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HomeMy WebLinkAbout8447-93 Authorizing Economic Development Revenue (P.A.I. Properties $450,000)ORDINANCE No 8447 -93 Passed by the Common Council of the City of South Bend, Indiana_ December 13, 19 93 Attest: 4:f' City Clerk Attest: IRENE K. GAMMON Of Common Council Presented by me to the Mayor of the City of South Bend, Indiana_ _ December 14, 1 9 93 /(-' City Clerk IRENE K. GAMMON Approved and signed by me i y 19-/— . v: ORDINANCE NO. $ q LI 7--64 3 AN ORDINANCE AUTHORIZING THE CITY OF SOUTH BEND, INDIANA(THE "CITY"), TO ISSUE ITS "ECONOMIC DEVELOPMENT REVENUE BOND (P.A.I. PROPERTIES, AN INDIANA PARTNERSHIP PROJECT, SERIES 1993),IN THE AGGREGATE PRINCIPAL AMOUNT OF FOUR HUNDRED FIFTY THOUSAND DOLLARS($450,000.00)AND APPROVING AND AUTHORIZING CERTAIN ACTIONS WITH RESPECT THERETO STATEMENT OF PURPOSE AND INTENT: The City is a municipal corporation and political subdivision of the State of Indiana, and by virtue of Title 36, Article 7, Chapters 11.9 and 12, of the Indiana Code, as amended (the "Act"), is authorized and empowered to adopt this Ordinance and to carry out its provisions. The South Bend Economic Development Commission (the "Commission") has rendered its report concerning the proposed financing of economic development facilities for P.A.I. Properties, an Indiana partnership, and the Area Plan Commission has commented favorably thereon. The Commission, after a public hearing held on November 19, 1993, has adopted a Resolution, which has been transmitted to this Council, (i) finding that the construction by P.A.I. Properties, an Indiana partnership (the "Company") of the proposed economic development facilities described in said report will not have an adverse competitive effect on any similar facilities already constructed or operating in or about the City, (ii) further finding that the proposed economic development revenue bond financing of such facilities will be of benefit to the health and general welfare of the City and its citizens, (iii) further finding that the proposed economic development revenue bond financing of such facilities complies with the purposes and provisions of the Act, (iv) approving the economic development revenue bond financing of such facilities, including the form and terms of the Loan Agreement, Mortgage and Security Agreement between the Company and the City, the Promissory Note from the Company to the City, the registered City of South Bend, Indiana, Economic Development Revenue Bond (P.A.I. Properties, an Indiana Partnership Project, Series 1993) from the City to the bondholders, The Trust Indenture between the City and 1st Source Bank(the "Trustee"), and this Ordinance,presented to the Commission, and (v) recommending that this Council find that the proposed economic development revenue bond financing of such facilities will be of benefit to the health and general welfare of the City and its citizens, and complies with the purposes and provisions of the Act, and that this Council adopt an ordinance approving such financing. NOW, THEREFORE, BE IT ORDAINED BY THE COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA, as follows: Section 1. This Council finds that the facilities described in said report and in the attached Loan Agreement, Mortgage and Security Agreement are "economic development facilities" within the meaning of the Act and that such facilities will not have an adverse competitive effect on any similar facilities already constructed or operating in or about the City. Section 2. This Council further finds that the proposed economic development revenue bond financing of such facilities will be of benefit to the health and general welfare of the City and its citizens. Section 3. This Council further finds that the proposed economic development revenue bond financing of such facilities complies with the purposes and provisions of the Act. Section 4. This Council hereby approves the proposed economic development revenue bond financing of such facilities, including (i) the form and terms of the aforementioned Loan Agreement, Mortgage and Security Agreement, Promissory Note, Economic Development Revenue Bond and Trust Indenture attached hereto and incorporated herein by reference (two (2) copies of which are on file in the Office of the Clerk of the City for public inspection), (ii) the issuance and sale of said Economic Development Revenue Bond, (iii) the loan of the net proceeds of said Economic Development Revenue Bond to the Company for the construction of such facilities, such loan to be evidenced by said Promissory Note, (iv) the repayment of said loan by the Company pursuant to said Loan Agreement, Mortgage and Security Agreement, and said Promissory Note, and (v) the securing of said Economic Development Revenue Bond by said Loan Agreement, Mortgage and Security Agreement and said Trust Indenture. Section 5. The City shall issue its Economic Development Revenue Bond (P.A.I. Properties, an Indiana Partnership Project, Series 1993), in the aggregate principal amount of Four Hundred Fifty Thousand Dollars ($450,000.00) for the purpose of procuring funds to loan to the Company in order to finance such facilities, as more particularly set out in said Loan Agreement, Mortgage and Security Agreement, which Economic Development Revenue Bond shall be payable as to principal and interest solely from the payments made by the Company on its aforesaid Promissory Note in the principal amount of Four Hundred Fifty Thousand Dollars ($450,000.00)which will be executed and delivered by the Company to evidence said loan, from other sources under said Loan Agreement, Mortgage and Security Agreement, and as otherwise provided in said Trust Indenture. Said Economic Development Revenue Bond shall never constitute a general obligation of, indebtednesses of, or charge against the general credit of the City. Said Economic Development Revenue Bond shall be executed by the manual or facsimile signatures of the Mayor and the Clerk of the City; shall be executed and delivered on or about December 17, 1993; shall be repayable and shall bear interest as provided therein; shall be in the denominations of Five Thousand Dollars ($5,000.00) or integral multiples thereof; shall be issued in registered form; shall be registrable as provided therein; shall be payable in the medium and at the -2- place or places provided therein; and shall be subject to optional and mandatory prepayment as provided therein. Section 6. The Mayor and/or the Clerk of the City are authorized and directed to sell said Economic Development Revenue Bond to the bond purchasers at a price not less than one hundred percent (100%) of the principal amount thereof, plus accrued interest, if any. Section 7. The Mayor and the Clerk of the City are authorized and directed to execute and deliver the aforementioned documents for and on behalf of the City after making therein such changes permitted by the Act as they deem necessary or proper, as evidenced by their execution of such documents, and are further authorized and directed to execute and deliver such other documents for and on behalf of the City, and to take such other actions for and on behalf of the City, as they deem necessary or proper in connection with the consummation of such financing including, but not limited to making the $10 million election pursuant to the requirements of the Internal Revenue Code. The Mayor and the Clerk of the City are authorized to arrange for the delivery of said Economic Development Revenue Bond to the bond purchaser,payment for which will be made to the Trustee for the account of the City. Section 8. The provisions of this Ordinance and the aforementioned documents shall constitute a contract binding between the City and the holders of said Economic Development Revenue Bond, and after the issuance of said Economic Development Revenue Bond, this Ordinance shall not be repealed or amended in any respect which would adversely affect the rights of said holders so long as any of the principal of said Economic Development Revenue Bond or the interest or premium thereon remains unpaid. Section 9. All ordinances or parts of ordinances in conflict herewith are hereby repealed. Section 10. If any section, praragraph or provision of this Ordinance shall be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section, paragraph or provision shall not affect any of the remaining provisions of this Ordinance. Section 11. This Ordinance shall be in full force and effect from and after its passage by this Council and its signature by the Mayor of the City. Member of Co on Council Filed In Clerk's Office MCK02302 NOV 2 2 1993 READ,NG //-a2?-y3 -3- PJBLIC HEARING i s- i 3- q 3 3rd READING I a- l 3 - a I tENEGAMMON CITY CLERK,SO.BEND,IN. NOT APPROVED REFERRED PASSED -- 1 3 q 3 ryr yrryruyrr yt t r ,SpUTN 8 `IV � �\ i i ii C7 ,w �p�� A�F� City of South Bend • ' '` .4 0 Joseph E. Kernan, Mayor I 1865 .•: ;r. 7.iY,,yj�.r•r Economic Development Commission Donald E. Inks Director November 19, 1993 Irene K. Gammon, Clerk City of South Bend County-City Building . ' South Bend, IN 46601 Re: P.A.I. Properties Dear Mrs. Gammon: Enclosed please find a proposed form of ordinance to be placed on the Council agenda for first reading on November 29, 1993, and public hearing on December 13, 1993 . Further enclosed is a copy of the Commission `' resolution passed on Friday, November 19, 1993 . Lastly, enclosed are two (2) copies of the various financing documents. Respectfully, r• J KE NET P. FEDDER KPF:ram enc. Filed in Clerks Office NOV 2 2 1993 IRENE OAAAPAON CITY CLERK,SO.BEND,IN. 1200 County-City Building • South Bend, Indiana 46601 • 219/235-9335 Stephen J. Luecke Gatha Vaughn Carolyn Anderson Carl Ellison Jerry Hammes Kenneth Fedder President Vice President Secretary Counsel flnmmtttrr Ir rnrt go the emu= Moonlit of t1 (Eng of Oontil Brad: Your Committee OF THE WHOLE to whom was referred BILL NO. 107-93 A BILL AUTHORIZING THE CITY OF SOUTH BEND, INDIANA (THE "CITY" ) , TO ISSUE ITS "ECONOMIC DEVELOPMENT REVENUE BOND" (P.A.I. PROPERTIES, AN INDIANA PARTNERSHIP PROJECT, SERIES 1993) , IN THE AGGREGATE PRINCIPAL AMOUNT OF FOUR HUNDRED FIFTY THOUSAND DOLLARS ($450,000.00) AND APPROVING AND AUTHORIZING CERTAIN ACTIONS WITH RESPECT THERETO. Respectfully report that they have examined the matter and that in their opinion This bill has been recommended to the Council favorable. Tom Zakrz ,ln FREE PRESS oSite,P PUBLISHING CO. J , RESOLUTION NO. /4.3 A RESOLUTION OF THE SOUTH BEND ECONOMIC DEVELOPMENT COMMISSION BE IT RESOLVED by the South Bend Economic Development Commission that: 1. It finds that the acquisition and construction of the proposed economic development facilities described in the Loan Agreement, Mortgage and Security Agreement between the City of South Bend, Indiana (the "City") and P.A. I. Properties, an Indiana partnership (the "Company") , presented to this meeting will be of benefit to the health and general welfare of the City and its citizens and will not have an adverse competitive effect on any similar facilities already constructed or operating in or about the City for the reason that such facilities will merely enable the Company to maintain its competitive position, vis-a-vis similar facilities located in or near South Bend. 2 . It further finds that the proposed economic development revenue bond financing of the P.A. I . Properties facilities complies with the purposes and provisions of Title 36, Article 7 , Chapters 11.9 and 12 of the Indiana Code, as amended (the "Act") . 3 . This Commission hereby approves the economic development revenue bond financing of such facilities, including the form and terms of the aforementioned Loan Agreement, Mortgage and Security Agreement, the Promissory Note from the Company to the City, the fully-registered City of South Bend, Indiana Economic Development Revenue Bond (P.A. I . Properties, an Indiana Partnership Project, Series 1993) from the City to the bondholders (the "Bonds") , the Trust Indenture between the City and 1st Source Bank (the "Trustee") and the Ordinance of the Common Council of the• City presented to this meeting. 4 . This Resolution, together with copies of the aforementioned documents shall be transmitted by this Commission to the Common Council of the City with the recommendation that the Common Council find that the proposed economic development revenue bond financing of such facilities will be of benefit to the health and general welfare of the City and its citizens, and complies with the purposes and provisions of the Act, and that the Common Council adopt an ordinance approving such financing. 5. The Common Council of the City is authorized to make such changes in the aforementioned documents as it deems necessary or proper, as evidenced by such Ordinance. ADOPTED this 19th day of November, 1993 . SOUTH BEND ECONOMIC DEVELOPMENT COMMISSION i By / ..__ ; A' By By &/(../e By By Filed in Clerk's Office NOV 2 2 1993 MCK02319 IRENE GAMMON CITY CLERK,SO.BEND,IN. WHEN RECORDED RETURN TO: Barnes & Thornburg 600 1st Source Bank Center 100 North Michigan Street South Bend, Indiana 46601 Attn: Mark C. Krcmaric LOAN AGREEMENT, MORTGAGE AND SECURITY AGREEMENT BETWEEN P.A. I. PROPERTIES, an Indiana Partnership Mortgagor AND CITY OF SOUTH BEND Mortgagee Dated as of December 1, 1993 Certain rights of the City of South Bend hereunder have been assigned to 1st Source Bank, as Trustee under a Trust Indenture dated as of December 1, 1993 , from such City. TABLE OF CONTENTS Page PARTIES 1 PRELIMINARY STATEMENT 1 GRANTING CLAUSES 2 ARTICLE I DEFINITIONS AND EXHIBITS 4 Section 1. 1. Terms Defined 4 Section 1.2 . Rules of Interpretation 7 Section 1. 3 . Exhibits 8 ARTICLE II REPRESENTATIONS AND COVENANTS; LOAN OF SERIES 1993 BOND PROCEEDS 10 Section 2 . 1. Representations and Covenants by Issuer 10 Section 2 .2 . Representations by Borrower 10 Section 2 . 3 . Loan of Series 1993 Bond Proceeds by Issuer 13 ARTICLE III PARTICULAR COVENANTS OF THE COMPANY 14 Section 3 . 1. Consent to Assignments to Trustee 14 Section 3 .2 . Payment of Principal, Premium and Interest; Payments Pledged 14 Section 3 . 3 . Maintenance of Lien; Recording 15 Section 3 .4 . Further Assurances; After-acquired Property 16 Section 3 .5. Financial Statements, Etc. 16 Section 3 . 6. Taxes, Charges and AssessmentS 17 Section 3 .7. Liens 18 Section 3 .8. Compliance with Orders, Ordinances, Etc. 18 Section 3 . 9. Permitted Contests 18 Section 3 . 10. Repairs, Maintenance and Alterations 18 Section 3 . 11. Borrower Duties Under Indenture 19 Section 3 . 12 . Insurance 19 Section 3 . 13 . Trustee's Right to Perform Borrower's Covenants; Advances 20 Section 3 . 14. Indemnity 21 Section 3 . 15. Issuance of Substitute Notes 22 Section 3 . 16. Payment of Expenses of Issuance of Series 1993 Bonds 22 (i) Page Section 3 . 17. Funding of Indenture Funds; Investments; Arbitrage Certificates 22 Section 3 . 18. Other Amounts Payable by the Borrower 23 Section 3 . 19. Credits on Notes 23 Section 3 .20. Completion of Project 24 Section 3 .21. Sale and Release of Mortgaged Property 25 Section 3 .22 . Substitution of Mortgaged Property 26 Section 3 .23 . Right of Access to the Facilities 26 Section 3 .24. Tax Exempt Status of Bonds 27 Section 3 . 25. Financial Covenants 27 Section 3 .26. Information Report 27 Section 3 .27 . Regulation U 27 ARTICLE IV DAMAGE, CONDEMNATION, AND LOSS OF TITLE 28 Section 4 . 1. Damage 28 Section 4 . 2 . Other Provisions with Respect to Net Proceeds 29 Section 4 . 3 . Insufficiency of Net Proceeds 29 ARTICLE V PREPAYMENT OF NOTES 30 Section 5. 1. Prepayment Generally 30 Section 5.2 . Optional Prepayments 30 Section 5. 3 . Additional Interest Upon Event of Taxability 30 Section 5.4. Notice of Prepayment 31 ARTICLE VI ADDITIONAL NOTES 32 Section 6. 1. Issuance of Additional Notes 32 Section 6.2 . Conditions to Issuance of Additional 33 Notes Section 6. 3 . Issuer Not Obligated to Accept Additional Notes 33 Section 6.4. Limitation on Notes 34 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES THEREFOR 35 Section 7 . 1. Events of Default 35 Section 7.2 . Foreclosure and Sale of Mortgaged Property 36 Section 7 . 3 . Sale a Bar 37 Section 7 .4. Receipt Sufficient Discharge for Purchaser 37 Section 7 .5. Sale to Accelerate Notes 37 Section 7. 