30 days after written notice, by registered or certified mail, to the Issuer and the Borrower specifying the failure and requiring that it be remedied, which notice may be given by the Trustee in its discretion and shall be given by the Trustee at the written request of the Holders of not less than 25% in aggregate principal amount of Bonds then outstanding; and (d) The occurrence and continuance of an Event of Default as defined in Section 7.1 of the Agreement. Notwithstanding anything herein to the contrary, the Trustee hereby agrees that any cure of any Event of Default hereunder made or tendered by the Investor Member shall be deemed to be a cure by the Borrower, and shall be accepted or rejected by the Trustee on the same basis as if made or tendered by the Borrower. The term "default" or"failure" as used in this Article means (i) a default or failure by the Issuer in the observance or performance of any of the covenants, agreements or obligations on its part to be observed or performed contained in this Indenture or in the Bonds, or (ii) a default or failure by the Borrower under the Agreement, exclusive of any period of grace or notice required to constitute a default or failure or an Event of Default, as provided above or in the Agreement. Section 7.02. Notice of Default. If an Event of Default shall occur, the Trustee shall give written notice of the Event of Default, by registered or certified mail, to the Issuer, the Borrower, the Registrar or any Paying Agent and Authenticating Agent and the Underwriter, within five days after the Trustee has notice of the Event of Default pursuant to Section 6.02(f) of this Indenture. If an Event of Default occurs of which the Trustee has notice pursuant to this Indenture, the Trustee shall give written notice thereof, within thirty days after the Trustee's receipt of notice of its occurrence, to the Holders of all Bonds then outstanding as shown by the Register at the close of business 15 days prior to the mailing of that notice; provided, that except in the case of a default in the payment of the principal of or interest on any Bond, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors or responsible officers of the Trustee in -49 - good faith determine that the withholding of notice to the Holders is in the interests of the Holders. Section 7.03. Acceleration. Upon the occurrence of an Event of Default described in Section 7.01(a) and (b), the Trustee shall declare, by a notice in writing delivered to the Borrower, the principal of all Bonds then outstanding (if not then due and payable), and the interest accrued thereon, to be due and payable immediately, with payment to be made in accordance with Section 7.06 hereof. For all other Events of Default, the Trustee shall declare upon the written request of the Holders of not less than 25% in aggregate principal amount of Bonds then outstanding declare the principal of all Bonds then outstanding (if not then due and payable), and the interest accrued thereon, to be due and payable immediately. The provisions of the preceding paragraph are subject, however, to the condition that if, at any time after declaration of acceleration and prior to the entry of a judgment in a court for enforcement hereunder(after an opportunity for hearing by the Issuer and the Borrower), (a) all sums payable hereunder (except the principal of and interest on Bonds which have not reached their stated Maturity Date but which are due and payable solely by reason of that declaration of acceleration), plus interest to the extent permitted by law on any overdue installments of interest at the rate borne by the Bonds in respect of which the default shall have occurred, shall have been duly paid or provision shall have been duly made therefor by deposit with the Trustee or Paying Agents, and (b) all existing Events of Default shall have been cured, then and in every case, the Trustee shall waive the Event of Default and its consequences and shall rescind and annul that declaration. No waiver or rescission and annulment shall extend to or affect any subsequent Event of Default or shall impair any rights consequent thereon. Section 7.04. Other Remedies; Rights of Holders. With or without taking action under Section 7.03 hereof, upon the occurrence and continuance of an Event of Default, the Trustee may pursue any available remedy, including without limitation actions at law or equity to enforce the payment of Bond Service Charges or the observance and performance of any other covenant, agreement or obligation under this Indenture, the Agreement, the Regulatory Agreement or the Note or any other instrument providing security, directly or indirectly, for the Bonds. If, upon the occurrence and continuance of an Event of Default, the Trustee is requested so to do by the Holders of at least 25% in aggregate principal amount of Bonds outstanding, the Trustee (subject to the provisions of Sections 6.01 and 6.02 and particularly subparagraph 6.01(c)(iv) and Subsection 6.02 (j) of those Sections), shall exercise any rights and powers conferred by this Section and by Section 7.03 hereof. No remedy conferred upon or reserved to the Trustee(or to the Holders)by this Indenture is intended to be exclusive of any other remedy. Each remedy shall be cumulative and shall be in addition to every other remedy given hereunder or otherwise to the Trustee or to the Holders now or hereafter existing. - 50 - No delay in exercising or omission to exercise any remedy, right or power accruing upon any default or Event of Default shall impair that remedy, right or power or shall be construed to be a waiver of any default or Event of Default or acquiescence therein. Every remedy, right and power may be exercised from time to time and as often as may be deemed to be expedient. No waiver of any default or Event of Default hereunder, whether by the Trustee or by the Holders, shall extend to or shall affect any subsequent default or Event of Default or shall impair any remedy, right or power consequent thereon. As the assignee of all right, title and interest of the Issuer in and to the Agreement (except for the Unassigned Issuer's Rights), the Trustee is empowered to enforce each remedy, right and power granted to the Issuer under the Agreement. In exercising any remedy, right or power thereunder or hereunder, the Trustee shall take any action which would best serve the interests of the Holders in the judgment of the Trustee, applying the standards described in Sections 6.01 and 6.02 hereof. Section 7.05. Right of Holders to Direct Proceedings. Anything to the contrary in this Indenture notwithstanding, the Holders of a majority in aggregate principal amount of Bonds then outstanding shall have the right at any time to direct, by an instrument or document in writing executed and delivered to the Trustee, the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of this Indenture or any other proceedings hereunder; provided, that (i) any direction shall not be other than in accordance with the provisions of law and of this Indenture, (ii) the Trustee shall be indemnified as provided in Sections 6.01 and 6.02, and (iii) the Trustee may take any other action which it deems to be proper and which is not inconsistent with the direction. Section 7.06. Application of Moneys. All moneys received by the Trustee, shall be applied as follows, subject to Section 3.04 hereof and any provision made pursuant to Section 5.10 hereof: (a) Unless the principal of all of the Bonds shall have become, or shall have been declared to be, due and payable, all of those moneys shall be deposited in the Bond Fund and shall be applied: First -- To the payment to the Holders entitled thereto of all installments of interest then due on the Bonds, in the order of the dates of maturity of the installments of that interest, beginning with the earliest date of maturity and, if the amount available is not sufficient to pay in full any particular installment, then to the payment thereof ratably, according to the amounts due on that installment, to the Holders entitled thereto, without any discrimination or privilege; and Second -- To the payment to the Holders entitled thereto of the unpaid principal of any of the Bonds which shall have become due, in the order of their due dates, beginning with the earliest due date, with interest on those Bonds from the respective dates upon which they became due at the rates specified in those Bonds, and if the amount available is not sufficient to pay in - 51 - full all Bonds due on any particular date, together with that interest, then to the payment thereof ratably, according to the amounts of principal due on that date, to the Holders entitled thereto, without any discrimination or privilege. (b) If the principal of all of the Bonds shall have become due or shall have been declared to be due and payable pursuant to this Article, all of those moneys shall be deposited into the Bond Fund and shall be applied to the payment of the principal and interest then due and unpaid upon the Bonds, without preference or priority of principal over interest, of interest over principal, of any installment of interest over any other installment of interest, or of any Bond over any other Bond, ratably, according to the amounts due respectively for principal and interest, to the Holders entitled thereto, without any discrimination