Exhibit 10.3

 

 

 

 

LOAN AGREEMENT

dated as of May 1, 2007

between

IOWA FINANCE AUTHORITY

and

WINDSOR ON THE RIVER, LLC

with respect to:

To be Issued

Iowa Finance Authority

Variable Rate Demand Multifamily Housing Revenue Bonds

(Windsor on the River, LLC Project),

Series 2007A

and

$24,000,000

Original Issued Amount

Iowa Finance Authority

Taxable Variable Rate Demand Multifamily Housing Revenue Bonds

(Windsor on the River, LLC Project),

Series 2007B

 

 

 

 

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TABLE OF CONTENTS

 

     Page  

ARTICLE I. DEFINITIONS

     2   

ARTICLE II. REPRESENTATIONS

     4   

Section 2.1.

  

Representations of the Issuer

     4   

Section 2.2.

  

Representations of the Borrower

     5   

ARTICLE III.

  

ISSUANCE OF BONDS

     8   

ARTICLE IV.

  

THE PROJECT

     9   

Section 4.1.

  

Rehabilitation of Project

     9   

Section 4.2.

  

Disbursements from the Project Fund

     9   

Section 4.3.

  

Establishment of Completion Date

     10   

Section 4.4.

  

Investment of Moneys

     12   

Section 4.5.

  

Operation of the Project

     12   

Section 4.6.

  

Issuer’s and Trustee’s Right of Access to the Project

     13   

Section 4.7.

  

Maintenance and Repair; Insurance

     13   

Section 4.8.

  

Annual Information for Audit

     13   

Section 4.9.

  

No Warranty by Issuer

     13   

ARTICLE V.

  

PAYMENTS

     14   

Section 5.1.

  

Repayment

     14   

Section 5.2.

  

Additional Payments

     15   

Section 5.3.

  

Prepayments

     16   

Section 5.4.

  

Obligations of Borrower Unconditional

     16   

Section 5.5.

  

Letter of Credit

     16   

ARTICLE VI.

  

SPECIAL COVENANTS AND AGREEMENTS

     17   

Section 6.1.

  

Maintenance of Existence

     17   

Section 6.2.

  

Reports

     17   

Section 6.3.

  

Payment of Taxes

     17   

Section 6.4.

  

Arbitrage

     17   

Section 6.5.

  

Borrower Obligation with Respect to Exclusion of Interest Paid on the Series
2007A Bonds

     18   

Section 6.6.

  

Recording and Maintenance of Liens

     18   

Section 6.7.

  

Compliance with Laws

     18   

Section 6.8.

  

Continuing Disclosure

     19   

ARTICLE VII.

  

NO RECOURSE TO ISSUER; INDEMNIFICATION

     20   

Section 7.1.

  

No Recourse to Issuer

     20   

 

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Section 7.2.

   Indemnification      20   

ARTICLE VIII.

   ASSIGNMENT      23   

Section 8.1.

   Assignment by Borrower      23   

Section 8.2.

   Assignment by Issuer      23   

ARTICLE IX.

   DEFAULTS AND REMEDIES      24   

Section 9.1.

   Events of Default      24   

Section 9.2.

   Remedies on Default      25   

Section 9.3.

   Agreement to Pay Attorneys’ Fees and Expenses      26   

Section 9.4.

   No Remedy Exclusive      26   

Section 9.5.

   No Additional Waiver Implied by One Waiver      26   

ARTICLE X.

   MISCELLANEOUS      27   

Section 10.1.

   Notices      27   

Section 10.2.

   Binding Effect      27   

Section 10.3.

   Severability      27   

Section 10.4.

   Amendments      27   

Section 10.5.

   Right of Borrower to Perform Issuer’s Agreements      27   

Section 10.6.

   Expiration of Rights of Credit Provider      27   

Section 10.7.

   Limitation of Liability      28   

Section 10.8.

   Indenture Provisions      28   

Section 10.9.

   Applicable Law      28   

Section 10.10.

   Captions; References to Sections      29   

Section 10.11.

   Complete Agreement      29   

Section 10.12.

   Termination      29   

Section 10.13.

   Counterparts      29   

Section 10.14.