6. Application of Proceeds of Sale 37 Section 7.7 . Payment of Defaulted Amounts on Demand of Trustee 38 (ii) Page Section 7. 8. Trustee May Enforce Demand 39 Section 7 .9. Trustee Entitled to Appointment of Receiver 39 Section 7 . 10. Remedies Cumulative 40 Section 7. 11. Delay or Omission Not a Waiver 40 Section 7 . 12 . Waiver of Extension, Appraisement or Stay Laws 40 Section 7. 13 . Remedies Subject to Provisions of Law 41 ARTICLE VIII SUPPLEMENTS AND AMENDMENTS TO THIS LOAN AGREEMENT 42 Section 8. 1. Supplements and Amendments to this Loan Agreement 42 ARTICLE IX DEFEASANCE 43 Section 9. 1. Defeasance 43 ARTICLE X MISCELLANEOUS PROVISIONS 44 Section 10. 1. Agreement Term 44 Section 10. 2 . Loan Agreement for Benefit of Parties Hereto 44 Section 10. 3 . Severability 44 Section 10.4. Limitation on Interest 44 Section 10. 5. Addresses for Notice and Demands 44 Section 10. 6. Successors and Assigns 45 Section 10.7. Counterparts 45 Section 10.8. Governing Law 45 TESTIMONIUM 46 SIGNATURES AND SEALS 47 ACKNOWLEDGEMENTS 47 EXHIBIT A 48 EXHIBIT B 49 (iii) LOAN AGREEMENT, MORTGAGE AND SECURITY AGREEMENT This is a LOAN AGREEMENT, MORTGAGE AND SECURITY AGREEMENT, dated as of December 1, 1993 (herein referred to as the "Loan Agreement" or "Mortgage") between P.A.I. PROPERTIES, an Indiana Partnership (the "Borrower") , as mortgagor, and the CITY OF SOUTH BEND (the "Issuer") , a municipal corporation duly organized and validly existing under the laws of the State of Indiana. PRELIMINARY STATEMENT The Indiana Code, Title 36, Article 7, Chapters 11. 9 and 12 (the "Act") , have been enacted by the General Assembly of Indiana. The Act provides that an issuer may pursuant to the Act issue revenue bonds and loan the proceeds thereof to a developer or user for the purpose of financing all costs of purchase or construction of facilities, including real and personal property, for diversification of economic development and promotion of job opportunities in or near such issuer, such revenue bonds being payable primarily from the revenues derived from the repayment of such loan. The Issuer intends to issue its Economic Development Revenue Bond (P.A. I. Properties, an Indiana Partnership Project, Series 1993) (the "Series 1993 Bonds") in the aggregate principal amount of $450, 000. 00 pursuant to the Trust Indenture dated as of December 1, 1993 (the "Indenture") from the Issuer to 1st Source Bank, as Trustee (the "Trustee") , and intends to lend the proceeds of the Series 1993 Bonds pursuant to the provisions of this Loan Agreement to the Borrower to finance certain economic development facilities (the "Project") . This Loan Agreement provides for the repayment by the Borrower of the loan of the proceeds of the Series 1993 Bonds and further provides (i) for the Borrower s repayment obligation to be evidenced by the Borrower's Promissory Note, Series 1993 (the "Series 1993 Note") , in substantially the form attached hereto as Exhibit B, and (ii) for such loan and the Series 1993 Note to be secured by the mortgage and security interest herein provided. Pursuant to the Indenture, the Issuer will pledge and assign the Series 1993 Note and assign certain of its rights under this Loan Agreement as security for the Series 1993 Bonds. The Series 1993 Bonds and any Additional Bonds issued under the Indenture will be payable solely out of (i) the payments to be made by the Borrower on the Series 1993 Note and any other Notes, and (ii) Bond proceeds and proceeds of condemnation and insurance. GRANTING CLAUSES In consideration of the premises, the loan of the proceeds of the Series 1993 Bonds to be made by the Issuer, the acceptance of the Series 1993 Note by the Issuer, and of other good and valuable consideration, the receipt whereof is hereby acknowledged, and in order to secure the payment of the principal of, premium, if any, and interest payable on the Series 1993 Note and any Additional Notes issued hereunder and any notes issued in substitution therefor, and to secure the payment of the 1986 Notes (as herein defined) and to secure the performance of all the covenants of the Borrower contained herein and in the 1986 Loan Agreement (as herein defined) , the Borrower has executed and delivered this Loan Agreement and by these presents does mortgage and warrant and grant a security interest in, to the Issuer and its successors and assigns forever, all the Borrower's right, title and interest in, to and under any and all of the following described property (herein called the "Mortgaged Property") : DIVISION I The real estate in St. Joseph County, Indiana described on Exhibit A hereto, incorporated herein, and all buildings, structures and fixtures of the Borrower now or hereafter located upon the real estate described in Exhibit A hereto or any part thereof, plus all machinery and equipment of the Borrower purchased with proceeds of the 1986 Bonds (as herein defined) , all as described in Exhibit A hereto, and any substitutions of, or replacements for, or additions to the foregoing. DIVISION II Any and all other property of every kind and nature from time to time hereafter, by delivery or by writing of any kind, conveyed, pledged, assigned or transferred as and for additional security hereunder by the Borrower or by anyone in its behalf to the Issuer or the Trustee, including without limitation, funds of the Borrower held by the Trustee as security for the Bonds. DIVISION III All moneys and securities from time to time held by Issuer or the Trustee under the terms of this Mortgage. -2- TO HAVE AND TO HOLD all and singular, the Mortgaged Property, whether now owned or hereafter acquired, unto the Issuer, its successors and assigns forever, for the equal, ratable and proportionate benefit of the holders of the Notes (as hereinafter defined) ; provided, however, that this Mortgage is executed upon the express condition that if the Borrower shall pay or cause to be paid all indebtedness secured hereby and shall keep, perform and observe all and singular the covenants and promises expressed in the Notes and this Mortgage to be kept, performed and observed by the Borrower, then this Mortgage and the rights hereby granted shall cease, determine and be void; otherwise to remain in full force and effect. Borrower hereby assigns to the Issuer all of Borrower' s right, title and interest in and to all existing and future leases (including all amendments thereof and all schedules thereto) of the Mortgaged Property or any portion thereof and all rents, issues, income, profits, products and proceeds arising therefrom, and all licenses, permits, agreements and contracts relating to the Mortgaged Property or any portion thereof and all other contract rights relating to and proceeds of any such leases. The foregoing assignment shall constitute an absolute, present and irrevocable assignment, provided that, so long as there shall exist no default with respect to any of the obligations secured by this Mortgage (the "Indebtedness") , the Borrower has permission to collect all rents, issues, income, profits, products and proceeds from such leases, and to retain, use and enjoy the same, and to exercise all other rights of the lessor under such leases. Upon default by Borrower with respect to any Indebtedness, such permission shall terminate immediately and automatically, without notice to Borrower or any other person, and shall not be reinstated upon a cure of such default without the express written consent of the Issuer, and furthermore, the Issuer may, in its sole discretion and without notice to Borrower or any other person, take possession of the Mortgaged Property subject to any or all such leases and exercise all or any rights of Borrower thereunder, may provide notification to lessees to pay rents directly to the Issuer, and may require Borrower to provide such notification to lessees. The foregoing assignment shall be fully effective without any further action on the part of the Borrower or the Issuer. Borrower will pay and perform all obligations and covenants required of it by the terms of any such lease. If Borrower defaults in the payment or performance of any obligation or covenant under any such lease, then the Issuer shall have the right, but shall have no obligation, to pay or perform the same on behalf of Borrower, and all sums expended by the Issuer in connection therewith shall become part of the Indebtedness and a lien upon the Mortgaged Property, payable by Borrower to the Issuer upon demand, with interest per annum at two percent (2%) above the National Prime Rate, adjusted monthly on the first day of the month, from the date of the advance until paid. The Issuer shall not be obligated to perform or discharge any obligation under such leases under or by reason hereof. Borrower -3- hereby agrees to defend and indemnify the Issuer against and hold it harmless from any and all claims and demands whatsoever which may be asserted against it by reason of any alleged obligation or undertaking on its part to perform or discharge any of the terms of such leases, except that the foregoing indemnification shall not apply with respect to any action taken by the Issuer which constitutes willful misconduct or gross negligence; and should the Issuer incur any liability, loss, or damage in defense against any such claims or demands, the amount thereof, together with all costs and expenses associated therewith, including attorneys' fees, legal assistants' fees and legal expenses, shall become part of the Indebtedness and a lien upon the Mortgaged Property, payable by Borrower to the Issuer upon demand, with interest per annum at two percent (2%) above the National Prime Rate, adjusted monthly on the first day of the month, from the date of the advance until paid. Borrower represents that it has not executed any prior assignments of any of its rights under such leases to any party other than the Issuer. The Borrower and the Issuer hereby further covenant and agree as follows: -4- ARTICLE I Definitions and Exhibits Section 1. 1. Terms Defined. In addition to the words and terms elsewhere defined in this Mortgage, the following words and terms shall have the following meanings unless the context clearly otherwise requires: "1986 Bonds" means the city of South Bend, Indiana Economic Development Revenue Bond, Series 1986 (P.A.I. Properties Project) , dated December 15, 1986, issued in original principal amount of $722, 000. 00 pursuant to the 1986 Indenture. "1986 Indenture" means the Trust Indenture between City of South Bend, Indiana, and 1st Source Bank, as Trustee, dated as of December 15, 1986. "1986 Loan Agreement" means the Loan Agreement and Security Agreement between the Borrower and City of South Bend, dated as of December 15, 1986. "1986 Notes" means the "Notes", as defined in the 1986 Loan Agreement. "Act" means Indiana Code 36-7-11.9 and 36-7-12 , as amended. "Additional Bonds" means the additional parity Bonds authorized to be issued by the Issuer pursuant to Section 208 of the Indenture and any Bonds issued in substitution or replacement therefor. "Additional Notes" means the additional parity Notes authorized to be issued by the Borrower pursuant to the provisions of Article VI hereof. "Bond Counsel" means a nationally recognized firm of municipal bond attorneys acceptable to the Trustee. "Bonds" means the Series 1993 Bonds, the Additional Bonds and any other Bonds issued under the Indenture. "Bond Fund" means the Bond Fund established by Section 402 of the Indenture. "Borrower" means, P.A.I. Properties, an Indiana partnership, the general partners of which are Noel H. Yarger and G. Toms Yarger, its successors or assigns or any surviving, resulting or transferee partnership or corporation. -5- "Commission" means the South Bend Economic Development Commission, an economic development commission created by the Issuer. "Completion Date" means the date of completion of the Project, as that date is certified to the Trustee as provided in Section 3 .20 hereof. "Construction Fund" means the Construction Fund established by Section 403 of the Indenture. "Costs of Construction" with respect to the Project shall be deemed to include those items included in Section 29 of the Act including, but not limited to: (i) obligations of Issuer or of Borrower incurred for labor and materials (including obligations payable to Borrower) in connection with the Project; (ii) the cost of contract bonds and of insurance of all kinds that may be required or necessary during the course of the Project; (iii) all costs and expenses of site preparation, 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 completion of the Project; (iv) all costs and expenses incurred in connection with the issuance of the Bonds for the purpose of providing funds for the Project, including without limitation compensation and expenses of Trustee, underwriting and legal expenses of Trustee, underwriting and legal expenses and fees, costs of printing and engraving, recording and filing fees; (v) all costs and expenses which Issuer or Borrower shall be required to pay, under the terms of any contract or contracts, for the Project; (vi) any sums required to reimburse Issuer or Borrower for advances made by either of them 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; and (vii) interest on the Series 1993 Bonds during construction of the Project. "Counsel" means an attorney duly admitted to practice law before the highest court of any state and, without limitation, may include legal counsel for either the Issuer or the Borrower. -6- "Event of Taxability" means any determination, decision or decree made by the Commissioner or any District Director of Internal Revenue Service, or by any court of competent jurisdiction that interest payable on the Series 1993 Bonds is includible in the gross income of a holder of the Series 1993 Bonds (other than a holder who is a substantial user or related person within the meaning of Section 147 (a) of the Internal Revenue Code of 1986, as amended (the "Code") , or any similar federal law then in effect) , or an opinion of Bond Counsel to the same effect. "Facilities" means the economic development facilities to be acquired and constructed with the funds advanced under the Loan. "Indenture" means the Trust Indenture dated as of December 1, 1993 , from the Issuer to the Trustee and all amendments and supplements thereto. "Issuer" means the City of South Bend, Indiana. "Loan" means the loan by the Issuer to the Borrower of the proceeds of the sale of the Series 1993 Bonds. "Mortgaged Property" means the property described in the granting clauses hereof plus any additional property which shall have been subjected to the lien hereof pursuant to the provisions of Article III and VI hereof. "National Prime Rate" or "Prime Rate" means the prime rate on corporate loans as announced from time to time by Citibank, N.A. , New York, New York. "Net Proceeds, " when used with respect to any insurance or condemnation award, means the gross proceeds from the insurance or condemnation award remaining after payment of all expenses (including attorneys' fees and any extraordinary expenses of the Trustee of the Issuer) incurred in the collection of such gross proceeds. "Notes" means the Series 1993 Note, the Additional Notes and any Notes issued in exchange therefor pursuant to Section 3 . 