or privilege. (c) If the principal of all of the Bonds shall have been declared to be due and payable pursuant to this Article, and if that declaration thereafter shall have been rescinded and annulled under the provisions of Section 7.03 or 7.10 hereof, subject to the provisions of paragraph (b) of this Section in the event that the principal of all of the Bonds shall become due and payable later, the moneys shall be deposited in the Bond Fund and shall be applied in accordance with the provisions of Article III. (d) After payments have been made as set forth in paragraphs (a) — (c) above, any remaining balance shall be used for payment of any costs, expenses, liabilities and advances paid, incurred or made by the Trustee in the collection of moneys and to all fees of the Trustee for Ordinary and Extraordinary Expenses pursuant to any right given or action taken under the provisions of this Article or the provisions of the Agreement, the Regulatory Agreement or the Note (including without limitation, reasonable attorneys' fees and expenses, except as limited by law or judicial order or decision entered in any action taken under this Article VII). Whenever moneys are to be applied pursuant to the provisions of this Section, those moneys shall be applied at such times, and from time to time, as the Trustee shall determine, provided that the Trustee shall have first determined that it will have sufficient funds available to pay the full amount of principal and accrued but unpaid interest due to the Holders as of the date of such payment or payments. Whenever the Trustee shall direct the application of those moneys, it shall fix the date upon which the application is to be made, and upon that date, interest shall cease to accrue on the amounts of principal, if any, to be paid on that date, provided the moneys are available therefor. The Trustee shall give notice of the deposit with it of any moneys and of the fixing of that date, all consistent with the requirements of Section 3.04 hereof for the establishment of, and for giving notice with respect to, a Special Record Date for the payment of overdue interest. The Trustee shall not be required to make payment of principal of a Bond to the Holder thereof, until the Bond shall be presented to the Trustee for appropriate endorsement or for cancellation if it is paid fully, unless presentation is not required pursuant to Section 3.08 hereof. Section 7.07. Remedies Vested in Trustee. All rights of action (including without limitation, the right to file proof of claims) under this Indenture or under any of the Bonds may be enforced by the Trustee without the possession of any of the Bonds or the production thereof - 52 - in any trial or other proceeding relating thereto. Any suit or proceeding instituted by the Trustee shall be brought in its name as Trustee without the necessity of joining any Holders as plaintiffs or defendants. Any recovery of judgment shall be for the benefit of the Holders of the Outstanding Bonds, subject to the provisions of this Indenture. Section 7.08. Rights and Remedies of Holders. A Holder shall not have any right to institute any suit, action or proceeding for the enforcement of this Indenture, for the execution of any trust hereof, or for the exercise of any other remedy hereunder, unless: (a) there has occurred and is continuing an Event of Default of which the Trustee has been notified, as provided in paragraph (f) of Section 6.02 hereof, or of which it is deemed to have notice under that paragraph, (b) the Holders of at least 25% in aggregate principal amount of Bonds then outstanding shall have made written request to the Trustee and shall have afforded the Trustee reasonable opportunity to proceed to exercise the remedies, rights and powers granted herein or to institute the suit, action or proceeding in its own name, and shall have offered indemnity to the Trustee as provided in Sections 6.01 and 6.02 hereof, and (c) the Trustee thereafter shall have failed or refused to exercise the remedies, rights and powers granted herein or to institute the suit, action or proceeding in its own name. At the option of the Trustee, that notification (or notice), request, opportunity and offer of indemnity are conditions precedent in every case, to the institution of any suit, action or proceeding described above. No one or more Holders of the Bonds shall have any right to affect, disturb or prejudice in any manner whatsoever the security or benefit of this Indenture by its or their action, or to enforce, except in the manner provided herein, any remedy, right or power hereunder. Any suit, action or proceedings shall be instituted, had and maintained in the manner provided herein for the benefit of the Holders of all Bonds then outstanding. Nothing in this Indenture shall affect or impair, however, the right of any Holder to enforce the payment of the Bond Service Charges on any Bond owned by that Holder at and after the maturity thereof, at the place, from the sources and in the manner expressed in that Bond. Section 7.09. Termination of Proceedings. In case the Trustee shall have proceeded to enforce any remedy, right or power under this Indenture in any suit, action or proceedings, and the suit, action or proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, the Issuer, the Trustee and the Holders shall be restored to their former positions and rights hereunder, respectively, and all rights, remedies and powers of the Trustee shall continue as if no suit, action or proceedings had been taken. Section 7.10. Waivers of Events of Default. Except as hereinafter provided, at any time, in its discretion, the Trustee may waive any Event of Default hereunder and its consequences and may rescind and annul any declaration of maturity of principal of or interest on, the Bonds. The Trustee shall do so upon the written request of the Holders of - 53 - (a) at least a majority in aggregate principal amount of all Bonds then outstanding in respect of which an Event of Default in the payment of Bond Service Charges exists, or (b) at least 25% in aggregate principal amount of all Bonds then outstanding, in the case of any other Event of Default. There shall not be so waived, however, any Event of Default described in paragraph (a) or(b) of Section 7.01 hereof or any declaration of acceleration in connection therewith rescinded or annulled, unless at the time of that waiver or rescission and annulment payments of the amounts provided in Section 7.03 hereof for waiver and rescission and annulment in connection with acceleration of maturity have been made or provision has been made therefor. In the case of the waiver or rescission and annulment, or in case any suit, action or proceedings taken by the Trustee on account of any Event of Default shall have been discontinued, abandoned or determined adversely to it, the Issuer, the Trustee and the Holders shall be restored to their former positions and rights hereunder, respectively. No waiver or rescission shall extend to any subsequent or other Event of Default or impair any right consequent thereon. (End of Article VII) - 54- ARTICLE VIII SUPPLEMENTAL INDENTURES Section 8.01. Supplemental Indentures Generally. The Issuer and the Trustee may enter into indentures supplemental to this Indenture, as provided in this Article and pursuant to the other provisions therefor in this Indenture. Section 8.02. Supplemental Indentures Not Requiring Consent of Holders. Without the consent of, or notice to, any of the Holders, the Issuer and the Trustee may enter into indentures supplemental to this Indenture which shall not, in the opinion of the Issuer and the Trustee, be inconsistent with the terms and provisions hereof for any one or more of the following purposes: (a) To cure any ambiguity, inconsistency or formal defect or omission in this Indenture; (b) To grant to or confer upon the Trustee for the benefit of the Holders any additional rights, remedies, powers or authority that lawfully may be granted to or conferred upon the Holders or the Trustee; (c) To assign additional revenues under this Indenture; (d) To accept additional security and instruments and documents of further assurance with respect to the Project; (e) To add to the covenants, agreements and obligations of the Issuer under this Indenture, other covenants, agreements and obligations to be observed for the protection of the Holders, or to surrender or limit any right, power or authority reserved to or conferred upon the Issuer in this Indenture; (f) To evidence any succession to the Issuer and the assumption by its successor of the covenants, agreements and obligations of the Issuer under this Indenture, the Agreement and the Bonds; (g) To facilitate (A) the transfer of Bonds issued by the Issuer under this Indenture and held in Book Entry Form from one Depository to another and the succession of Depositories, or (B) the withdrawal of Bonds issued by the Issuer under this Indenture and delivered to a Depository for use in a Book Entry System and the issuance of replacement Bonds in fully registered form and in the form of physical certificates to others than a Depository; (h) To permit the Trustee to comply with any obligations imposed upon it by law; (i) To specify further the duties and responsibilities of, and to define further the relationship among, the Trustee, the Registrar and