   Non-Recourse      29   

EXHIBIT A

   DESCRIPTION OF THE PROJECT      A-1   

EXHIBIT B

   FORM OF COMPLETION CERTIFICATE      B-1   

EXHIBIT C

   PROMISSORY NOTE (SERIES 2007A)      C-1   

EXHIBIT D

   PROMISSORY NOTE (SERIES 2007B)      D-1   

 

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LOAN AGREEMENT dated as of May 1, 2007, between IOWA FINANCE AUTHORITY, a public
instrumentality and agency of the State of Iowa (the “Issuer”) and WINDSOR ON
THE RIVER, LLC, a Delaware limited liability company (the “Borrower”).

WHEREAS, pursuant to Chapter 16 of the Code of Iowa Code, as amended (the
“Act”), the Issuer has the power to issue revenue bonds for the purpose of
financing projects as defined in the Act; and

WHEREAS, in order to further the purposes of the Act, the Issuer plans to
undertake the refinancing of certain existing indebtedness in connection with
the acquisition and the financing of the rehabilitation of, approximately 424
units of multifamily housing in Cedar Rapids, Linn County, Iowa (the “Project”),
as further described in Exhibit A attached hereto, by authorizing the issuance
of its Variable Rate Demand Multifamily Housing Revenue Bonds (Windsor on the
River, LLC Project), Series 2007A, in an aggregate principal amount of up to
$24,000,000 (when, and if, issued, the “Series 2007A Bonds”) and its Taxable
Variable Rate Demand Multifamily Housing Revenue Bonds (Windsor on the River,
LLC Project), Series 2007B, originally issued in the aggregate principal amount
of $24,000,000 (the “Series 2007B Bonds” and together with the Series 2007A
Bonds, the “Bonds”); and

WHEREAS, the Bonds will be issued under the terms of an Indenture of Trust (the
“Indenture”) of even date herewith between the Issuer and The Bank of New York
Trust Company, N.A., as trustee (the “Trustee”); and

WHEREAS, the Borrower’s obligation to repay the loan is evidenced by this
Agreement and the Borrower’s execution and delivery to the Trustee of their
promissory notes (collectively, the “Notes”) concurrent herewith; and

WHEREAS, the Bonds are secured by (i) an assignment and pledge by the Issuer to
the Trustee of this Agreement, (ii) the Notes, and (iii) an irrevocable,
transferable, direct pay letter of credit issued by Wells Fargo Bank, N.A.,
Chicago, Illinois (the “Initial Credit Provider” and together with any bank
issuing an Alternate Credit Facility, the “Credit Provider”), in favor of the
Trustee for the benefit of the owners from time to time of the Bonds, and any
other letter of credit issued in substitution therefor in accordance with the
terms hereof and thereof (the “Letter of Credit”);

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NOW, THEREFORE, in consideration of the respective representations and
agreements herein contained, the parties hereto agree as follows (provided, that
in the performance of the agreements of the Issuer herein contained, any
obligation it may thereby incur shall not constitute a debt, liability or
obligation of the State of Iowa (the “State”), or any political subdivision
thereof, including, without limitation, the Issuer and shall never be payable
from tax revenues or other public or general funds or assets of the State or the
Issuer, except to the extent the Bonds shall be a limited obligation of the
Issuer payable solely out of the revenues and receipts derived from this
Agreement, the Notes, the sale of the Bonds, the income from the temporary
investment thereof and moneys derived from drawings under the Letter of Credit,
all as herein provided):

ARTICLE I.

DEFINITIONS

For all purposes of this Agreement, unless the context clearly requires
otherwise, all terms defined in Article I of the Indenture have the same
meanings in this Agreement.

“Completion Date” means the date the rehabilitation of the Project is certified
to be complete in accordance with the provisions of Section 4.3 hereof.

“Construction Period” means the period between the beginning of the
rehabilitation or the date on which Bonds are first delivered to the purchasers
thereof, whichever is earlier, and the Completion Date.

“Cost of the Project” means the sum of the items authorized to be paid from the
Project Fund pursuant to the provisions of Section 4.2 hereof.