15 hereof, and the 1986 Notes, all of which shall rank on a parity with each other. "Outstanding, " with reference to Bonds, means all Bonds theretofore issued and not yet fully paid and discharged under the terms of the Indenture and with reference to Notes, means all Notes theretofore issued and not yet paid and discharged under the terms of this Loan Agreement with respect to Notes. "Permitted Encumbrances" means, as of any particular time, (i) any exception to title shown in Exhibit A hereto, (ii) this Loan Agreement, the 1986 Loan Agreement, the Indenture and the 1986 -7- Indenture, (iii) liens arising in connection with workmen's compensation, unemployment insurance, social security, taxes, assessments, statutory obligations, or other similar liens and charges arising in the ordinary course of the Borrower's operations or required by law as a condition precedent to the transaction of the business of the Borrower or the exercise of any privileges or licenses of the Borrower; provided, however, that no amount secured by any lien or charge described in this item (iii) shall be overdue or, if overdue, is being contested in good faith by the Borrower, and the Borrower has established appropriate reserves in connection therewith, and (iv) mechanics' liens of record arising from the Project, provided such liens are being contested by the Borrower in good faith and provided further that the Borrower shall have reserved sufficient amounts in the Construction Fund to satisfy all such liens. "Project" means the construction of an addition of approximately 20, 000 square feet to the manufacturing facility located in St. Joseph County, Indiana, all as described in Exhibit A hereto and made a part hereof. "Qualified Investments" means investments in: (i) obligations issued or guaranteed by the full faith and credit of the United States of America; (ii) certificates of deposit or other deposits of, or bankers' acceptances drawn on and accepted by commercial banks, including Trustee; (iii) repurchase agreements fully secured by obligations of the type specified in (i) above; or (iv) commercial paper of the quality rated "A-1" by Standard & Poors Corporation or "P-1" by Moody's Investor Service, Inc. "Series 1993 Bonds" means the Economic Development Revenue Bonds (P.A.I. Properties, an Indiana Partnership Project, Series 1993) to be issued by the Issuer under the Indenture in the aggregate principal amount of $450, 000. 00 and any Bonds issued in substitution or replacement therefor. "Series 1993 Note" means the Promissory Note, Series 1993, of the Borrower in the principal amount of $450, 000. 00 in substantially the form attached hereto as Exhibit B which will be issued and delivered by the Borrower to the Issuer to evidence the loan of the proceeds of the Series 1993 Bonds and any Note issued in exchange therefor pursuant to Section 3 . 15 hereof. "Taxable Rate" means four percent (4%) per annum in excess of the National Prime Rate, adjusted quarterly on the first business day of each calendar quarter based on said rate as most recently published. "Trustee" means the trustee and/or co-trustee at the time serving as such under the Indenture. -8- "Written Request" with respect to the Borrower or the Issuer shall mean a request in writing signed by a general partner of the Borrower or an authorized officer of the Issuer, as the case may be. Section 1.2 . Rules of Interpretation. For all purposes of this Loan Agreement, except as otherwise expressly provided, or unless the context otherwise requires: (1) "This Loan Agreement" or "this Mortgage" means this instrument as originally executed and as it may from time to time be supplemented or amended pursuant to the applicable provisions hereof. (2) All references in this instrument to designated "Articles, " "Sections" and other subdivisions are to the designated Articles, Sections and other subdivisions of this instrument as originally executed. The words "herein, " "hereof " and "hereunder" and other words of similar import refer to this Loan Agreement as a whole and not to any particular Article, Section or other subdivision. (3) The terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular and the singular as well as the plural. (4) All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles as consistently applied. (5) Any terms not defined herein but defined in the Indenture shall have the same meaning herein. (6) The terms defined elsewhere in this Loan Agreement shall have the meanings therein prescribed for them. (7) This Loan Agreement shall be interpreted and construed in accordance with the laws of the State of Indiana. Section 1. 3 . Exhibits. The following Exhibits are attached to and by reference made a part of this Loan Agreement. Exhibit A. Description of the Project, Mortgaged Equipment and Real Estate and Exceptions to Title. Exhibit B. Form of Series 1993 Note. (End of Article I) -9- ARTICLE II Representations and Covenants; Loan of Series 1993 Bond Proceeds Section 2 . 1. Representations and Covenants by Issuer. Issuer represents, warrants, covenants and agrees that: (a) Issuer is a municipal corporation duly organized and duly existing under the laws of the State of Indiana. Under the provisions of the Act, Issuer is authorized to enter into the transactions contemplated by this Agreement and to carry out its obligations hereunder. Issuer has been duly authorized to execute and deliver this Agreement. Issuer agrees that it will do or cause to be done all things necessary to preserve and keep in full force and effect its existence. (b) Issuer shall provide funds from the issuance of the Series 1993 Bonds for the Project, as may be necessary, subject to the consideration of the Series 1993 Note and the Borrower granting a mortgage and security interest in the Project to the Issuer, all for the benefit of the holders of the Bonds, to the end that industry and the economy may be diversified and job opportunities promoted, and to secure the Bonds by pledging its interest in this Loan Agreement and the Series 1993 Note to the Trustee. (c) Issuer shall assign the Series 1993 Note to the Trustee pursuant to the Indenture, and no further assignment is contemplated by the Issuer, since the Issuer recognizes that the Series 1993 Note has not been registered under the Securities Act of 1933 . (d) The public approval requirements of paragraph (2) of Subsection 147 (f) of the Code have been satisfied in respect of the Series 1993 Bonds. (e) Issuer shall file, not later than the 15th day of the 2nd calendar month after the close of the calendar quarter in which the Bonds are issued, a statement concerning the Bonds which contains the information referred to in Section 149 (e) of the Code. Section 2 .2 . Representations by Borrower. Borrower represents and warrants that: (a) P.A.I. Properties is an Indiana partnership with its principal place of business in St. Joseph County, Indiana, and it has not received notice and has no reasonable grounds to -10- believe that it is in violation of any laws in any manner material to its ability to perform its obligations under this Loan Agreement and the Series 1993 Note, and has power to enter into this Loan Agreement and the Series 1993 Note. (b) The indication of interest by the Economic Development Commission of the Issuer on October 8, 1993 to issue its Series 1993 Bonds and lend the proceeds to Borrower for the purposes set forth herein has encouraged Borrower to make an addition to the Facilities in or near the City of South Bend, Indiana, and will promote diversification of economic development and create new job opportunities in the area. The Project has not been commenced by the Borrower prior to the adoption of such indication of interest with respect to the Project. (c) All of the proceeds from the Series 1993 Bonds (including any income earned on the investment of such proceeds, but after reduction for costs of issuance and interest prior to completion of the Project) will be used for the Project. No part of the proceeds are to be used by the Borrower, directly or indirectly, as working capital or to finance inventory. Costs of issuance financed by proceeds from the Series 1993 Bonds shall not exceed two percent (2%) of the face amount of the Series 1993 Bonds. (d) The Facilities constitute and will constitute either land or property of a character subject to the allowance for depreciation under Section 167 of the Code. (e) The Borrower will not use any of the funds provided by the Issuer hereunder in such manner as to, or take or omit to take any action which would, impair the exemption of interest on the Series 1993 Bonds from Federal income taxation. (f) The Borrower intends to operate or cause the Facilities to be operated as an economic development facility until the expiration or earlier termination of this Agreement as provided herein. (g) The Project is of the type authorized and permitted by the Act. (h) Neither the execution and delivery of this Loan Agreement, the consummation of the transactions contemplated hereby, including execution and delivery of the Series 1993 Note, nor the fulfillment of or compliance with the terms and conditions of this Loan Agreement, conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which Borrower is now a party or by which it is bound, or constitutes a -11- default under any of the foregoing, or results in the creation or imposition of any liens, charges, or encumbrances whatsoever upon any of the property or assets of Borrower under the terms of any other instrument or agreement. (i) The Borrower is or shall become the lawful owner and is now or shall become lawfully seized and possessed of the Mortgaged Property (other than that not presently in existence) , free and clear of all liens, security interests, charges or encumbrances whatever except Permitted Encumbrances, and has full power and lawful authority to mortgage and grant a security interest in the same to the Issuer. This Mortgage constitutes a direct and valid first lien on such Mortgaged Property, subject only to Permitted Encumbrances. (j) There are no obligations which are sold less than fifteen (15) days apart from the Series 1993 Bonds, are sold pursuant to the same plan of financing as the Series 1993 Bonds, and are reasonably expected to be paid from substantially the same source of funds as the Series 1993 Bonds. (k) No part of the Project reached a degree of completion which would permit operation at substantially the level for which it was designed and was, in fact, in operation at such level before the date of delivery of the Series 1993 Bonds. (1) Not more than 25 percent of the proceeds of the Series 1993 Bonds will be used to provide a facility the primary purpose of which is one of those referred to in Section 144 (a) (8) (A) of the Code, and no portion of the proceeds of the Series 1993 Bonds will be used to provide a facility referred to in Section 144 (a) (8) (B) or Section 147 (e) of the Code. (m) The average maturity of the Series 1993 Bonds (determined as provided in Section 147 (b) of the Code) does not exceed 120 percent of the average reasonably expected useful life of the Facilities being financed with the proceeds of the Series 1993 Bonds (determined as provided in Section 147 (b) of the Code) . (n) The Borrower has delivered to the Trustee a certificate of the Borrower or of independent certified public accountants for the Borrower: (i) identifying the property financed by the Series 1993 Bonds on an asset-by-asset basis (by ACRS cost recovery class, if any) and generally describing the facility or project, (ii) certifying the average maturity of the Series 1993 Bonds (determined as provided in Section 147 (b) of the Code) , and (iii) certifying the average -12- reasonably expected useful life of the facilities being financed with the proceeds of the Series 1993 Bonds (determined as provided in Section 147 (b) of the Code) . Section 2 . 3 . Loan of Series 1993 Bond Proceeds by Issuer. Concurrently with the execution and delivery hereof, the Issuer is issuing the Series 1993 Bonds and is lending the proceeds from the sale thereof to the Borrower by making the deposits and payments specified in Section 301 of the Indenture. Such loan is being evidenced by the execution and delivery by the Borrower of the Series 1993 Note substantially in the form attached hereto as Exhibit B. (End of Article II) -13- ARTICLE III Particular Covenants of the Borrower Section 3 . 1. Consent to Assignments to Trustee. The Borrower acknowledges and consents to the pledges and assignments of the Series 1993 Note and the assignment of the Issuer's rights hereunder to the Trustee pursuant to the Indenture and agrees that the Trustee may enforce the rights, remedies and privileges granted to the Issuer hereunder other than the rights of the Issuer to decline to accept Additional Notes as set forth in Section 6. 1 and 6. 3 hereof, to receive payments under Section 3 . 14 and 3 . 19 hereof and to execute and deliver supplements and amendments to this Loan Agreement pursuant to Section 8. 1 hereof. Other than as set forth above the Series 1993 Note may not be assigned without the prior written consent of the Borrower. Section 3 . 2 . Payment of Principal, Premium and Interest; Payments Pledged. The Borrower will duly and punctually pay the principal of, premium, if any, and interest on the Notes at the rates and the places and in the manner mentioned in the Notes and in this Loan Agreement according to the true intent and meaning thereof and hereof. The Borrower covenants and agrees with and for the express benefit of the Issuer, the Trustee and the holders of the Bonds that all payments pursuant hereto and to the Notes shall be made by the Borrower on or before the date the same become due, and the Borrower shall perform all of its other obligations, covenants and agreements hereunder, to the extent permitted by law, without notice or demand (except as provided herein) , and without abatement, deduction, reduction, diminution, waiver, abrogation, set-off, counterclaim, recoupment, defense or other modification of any right of termination or cancellation arising from any circumstance whatsoever, whether now existing or hereafter arising, and regardless of any act of God, contingency, event or cause whatsoever, and irrespective (without limitation) of whether the Mortgaged Property or any part thereof is defective or nonexistent, or whether the Borrower's revenues are sufficient to make such payments, and notwithstanding any damage to, or loss, theft or destruction of, the Mortgaged Property or any part thereof, expiration of this Mortgage, any failure of consideration or frustration of purpose, the taking by eminent domain or otherwise of title to or of the right of temporary use of, all or any part of the Mortgaged Property, legal curtailment of the Borrower's use thereof, or whether with or without the approval of the Issuer, any change in the tax or other laws of the United States of America, the State of Indiana, or any political subdivision of either thereof, any change in the Issuer's legal organization or status, or any default of the Issuer hereunder, and regardless of the -14- invalidity of any portion of this Mortgage; and, to the extent permitted by law the Borrower hereby waives the provisions of any statute or other law now or hereafter in effect impairing or conflicting with any of its obligations, covenants or agreements under this Mortgage or which releases or purports to release the Borrower therefrom. Nothing in this Mortgage shall be construed as a waiver by the Borrower of any rights or claims the Borrower may have against the Issuer under this Mortgage or otherwise, but any recovery upon such rights and claims shall be had from the Issuer separately, it being the intent of this Mortgage that the Borrower shall be unconditionally and absolutely obligated without right of set-off or abatement, to perform fully all of its obligations, agreements and covenants under this Mortgage for the benefit of the holders of the Bonds. It is understood and agreed that all payments made by the Borrower pursuant to Section 3 .2 hereof and the Notes are pledged to Trustee pursuant to the granting clauses of the Indenture. Borrower assents to such pledge, and hereby agrees that, as to Trustee, its obligation to make such payments shall be absolute and shall not be subject to any defense or any right of set-off, counterclaim or recoupment arising out of any breach by Issuer of any obligation to Borrower, whether hereunder or otherwise, or out of any indebtedness or liability at any time owing to Borrower by Issuer. Issuer hereby directs Borrower and Borrower hereby agrees to pay to Trustee at its principal office all said amounts payable by Borrower pursuant to Section 3 .2 hereof and the Notes. It is understood and agreed that Borrower shall be obligated to continue to pay the amounts specified herein and in the Notes whether or not the Project is damaged, destroyed or taken in condemnation and that there shall be no abatement of any such payments and other charges by reason thereof. Section 3 . 