any Authenticating Agents or Paying Agents; - 55 - (j) To achieve compliance of this Indenture with any applicable federal securities or tax law; (k) To make amendments to the provisions hereof relating to arbitrage matters under Section 148 of the Code, if, in the Opinion of Bond Counsel, those amendments would not cause the interest on the Bonds outstanding to be included in gross income of the Holders for federal income tax purposes which amendments may, among other things, change the responsibility for making the relevant calculations, provided that in no event shall such amendment delegate to the Trustee, without its consent, in its sole discretion the obligation to make or perform the calculations required under Section 148 of the Code; and (1) To permit any other amendment which, in the judgment of the Trustee, is not to the prejudice of the Trustee or the Holders. The provisions of Subsections 8.02(h) and (j) shall not be deemed to constitute a waiver by the Trustee, the Registrar, the Issuer or any Holder of any right which it may have in the absence of those provisions to contest the application of any change in law to this Indenture or the Bonds. Section 8.03. Supplemental Indentures Requiring Consent of Holders. Exclusive of Supplemental Indentures to which reference is made in Section 8.02 hereof and subject to the terms, provisions and limitations contained in this Section, and not otherwise, with the consent of the Holders of not less than a majority of the principal amount of the Bonds, and with the consent of the Borrower if required by Section 8.04 hereof, the Issuer and the Trustee may execute and deliver Supplemental Indentures adding any provisions to, changing in any manner or eliminating any of the provisions of this Indenture or any Supplemental Indenture or restricting in any manner the rights of the Holders. Nothing in this Section or Section 8.02 hereof shall permit, however, or be construed as permitting without the consent of all of the Holders, (i) an extension of the maturity of the principal of or the interest on the Bonds, (ii) a reduction in the principal amount of the Bonds or the rate of interest thereon, (iii) the creation of a privilege or priority of any Bond or Bonds over any other Bond or Bonds, or(iv) a reduction in the aggregate principal amount of the Bonds required for consent to a Supplemental Indenture. If the Issuer shall request that the Trustee execute and deliver any Supplemental Indenture for any of the purposes of this Section, upon (i) being satisfactorily indemnified with respect to its expenses in connection therewith, and(ii) if required by Section 8.04 hereof,receipt of the Borrower's consent to the proposed execution and delivery of the Supplemental Indenture, the Trustee shall cause notice of the proposed execution and delivery of the Supplemental Indenture to be mailed by first-class mail, postage prepaid, to the Holders at their addresses as they appear on the Register at the close of business on the 15th day preceding that mailing. The Trustee shall not be subject to any liability to any Holder by reason of the Trustee's failure to mail, or the failure of any Holder to receive, the notice required by this Section. Any failure of that nature shall not affect the validity of the Supplemental Indenture when there has been consent thereto as provided in this Section. The notice shall set forth briefly the nature of - 56 - the proposed Supplemental Indenture and shall state that copies thereof are on file at the designated corporate trust office of the Trustee for inspection by all Holders. If the Trustee shall receive, within a period prescribed by the Borrower, of not less than 60 days, but not exceeding one year, following the mailing of the notice, an instrument or document or instruments or documents, in form to which the Trustee does not reasonably object, purporting to be executed by the Holders in the required aggregate principal amount of the Bonds then outstanding (which instrument or document or instruments or documents shall refer to the proposed Supplemental Indenture in the form described in the notice and specifically shall consent to the Supplemental Indenture in substantially that form), the Trustee shall, but shall not otherwise, execute and deliver the Supplemental Indenture in substantially the form to which reference is made in the notice as being on file with the Trustee, without liability or responsibility to any Holder, regardless of whether that Holder shall have consented thereto. Any consent shall be binding upon the Holder giving the consent and, anything herein to the contrary notwithstanding, upon any subsequent Holder of that Bond and of any Bond issued in exchange therefor (regardless of whether the subsequent Holder has notice of the consent to the Supplemental Indenture). A consent may be revoked in writing, however, by the Holder who gave the consent or by a subsequent Holder of the Bond by a revocation of such consent received by the Trustee prior to the execution and delivery by the Trustee of the Supplemental Indenture. At any time after the Holders of the required percentage of Bonds shall have filed their consents to the Supplemental Indenture, the Trustee shall make and file with the Issuer a written statement that the Holders of the required percentage of Bonds have filed those consents. That written statement shall be conclusive evidence that the consents have been so filed. If the Holders of the required percentage in aggregate principal amount of Bonds outstanding shall have consented to the Supplemental Indenture, as provided in this Section, no Holder shall have any right (a) to object to (i) the execution or delivery of the Supplemental Indenture, (ii) any of the terms and provisions contained therein, or(iii) the operation thereof, (b) to question the propriety of the execution and delivery thereof, or (c) to enjoin or restrain the Trustee or the Issuer from that execution or delivery or from taking any action pursuant to the provisions thereof Section 8.04. Consent of Borrower. Anything contained herein to the contrary notwithstanding, a Supplemental Indenture executed and delivered in accordance with this Article VIII which affects any rights or obligations of the Borrower shall not become effective unless and until the Borrower has consented in writing to the execution and delivery of that Supplemental Indenture. The Trustee shall cause notice of the proposed execution and delivery of any Supplemental Indenture and a copy of the proposed Supplemental Indenture to be mailed to the Borrower, as provided in Section 13.03 hereof, (i) at least 30 days (unless waived by the Borrower) before the date of the proposed execution and delivery in the case of a Supplemental Indenture to which reference is made in Section 8.02 hereof, and (ii) at least 30 days (unless waived by the Borrower) before the giving of the notice of the proposed execution and delivery in the case of a Supplemental Indenture for which provision is made in Section 8.03 hereof. Section 8.05. Authorization to Trustee; Effect of Supplement. The Trustee is authorized to join with the Issuer in the execution and delivery of any Supplemental Indenture in accordance - 57 - with this Article and to make the further agreements and stipulations which may be contained therein. Thereafter, (a) That Supplemental Indenture shall form a part of this Indenture; (b) All terms and conditions contained in that Supplemental Indenture as to any provision authorized to be contained therein shall be deemed to be a part of the terms and conditions of this Indenture for any and all purposes; (c) This Indenture shall be deemed to be modified and amended in accordance with the Supplemental Indenture; and (d) The respective rights, duties and obligations under this Indenture of the Issuer, the Borrower, the Trustee, the Registrar, the Paying Agents, the Authenticating Agents and all Holders of Bonds then outstanding shall be determined, exercised and enforced hereunder in a manner which is subject in all respects to those modifications and amendments made by the Supplemental Indenture. Express reference to any executed and delivered Supplemental Indenture may be made in the text of any Bonds issued thereafter, if that reference is deemed necessary or desirable by the Trustee or the Issuer. A copy of any Supplemental Indenture for which provision is made in this Article, except a Supplemental Indenture described in clause (g) of Section 8.02 hereof, shall be mailed by the Trustee to the Registrar, each Authenticating Agent and Paying Agent and the Underwriter. The Trustee shall not be required to execute any supplemental indenture containing provisions adverse to the Trustee. Section 8.06. Opinion of Counsel. The Trustee shall be entitled to receive, and shall be fully protected in relying upon, the opinion of any counsel approved by it as conclusive evidence that (i) any proposed Supplemental Indenture complies with the provisions of this Indenture, and (ii) it is proper for the Trustee to join in the execution of that Supplemental Indenture under the provisions of this Article. That counsel may be counsel for the Issuer or the Borrower. Section 8.07. Modification by Unanimous Consent. Notwithstanding anything contained elsewhere in this Indenture, the rights and obligations of the Issuer and of the