“Indenture” means the Indenture of Trust relating to the Bonds, dated as of the
date of this Agreement, between the Issuer and The Bank of New York Trust
Company, N.A., as Trustee, as such Indenture of Trust may be amended or
supplemented from time to time in accordance with its terms.

“Issuance Costs” means all costs and expenses of issuance of the Bonds,
including, but not limited to:

(i) underwriter’s fees;

(ii) counsel fees and expenses, including Bond Counsel, Issuer’s counsel, Credit
Provider’s counsel, underwriter’s counsel and Borrower’s counsel, as well as any
other specialized counsel;

(iii) financial advisor fees;

(iv) rating agency fees;

(v) Trustee fees and Trustee’s counsel fees;

(vi) paying agent and certifying and authenticating agent fees related to
issuance of the Bonds;

(vii) accountant fees;

(viii) printing costs of the Bonds and of any official statement;

(ix) publication costs associated with the financing proceedings.

“Loan” means the Loan made pursuant to Article III of the Agreement.

“Notes” means collectively, the Series 2007A Note and the Series 2007B Note.

 

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“Qualified Costs of Construction” means that portion of the Cost of the Project
which is chargeable to the Project’s capital account for Federal income tax
purposes or which would be so chargeable either with a proper election by the
Borrower under the Code or but for a proper election by the Borrower to deduct
such amount and which were incurred and paid, or are to be incurred and paid,
after sixty (60) days prior to March 14, 2007.

“Series 2007A Note” means when, and if, issued, the promissory note given by the
Borrower in connection with the Series 2007A Bonds pursuant to Section 5.1 of
this Agreement, substantially in the form of Exhibit C attached hereto.

“Series 2007B Note” means the promissory note given by the Borrower in
connection with the Series 2007B Bonds pursuant to Section 5.1 of this
Agreement, substantially in the form of Exhibit D attached hereto.

“Tax Certificate” means the Tax Representation Certificate of the Borrower
delivered in connection with the initial issuance and delivery of the Bonds.

 

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ARTICLE II.

REPRESENTATIONS

Section 2.1. Representations of the Issuer. The Issuer makes the following
representations and warranties as the basis for the undertakings on its part
herein contained:

(a) The Issuer is a public instrumentality and agency of the State of Iowa and
is authorized to enter into the transactions contemplated by this Agreement, the
Indenture, the Land Use Restriction Agreement and the Bond Purchase Agreement,
and to carry out its obligations hereunder and thereunder. By proper action the
Issuer has duly authorized the execution and delivery of the Bonds, this
Agreement, the Indenture, the Land Use Restriction Agreement and the Bond
Purchase Agreement and the performance of its obligations under this Agreement,
the Indenture, the Land Use Restriction Agreement, the Bond Purchase Agreement
and the Bonds.

(b) Neither the execution and delivery of the Bonds, this Agreement, the
Indenture, the Land Use Restriction Agreement or the Bond Purchase Agreement,
the consummation of the transactions contemplated hereby and thereby nor the
fulfillment of or compliance with the terms and conditions or provisions of the
Bonds, this Agreement, the Indenture or the Bond Purchase Agreement conflicts
with or results in the breach of any of the terms, conditions or provisions of
any constitutional provision or statute of the State or of any agreement or
instrument or judgment, order or decree to which the Issuer is now a party or by
which it or its property is bound or constitutes a default under any of the
foregoing or results in the creation or imposition of any prohibited lien,
charge or encumbrance of any nature upon any property or assets of the Issuer
under the terms of any instrument or agreement.

(c) The Issuer is issuing the Bonds to enable the Borrower to obtain moneys
which will be used, together with certain other moneys of the Borrower, to
(i) finance a portion of the costs of rehabilitation of the Project,
(ii) refinance certain existing indebtedness incurred in connection with the
Project and (iii) pay certain expenses incurred in connection with the issuance
of the Bonds.