3 . Maintenance of Lien; Recording. The Borrower will, at its expense, take all necessary action to maintain and preserve the lien and security interest of this Loan Agreement so long as any Note is outstanding. The Borrower will, forthwith after the execution and delivery of this Loan Agreement and thereafter from time to time, cause this Loan Agreement and any financing statements in respect thereof to be filed, registered and recorded in such manner and in such places as may be required by law in order to publish notice of and fully to protect the lien and security interest hereof upon, and the title of the Borrower to, the Mortgaged Property; and from time to time will perform or cause to be performed any other act as provided by law and will execute or cause to be executed any and all continuation statements and further instruments that may be required by the Issuer or Trustee for such publication and protection. The Borrower will pay or cause to be paid all filing, registration and recording fees incident to such filing, registration and recording, and all expenses incident to the preparation, execution and acknowledgement -15- of such instruments of further assurance, and all federal or state fees and other similar fees, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Mortgage and such instruments of further assurance. Section 3 .4 . Further Assurances; After-acquired Property. (a) The Borrower will do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged and delivered, all such further acts, deeds, conveyances, mortgages, assignments, transfers and assurances as the Issuer or Trustee reasonably may require for the better assuring, conveying, mortgaging, assigning and confirming unto the Issuer and the Trustee all and singular the Mortgaged Property as now or hereafter constituted. (b) All right, title and interest of the Borrower in and to all improvements, betterments, renewals, substitutions and replacements of, the Mortgaged Property or any part thereof, hereafter constructed or acquired by the Borrower immediately upon such construction or acquisition, without any further mortgaging, conveyance or assignment, shall become and be part of the Mortgaged Property and shall be subject to the lien and security interest of this Loan Agreement as fully and completely and with the same effect as though now owned by the Borrower, but at any and all times the Borrower will execute and deliver to the Issuer any and all such further assurances, mortgages, conveyances or assignments therefor and other instruments with respect thereto as the Issuer may reasonably require for the purpose of expressly and specifically subjecting the same to the lien and security interest of this Loan Agreement. Section 3 .5. Financial Statements, Etc. The Borrower covenants that it will keep proper books of record and account in which full, true and correct entries will be made of all dealings or transactions of or in relation to the business and affairs of the Borrower, in accordance with generally accepted principles of accounting consistently maintained, and will furnish to the Issuer and the Trustee, and also to any holder of Bonds (or to the accountants or agents of such holder) who shall request the same in writing and who at the time of such request shall hold Bonds in the aggregate amount of $50, 000 or more, within ninety (90) days after the last day of each fiscal year of the Borrower, the financial report of the Borrower for such fiscal year prepared on a review basis, together with a separate written statement of the Borrower certifying that the Borrower has no knowledge of any default by the Borrower in the fulfillment of any of the terms, covenants, provisions or conditions of this Loan Agreement, or, if the Borrower shall have knowledge of any such default or defaults, it shall disclose the same and the nature thereof. Borrower shall also furnish to the Trustee and the Issuer, and also to any holder -16- of Bonds quarterly interim statements prepared by an independent accounting firm on a compilation basis. In addition, the Borrower shall furnish such additional information as the Trustee or any holder of Bonds in aggregate principal amount of $50, 000 or more may reasonably request concerning the Borrower in order to enable the Trustee or such holder to determine whether the covenants, terms and provisions of this Loan Agreement have been complied with by the Borrower and for that purpose all pertinent financial books, documents and vouchers relating to its business affairs and properties shall at all times upon reasonable prior written notice during regular business hours be open to the inspection of such persons or their accountants or other agents (who may make copies of all or any part thereof) as shall from time to time be designated and compensated by the Trustee or such holder of the Bonds, as the case may be. Without limiting the foregoing, the Borrower will permit the Trustee and any such holder (or such persons as such holder may designate) to visit and inspect, at the expense of the Trustee or such holder, any of the properties of the Borrower and to discuss the business affairs, finances and accounts of the Borrower with its officers, agents and independent accountants, and will provide such further financial information as Trustee or any such holder may reasonably request, all upon reasonable prior written notice and at such reasonable times during normal business hours and as often as the Trustee or such holder may reasonably desire. Section 3 . 6. Taxes, Charges and Assessments. The Borrower covenants and agrees, subject to the provisions of Section 3 .9 hereof, to pay or cause to be paid when the same shall become due or payable: (a) all taxes and charges on account of the ownership, use or operation of the Mortgaged Property, including but not limited to all sales, use, occupation and personal property taxes, all permit and inspection fees, occupation and license fees and all utility charges assessed or charged on or against such Mortgaged Property or on account of the Borrower's use thereof; and (b) all taxes, assessments and impositions, general and special, ordinary and extraordinary, of every name and kind, which shall be taxed, levied, imposed or assessed upon all or any part of such Mortgaged Property, or the interest of the Borrower therein. If under applicable law any such tax, charge, fee, rate, imposition or assessment may at the option of the taxpayer be paid in installments, the Borrower may exercise such option. Nothing contained herein shall be deemed to constitute an admission by the Borrower that the Borrower is liable for any tax, charge, fee, rate, imposition or assessment. -17- Section 3 .7 . Liens. Subject to the provisions of Section 3 .9 hereof, the Borrower will not create or permit to be created or remain and will, at its cost and expense, promptly discharge all liens, security interests, encumbrances and charges on the Mortgaged Property or any part thereof other than Permitted Encumbrances. Section 3 .8. Compliance with Orders, Ordinances, Etc. Subject to the provisions of Section 3 .9 hereof, the Borrower will, at its sole cost and expense, comply with all present and future laws, ordinances, orders, decrees, rules, regulations and requirements of every duly constituted governmental authority, commission and court and the officers thereof of which it has notice, and the failure to comply with which would materially and adversely affect the Mortgaged Property or the use, occupancy or condition thereof. Section 3 . 9. Permitted Contests. The Borrower shall not be required to pay any tax, charge or assessment required to be paid under Section 3 . 6 hereof, nor to remove any lien, security interest, encumbrance or charge required to be removed under Section 3 .7 hereof, nor to comply with any law, ordinance, order, decree, rule, regulation or requirement referred to in Section 3 .8 hereof, so long as the Borrower shall in good faith and at its cost and expense contest the amount or validity thereof, or take other appropriate action with respect thereto, in an appropriate manner or by appropriate proceedings, which shall operate during the pendency thereof to prevent the collection of or other realization upon the tax, charge, assessment, lien, security interest or encumbrance so contested, and the sale, forfeiture or loss of the Mortgaged Property or any part thereof to satisfy the same; provided, that no such contest or action shall subject the Issuer or the Trustee to any liability unless the Borrower properly indemnifies the Issuer or the Trustee, as the case may be. While any such matters are pending, the Borrower shall have the right to pay, remove or cause to be discharged or marked exempt the tax, charge, assessment, lien, security interest or encumbrance being contested. Each such contest shall be promptly prosecuted to final conclusion or settlement, and the Borrower will pay, and save the Issuer and the Trustee harmless against, all losses, judgments, decrees and costs (including reasonable attorneys fees and expenses in connection therewith) and will, promptly after the final determination or settlement of such contest or action, pay and discharge the amounts which shall be levied, assessed or imposed or determined to be payable thereon, together with all penalties, fines, interests, costs and expenses thereon or in connection therewith. Section 3 . 10. Repairs, Maintenance and Alterations. The Borrower will at its own cost and expense keep the Mortgaged Property in good repair and order, reasonable wear and tear excepted, and in as reasonably safe condition as its operation will permit and will make all necessary repairs thereto, ordinary as -18- well as extraordinary and foreseen as well as unforeseen, and all necessary replacements or renewals thereof. The Borrower shall have the right from time to time at its own cost and expense to make additions, alterations and changes (hereinafter collectively referred to as "alterations") in or to the Mortgaged Property, subject, however, in all cases to the' condition that no alteration to the Mortgaged Property be made which would substantially impair the utility or market value thereof, without in each case the prior written consent of the Trustee thereto. Section 3 . 11. Borrower Duties Under Indenture. The Borrower agrees to perform all matters provided by the Indenture to be performed by the Borrower and to comply with all provisions of the Indenture applicable to the Borrower. Section 3 . 12. Insurance. The Borrower shall maintain the following insurance at its sole cost and expense: (a) Insurance against loss and/or damage to the Mortgaged Property under a policy or policies covering such risks as are ordinarily insured against by similar companies, but in any event including fire, lightning, windstorm, hail, explosion, riot, riot attending a strike, civil commotion, damage from aircraft, smoke and uniform standard extended coverage and vandalism and malicious mischief endorsements, limited only as may be provided in the standard form of such endorsements at the time in use in the State of Indiana. Such insurance shall be for the lesser of (i) the full insurable value of such Mortgaged Property, or (ii) the optional redemption price of all Notes outstanding, but any such policy may have a deductible amount of not more than $50, 000. No policy of insurance shall be so written that the proceeds thereof will produce less than the minimum coverage required by the preceding sentence, by reason of co-insurance provisions or otherwise, without the prior consent thereto in writing by the Trustee. The term "full insurable value" shall mean the actual replacement cost of such Mortgaged Property and shall be determined from time to time at the request of the Trustee, but not more frequently than once every five years, by an architect, contractor, appraiser or appraisal company or one of the insurers, in any case, selected and paid for by the Borrower and approved by the Trustee. (b) Comprehensive general public liability insurance for injuries to persons and/or property, in limits not less than, and with deductibles not greater than, that customarily carried by companies similarly situated, and as is acceptable to the Trustee. (c) Workmen's compensation insurance respecting all employees of the Borrower in such amount as is customarily carried by like organizations engaged in like activities of comparable size and liability exposure. -19- Each policy of insurance obtained pursuant hereto shall (i) be issued by one or more recognized, financially sound and responsible insurance companies qualified or authorized under the laws of the State of Indiana to assume the risks covered by such policy, (ii) name the Trustee, the Borrower and the Issuer as assureds, as their respective interests may appear, and (iii) provide that such policy shall not be cancelled without at least 10 days prior written notice to each assured named therein. With respect to the insurance required by subsection (a) above, the policy or policies shall provide that whenever the Net Proceeds resulting from a claim exceed $50, 000, such Net Proceeds shall be payable to the Trustee, and if such Net Proceeds are equal to or less than $50,000, such Net Proceeds shall be payable directly to the Borrower. As to the insurance required by subsections (b) and (c) above, the Net Proceeds shall be payable directly to the Borrower. Upon the delivery of this Loan Agreement and thereafter not less than 10 days prior to the expiration dates of any policies, certificates, binders, or other evidence of insurance satisfactory to the Trustee given by the respective insurers of the policies provided for in subparagraphs (a) through (c) shall be delivered by the Borrower to the Trustee. If requested in writing by the Trustee, the Borrower shall furnish the Trustee with the schedule of premium payment dates and receipted bills or other evidence satisfactory to the Trustee of the payment when due of all premiums for all policies of insurance at any time required to be maintained hereunder. Upon reasonable prior written notice the Borrower will permit the Trustee to visit the offices of the Borrower and inspect the Borrower' s insurance records including all policies of insurance maintained pursuant to this Section and to make copies of all or any part thereof. Any of the foregoing insurance maintained by the Borrower pursuant hereto may be evidenced by one or more blanket insurance policies covering such Mortgaged Property and other property or assets of the Borrower, provided that any such policy shall specify that portion of the total coverage of such policy that is allocated to such Mortgaged Property and shall in all other respects comply with the requirements of this Section. Section 3 . 13 . Trustee's Right to Perform Borrower' s Covenants; Advances. In the event the Borrower shall fail to (i) perform any covenant contained in Section 3 . 6 hereof, (ii) remove any lien, security interest, encumbrance or charge pursuant to Section 3 .7 hereof, (iii) maintain the Mortgaged Property in repair pursuant to Section 3 . 10 hereof, (iv) procure the insurance required by Section 3 . 12 hereof, or (v) fail to make any other payment or perform any other act required to be performed hereunder, then and in each such case (unless the same is being contested or other appropriate action is being taken with respect thereto pursuant to Section 3 .9 hereof) , the Trustee, upon not less than 15 days prior written notice to the Borrower, may (but shall -20- not be obligated to) remedy such default for the account of the Borrower and make advances for that purpose from the Construction Fund or the Bond Fund, as the case may be. No such performance or advance shall operate to release the Borrower from any such default, and any sums so advanced by the Trustee shall be repayable by the Borrower on demand and shall bear interest at two percent (2%) above the National Prime Rate, adjusted monthly on the first day of the month, from the date of the advance until paid. Section 3 . 