Holders, and the terms and provisions of the Bonds and this Indenture or any Supplemental Indenture, may be modified or altered in any respect with the consent of(i) the Issuer, (ii) the Holders of all of the Bonds then outstanding, (iii) the Borrower and (iv) if such modification or alteration contains provisions adverse to the Trustee,the Trustee. (End of Article VIII) - 58 - ARTICLE IX DEFEASANCE Section 9.01. Release of Indenture. If (i) the Issuer shall pay all of the Outstanding Bonds, or shall cause them to be paid and discharged, or if there otherwise shall be paid to the Holders of the Outstanding Bonds, all Bond Service Charges due or to become due thereon, and (ii) provision also shall be made for the payment of all other sums payable hereunder or under the Agreement, the Regulatory Agreement and the Note, then this Indenture shall cease, determine and become null and void (except for those provisions surviving by reason of Section 9.03 hereof in the event the Bonds are deemed paid and discharged pursuant to Section 9.02 hereof), and the covenants, agreements and obligations of the Issuer hereunder shall be released, discharged and satisfied. Thereupon, and subject to the provisions of Section 9.03 hereof if applicable, (a) the Trustee shall release this Indenture (except for those provisions surviving by reason of Section 9.03 hereof in the event the Bonds are deemed paid and discharged pursuant to Section 9.02 hereof) and the Note, and shall execute and deliver to the Issuer any instruments or documents in writing as shall be requisite to evidence that release and discharge or as reasonably may be requested by the Issuer, and (b) the Trustee and any other Paying Agents shall assign and deliver to the Issuer any property subject at the time to the lien of this Indenture which then may be in their possession, except amounts in the Bond Fund required (a) to be paid to the Borrower under Section 5.09 hereof, or (b) to be held by the Trustee and the Paying Agents under Section 5.10 hereof or otherwise for the payment of Bond Service Charges. Section 9.02. Payment and Discharge of Bonds. All or any part of the Bonds shall be deemed to have been paid and discharged within the meaning of this Indenture, including without limitation, Section 9.01 hereof, if: (a) the Trustee as paying agent and any Paying Agents shall have received, in trust for and irrevocably committed thereto, sufficient moneys, or (b) the Trustee shall have received, in trust for and irrevocably committed thereto, noncallable direct obligations of or obligations guaranteed as to full and timely payment by the United States of America which are certified by an Independent public accounting firm of national reputation to be of such maturities or redemption dates and interest payment dates, and to bear such interest, as will be sufficient together with any moneys to which reference is made in subparagraph(a) above, without further investment or reinvestment of either the principal amount thereof or the interest earnings therefrom (which earnings are to be held likewise in trust and so committed, except as provided herein), for the payment of all Bond Service Charges on those Bonds at their maturity. Any moneys held by the Trustee in accordance with the provisions of this Section may be invested by the Trustee only in noncallable direct obligations of or obligations guaranteed as to full and timely payment by the United States of America having maturity dates, or having - 59 - redemption dates which, at the option of the Holder of those obligations, shall be not later than the date or dates at which moneys will be required for the purposes described above. To the extent that any income or interest earned by, or increment to, the investments held under this Section is determined from time to time by the Trustee to be in excess of the amount required to be held by the Trustee for the purposes of this Section, that income, interest or increment shall be transferred at the time of that determination in the manner provided in Section 5.09 hereof for transfers of amounts remaining in the Bond Fund. If any Bonds shall be deemed paid and discharged pursuant to this Section 9.02, then within 15 days after such Bonds are so deemed paid and discharged the Trustee shall cause a written notice to be given to each Holder as shown on the Register on the date on which such Bonds are deemed paid and discharged. Such notice shall state the numbers of the Bonds deemed paid and discharged or state that all Bonds are deemed paid and discharged, and shall set forth a description of the obligations held pursuant to subparagraph (b) of the first paragraph of this Section 9.02. Section 9.03. Survival of Certain Provisions. Notwithstanding the foregoing, any provisions of the Bond Resolution and this Indenture which relate to the maturity of Bonds, interest payments and dates thereof, exchange, transfer and registration of Bonds, replacement of mutilated, destroyed, lost or stolen Bonds, the safekeeping and cancellation of Bonds, non-presentment of Bonds, the holding of moneys in trust, and repayments to the Borrower from the Bond Fund, the rebate of moneys to the United States in accordance with Section 5.10 hereof, and the rights and duties of the Trustee and the Registrar in connection with all of the foregoing, shall remain in effect and be binding upon the Trustee, the Registrar, the Authenticating Agents, Paying Agents and the Holders notwithstanding the release and discharge of this Indenture. The provisions of this Article shall survive the release, discharge and satisfaction of this Indenture. The obligations of the Borrower to pay the Trustee its fees and expenses hereunder shall survive the release, discharge and satisfaction of this Indenture. (End of Article IX) -60 - ARTICLE X COVENANTS AND AGREEMENTS OF THE ISSUER Section 10.01. Covenants and Agreements of the Issuer. In addition to any other covenants and agreements of the Issuer contained in this Indenture or the Bond Resolution, the Issuer further covenants and agrees with the Holders and the Trustee as follows: (a) Payment of Bond Service Charges. The Issuer will cause the Bond Service Charges to be paid by the Trustee, solely from the Pledged Revenues received on the dates, at the places and in the manner provided in this Indenture. (b) Pledged Revenues and Assignment of Pledged Revenues. The Issuer will not assign the Pledged Revenues or create or authorize to be created any debt, lien or charge thereon, other than the assignment thereof under this Indenture. (c) Recordings and Filings. The Borrower will cause this Indenture, and any financing statements, related instruments or documents relating to the assignment made by it under this Indenture to secure the Bonds, to be recorded and filed in the manner and in the places which may be required by law in order to preserve and protect fully the security of the Holders and the rights of the Trustee hereunder. (d) Inspection of Project Books. All books, instruments and documents in the Issuer's possession relating to the Project and the Pledged Revenues to the extent they are public under applicable public records laws, shall be open to inspection and copying at all times during the Issuer's regular business hours by any accountants or other agents of the Trustee which the Trustee may designate from time to time. (e) Register. At reasonable times and under reasonable regulations established by the Registrar, the Register may be inspected and copied (at the expense of the person making such copies) by the Borrower, the Issuer, the Trustee, by Holders of 25% or more in principal amount of the Bonds then outstanding, or a designated representative thereof. (f) Rights and Enforcement of the Agreement. The Trustee may enforce, in its name or in the name of the Issuer, all rights of the Issuer for and on behalf of the Holders, except for Unassigned Issuer's Rights, and may enforce all covenants, agreements and obligations of the Borrower under and pursuant to the Agreement, regardless of whether the Issuer is in default in the pursuit or enforcement of those rights, covenants, agreements or obligations. The Issuer, however, will do all things and take all actions on its part necessary to the extent of its legal authority and control, to comply with covenants, agreements, obligations, duties and responsibilities on its part to be observed or performed under the Agreement, and will take all actions within its authority to keep the Agreement in effect in accordance with the terms thereof. (g) Issuer Not to Adversely Affect Exclusion From Gross Income of Interest on Bonds. The Issuer covenants that it (i) will take, or require to be taken, all actions that may be required of the Issuer for the interest on the Bonds to be and remain excluded from gross income - 61 - for federal income tax purposes, and (ii) will not take or require to be taken any actions that to the Issuer's knowledge would adversely affect that exclusion under the provisions of the Code. Section 10.02. Observance and Performance of Covenants, Agreements, Authority and Actions. The Issuer will observe and perform at all times all covenants, agreements, authority, actions, undertakings, stipulations and provisions to be observed or performed on its part under the Agreement, this Indenture, the Bond Resolution, the Regulatory Agreement