(d) There is no action, suit, proceeding, inquiry or investigation pending or,
to the knowledge of the Issuer, threatened against the Issuer by or before any
court, governmental agency or public board or body, which (i) affects or
questions the existence or the territorial jurisdiction of the Issuer or the
title to the office of any officer or member of the governing body of the
Issuer; (ii) affects or seeks to prohibit, restrain or enjoin the execution and
delivery of this Agreement, the Indenture or the Bond Purchase Agreement or the
issuance, execution or delivery of the Bonds; (iii) affects or questions the
validity or enforceability of this Agreement, the Indenture, the Bond Purchase
Agreement or the Bonds; or (iv) questions the power or authority of the Issuer
to perform its obligations under the Bonds, this Agreement, the Indenture or the
Bond Purchase Agreement.

(e) The Issuer has taken all action and has complied with all provisions of law
with respect to the execution, delivery and performance of this Agreement, the
Bonds, the

 

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Indenture and the Bond Purchase Agreement and the due authorization of the
consummation of the transactions contemplated hereby and thereby, and this
Agreement, the Bonds, the Indenture and the Bond Purchase Agreement have been
duly executed and delivered by, the Issuer.

(f) The Issuer has not pledged and will not pledge or grant any security
interest in its interest in, to or under this Agreement and the payments made
hereunder and thereunder, or the revenues or income to be derived by the Issuer
hereunder and thereunder for any purpose other than to secure the Bonds.

(g) The Issuer will not knowingly engage in any activity which will result in
the interest on any Series 2007A Bonds issued becoming taxable to the holders
thereof under Federal or State income tax laws.

Section 2.2. Representations of the Borrower. The Borrower makes the following
representations and warranties as the basis for the undertakings on its part
herein contained:

(a) The Borrower is a limited liability company duly organized and validly
existing under the laws of the State of Delaware and is authorized to conduct
business in the State and every other state in which the nature of its business
requires such authorization and has full power to enter into this Agreement, the
Notes, the Reimbursement Agreement, the Bond Purchase Agreement, the Remarketing
Agreement and the Tax Certificate.

(b) The Bond Documents to which the Borrower is a party have each been duly
executed and delivered by the Borrower, and, assuming due authorization,
execution and delivery by the other party or parties hereto and thereto, the
Bond Documents to which the Borrower is a party are each legal, valid and
binding obligations of the Borrower enforceable against the Borrower, in
accordance with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws or equitable principles relating to, or limiting creditors’ rights or
contractual obligations generally.

(c) The execution and delivery of the Bond Documents, the compliance with the
terms, conditions and provisions hereof and thereof, and the consummation of the
transactions herein and therein contemplated do not and will not violate any
existing law or any existing regulation, order, writ, injunction or decree of
any court or governmental instrumentality applicable to the Borrower, or result
in a breach of any of the terms, conditions or provisions of, or constitute a
default under, or result in the creation or imposition of any material mortgage,
lien, charge or encumbrance of any nature whatsoever upon any of the properties
or assets of the Borrower (except as contemplated by the Indenture) in violation
of the terms of any mortgage, indenture, agreement or instrument to which the
Borrower is a party or by which it or any of its properties is bound.

(d) Except as disclosed in writing to the Issuer and the Credit Provider, there
is no action, suit, proceeding, inquiry or investigation before or by any court,
public board or body pending or, to the knowledge of the Borrower, threatened
against or

 

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affecting the Borrower wherein an unfavorable decision, ruling or finding could
have a material adverse effect on the properties, business, condition (financial
or otherwise) or results of operations of the Borrower or would adversely affect
the validity or enforceability of, or the authority or ability of the Borrower
to perform its obligations under, the Bond Documents.

(e) All necessary authorizations, approvals, consents and other orders of any
governmental authority or agency for the execution and delivery by the Borrower
of the Bond Documents have been obtained and are in full force and effect.

(f) In the rehabilitation of the Project, the Borrower will, and at no expense
to Issuer, comply in all material respects with all applicable building, zoning
and land use, environmental protection, sanitary and safety and other laws,
rules and regulations. It shall not be a breach of this paragraph, however, if
the Borrower fails to comply with such laws, rules and regulations during any
period in which it shall in good faith diligently contest the validity or
applicability thereof and no proceeding shall have been commenced or unstayed
binding order issued which has a material adverse effect on the operations
(financial or otherwise), business or properties of the Borrower arising out of
such contest.

