Issurance and Sale $20,000,000.00 Economic Development Revenue Bonds Purpose of Making a Loan to Mill Race

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(as that phrase is defined in the Act) which will be required by the Project. Section 2 . Authorization of Economic Development Revenue Bond. In order to pay a portion of the cost of acquiring, reha- bilitating and constructing the Project, there is hereby authorized to be issued, sold and delivered not to exceed $20, 000, 000. 00 principal amount of City of South Bend, Indiana, Multifamily Housing Economic Development Revenue Bonds, Series 1985 (Mill Race Project) of the City (the "Series 1985 Bond") . Any additional costs of the Project will be paid for by the Company unless paid for out of the proceeds of additional parity bonds (the "Additional Bonds") as identified in the Indenture. Section 3 . Terms of the Series 1985 Bond. The total prin- cipal amount of Series 1985 Bond that may be issued is hereby expressly limited to not to exceed $20, 000,000. 00, provided, however, that Additional Bonds may be issued as hereinafter provided. The interest rate on the Bonds shall not exceed fifteen percent (15%) per annum. The Bonds will bear interest at the Initial Interest Rate until December 15, 1988, payable on June 15 and December 15 of each year, commencing June 15, 1986. From and after December 15, 1988 (the "Adjustment Date") , the Bonds will bear interest at the Adjustable Interest Rate (unless converted to a Fixed Interest Rate) , payable on the fifteenth day of each month commencing January 15, 1989. Upon conversion to the Fixed Interest Rate (the "Conversion Date") , the Bonds will bear interest at the Fixed Interest Rate, payable semiannually on June 15 and December 15 of each year. Each outstanding Bond will be purchased on the Adjustment Date and the Conversion Date unless the holder thereof elects to keep his Bond and gives written notice thereof to the Trustee or the Tender Agent. The Adjustable Interest Rate and the Fixed Interest Rate will be determined by the Remarketing Agent. Interest will be payable by check or draft of the Trustee mailed to the registered owners of the Bonds, or, upon the request of any owner of at least $1, 000, 000 in principal amount of Bonds, by wire transfer in immediately available funds. Payment of the principal and premium, if any, on the Bonds is payable at the principal corporate trust office of the Trustee upon surrender of the Bonds. The Bonds will be issued in fully registered form in the denominations of $5, 000 or any integral multiple thereof, and in any event will mature on or before December 15, 1999. On the Adjustment Date and at any time thereafter during which the Bonds bear interest at an Adjustable Interest Rate, any Bond will be purchased on any Business Day at the demand of the Bondholder, upon seven (7) days notice, at a purchase price equal to one hundred percent 4 MRAMORD