and the Bonds which are executed, authenticated and delivered under this Indenture, and under all proceedings of the Issuer pertaining thereto. The Issuer represents and warrants that (a) It is duly authorized by the Constitution and laws of the State, including particularly and without limitation the Act, to issue the Bonds, to execute and deliver this Indenture, the Agreement and the Regulatory Agreement and to provide the security for payment of the Bond Service Charges in the manner and to the extent set forth in this Indenture. (b) All actions required on its part to be performed for the issuance, sale and delivery of the Bonds and for the execution and delivery of this Indenture and the Agreement have been taken duly and effectively, as advised by Bond Counsel. (c) The Bonds will be valid and enforceable special obligations of the Issuer according to their terms. Section 10.03. Enforcement of Issuer's Obligations. Each obligation of the Issuer required to be undertaken pursuant to the Bond Resolution, this Indenture, the Agreement, the Regulatory Agreement and the Bonds is binding upon the Issuer, and upon each officer or employee thereof as may have from time to time the authority under law to take any action on behalf of the Issuer which may be necessary to perform all or any part of that obligation, as a duty of the Issuer and of each of those officers and employees resulting from an office, trust, or station, providing for enforcement by writ of mandamus. (End of Article X) -62 - ARTICLE XI AMENDMENTS TO AGREEMENT, REGULATORY AGREEMENT AND NOTE Section 11.01. Amendments Not Requiring Consent of Holders. Without the consent of or notice to the Holders, the Issuer, the Borrower and the Trustee may consent to any amendment, change or modification of the Agreement, the Regulatory Agreement or the Note as may be required (i) by the provisions of the Agreement, the Regulatory Agreement or this Indenture, (ii) for the purpose of curing any ambiguity, inconsistency or formal defect or omission in the Agreement, the Regulatory Agreement or the Note, (iii) in connection with an amendment or to effect any purpose for which there could be an amendment of this Indenture pursuant to Section 8.02 hereof, or (iv) in connection with any other change therein which is not to the prejudice of the Trustee or the Holders of the Bonds, in the judgment of the Trustee. Section 11.02. Amendments Requiring Consent of Holders. Except for the amendments, changes or modifications contemplated in Section 11.01 hereof, neither the Issuer nor the Trustee shall consent to (a) any amendment, change or modification of the Agreement or the Note which would change the amount or time as of which Loan Payments are required to be paid, without the giving of notice as provided in this Section of the proposed amendment, change or modification and receipt of the written consent thereto of the Holders of all of the then Outstanding Bonds affected by such amendment, change or modification, or (b) any other amendment, change or modification of the Agreement, the Regulatory Agreement or the Note without the giving of notice as provided in this Section of the proposed amendment, change or modification and receipt of the written consent thereto of the Holders of not less than a majority in aggregate principal amount of the Bonds then Outstanding affected by such amendment, change or modification. The consent of the Holders shall be obtained as provided in Section 8.03 hereof with respect to Supplemental Indentures. If the Issuer or the Borrower shall request at any time the consent of the Trustee to any proposed amendment, change or modification of the Agreement, the Regulatory Agreement or the Note contemplated in subparagraphs (a) or (b) of this Section, upon being indemnified satisfactorily with respect to expenses, the Trustee shall cause notice of the proposed amendment, change or modification to be provided in the manner which is required by Section 8.03 hereof with respect to notice of Supplemental Indentures. The notice shall set forth briefly the nature of the proposed amendment, change or modification and shall state that copies of the instrument or document embodying it are on file at the designated corporate trust office of the Trustee for inspection by all Holders. (End of Article XI) -63 - ARTICLE XII MEETINGS OF HOLDERS Section 12.01. Purposes of Meetings. A meeting of Holders may be called at any time and from time to time pursuant to the provisions of this Article XII, to take any action (i) authorized to be taken by or on behalf of the Holders of any specified aggregate principal amount of the Bonds, (ii)under any provision of this Indenture or(iii) authorized or permitted by law. Section 12.02. Call of Meetings. The Trustee may (but shall not be obligated to) call at any time a meeting of Holders pursuant to Section 12.01 to be held at any reasonable time and place the Trustee shall determine. Notice of such meeting, setting forth the time, place and generally the subject thereof, shall be mailed by first-class mail, postage prepaid, not fewer than 15 nor more than 90 days prior to the date of the meeting to the Holders at their addresses as they appear on the Register on the 15`h day preceding such mailing, which 15`h day, preceding the mailing, shall be the record date for the meeting. If at any time, the Issuer or the Borrower, or the Holders of at least 25% in aggregate principal amount of the Bonds then outstanding, shall have requested the Trustee to call a meeting of Holders, by written request setting forth the purpose of the meeting, and the Trustee shall not have mailed the notice of the meeting within 20 days after receipt of the request, then the Issuer, the Borrower or the Holders of Bonds in the amount above specified may determine the time and the place of the meeting and may call the meeting to take any action authorized in Section 12.01, by mailing notice thereof as provided above. Any meetings of Holders shall be valid without notice, if the Holders of all Bonds then outstanding are present in person or by proxy, or if notice is waived before or after the meeting by the Holders of all Bonds outstanding who were not so present at the meeting, and if the Issuer, the Borrower and the Trustee are either present by duly authorized representatives or have waived notice, before or after the meeting. Section 12.03. Voting. To be entitled to vote at any meeting of Holders, a Person shall (a) be a Holder of one or more outstanding Bonds as of the record date for the meeting as determined above, or(b) be a person appointed by an instrument or document in writing as proxy by a Person who is a Holder as of the record date for the meeting, of one or more outstanding Bonds. Each Holder or proxy shall be entitled to one vote for each $5,000 principal amount of Bonds held or represented by it. The vote upon any resolution submitted to any meeting of Holders shall be by written ballots on which shall be subscribed the signatures of the Holders of Bonds or of their representatives by proxy and the identifying number or numbers of the Bonds held or represented by them. Section 12.04. Meetings. Notwithstanding any other provisions of this Indenture, the Trustee may make any reasonable regulations which it may deem to be advisable for meetings of Holders, with regard to (a) proof of the holding of Bonds and of the appointment of proxies, - 64 - (b) the appointment and duties of inspectors of votes, (c) recordation of the proceedings of those meetings, (d) the execution, submission and examination of proxies and other evidence of the right to vote, and (e) any other matters concerning the conduct, adjournment or reconvening of meetings which it may think fit. The Trustee shall appoint a temporary chair of the meeting by an instrument or document in writing, unless the meeting shall have been called by the Issuer, the Borrower or by the Holders, as provided in Section 12.02, in which case the Issuer, the Borrower or the Holders calling the meeting, as the case may be, shall appoint a temporary chair in like manner. A permanent chair and a permanent secretary of the meeting shall be elected by vote of the Holders of a majority in principal amount of the Bonds represented at the meeting and entitled to vote. The only Persons who shall be entitled to be present or to speak at any meeting of Holders shall be the Persons entitled to vote at the meeting and their counsel, any representatives of the Trustee or Registrar and their counsel, any representatives of the Issuer and its counsel and any representatives of the Borrower and its counsel. Section 12.05. Miscellaneous. Nothing contained in this Article XII shall be deemed or construed to authorize or permit any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee or to the Holders under any of the provisions of this Indenture or of the Bonds by reason of any call of a meeting of Holders or any rights conferred expressly or impliedly hereunder to make a call. (End of Article XII) - 65 - ARTICLE XIII MISCELLANEOUS Section 13.01. Limitation of Rights. With the exception of rights conferred expressly in this Indenture, nothing expressed or mentioned in or to be implied from this Indenture or the Bonds is intended or shall be construed to give to any Person other than the parties hereto, the Registrar, the Authenticating