(g) The Borrower shall duly pay or cause to be paid all taxes and governmental
charges of any kind that may at any time be lawfully assessed or levied against
or with respect to the Project, all utility and other charges incurred in the
operation, maintenance and upkeep of the Project and all assessments and charges
lawfully made by any governmental body for public improvements that may be
secured by a lien on the Project. However, the Borrower may contest in good
faith any such event and may permit the taxes, assessments or other charges so
contested to remain unpaid during any period, including appeals, when the
Borrower is in good faith contesting the same, provided that such non-payment
does not have a material adverse effect on the operations (financial or
otherwise), business or properties of the Borrower.

(h) All necessary orders, consents, authorizations, permits, licenses and
approvals legally required by governmental authorities to be obtained on the
date hereof in connection with the operation, ownership, maintenance and
construction of the Project and of other facilities of the Borrower have been
obtained and are in full force and effect, and the Borrower knows of no reason
why it cannot obtain all other necessary orders, consents, authorizations,
permits, licenses and approvals legally required by governmental authorities to
be obtained after the date hereof in connection with the completion of the
construction and the operation of the Project.

(i) No event has occurred and no condition exists which, upon the issuance of
the Bonds, would constitute a material violation of, breach of, or default under
any of the Bond Documents or any material agreement or instrument to which the
Borrower is a party and which is used or contemplated for use in consummation of
the transactions contemplated hereby or thereby, or constitute an Event of
Default under the Indenture, the Reimbursement Agreement or this Agreement or
which, with the lapse of time or with the giving of notice or both, would become
or constitute such an Event of Default or such a violation, breach or default.

 

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(j) The information furnished by the Borrower and filed by the Issuer with the
Internal Revenue Service pursuant to Section 149(e) of the Code is true and
correct in all material respects.

(k) Neither this Agreement nor any other document, certificate or written
statement furnished to the Issuer by or on behalf of the Borrower in connection
with the transactions contemplated hereby or thereby or by the Indenture,
contains, to the best of the Borrower’s knowledge, any untrue statement.

(1) The Borrower agrees to comply with the requirements of Section 148 of the
Code as described in the Tax Certificate regarding the payment of certain
investment earnings to the United States.

(m) None of the proceeds of the Bonds shall be used in such a manner as to cause
the Bonds to be “federally guaranteed” within the meaning of Section 147(b) of
the Code.

(n) No event has occurred and no condition exists with respect to the Borrower
that would constitute an “Event of Default” under this Agreement or that, with
the lapse of time or the giving of notice or both, would become an “Event of
Default” under this Agreement.

(o) The Credit Provider does not control, either directly or indirectly through
one or more intermediaries, the Borrower or any of its members. Likewise,
neither the Borrower or its members control, either directly or indirectly
through one or more intermediaries, the Credit Provider. “Control” for this
purpose has the meaning given to such term in Section 2(a)(9) of the Investment
Company Act of 1940. The Borrower agrees to provide written notice to the
Trustee, the Remarketing Agent and the Bondholders at least thirty days prior to
its consummation of any transaction that would result in the Borrower
controlling or being controlled by the Credit Provider or any provider of an
alternate Credit Facility.

 

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ARTICLE III.

ISSUANCE OF BONDS

In order to provide funds to refinance certain existing indebtedness incurred in
connection with the acquisition of the Project and to finance the rehabilitation
of the Project, the Issuer agrees that it will issue under the Indenture, sell
and cause to be delivered, the Bonds, bearing interest and maturing as set forth
in the Indenture. The Issuer will thereupon direct the proceeds received from
the sale of the Bonds to be deposited in accordance with Section 301 of the
Indenture and such deposits shall constitute a loan equal to the initial
principal amount of the Bonds to the Borrower. The Loan shall be evidenced by
the Notes. Any moneys held in the Project Fund (including earnings on any
investment thereof) and pending application as provided in Article IV hereof,
are subject to a lien in favor of the holders of the Bonds as provided in the
Indenture.

 

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ARTICLE IV.