14. Indemnity. To the extent permitted by law, the Borrower will pay, and protect, indemnify and save the Issuer and the Trustee harmless from and against, all liabilities, losses, damages, costs, expenses (including attorneys' fees and expenses of the Issuer and the Trustee) , causes of actions, suits, claims, demands and judgments of any nature arising from: (1) any injury to or death of any person or damage to property resulting from or connected with the use, non-use or condition of the Facilities or Mortgaged Property or a part thereof; (2) violation of any agreement or condition of this Loan Agreement or the Indenture, except by the Issuer or the Trustee; (3) violation of any contract or agreement by the Borrower relating to the Mortgaged Property; (4) violation of any law, ordinance or regulation arising out of the ownership or use of the Mortgaged Property or a part thereof; (5) the acquisition and construction of the Facilities or the failure to acquire or construct the Facilities; and (6) any statement or information concerning the Borrower or Mortgaged Property, contained in any statement or prospectus furnished to purchasers of any Bonds, that is untrue or incorrect in any material respect, and any omission from any such statement or prospectus of any statement or information which should be contained therein for the purpose for which the same is to be used or which is necessary to make statements therein concerning the Borrower or its directors, officers and employees not misleading in any material respect. Furthermore, no covenant or agreement contained in this Agreement, the Bonds or the Indenture shall be deemed to be a covenant or agreement of any member of the Commission or of the legislative body of the Issuer or of any officer or employee of the Issuer or its legislative body in his or her individual capacity, and neither the members of the Commission or the legislative body of the Issuer nor any officer or employee of the Issuer executing the Bonds shall be liable -21- personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance of the Bonds. The foregoing shall not be construed to prohibit the Borrower from pursuing its remedies against either the Issuer or the Trustee for damages to the Borrower resulting from personal injury or property damage caused by the negligent or willful acts of either the Issuer or the Trustee. Section 3 . 15. Issuance of Substitute Notes. Upon the surrender of any Note, the Borrower will execute and deliver to the holder thereof a new Note dated the date of the Note being surrendered but with appropriate notations thereon to reflect payments of principal and interest thereon; provided, however, that there shall never be outstanding at any one time more than one Note of any one series. Section 3 . 16. Payment of Expenses of Issuance of Series 1993 Bonds. The Borrower agrees to be liable for and pay for any recording expenses, Trustee's acceptance fees, escrow and title insurance costs, reasonable legal fees, printing expenses and other fees and expenses incurred or to be incurred by or on behalf of the Issuer and the Trustee in connection with or as an incident to the issuance and sale of the Series 1993 Bonds. Pursuant to Sections 301 and 403 of the Indenture, the Issuer has authorized the use of certain proceeds of the Series 1993 Bonds to defray the Borrower's obligations under this Section. Section 3 . 17 . Funding of Indenture Funds; Investments; Arbitrage Certificates. The Issuer shall direct the Trustee to deposit and pay the proceeds from the sale of the Series 1993 Bonds in the manner specified in Article III of the Indenture. The Borrower and the Issuer agree that all moneys in any Fund established by the Indenture may, at the written direction of the Borrower, be invested in Qualified Investments, provided, however, that any securities purchased pursuant to this Section shall mature or be redeemable on a date or dates prior to the time when, in the judgment of the Borrower, such funds so invested will be required for expenditure, except to the extent any supplemental indenture between the Issuer and the Trustee may regulate the investment of such funds or any additional funds created by such supplemental indenture. The Trustee is hereby authorized to trade with itself in the purchase and sale of securities for such investments. The Trustee shall not be liable or responsible for any loss resulting from any such investment. All such investments shall be held by or under the control of the Trustee and any income resulting therefrom shall be applied in the manner specified in the Indenture. If at any time two (2) or more Notes having the same installment payment -22- dates are outstanding, any such income designated for application to the payment of the installments of the Notes shall be ratably applied and credited to such installments in proportion to the amounts thereof. The Issuer and the Borrower covenant that they will not, and will not cause the Trustee to, make any investment or do any other act or thing during the period that any Bonds are outstanding under the Indenture which would cause any of the Bonds to become or be classified as arbitrage bonds or federally guaranteed obligations within the meaning of Sections 148 and 149 (b) , respectively, of the Code and the regulations thereunder now or hereafter proposed or published in the Federal Register or as promulgated in final form. It is further understood and agreed that the Trustee shall not be required at any time to make any such investment or to do any such act. Section 3 . 18. Other Amounts Payable by the Borrower. The Borrower agrees to pay directly to the Trustee from time to time as long as there are Bonds outstanding (i) an amount equal to the annual fee of the Trustee for the ordinary services of the Trustee, as trustee, rendered and its ordinary expenses, including reasonable attorney' s fees, incurred under the Indenture, as and when the same becomes due, (ii) the reasonable fees, charges and expenses of the Trustee, as Bond Registrar and paying agent, and any other paying agent on the Bonds for acting as paying agent as provided in the Indenture, as and when the same become due, (iii) the reasonable fees, charges and expenses of the Trustee for the necessary extraordinary services rendered by it and extraordinary expenses incurred by it under the Indenture, as and when the same become due. Notwithstanding anything in this Section 3 . 18 to the contrary, the Borrower may, without creating an event of default as herein defined, contest in good faith the necessity for any such services, fees, charges or expenses of the Issuer or the Trustee. Section 3 . 19. Credits on Notes. Notwithstanding any provision contained in this Loan Agreement or in the Indenture to the contrary, in addition to any credits on the Notes resulting from the payment or prepayment thereof from other sources: (a) any moneys deposited by the Trustee in the Bond Fund for payment on the Notes shall be credited against the obligation of the Borrower to pay the principal of, premium, if any, and interest on, the Notes as the same become due; and (b) the principal amount of Bonds of any series and maturity acquired or prepaid in whole or in part by the Borrower and delivered to the Trustee, or acquired or prepaid in whole or in part by the Trustee and cancelled, shall be credited against the obligation of the Borrower to pay the principal of the Note evidencing the loan made by the Issuer with the proceeds of the sale of Bonds of such series maturity on the and maturity. -23- Section 3 . 20. Completion of Project. (a) Borrower agrees that: (i) It will make, execute, acknowledge and deliver any contracts, orders, receipts, writings and instructions with any other persons, firms or corporations and in general do all things which may be requisite or proper, all for acquiring, installing and completing the Project, to the extent permitted by law. (ii) It will cause the Facilities to be acquired, constructed and installed. (iii) It will, upon completion of the acquisition, construction and installation of the Facilities, furnish to the Trustee final lien waivers from all contractors or suppliers who have furnished material or labor for the Project. Borrower agrees to acquire, install and construct the Facilities with all reasonable dispatch; and to use its best efforts to cause the Project to be completed by 1 or as soon thereafter as may be practicable, delays incident to force majeure only excepted; but if for any reason such acquisition, installation and construction is not completed by said date there shall be no resulting liability on the part of Borrower and no diminution in or postponement of the payments required to be paid by Borrower under this Loan Agreement or the Series 1993 Note. In the event the moneys in the Construction Fund (including moneys from the proceeds of any Additional Bonds sold to finance completion of the Project) should not be sufficient to pay in full the costs to be paid therefrom, the Borrower agrees, for the benefit of the Issuer and in order to fulfill the purposes of the Act, to complete the acquisition, installation and construction of the Project and to pay that portion of the costs therefor as may be in excess of the moneys available therefor in the Construction Fund. The Issuer does not make any warranty, either express or implied, that the moneys, which will be paid into the Construction Fund and which under the provisions of this Loan Agreement will be available for payment of the costs of the acquisition, installation and construction of the Project, will be sufficient to pay all the costs which will be incurred in that connection. The Borrower agrees that if after exhaustion of the moneys in the Construction Fund the Borrower should pay pursuant hereto any portion of the said costs of the acquisition, installation and construction, it shall not be entitled to any reimbursement therefor from the Issuer, the Trustee or the holders of any of the Bonds, nor shall it be entitled to any diminution in or abatement or postponement of the amounts payable hereunder or under the Series 1993 Note. (b) Issuer has, in the Indenture, authorized and directed Trustee to make payments from the Construction Fund to pay the Costs -24- of Construction, or to reimburse Borrower for any Costs of Construction paid by it. At the time of each payment, evidence of the title shall be continued down to such time for possible liens or objections intervening between the date of the delivery of the Bonds and the date of such payment. Borrower agrees to direct such requisitions to the Trustee as may be necessary to effect payments out of the Construction Fund in accordance with this Section 3 .20. (c) The Completion Date shall be evidenced to Trustee and Issuer by a certificate signed by an authorized representative of Borrower stating that, except for amounts retained by Trustee at Borrower' s direction for any Costs of Construction not then due and payable or being contested in good faith, (i) acquisition and construction of the Project has been completed and any and all labor, services, materials and supplies used in such acquisition, installation and equipping have been paid for, (ii) all other facilities necessary in connection with the Project have been constructed, acquired and installed and all costs and expenses incurred in connection therewith have been paid. Notwithstanding the foregoing, such certificate shall state that it is given without prejudice to any rights against third parties which exist at the date of such certificate or which may subsequently come into being. Upon receipt of such certificate, Trustee shall in accordance with Section 403 of the Indenture transfer all moneys then in the Construction Fund to a special escrow account within the Bond Fund, except any amount retained as aforesaid by Trustee for any Costs of Construction, provided that at least 95% of the amount actually expended has been expended on land or property of a character subject to the allowance for depreciation under the Code. Trustee, as directed by Borrower, shall use any amount transferred to the Bond Fund from the original Loan (together with interest thereon, limited as provided in the Internal Revenue Service Rev. Proc. 79-5 at 26 CFR 601.201 and any subsequent amendments, modifications or replacements thereof) to pay principal of, or redeem Series 1993 Bonds, or upon receipt of an opinion from Bond Counsel to the effect that such use would not cause interest on the Bonds to become taxable, for any other use so approved by said Bond Counsel. Section 3 . 21. Sale and Release of Mortgaged Property. Except for Permitted Encumbrances and as herein specifically provided in this Section or in Section 3 .22 or otherwise, the Borrower will not sell or transfer or otherwise dispose of all or any part of the Mortgaged Property. The Borrower may at any time request the Issuer to enter into an amendment to this Loan Agreement for the purpose of effecting the release from this mortgage of any portion of the Mortgaged Property which constitutes equipment and is not necessary to the Borrower's business operations and the release of which will not adversely affect the ability of the Borrower to operate and maintain the remaining Mortgaged Property as provided in this Loan Agreement. The Issuer will execute the amendment but the amendment shall not -25- become effective until the following items have been submitted to the Trustee: (a) A copy of the said amendment as executed; (b) A certificate of the Borrower approving said amendment and stating that the Borrower is not in default under any of the provisions of this Loan Agreement; (c) A certificate of Borrower dated not more than sixty (60) days prior to the date of the release, stating that the part of such Mortgaged Property proposed to be released is not required for the Borrower's business operations; (d) Either (1) a deposit of an amount of money equal to the value of such Mortgaged Property as determined by an appraisal furnished to the Trustee and prepared by an appraiser satisfactory to the Trustee, which amount shall be placed by the Trustee in the Bond Fund; or (2) the Borrower may, in said amendment, subject to the lien of this Loan Agreement equipment of equivalent value and utility to the equipment to be released, the value of such equipment to be determined by an appraisal furnished to the Trustee and prepared by an appraiser satisfactory to the Trustee; (e) An opinion of Counsel stating that in his opinion all of the legal requirements necessary for such release have been met. If all of the conditions of this Section are met, the Trustee shall release any such part of the Mortgaged Property from the Indenture. No release effected under the provisions of this Section shall, except to the extent provided in subsection (d) hereof, entitle the Borrower to any abatement or diminution of the payments to be made hereunder. Section 3 .22 . Substitution of Mortgaged Property. The Borrower may from time to time substitute Mortgaged Property which constitutes equipment if the Mortgaged Property so substituted shall be of equivalent value and utility to that replaced. Any such substituted equipment shall be identified in writing by the Borrower to the Trustee and shall become a part of the Mortgaged Property and be included under the terms of this Loan Agreement, and the equipment for which substitution has been made shall become the property of the Borrower free and clear of any claims of the Issuer, the Trustee or the Bondholders therein or thereto. Section 3 .23 . Right of Access to the Facilities. Borrower agrees that the Issuer, the Trustee and their or either of their duly authorized agents shall have the right at all reasonable times during business hours, subject to Borrower's safety and security -26- requirements, to enter upon and examine and inspect the Facilities without interference or prejudice to the Borrower's operation. Borrower further agrees that the Issuer and its duly authorized agents shall have such rights of access to the Facilities as may be reasonably necessary to cause to be completed the acquisition and installation provided for in Section 3 .20 hereof, and thereafter for the proper maintenance of the Facilities, in the event of failure by Borrower to perform its obligations under Section 3 . 10 hereof. Section 3 . 