Agents, the Paying Agents, the Borrower and the Holders of the Bonds any legal or equitable right, remedy, power or claim under or with respect to this Indenture or any covenants, agreements, conditions and provisions contained herein. This Indenture and all of those covenants, agreements, conditions and provisions are intended to be, and are, for the sole and exclusive benefit of the parties hereto, the Registrar, the Paying Agents, the Authenticating Agents, the Borrower and the Holders of the Bonds, as provided herein. Section 13.02. Severability. In case any section or provision of this Indenture, or any covenant, agreement, stipulation, obligation, act or action, or part thereof, made, assumed, entered into or taken under this Indenture, or any application thereof, is held to be illegal or invalid for any reason, or is inoperable at any time, that illegality, invalidity or inoperability shall not affect the remainder thereof or any other section or provision of this Indenture or any other covenant, agreement, stipulation, obligation, act or action, or part thereof, made, assumed, entered into or taken under this Indenture, all of which shall be construed and enforced at the time as if the illegal, invalid or inoperable portion were not contained therein. Any illegality, invalidity or inoperability shall not affect any legal, valid and operable section, provision, covenant, agreement, stipulation, obligation, act, action, part or application, all of which shall be deemed to be effective, operative, made, assumed, entered into or taken in the manner and to the full extent permitted by law from time to time. Section 13.03. Notices. Except as provided in Section 7.02 hereof, it shall be sufficient service or giving of any notice, request, complaint, demand or other instrument or document, if it is duly mailed by first-class mail, postage pre-paid, or is forwarded by overnight courier service, delivery charges pre-paid. Notices to the Issuer, the Borrower, the Investor Member, the Trustee and the Rating Agency shall be delivered to their respective Notice Address. Duplicate copies of each notice, request, complaint, demand or other instrument or document given hereunder by the Issuer, the Trustee or the Borrower to one or both of the others also shall be given to the others. Any notice given pursuant to Sections 6.09, 6.13, 7.02, 7.03, 8.02, 8.03, 9.02 and 11.02 shall be simultaneously given to the Rating Agency. The foregoing parties may designate, by notice given hereunder, any further or different addresses to which any subsequent notice, request, complaint, demand or other instrument or document shall be sent. The Trustee shall designate, by notice to the Issuer and the Borrower the addresses to which notices or copies thereof shall be sent to the Registrar, the Authenticating Agents and the Paying Agents. In addition to the foregoing, the Trustee hereby agrees to send written notice to the Rating Agency upon the occurrence of any of the following events: (1) any change in the Trustee; (2) any amendment to the documents; (3) a payment of all principal and interest on all of the Bonds; (4) any change or notification of proposed change of the Mandatory Tender Date pursuant to a remarketing of the Bonds or(5) any defeasance or acceleration of the Bonds. - 66 - In connection with any notice mailed pursuant to the provisions of this Indenture, a certificate of the Trustee, the Issuer, the Registrar, the Authenticating Agents, the Borrower or the Holders of the Bonds,whichever or whoever mailed that notice, that the notice was so mailed shall be conclusive evidence of the proper mailing of the notice. Section 13.04. Suspension of Mail and Courier Service. If because of the suspension of delivery of first-class mail or of delivery by overnight courier services, or for any other reason, the Trustee shall be unable to mail by the required class of mail or forward by overnight courier service any notice required to be given by the provisions of this Indenture, the Trustee shall give such notice in such other manner as in the judgment of the Trustee shall most effectively approximate the required mailing or forwarding thereof, and the giving of that notice in that manner for all purposes of this Indenture shall be deemed to be in compliance with the requirement of this Section. Except as otherwise provided herein, the mailing of any notice shall be deemed complete upon deposit of that notice in the mail and the giving of any notice by any other means of delivery shall be deemed complete upon receipt of the notice by the delivery service. Section 13.05. Payments Due on Saturdays, Sundays and Holidays. If any Bond Payment Date or a date of maturity of the principal of any Bonds is a Saturday, Sunday or a day on which (i) the Trustee is required, or authorized or not prohibited, by law (including without limitation, executive orders) to close and is closed, then payment of interest and principal need not be made by the Trustee or any Paying Agent on that date, but that payment may be made on the next succeeding Business Day on which the Trustee and the Paying Agent are open for business with the same force and effect as if that payment were made on the Bond Payment Date or date of maturity, and no interest shall accrue for the period after that date, or (ii) a Paying Agent is required, or authorized or not prohibited, by law (including without limitation, executive orders) to close and is closed, then payment of interest and principal need not be made by that Paying Agent on that date, but that payment may be made on the next succeeding Business Day on which that Paying Agent is open for business with the same force and effect as if that payment were made on the Bond Payment Date or date of maturity and no interest shall accrue for the period after that date; provided, that if the Trustee is open for business on the applicable Bond Payment Date or date of maturity, it shall make any payment required hereunder with respect to payment of interest on outstanding Bonds and payment of principal of the Bonds presented to it for payment,regardless of whether any Paying Agent shall be open for business or closed on the applicable Bond Payment Date or date of maturity. Section 13.06. Instruments of Holders. Any writing, including without limitation, any consent, request, direction, approval, objection or other instrument or document, required under this Indenture to be executed by any Holder may be in any number of concurrent writings of similar tenor and may be executed by that Holder in person or by an agent or attorney appointed in writing. Proof of(i) the execution of any writing, including without limitation, any consent, request, direction, approval, objection or other instrument or document, (ii) the execution of any writing appointing any agent or attorney, and (iii) the ownership of Bonds, shall be sufficient for any of the purposes of this Indenture, if made in the following manner, and if so made, shall be conclusive in favor of the Trustee with regard to any action taken thereunder, namely: - 67 - (a) The fact and date of the execution by any person of any writing may be proved by the certificate of any officer in any jurisdiction, who has power by law to take acknowledgments within that jurisdiction, that the person signing the writing acknowledged that execution before that officer, or by affidavit of any witness to that execution; and (b) The fact of ownership of Bonds shall be proved by the Register maintained by the Registrar. Nothing contained herein shall be construed to limit the Trustee to the foregoing proof, and the Trustee may accept any other evidence of the matters stated therein which it deems to be sufficient. Any writing, including without limitation, any consent, request, direction, approval, objection or other instrument or document, of the Holder of any Bond shall bind every future Holder of the same Bond, with respect to anything done or suffered to be done by the Issuer, the Borrower, the Trustee, the Registrar or any Paying Agent or Authenticating Agent pursuant to that writing. Section 13.07. Priority of this Indenture. This Indenture shall be superior to any liens which may be placed upon the Pledged Revenues or any other funds or accounts created pursuant to this Indenture. Section 13.08. Extent of Covenants; No Personal Liability. All covenants, stipulations, obligations and agreements of the Issuer contained in this Indenture are and shall be deemed to be covenants, stipulations, obligations and agreements of the Issuer to the full extent authorized by the Act and permitted by the Constitution of the State. No covenant, stipulation, obligation or agreement of the Issuer contained in this Indenture shall be deemed to be a covenant, stipulation, obligation or agreement of any present or future member, officer, agent or employee of the Issuer in other than that person's official capacity. Neither the members of the Issuer nor any official executing the Bonds, this Indenture, the Agreement or any amendment or supplement hereto or thereto shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance or execution hereof or thereof. Section 13.09. Binding Effect. This Indenture shall inure to the benefit of and shall be binding upon the Issuer and the Trustee and their respective successors and assigns, subject, however, to the limitations contained herein. Section 13.10. Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be regarded as an original and all of which shall constitute but one and the same instrument. Section 13.11. Governing Law. This Indenture and the Bonds shall be deemed to be contracts made under the laws of the State of Indiana and for all purposes shall be governed by and construed in accordance with the laws of the State of Indiana. Section 13.12. FHA Federal Laws and Requirements Control. Notwithstanding anything in this Indenture or the Loan Agreement to the contrary: -68 - (a) Borrower, Trustee and Issuer acknowledge that this Indenture, and any obligations of Borrower hereunder, are subject and subordinate to the FHA Loan Documents. Notwithstanding any provision in this Indenture to the contrary, no obligations of the Borrower hereunder shall be payable except from (A) Surplus Cash (as defined in the HUD Regulatory Agreement) or (B) funds that are not derived from (i) revenues of the Project (as defined in the FHA Mortgage), (ii) any reserve or deposit made with the FHA Lender or any other party as required by HUD in connection with the FHA Loan Documents, or(iii) any proceeds of the FHA Note (collectively, "Non-Project Sources"). No claims or actions shall be made (or payable) under this Indenture against the Project, the FHA Lender, the proceeds of the FHA Note, or the assets of the Borrower, except from Non-Project Sources. In addition, the rights and obligations of the parties under this Indenture and all other documents evidencing, implementing, or securing this Indenture (collectively, the "Subordinate Bond Documents") are and shall be subordinated in all respects to the rights and obligations of the parties to and under the FHA Loan Documents. In the event of any conflict between the provisions of(i) this Indenture or the Subordinate Bond Documents and (ii) the provisions of the FHA Loan Documents or the Program Obligations (as defined in the FHA Mortgage), the provisions of the FHA Loan Documents or the Program Obligations shall control. The provisions of this Section 13.14 shall control over any inconsistent provisions in this Indenture or the Subordinate Bond Documents. (b) Any subsequent amendment to this Indenture or the Loan Agreement is subject to prior written approval of HUD (so long as the Project is subject to a mortgage insured or held by HUD). No amendment to this Indenture or the Loan Agreement shall conflict with the provisions of the Program Obligations. (c) The Bonds are not a debt of the United States of America, HUD, FHA, GNMA or any other agency or instrumentality of the federal government and are not guaranteed by the full faith and credit of the United States or any agency or instrumentality thereof. (d) There is no pledge hereunder or under the Loan Agreement of the gross revenues or any of the assets of the Project. (e) Neither a default under this Indenture nor under the Loan Agreement shall constitute a default under the FHA Loan Documents related to the Project. (f) Nothing contained herein or in the Loan Agreement shall inhibit or impair the right of FHA to require or agree to any amendment, change or modification of any FHA Loan Documents related to the Project for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective or inconsistent provision contained therein, or in regard to matters or questions arising under said FHA Loan Documents so long as any such amendment, change or modification shall not adversely affect the payment terms of the Bonds. (g) Neither the Issuer, the Trustee, nor any of the Holders has or shall be entitled to assert any claim against the Project, any reserves or deposits required by HUD in connection with the Project, or the rents or deposits or other income of the Project. - 69 - (h) Proceeds from any condemnation award or from the payment of a claim under any hazard insurance policy relating to the Project will not be payable to the Trustee, but will be payable in accordance with the FHA Loan Documents. (i) As required under 24 CFR 207.261(a)(1), in the event of an assignment or conveyance of the FHA Mortgage to HUD subsequent to the issuance of the Bonds, all money remaining in all funds and accounts other than the Rebate Fund, and any other funds remaining under the Indenture after payment or provision for payment of debt service on the Bonds and the fees and expenses of the Rating Agency, Issuer, Trustee, and other such parties unrelated to the Borrower (other than funds originally deposited by the Borrower or related parties on or before the date of issuance of the Bonds) shall be remitted to the FHA Lender. (End of Article XIII) US.126411071 04 - 70 - IN WITNESS WHEREOF, the Issuer has caused this Indenture to be executed and delivered for it and in its name and on its behalf by its duly authorized officers; in token of its acceptance of the trusts created hereunder, the Trustee has caused this Indenture to be executed and delivered for it and in its name and on its behalf by its duly authorized officers; and in token of its acceptance of the duties and obligations of the Registrar hereunder, the Registrar has caused this Indenture to be executed and delivered for it and in its name and on its behalf by its duly authorized officers, all as of the day and year first above written. CITY OF SOUTH BEND, INDIANA, as Issuer By: James Mueller, Mayor ATTEST: Dawn Jones,Clerk [Issuer Signature Page to Trust Indenture] Trust Indenture S-1 THE HUNTINGTON NATIONAL BANK, as Trustee and as Registrar of the Bonds By: Authorized Officer [Trustee Signature Page to Trust Indenture] Trust Indenture S-2 EXHIBIT A [BOND FORM] REGISTERED REGISTERED NO. RA- $ United States of America State of Indiana City of South Bend Multifamily Housing Revenue Bonds, Series 2020A (Cedar Glen Apartments Project) INITIAL INITIAL MANDATORY MATURITY INTEREST RATE: TENDER DATE: DATE: DATED AS OF: CUSIP: %per annum November 1, 2021 November 1, 2022 April 1, 2020 REGISTERED OWNER: CEDE & Co. PRINCIPAL AMOUNT: DOLLARS The City of South Bend(the"Issuer"), a municipal corporation and validly existing under the laws of the State of Indiana, for value received, promises to pay to the Registered Owner specified above or registered assigns, but solely from the sources and in the manner referred to herein, the Principal Amount specified above on the Maturity Date specified above (subject to the rights of redemption and tender set forth herein), and to pay from those sources interest on the unpaid principal balance of said Principal Amount calculated at the Interest Rate (as defined in the Indenture) on (a) May 1 and November 1 of each year beginning November 1, 2020, and (B) each Mandatory Tender Date (the "Interest Payment Dates") until the principal amount is paid or duly provided for. This Bond will bear interest from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from its above dated as of date, to, but not including the Initial Mandatory Tender Date at a rate per annum equal to the Initial Interest Rate and thereafter this Bond shall bear interest at the Remarketing Rate for each subsequent Remarketing Period (as defined in the Indenture). Interest on this Bond shall be calculated on the basis of a 360-day year consisting of twelve 30- day months, for the actual number of days elapsed. The principal of this Bond is payable upon presentation and surrender hereof at the designated corporate trust office of the trustee, presently The Huntington National Bank (the "Trustee"). Interest is payable on each Interest Payment Date by check or draft mailed to the person in whose name this Bond (or one or more predecessor bonds) is registered (the "Holder") at the close of business on the 15th day of the calendar month next preceding that Interest RA-1 Payment Date or the 45th day prior to any Mandatory Tender Date (the "Regular Record Date") on the registration books for this issue maintained by the Trustee, as Registrar, at the address appearing therein. Any interest which is not timely paid or duly provided for shall cease to be payable to the Holder hereof(or of one or more predecessor bonds) as of the Regular Record Date, and shall be payable to the Holder hereof (or of one or more predecessor bonds) at the close of business on a Special Record Date to be fixed by the Trustee for the payment of that overdue interest. Notice of the Special Record Date shall be mailed to Holders not less than 10 days prior thereto. The principal of and interest on this Bond are payable in lawful money of the United States of America, without deduction for the services of the paying agent. While the Bonds are held in a book-entry system and in certain other circumstances, all as provided in the Indenture, principal of and interest on this Bond is required to be paid by wire transfer or other arrangement, other than any payment of the entire unpaid principal amount hereof. THE BONDS ARE NOT A GENERAL OBLIGATION, DEBT OR BONDED INDEBTEDNESS OF THE ISSUER, OR A PLEDGE OF THE MONEYS, FAITH AND CREDIT OF THE ISSUER AND THE HOLDERS OF THE BONDS HAVE NOT BEEN GIVEN AND DO NOT HAVE ANY RIGHT TO HAVE EXCISES OR TAXES LEVIED BY THE ISSUER FOR THE PAYMENT OF BOND SERVICE CHARGES THEREON. This Bond is one of a duly authorized issue of Multifamily Housing Revenue Bonds, Series 2020A (Cedar Glen Apartments Project) (the "Bonds"), issuable under the Trust Indenture