24. Tax Exempt Status of Bonds. The Borrower further covenants that it will not take, or fail to take, any action which action or failure will cause the interest on the Bonds to become subject to federal income taxes pursuant to the provisions of Section 103 of the Code so long as any of the Bonds are outstanding under the Indenture; provided, that Borrower shall not have violated this covenant if the interest on any of the Bonds becomes taxable to a person who is a substantial user of the Project or a related person pursuant to the provisions of Section 147 (a) of the Code, or taxed by virtue of the alternative minimum tax or any section of the Code other than Section 103 . Section 3 .25. Financial Covenants. The Borrower covenants and agrees that so long as any of the Bonds are outstanding it shall: (a) pay all trade accounts due in accordance with industry standards; and (b) not mortgage, sell, pledge or otherwise dispose of any of its business assets except as provided herein or in the normal course of business. Section 3 .26. Information Report. The Borrower covenants and agrees that it will cooperate with the Issuer in preparing and submitting the information report required under Section 149 (e) of the Code concerning the Series 1993 Bonds. Section 3 . 27. Regulation U. The Borrower covenants and agrees that from and after the date hereof and so long as any amount remains unpaid on account of any Bond, it will not without the prior written approval of the Trustee, apply, directly or indirectly, any part of the Net Proceeds for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying any "margin security" as defined in Regulation U of the Board of Governors of the Federal Reserve System (Title 12, Part 221, Code of Federal Regulations, as amended) , or for the purpose of reducing or retiring any indebtedness which was originally incurred for any such purpose. (End of Article III) -27- ARTICLE IV Damage, Condemnation, and Loss of Title Section 4. 1. Damage. The Borrower agrees to notify the Trustee immediately (a) in the case of damage estimated to exceed $50,000 in amount to the Mortgaged Property resulting from fire or other casualty, or (b) upon obtaining knowledge of the institution of any proceedings for the condemnation or taking of the Mortgaged Property or any portion thereof for public or quasi-public use. In the event any such damage or condemnation is estimated to not exceed $50, 000, the Borrower will forthwith repair or replace such Mortgaged Property to substantially the same condition as it existed prior to the event causing such damage or condemnation or to a condition of at least equal utility and value and will apply the Net Proceeds of any insurance or condemnation award relating to such damage or condemnation received by the Borrower to the payment or reimbursement of the costs of such repair or replacement. So long as the Borrower is not in default hereunder, the Net Proceeds of any insurance or condemnation award relating to such damage or condemnation shall be paid over to the Borrower upon its Written Request therefor. In the event any such damage or condemnation shall be estimated to exceed $50, 000 in amount, the Borrower shall within 90 days after the receipt of the Net Proceeds of any insurance or condemnation award relating to such damage or condemnation elect one of the following two options by written notice of such election to the Trustee: (a) Option A - Repair or Replacement. The Borrower may elect to repair such Mortgaged Property or it may elect to replace the same with property substantially equal in value to the property destroyed, damaged or condemned. In such event the Borrower shall proceed forthwith to repair such Mortgaged Property to substantially the same condition as it existed prior to the event causing such damage, destruction or condemnation or to a condition of at least equal utility and value, or to replace the same, and will apply the Net Proceeds of any insurance or condemnation award relating to such damage, destruction or condemnation received by the Borrower to the payment or reimbursement of the costs of such repair or replacement. So long as the Borrower is not in default hereunder, any Net Proceeds of insurance relating to such damage received by the Trustee shall be released from time to time by the Trustee to the Borrower upon the receipt of the Written Request of the Borrower specifying the expenditures made or to be made or the indebtedness incurred in connection with such repair or replacement and stating that such Net Proceeds, together with any other moneys legally available for such purposes, will be sufficient to complete such repair or replacement; and -28- In the event the Borrower shall elect this Option A, the Borrower shall complete the repair or replacement of such Mortgaged Property, whether or not the Net Proceeds of insurance or condemnation award received by the Borrower for such purposes are sufficient to pay for the same. (b) Option B - Prepayment of Notes. The Borrower may elect to have the Net Proceeds payable as a result of such damage or condemnation applied to the prepayment of the Notes; provided, however, that the Borrower may elect to prepay less than all the Notes only if (i) the property damaged or condemned is not essential to the Borrower's use or occupancy of the Mortgaged Property; or (ii) the Mortgaged Property has been restored to a condition substantially equivalent to its condition prior to such damage; or (iii) suitable improvements or equipment of substantially equal utility value have been acquired for the Borrower' s operations at the Mortgaged Property. Whenever the Borrower elects to prepay Notes under this option, the Borrower shall, in its notice of election to the Trustee, direct the Trustee to apply such Net Proceeds, when an as received, to the prepayment of Notes in the manner specified in Section 5. 2 hereof. Section 4 .2 . Other Provisions with Respect to Net Proceeds. The Net Proceeds of any insurance or condemnation award in excess of $50, 000 received by the Trustee or the Borrower shall be deposited in a special trust account and invested or reinvested in Qualified Investments subject to the Borrower's right to receive the same pursuant to Section 4. 1(a) hereof. Any such Net Proceeds not so paid to the Borrower shall be applied to the prepayment of the Notes in the manner specified in Section 5. 2 hereof. Section 4.3 . Insufficiency of Net Proceeds. If the Net Proceeds are insufficient to pay in full the cost of any repair or replacement referred to in Section 4. 1 hereof, Borrower will nonetheless complete the work and will pay any cost in excess of the amount of the Net Proceeds held by the Trustee. (End of Article IV) -29- ARTICLE V Prepayment of Notes Section 5. 1. Prepayment Generally. Prepayment of the Series 1993 Note may be made to the extent and in the manner expressly permitted by this Loan Agreement. Section 5.2 . Optional Prepayments. Borrower shall have and is hereby granted the option to prepay, on any date, subject to the requirements of Section 5.4 of this Loan Agreement, the whole amount payable or any portion of the amount payable under this Loan Agreement and the Series 1993 Note prior to the expiration of the Loan Agreement and prior to full payment of the Bonds (or prior to making provision for payment thereof in accordance with the Indenture) by paying to the Trustee such amount plus accrued interest to prepayment date, plus a premium if such prepayment is prepaid at any time during the period prior to December 15 of the years indicated below but after the end of the preceding period: Premium as Percentage of Year Principal Amount Prepaid 1994 4% 1995 3% 1996 2% 1997 1% 1998 and thereafter 0% Section 5. 3 . Additional Interest Upon Event of Taxability. (a) If an Event of Taxability occurs, then the Borrower shall furnish to Issuer for payment to the Series 1993 Bondholders the following amounts: (i) from the date of taxability (such date being the date as of which interest on the Series 1993 Bonds is determined to be taxable) , an amount equal to the difference between (A) the interest that would have been payable had such interest payments been calculated at the Taxable Rate and (B) the actual amount of such interest payments, plus (ii) the amount of penalties, additions to tax, exclusive of any taxes imposed under Section 11 (or any successor provision) of the Code, and interest assessed against the Bondholders due to the inclusion of such additional interest payments in the Bondholders' gross income for federal income tax purposes ("Additions to Tax") that are deductible by the Bondholders for federal income tax purposes, plus -30- (iii) an amount, which after the deduction of all federal, state, or local taxes required to be paid by the Bondholders in respect of the receipt thereof (calculated at the maximum statutory rates applicable to the Bondholders) minus any tax benefit derived therefrom, shall be equal to the amount of any Additions to Tax that are not deductible by the Bondholders for Federal income tax purposes. The obligations of the Issuer, Bondholders and Borrower under this subsection (a) and subsection (b) below shall survive termination of this Agreement, payment of the Series 1993 Bonds, redemption of the Series 1993 Bond, and any purchase of the Series 1993 Bonds by or on behalf of the Borrower. (b) If the Issuer shall have made any payments to the Bondholder by reason of subsection (a) of this Section and if any Bondholder shall successfully claim for the taxable year in question that all or any part of the interest on the Bonds for such taxable year is excluded from the Bondholder's gross income for federal income tax purposes (for this purpose a claim shall be successful only upon expiration of the statute of limitations provided by Section 6501 or any successor provision of the Code with respect to such taxable year) , then such Bondholder shall pay to the Issuer for repayment to the Borrower the lesser of an amount equal to such payment with respect to such taxable year in question made by the Borrower, or the amount of the claim allowed, plus interest recovered by the Bondholder on the claim allowed. (c) After the occurrence of an Event of Taxability and until payment in full of the Series 1993 Note and the Series 1993 Bonds, interest will accrue and be payable on the Series 1993 Note and the Series 1993 Bonds at the Taxable Rate. Section 5.4 . Notice of Prepayment. The Borrower shall give the Trustee not less than thirty (30) days nor more than sixty (60) days prior written notice of any prepayment of the Notes which notice shall designate the date of prepayment and the amount thereof and direct the redemption of Bonds of the series and in the amounts corresponding to the Note or Notes to be prepaid; provided, however, that the Borrower shall have the right to rescind any election to prepay any Note or installment thereof prior to the time that the Trustee gives notice of the redemption of the Bonds to be redeemed from such prepayment. Such notice may be contained in any notice of election given pursuant to Section 4. 1 hereof. (End of Article V) -31- ARTICLE VI Additional Notes Section 6. 1. Issuance of Additional Notes. So long as no event of default (as defined in Section 7. 1 hereof) has occurred and is continuing, the Borrower from time to time may, with the consent of the Issuer, issue and sell to the Issuer (but only to the Issuer) one or more Notes pursuant to this Loan Agreement in addition to the Series 1993 Note (herein referred to as "Additional Notes") . Additional Notes may be issued for one or more of the following purposes (and for the purpose of securing funds deemed necessary to establish reserves therefor, to allow for capitalized interest, and to pay the expenses of the issuance thereof) : (a) obtaining funds to redeem any outstanding Note if such Note is then redeemable; (b) obtaining funds for the advance refunding of any outstanding Note, regardless of whether such Note is redeemable at such time; (c) financing the cost or estimated cost of completing the Project or of acquiring or constructing additions to the Project. Any Additional Note shall (i) be issued only in connection with the issuance of Additional Bonds, (ii) be lettered to correspond with the series of Additional Bonds the proceeds of which are being used to make the loan to the Borrower evidenced by such Additional Note, (iii) be substantially in the form of the Series 1993 Note attached hereto as Exhibit B (with appropriate variations or insertions) , (iv) be pledged and assigned by the Issuer to the Trustee as security for a corresponding series of Additional Bonds concurrently issued and sold under the Indenture, (v) be issued in the same principal amount as such corresponding series of Additional Bonds, (vi) be issued with the same final maturity date as such corresponding series of Additional Bonds, (vii) be issued with the same rate or rates of interest payable at the same time or times as such corresponding series of Additional Bonds, and (viii) require payments of installments of principal in the same amounts and at the same time as any payments of principal of such corresponding series of Additional Bonds. Additional Notes shall be authorized by a supplement to this Loan Agreement. Upon the issuance and sale of any Additional Notes the same shall, together with any other Note then outstanding, be equally and ratably secured by the lien of this Loan Agreement on the Mortgaged Property. It is the intent hereof that the rights and remedies of the holders of the Notes be equal and pari passu and nothing contained -32- herein or in any supplement to this Mortgage shall be deemed to give the holders of any Notes any rights or remedies superior or inferior to the rights and remedies of the holder or holders of any other Notes; provided, however, that in the event of any disagreement between the Trustee and the holder or holders of or any trustee acting for their benefit concerning the remedies to be pursued in the event of a default, the Trustee under the Indenture shall have the right to direct the remedies to be pursued. Section 6.2 . Conditions to Issuance of. Additional Notes. Prior to the issuance and sale of any Additional Note, and as a condition precedent thereto, the following documents and showings shall be executed and delivered to the Trustee: (a) If an Additional Note is being issued, a supplement to this Loan Agreement, executed by the Borrower and the Issuer, specifying the principal amount, rate of interest, maturity, terms of optional prepayment, if any, and form of such Additional Note and a supplement to the Indenture, executed by the Issuer and the Trustee, creating the Additional Bonds being issued and sold to finance the purchase of such Additional Note, specifying the terms thereof, pledging and assigning such Additional Note as security therefor and providing for the disposition of the proceeds of the sale thereof. (b) A certificate executed by the Borrower stating that no event of default (as defined in Section 7 . 1 hereof with respect to Additional Notes) has occurred and is continuing and that no event has occurred and is continuing which, with the lapse of time or giving of notice, or both, would constitute such an event of default. (c) An opinion of Bond Counsel stating that such Additional Notes have been issued in accordance with the terms and conditions of this Loan Agreement, and that such issuance will have no adverse affect on the tax-free nature for Federal income tax purposes of the interest on any Bonds outstanding. (d) Such other certificates and opinions of counsel as the Trustee may reasonably request. Section 6.3 . Issuer Not Obligated to Accept Additional Notes. Nothing contained in this Mortgage shall be interpreted as creating any obligation on the part of the Issuer to make any loan to the Borrower nor to accept any Additional Note evidencing any such loan, it being the intent hereof to reserve to the Issuer full and complete discretion to decline any such loan; provided, however, that if the Borrower meets and complies with all the conditions and requirements set out in this Article VI, the Issuer shall cooperate fully with the Borrower to procure the financing and shall use its best efforts to make such financing available through Additional Notes issued in accordance with the terms hereof. -33- Section 6.4 . Limitation on Notes. No Notes may be issued hereunder except for the Series 1993 Note, the Additional Notes and Notes issued in exchange therefor pursuant to Section 3 . 15 hereof. (End of Article VI) -34- ARTICLE VII Events of Default and Remedies Therefor Section 7. 