dated as of April 1, 2020 (the "Indenture"), between the Issuer and the Trustee, aggregating in principal amount $4,100,000 and issued for the purpose of making a loan (the "Loan") to assist MAH Cedar Glen, LP (the "Borrower") to pay a portion of the costs of rehabilitating, equipping and improving the Project, as defined in the Loan Agreement dated as of even date with the Indenture (the "Agreement"), between the Issuer and the Borrower. The Bonds are special obligations of the Issuer, issued or to be issued under and are to be secured and entitled equally and ratably to the protection given by the Indenture. The Bonds are issued pursuant to the laws of the State and an ordinance duly enacted by the Issuer. Reference is made to the Indenture for a more complete description of the Project, the provisions, among others, with respect to the nature and extent of the security for the Bonds, the rights, duties and obligations of the Issuer, the Trustee and the Holders of the Bonds, and the terms and conditions upon which the Bonds are issued and secured. Each Holder assents, by its acceptance hereof, to all of the provisions of the Indenture. The Bonds are subject to mandatory tender in whole on each Mandatory Tender Date. Holders will not have the right to elect to retain their Bonds. Upon presentation and surrender of the Bonds by the Holder on the date fixed for tender, the Holder shall be paid the principal amount of the Bonds to be tendered, plus accrued interest on such Bonds to the tender date. Upon the occurrence of any of (i)the Borrower electing not to remarket the Bonds, (ii) the conditions precedent to a remarketing have not been met by the dates and times required, or (iii) the proceeds of a remarketing on deposit are insufficient to pay the purchase price of the Outstanding Bonds on such Mandatory Tender Date, Bonds tendered for purchase shall not be purchased, but rather shall be redeemed on the Mandatory Tender Date at a redemption price equal to the principal amount of the Bonds tendered, plus accrued interest on such Bonds to the tender date. RA-2 Pursuant to the Agreement, the Borrower has executed and delivered to the Trustee the Borrower's promissory note dated as of even date with the Bonds initially issued (the"Note"), in the principal amount of$4,100,000. The Borrower is required by the Agreement and the Note to make payments to the Trustee in the amounts and at the times necessary to pay the principal of and interest (the "Bond Service Charges") on the Bonds. In the Indenture, the Issuer has assigned to the Trustee, to provide for the payment of the Bond Service Charges on the Bonds, the Issuer's right, title and interest in and to the Agreement, except for Unassigned Issuer's Rights as defined in the Agreement. To secure its compliance with certain covenants in the Agreement, the Borrower has executed and delivered the Regulatory Agreement and Declaration of Restrictive Covenants (the "Regulatory Agreement") among itself, the Issuer and the Trustee dated as of even date with the Indenture. Copies of the Indenture, the Agreement, the Regulatory Agreement and the Note are on file in the designated corporate trust office of the Trustee. The Bond Service Charges on the Bonds are payable solely from the Pledged Revenues, as defined and as provided in the Indenture (being, generally, the amounts payable under the Agreement and the Note in repayment of the Loan and any unexpended proceeds of the Bonds), and are an obligation of the Issuer only to the extent of the Pledged Revenues. The Bonds are not secured by an obligation or pledge of any moneys raised by taxation and do not represent or constitute a debt or pledge of the faith and credit of the Issuer. The Bonds are issuable only as fully registered bonds and, except as hereinafter provided, in printed or typewritten form, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ("DTC"), which shall be considered to be the Holder for all purposes of the Indenture, including, without limitation, payment by the Issuer of Bond Service Charges, and receipt of notices to, giving of consents by and exercise of rights of, Holders. There shall be a single Bond representing each maturity, and all Bonds shall be immobilized in the custody of DTC with the owners of beneficial interests in those Bonds (the "book entry interests") having no right to receive from the Issuer Bonds in the form of physical securities or certificates. Ownership of book entry interests in the Bonds shall be shown by book entry on the system maintained and operated by DTC, its participants (the "Participants") and certain persons acting through the Participants, and transfers of ownership of book entry interests shall be made only by that book entry system, the Issuer and the Trustee having no responsibility therefor. DTC is to maintain records of the positions of Participants in the Bonds, and the Participants and persons acting through Participants are to maintain records of the purchasers and owners of book entry interests in the Bonds. The Bonds as such shall not be transferable or exchangeable, except for transfer to another Depository (as defined in the Indenture) or to another nominee of a Depository, without further action by the Issuer and otherwise at the expense of the Borrower. If any Depository determines not to continue to act as a Depository for the Bonds for use in a book entry system, the Issuer may attempt to have established a Depository/book entry system relationship with another qualified Depository under the Indenture. If the Issuer does not or is unable to do so, the Issuer and the Trustee, after the Trustee has made provision for notification of the owners of book entry interests by the then Depository, shall permit withdrawal of the Bonds from the Depository, and authenticate and deliver Bond certificates in fully RA-3 registered form (in denominations of$5,000 or any integral multiple thereof) to the assignees of the Depository or its nominee, all at the cost and expense (including costs of printing or otherwise preparing and delivering replacement Bond certificates) of those persons requesting such authentication and delivery, if the event is not the result of Issuer action or inaction (including action at the request of the Borrower). The Indenture permits certain amendments or supplements to the Indenture, the Agreement, the Regulatory Agreement and the Note not prejudicial to the Holders to be made without the consent of or notice to the Holders, and certain other amendments or supplements thereto to be made with the consent of the Holders of not less than a majority in aggregate principal amount of the Bonds then outstanding. The Holder of each Bond has only those remedies provided in the Indenture. The Bonds shall not constitute the personal obligation, either jointly or severally, of any officer of the Issuer. No recourse shall be had for the payment of the Bonds against any elected or appointed officer, employee or agent of the Issuer, and no elected or appointed officer, employee or Agent of the Issuer shall have any monetary liability arising out of Issuer's obligations under the Bonds or in connection with any covenant, representation, or warranty made by the Issuer. This Bond shall not be entitled to any security or benefit under the Indenture or be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed. It is certified and recited that there have been performed and have happened in regular and due form, as required by law, all acts and conditions necessary to be done or performed by the Issuer or to have happened (i) precedent to and in the issuing of the Bonds in order to make them legal, valid and binding special obligations of the Issuer, and (ii) precedent to and in the execution and delivery of the Indenture and the Agreement; that payment in full for the Bonds has been received; and that the Bonds do not exceed or violate any constitutional or statutory limitation. IN WITNESS OF THE ABOVE the Issuer has caused this Bond to be executed in the name of the Issuer by the manual or facsimile signature of its duly authorized officers as of the date shown above. CITY OF SOUTH BEND By: James Mueller, Mayor ATTEST: Dawn Jones, Clerk RA-4 CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds described in the within-mentioned Indenture. Date of Registration and Authentication: [ , 2020] THE HUNTINGTON NATIONAL BANK, as Trustee By: Authorized Officer Registrable by and Payable at: The Huntington National Bank, as Trustee RA-5 (FORM OF ASSIGNMENT) ASSIGNMENT For value received, the undersigned hereby sells, assigns and transfers unto the within Bond and irrevocably constitutes and appoints attorney to transfer that Bond on the books kept for registration thereof, with full power of substitution in the premises. Dated: Signature Guaranteed: Signature guarantee shall be made by a guarantor institution participating in the Securities Transfer Agent Medallion Program or in such other guarantee program acceptable to the Registrar. Notice: The assignor's signature to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration or any change whatever. Please insert social security number or other tax identification number of transferee Unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) to the Issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede& Co., has an interest herein. RA-6