1. Events of Default. The occurrence and continuance of any of the following events shall constitute an "event of default" hereunder: (a) failure of the Borrower to pay any installment of interest or principal, or any premium, on the Notes within five (5) days of when the same shall become due and payable, whether at maturity, or any installment payment date, or upon any date fixed for prepayment or by acceleration or otherwise (provided that failure to pay any additional interest or other amounts accrued on the Series 1993 Note as described in Section 5. 3 (a) hereof shall not constitute an event of default until 60 days after the Borrower has received notice of the Event of Taxability) ; or (b) failure of the Borrower to perform any other covenant, condition or provision hereof and to remedy such default within 30 days after notice thereof from the Trustee to the Borrower, unless the nature of the default is such that it cannot be remedied within the 30-day period, the Borrower institutes corrective action within the 30-day period, and the Borrower diligently pursues such action until the default is remedied; or (c) if any representation or warranty made by the Borrower in any statement or certificate furnished to the Issuer or the Trustee or the purchaser of any Bonds in connection with the sale of any Bonds or furnished by the Borrower pursuant hereto proves untrue in any material respect as of the date of the issuance or making thereof and shall not be made good within 60 days after notice thereof to the Borrower by the Trustee; or (d) any judgment, writ or warrant of attachment or of any similar process in any amount in excess of $50, 000 shall be entered or filed against the Borrower or against any of its property and remains unvacated, unpaid, unbonded, unstayed, uncontested or unappealed in good faith for a period of 60 days after notice thereof to the Borrower; or (e) if the Borrower or either Noel. H. Yarger or G. Toms Yarger admits insolvency or bankruptcy or inability to pay debts as they mature, or makes an assignment for the benefit of creditors or applies for or consents to the appointment of a trustee or receiver for the Borrower, or for the major part of their property; or (f) if a trustee or receiver is appointed for the Borrower or for the major part of its property and is not discharged within 10 days after such appointment; or -35- (g) if bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings for relief under any bankruptcy law or similar law for the relief of debtors are instituted by or against the Borrower or either Noel H.Yarger or G. Toms Yarger (other than bankruptcy proceedings instituted by the Borrower against third parties) , and if instituted against the Borrower or either Noel H. Yarger or G. Toms Yarger and are allowed against the Borrower or either Noel H. Yarger or G. Toms Yarger or are consented to or are not dismissed, stayed or otherwise nullified within 10 days after such institution; or (h) any event of default occurs under the 1986 Loan Agreement. During the occurrence and continuance of any event of default hereunder, the Trustee, as assignee of the Issuer pursuant to the Indenture, shall, to the extent permitted by law, have the following rights and remedies, in addition to any other remedies herein or by law provided: I. Remedies Under Uniform Commercial Code. In addition to any other remedies provided for hereby or by law, the Trustee shall have the rights of a secured party and the Borrower shall have the rights of a debtor under the Uniform Commercial Code of Indiana, codified at Indiana Code 26-1 (or any successor code or statute) , with respect to the Mortgaged Property upon the occurrence and continuance of an event of default hereunder, as defined in this Section 7. 1. II. Right to Bring Suit, Etc. The Trustee may in its discretion proceed to protect and enforce its rights by a suit or suits in equity or at law, whether for damages or for the specific performance of any covenant or agreement contained in the Notes, this Loan Agreement or in aid of the execution of any power herein granted, or for any foreclosure hereunder, or for the enforcement of any other appropriate legal or equitable remedy, as the Trustee shall deem most effectual to protect and enforce any of its rights or duties hereunder; provided, however that all costs incurred by the Trustee and the Issuer under this Article shall be paid to the Trustee or the Issuer, as the case may be, by the Borrower on demand. III. Acceleration of Series 1993 Note. The Trustee may declare the unpaid indebtedness on the Series 1993 Note and under this Loan Agreement to be due and payable immediately, if concurrently or prior to such declaration, the unpaid principal amount of the Series 1993 Bonds shall have been declared due and payable, and upon such declaration the same shall become immediately due and payable. Section 7 .2. Foreclosure and Sale of Mortgaged Property. During occurrence and continuance of an event of default the Trustee in its discretion may, to the extent permitted by law, sell to the -36- highest bidder all or any part of the Mortgaged Property and all right, title, interest, claim and demand therein, and the right of redemption thereof, in one lot as an entirety, or in separate lots, as the Trustee may elect, and in one sale or in any number of separate sales held at one time or any number of times, which such sale or lease shall be made at public auction at such place in the county in which the Mortgaged Property to be sold is situated and at such time and upon such terms as may be fixed by the Trustee and briefly specified in the notice of such sale or sales. Any sale by the Trustee may nevertheless, at its option, be made at such other place or places, and in such other manner, as may now or hereafter be authorized bylaw. Section 7 . 3 . Sale a Bar. To the extent permitted by law, any sale or sales pursuant to Section 7.2 hereof shall operate to divest all estate, right, title, interest, claim or demand whatsoever, whether at law or in equity, of the Borrower, in and to the premises, property, privileges and rights so sold, and shall be a perpetual bar both at law and in equity against the Borrower, its successors and assigns, and against any and all persons claiming or who may claim the same, or any part thereof, from, through or under the Borrower, its successors or assigns. Section 7.4. Receipt Sufficient Discharge for Purchaser. The receipt of the Trustee or of the court officer conducting any such sale for the purchase money paid at any such sale shall be a sufficient discharge therefor to any purchaser of the property, or any part thereof, sold as aforesaid; and no such purchaser or his representatives, grantees or assigns, after paying such purchase money and receiving such a receipt, shall be bound to see to the application of such purchase money upon or for the purpose of this Loan Agreement, or shall be answerable in any manner whatsoever for any loss, misapplication or non-application of any such purchase money or any part thereof, nor shall any such purchaser be bound to inquire as to the necessity or expediency of any such sale. Section 7 .5. Sale to Accelerate Notes. In the event of any sale pursuant to Section 7.2 hereof, the principal of the Notes, if not previously due, immediately thereupon shall become due and payable, anything in the Notes or this Loan Agreement or the 1986 Loan Agreement to the contrary notwithstanding. Section 7. 6. Application of Proceeds of Sales. The purchase money proceeds or avails of any such sale, together with any other sums which then may be held by the Trustee under this Loan Agreement as part of the Mortgaged Property or the proceeds thereof, whether under the provisions of this Article or otherwise, shall be paid to the Trustee who shall apply such funds as follows: FIRST: To the payment of the costs and expenses of such sale, including reasonable compensation to the Issuer or the Trustee, its or their agents, attorneys and counsel, and the -37- expenses of any judicial proceedings wherein the same may be made, and of all expenses, liabilities and advances made or incurred by the Issuer or the Trustee as permitted by this Loan Agreement, together with interest on all advances made by the Trustee at two percent (2%) above the National Prime Rate, adjusted monthly on the first day of the month, and to the payment of all taxes, assessments or liens prior to the lien of this Loan Agreement, except any taxes, assessments, liens, or other charges, subject to which the property shall have been sold. SECOND: To the payment of the whole amount then due, owing and unpaid upon the Notes for principal, interest and premium, if any; and in case such proceeds shall be insufficient to pay in full the whole amount so due, owing or unpaid upon the Notes, then ratably according to the aggregate of such principal and the accrued and unpaid interest and premium, if any, without preference or priority as between principal, interest or premium; such application to be made upon presentation of the Notes and the notation thereon of the payment, if partially paid, or the surrender and cancellation thereof, if fully paid. THIRD: To the payment of any other sums required to be paid by the Borrower pursuant to any provisions of this Loan Agreement or of the Notes. FOURTH: To the payment of the surplus, if any, to the Borrower or its successors or assigns, upon the written request of the Borrower or to whomsoever may be lawfully entitled to receive the same upon its written request, or as any court of competent jurisdiction may direct. Section 7 .7. Payment of Defaulted Amounts on Demand of Trustee. In case the Borrower shall: (a) fail to pay any installment of interest on the Notes when and as the same shall become due and payable, as therein and herein expressed; or (b) fail to pay the principal of the Notes, when and as the same shall become due and payable, whether at maturity, on any installment payment date, or upon designation for prepayment or by declaration, or upon a sale as in Section 7 .5 hereof provided, or otherwise; then upon written demand of the Trustee, the Borrower will pay to the Trustee the whole amount which then shall have become due and payable on the Notes for interest or principal or both, as the case may be, and in addition thereto such further amount as shall be sufficient to cover the cost and expenses of collection, including a reasonable compensation to the Trustee, its agents, attorneys and -38- counsel, and any expenses or liabilities incurred by the Trustee hereunder. Section 7.8. Trustee May Enforce Demand. In case the Borrower shall have failed to pay such principal and interest and other amounts upon demand, the Trustee, in its own name, may institute such actions or proceedings at law or in equity for the collection of the amounts so due and unpaid and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the Borrower and collect the moneys adjudged or decreed to be payable out of the property of the Borrower wherever situated, in the manner provided by law. The Trustee shall, if permitted by law, be entitled to recover judgment as aforesaid either before or after or during the pendency of any proceedings for the enforcement of the lien of this Loan Agreement; and, to the extent permitted by law, the right of the Trustee to recover such judgment shall not be affected by any entry or sale hereunder or by the exercise of any other right, power or remedy for the enforcement of the provisions of this Loan Agreement or the foreclosure of the lien hereof; and in case of a sale of the Mortgaged Property and of the application of the proceeds of sale, as in Section 7. 6 provided, to the payment of the debt hereby secured, the Trustee shall be entitled to enforce payment and to receive all amounts then remaining due and unpaid upon the Notes then outstanding, and shall be entitled to recover judgment for any portion of the debt remaining unpaid, with interest. To the extent permitted by law, no recovery of any judgment by the Trustee and no levy of an execution under any judgment upon the Mortgaged Property or upon any other property, shall affect the lien of this Loan Agreement upon the Mortgaged Property or any part thereof, or any lien, rights, powers or remedies of the Trustee hereunder, but such lien, rights, powers or remedies of the Trustee shall continue unimpaired as before. Any moneys thus collected by the Trustee under this Section shall be applied by the Trustee, as follows: FIRST: To the payment of all advances by the Issuer or Trustee with interest at the rate of interest equal to two percent (2%) above the National Prime Rate, adjusted monthly on the first day of the month, and all expenses and disbursements. SECOND: To the payment of the amounts then due and unpaid upon the Notes (whether for principal, interest or premium) in respect of which such moneys shall have been collected, ratably and without preference or priority of any kind, according to the amounts due and payable upon the Notes, upon presentation of the Notes and the notation thereon of such payment, if partly paid, and upon surrender thereof, if fully paid. -39- Section 7.9. Trustee Entitled to Appointment of Receiver. The Borrower further covenants that upon the happening of any event of default and thereafter during the continuance of such event of default unless the same shall have been waived as hereinbefore provided, the Trustee shall be entitled as a matter of right if it shall so elect, to the extent permitted by law, (i) forthwith and without declaring the principal of the Notes to be due and payable, or (ii) after declaring the same to be due and payable, or (iii) upon the filing of an action to foreclose this Mortgage or to enforce the specific performance hereof or in aid thereof or upon the commencement of any other judicial proceeding to enforce any right of the Trustee, to the appointment of a receiver or receivers of the Mortgaged Property and of all the earnings, revenues, rents, issues, profits and income thereof, with such powers as the court making such appointment shall confer, which may comprise any or all of the powers which the Trustee, is authorized to exercise by the provisions of subdivision II of Section 7. 1. The Borrower, if requested so to do by the Trustee to the extent permitted by law, will consent to the appointment of any such receiver as aforesaid. Section 7 . 10. Remedies Cumulative. No remedy herein conferred upon or reserved to the Trustee is intended to be exclusive of any other remedy or remedies, and each and every such remedy shall be cumulative, and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. Section 7. 11. Delay or Omission Not a Waiver. No delay or omission of the Trustee to exercise any right or power accruing upon any event of default shall impair any such right or power, or shall be construed to be a waiver of any such event of default or an acquiescence therein; and every power and remedy given by this Loan Agreement to the Trustee may be exercised from time to time and as often as may be deemed expedient by the Trustee. Section 7 . 12. Waiver of Extension, Appraisement or Stay Laws. To the extent permitted by law, the Borrower will not during the continuance of any event of default hereunder insist upon, or plead, or in any manner whatever claim or take any benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants and terms of performance of this Loan Agreement; nor claim, take or insist upon any benefit or advantage of any law now or thereafter in force providing for the valuation or appraisement of the Mortgaged Property, or any part thereof, prior to any sale or sales thereof which may be made pursuant to any provisions herein contained, or pursuant to the decree, judgment or order of any court of competent jurisdiction; nor after any such sale or sales, claim or exercise any right under any statute heretofore or hereafter enacted by the United States of America or by any state or territory, or otherwise, to redeem the property so sold or any part thereof; and the Borrower hereby expressly waives all benefits or advantage of any such law or -40- laws and covenants not to hinder, delay or impede the execution of any power herein granted or delegated to the Trustee, but to suffer and permit the execution of every power as though no such law or laws had been made or enacted. Section 7. 13 . Remedies Subject to Provisions of Law. All rights, remedies and powers provided by this Article may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law in the premises, and all the provisions of this Article are intended to be subject to all applicable mandatory provisions of law which may be controlling in the premises and to be limited to the extent necessary so that they will not render this Mortgage invalid or unenforceable under the provisions of any applicable law. (End of Article VII) -41- ARTICLE VIII Supplements and Amendments to this Loan Agreement Section 8. 1. Supplements and Amendments to this Loan Agreement. The Borrower and the Issuer may, with the consent of the Trustee, from time to time enter into such supplements and amendments to this Loan Agreement as to them may seem necessary or desirable to effectuate the purposes or intent hereof, subject to the provisions of the Indenture. (End of Article VIII) -42- ARTICLE IX Defeasance Section 9. 1. Defeasance. If the Borrower shall pay and discharge or provide, in a manner satisfactory to the Trustee, for the payment and discharge of the whole amount of the principal of, premium, if any, and interest on the Notes at the time outstanding, and shall pay or cause to be paid all other sums payable hereunder, or shall make arrangements satisfactory to the Trustee for such payment and discharge, and if provision shall have been made for the satisfaction and discharge of the Indenture as provided therein, then and in that case all property, rights and interest hereby conveyed or assigned or pledged shall revert to the Borrower, and the estate, right, title and interest of the Trustee therein shall thereupon cease, terminate and become void; and this Mortgage, and the covenants of the Borrower contained herein, shall be discharged and the Trustee in such case on demand of the Borrower and at its cost and expense, shall execute and deliver to the Borrower a proper instrument or proper instruments acknowledging the satisfaction and termination of this Mortgage, and shall convey, assign and transfer or cause to be conveyed, assigned or transferred, and shall deliver or cause to be delivered, to the Borrower, all property, including money, then held by the Trustee together with the Notes marked paid or cancelled. (End of Article IX) -43- ARTICLE X Miscellaneous Provisions Section 10. 1. Agreement Term. This Loan Agreement shall remain in full force and effect from the date hereof to and including the date of payment in full of the Notes, or, if said date is not a Business Day, on the next succeeding Business Day, or, such earlier date on which the Borrower prepays the amounts due under the Series 1993 Note pursuant to Article V hereof and under the Agreement; provided, however, the obligation of the Borrower to pay additional amounts pursuant to Sections 5. 3 (a) and (b) hereof shall survive termination of this Agreement. Section 10.2. Loan Agreement for Benefit of Parties Hereto. Nothing in this Loan Agreement, express or implied, is intended or shall be construed to confer upon, or to give to, any person other than the parties hereto, their successors and assigns and the holder of the Notes, any right, remedy or claim under or by reason of this Loan Agreement or any covenant, condition or stipulation hereof; and the covenants, stipulations and agreements in this Loan Agreement contained are and shall be for the sole and exclusive benefit of the parties hereto, their successors and assigns, the Trustee and the holder of the Notes. Section 10.3 . Severability. In case any one or more of the provisions contained in this Loan Agreement or in the Notes shall be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby. Section 10.4 . Limitation on Interest No provisions of this Loan Agreement or of the Notes shall require the payment or permit the collection of interest in excess of the maximum permitted by law. If any excess of interest in such respect is herein or in the Notes provided for, or shall be adjudicated to be so provided for herein or in the Notes, neither the Borrower nor its successors or assigns shall be obligated to pay such interest in excess of the amount permitted by law, and the right to demand the payment of any such excess shall be and hereby is waived, and this provision shall control any provisions of this Loan Agreement and the Notes inconsistent with this provision. Section 10.5. Addresses for Notice and Demands. All notices, demands, certificates or other communications hereunder shall be sufficiently given and shall be deemed given when mailed by registered or certified mail, postage prepaid, with proper address as indicated below. The Issuer, the Company, and the Trustee may, by written notice given by each to the others, designate any address or addresses to which notices, demands, certificates or other -44- communications to them shall be sent when required as contemplated by this Mortgage. Until otherwise provided by the respective parties, all notices, demands, certificates and communications to each of them shall be addressed as follows: To the Borrower: G. Toms Yarger 916 Riverside Drive South Bend, Indiana 46616 To the Issuer: City of South Bend, Indiana Fourth Floor County-City Building South Bend, Indiana 46601 Attention: City Clerk To the Trustee: 1st Source Bank 100 North Michigan South Bend, Indiana 46601 Attention: Trust Department Section 10. 6. Successors and Assigns. Whenever in this Loan Agreement any of the parties hereto is named or referred to, the successors and assigns of such party shall be deemed to be included and all the covenants, promises and agreements in this Loan Agreement contained by or on behalf of the Borrower, or by or on behalf of the Issuer, shall bind and inure to the benefit of the respective successors and assigns, whether so expressed or not. Section 10.7. Counterparts. This Loan Agreement is being executed in any number of counterparts, each of which is an original and all of which are identical. Each counterpart of this Loan Agreement is to be deemed an original hereof and all counterparts collectively are to be deemed but one instrument. Section 10.8. Governing Law. It is the intention of the parties hereto that this Loan Agreement and the rights and obligations of the parties hereunder and the Notes and the rights and obligations of the parties thereunder, shall be governed by and construed and enforced in accordance with, the laws of Indiana. (End of Article X) -45- IN WITNESS WHEREOF, the Borrower and the Issuer have caused this Loan Agreement to be executed in their respective names, and the Issuer has caused its corporate seal to be hereunto affixed and attested by its duly authorized officers, all as of the date first above written. P.A.I. PROPERTIES, an Indiana partnership By Noel H. Yarger, Partner G. Toms Yarger, Partner STATE OF INDIANA ) SS: COUNTY OF ST. JOSEPH ) On this day of December, 1993, before me, a notary public in and for said county and state, personally appeared Noel H. Yarger and G. Toms Yarger, to me personally known and known to me to be the same persons who executed the within and foregoing instrument, and they acknowledge the execution of said instrument to be their voluntary act and deed. IN WITNESS WHEREOF, I have hereunto set my hand and official seal this day of December, 1993 . (Written Signature) (Printed Signature) Notary Public My commission expires: My county of residence: (SEAL) -46- CITY OF SOUTH BEND By Joseph E. Kernan, Mayor (SEAL) Attest: Irene K. Gammon, Clerk STATE OF INDIANA ) SS: COUNTY OF ST. JOSEPH ) On this day of December, 1993, before me, a notary public in and for said county and state, personally appeared Joseph E. Kernan, to me personally known and known to me to be the same person who executed the within and foregoing instrument, who, being by me duly sworn, did depose, acknowledge and say: That he is Mayor of the City of South Bend (the "Issuer") , the municipal corporation described in and which executed the foregoing instrument; that he knows the seal of said Issuer; that the seal affixed to said instrument is the seal of said Issuer; that said instrument was signed and sealed on behalf of said Issuer; and the said Irene K. Gammon, as the Clerk of the Issuer, acknowledged the execution of said instrument to be the voluntary act and deed of said Issuer by it voluntarily executed. IN WITNESS WHEREOF, I have hereunto set my hand and official seal this day of December, 1993 . (Written Signature) (Printed Signature) Notary Public My commission expires: My county of residence: St. Joseph (SEAL) This instrument prepared by Mark C. Krcmaric of Barnes & Thornburg, 600 1st Source Bank Center, 100 North Michigan, South Bend, Indiana 46601. -47- EXHIBIT A DESCRIPTION OF PROJECT, MORTGAGED EQUIPMENT AND REAL ESTATE AND EXCEPTIONS TO TITLE Project Description: Equipment Subject to Security Interest: Description of Mortgaged Real Estate: Exceptions to Title: -48- EXHIBIT B P.A.I. PROPERTIES SERIES 1993 NOTE $450, 000 December , 1993 FOR VALUE RECEIVED, the undersigned, P.A.I. PROPERTIES, an Indiana partnership, hereby promises to pay, to the order of the City of South Bend, Indiana, as hereinafter provided, the principal sum of FOUR HUNDRED FIFTY THOUSAND DOLLARS ($450, 000. 00) , together with interest from the date hereof (computed on the basis of a 360- day year, twelve 30-day months) , at the fixed per annum rate of six and one-half percent (6-1/2%) . Payment shall be made in 180 equal successive monthly installments of principal, in the amount of Two Thousand Five Hundred Dollars ($2, 500. 00) per installment, plus interest on the unpaid principal balance at the fixed rate of six and one-half percent (6-1/2%) per annum, in arrears, due and payable monthly on the same days as principal, commencing on January 15, 1994, and continuing on the 15th day of each month thereafter to and including December 15, 2008, on which date all unpaid amounts hereunder shall be due and payable. Notwithstanding anything herein to the contrary, if an Event of Taxability occurs, then the Borrower shall furnish to Issuer for payment to the Bondholders the following amounts: (i) from the date of taxability (such date being the date as of which interest on the Series 1993 Bonds is determined to be taxable) , an amount equal to the difference between (A) the interest that would have been payable had such interest payments been calculated at the Taxable Rate and (B) the actual amount of such interest payments, plus (ii) the amount of penalties, additions to tax, exclusive of any taxes imposed under Section 11 (or any successor provision) of the Code, and interest assessed against the Bondholders due to the inclusion of such additional interest payments in the Bondholders' gross income for federal income tax purposes ("Additions to Tax") that are deductible by the Bondholders for federal income tax purposes, plus (iii) an amount, which after the deduction of all federal, state, or local taxes required to be paid by the Bondholders in respect of the receipt thereof (calculated at the maximum statutory rates applicable to the Bondholders) minus any tax benefit derived therefrom, shall be equal to the amount of any Additions to Tax that are not deductible by the Bondholders for Federal income tax purposes. -49- The obligations of the Borrower to pay such additional amounts due to an Event of Taxability shall survive termination of the Loan Agreement, payment of the Series 1993 Bonds, redemption of the Series 1993 Bond, any purchase of the Series 1993 Bonds by or on behalf of the Borrower, and payment of all other amounts owing on this Series 1993 Note. After the occurrence of an Event of Taxability and until payment in full of this Series 1993 Note, interest will accrue and be payable on this Series 1993 Note at the Taxable Rate. The Taxable Rate is four percent (4%) per annum in excess of the Prime Rate adjusted quarterly on the first business day of each calendar quarter. Payments of both principal and interest are to be endorsed to the Trustee, and are to be made directly to the Trustee for the account of the Issuer pursuant to such endorsement. Such endorsement is to be made as security for the payment of the bonds of the designated "City of South Bend Economic Development Revenue Bond (P.A.I. Properties, an Indiana Partnership Project, Series 1993) " issued pursuant to the Indenture (the "Series 1993 Bonds") . This Note is issued pursuant to the Loan Agreement and is entitled to the benefits, and is subject to the conditions thereof. To the extent permitted by law, the obligations of Borrower to make the payments required hereunder shall be absolute and unconditional without any defenses or right of setoff, counterclaim or recoupment by reason of any default by Issuer under the Loan Agreement or under any other agreement between Borrower and Issuer or out of any indebtedness or liability at any time owing to the Borrower by the Issuer or for any other reason. The Borrower promises to pay interest on any overdue principal and premium and, to the extent permitted by law, on any overdue interest, at the rate or rates of interest on the Bonds. Such principal, premium, if any, and interest are payable at the offices of the Trustee, or at the offices of any successor trustee under the Indenture. This Note is issued under and secured by the Loan Agreement. As provided in the Loan Agreement, Additional Notes may be issued and delivered by the Borrower to the Issuer or the purchaser or purchasers of the Additional Notes, with the consent of the Issuer, to refund outstanding Notes, or to finance the cost of construction or acquiring improvements for the Borrower as defined in the Loan Agreement and such Notes, if issued, together with this Note, shall be equally and ratably secured by the lien of the Loan Agreement. Furthermore, this Note ranks on a parity with the Borrower's Series 1986 Note, dated December 15, 1986, in original principal amount of $722, 000. Reference is hereby made to the Loan Agreement for a description of the property thereby mortgaged, the nature and extent of the security for such Notes and the rights of the holder thereof, the Borrower and the Issuer in respect thereof, and the -50- provisions for amending the Loan Agreement, to all of which the holder hereof, by its acceptance hereof, assents. The principal of this Note is subject to prepayment by the Borrower in the manner and as otherwise set forth in the Loan Agreement, in whole or in part, at a price equal to 100% of the principal amount hereof to be prepaid plus accrued and unpaid interest thereon to the date fixed for prepayment, plus a premium if such prepayment is paid at any time during the period prior to December 15 of the years indicated below but after the end of the preceding period: Premium as Percentage of Year Principal Amount Prepaid 1994 4% 1995 3% 1996 2% 1997 1% 1998 and thereafter 0% This Note may not be assigned or endorsed to any party without the express written consent of the Borrower. The Borrower hereby unconditionally waives diligence, presentment, protest, notice of dishonor and notice of default of the payment of any amount at any time payable to the Issuer under or in connection with this Note. All amounts payable hereunder are payable without relief from valuation and appraisement laws. In any case where the date of payment hereunder shall be in the Issuer, a Saturday, Sunday or a legal holiday or a day on which banking institutions are authorized by law to close, then such payment shall be made on the next succeeding business day with the same force and effect as if made on the date of payment hereunder. All terms used in this Note which are defined in the Loan Agreement shall have the meanings assigned to them in the Loan Agreement. IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed. Dated: December , 1993 . P.A.I. PROPERTIES, an Indiana general partnership By Noel H. Yarger, Partner G.Toms Yarger, Partner -51- ENDORSEMENT Pay, without recourse, to the Order of 1st Source Bank, as Trustee under the Trust Indenture dated as of December 1, 1993 , from the undersigned. CITY OF SOUTH BEND, INDIANA By Joseph E. Kernan, Mayor (SEAL) Attest: Irene K. Gammon, Clerk MCK02320 -52-