THE PROJECT

Section 4.1. Rehabilitation of Project. The Borrower represents, warrants and
covenants that it will complete the rehabilitation of the Project in accordance
with this Article IV, substantially in accordance with the plans and
specifications, if any, therefor prepared by it, including any and all
supplements, amendments and additions (or deletions) thereto (or therefrom);
provided, however, that such other facilities and property contemplated by such
supplements, amendments, additions or deletions to the plans and specifications
shall not disqualify the Project as a “project” within the meaning of the Act or
result in the interest on any Series 2007A Bonds becoming includable in the
gross income of the owners of the Series 2007A Bonds for Federal income tax
purposes.

In the event that Exhibit A hereto is to be amended or supplemented in
accordance with the provisions of Section 1101 of the Indenture, the Issuer may
enter into, and may instruct the Trustee to consent to, an amendment of or
supplement to Exhibit A hereto upon receipt of:

(i) a copy of the proposed form of amendment or supplement to Exhibit A hereto,
and

(ii) the written approving opinion of Bond Counsel to the effect that such
amendment or supplement will not have the effect of disqualifying the Project as
a “project” within the meaning of the Act or result in the interest on any
Series 2007A Bonds becoming includable in the gross income of the owners of the
Series 2007A Bonds for Federal income tax purposes.

Section 4.2. Disbursements from the Project Fund. The Issuer authorizes and
directs the Trustee upon compliance with Section 308 of the Indenture to
disburse the moneys in the Project Fund to or on behalf of the Borrower, for the
following purposes:

(a) Payment to the Borrower of such amounts, if any, as shall be necessary to
reimburse the Borrower for advances and payments made by it prior to or after
the delivery of the Bonds for expenditures in connection with the preparation of
plans and specifications for the Project (including any preliminary study or
planning of the Project or any aspect thereof) and the rehabilitation of the
Project or to enable the Borrower to pay off certain existing indebtedness
incurred in connection with the acquisition of the Project.

(b) Payment of the initial or acceptance fee of the Trustee, fees of the Trustee
and any paying agent incurred during the Construction Period, fees relating to
the underwriting or placement of the Bonds, legal, financial and accounting fees
and expenses, printing and engraving costs incurred in connection with the
authorization, sale and issuance of the Bonds, the execution and filing of the
Indenture and the preparation of all other documents in connection therewith,
and payment of all fees, costs and expenses for the preparation of this
Agreement, the Indenture, the Bonds and all related agreements and instruments.

 

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(c) Payment for labor, services, materials and supplies used or furnished in the
rehabilitation or installing of the Project, all as provided in the plans,
specifications and work orders therefor, payment for the cost of the acquisition
and installation of utility services or other facilities, and acquisition and
installation of all real and personal property deemed necessary in connection
with the Project and payment for the miscellaneous capitalized expenditures
incidental to any of the foregoing items.

(d) Payment of the fees, if any, for architectural, engineering, legal,
printing, underwriting and supervisory services with respect to the Project.

(e) To the extent not paid by a contractor for construction with respect to any
part of the Project, payment of the premiums on all insurance required to be
taken out and maintained during the Construction Period.

(f) Payment of the taxes, assessments and other charges, if any, that may become
payable during the Construction Period with respect to the Project, or
reimbursement thereof if paid by the Borrower.

(g) Payment of expenses incurred in seeking to enforce any remedy against any
contractor or subcontractor in respect of any default under a contract relating
to the Project.

(h) Interest on the Bonds during the Construction Period (or reimbursement of
the Credit Provider for draws under the Letter of Credit to pay such interest).

(i) Fees of the Credit Provider during the Construction Period for the issuance
of the Letter of Credit and any other fees of the Credit Provider under the
Reimbursement Agreement.

(j) Payment of any other costs permitted by the Act which will not adversely
affect the exclusion from Federal income taxation of interest on the Series
2007A Bonds.

All moneys remaining in the Project Fund after the Completion Date and after
payment or provisions for payment of all other items provided for in the
preceding subsections (a) to (c), of this Section, shall at the direction of the
Borrower Representative with the consent of the Credit Provider be used in
accordance with Section 4.3 hereof.

Each of the payments referred to in this Section shall be made upon receipt by
the Trustee of a written order complying with the requirements of Section 308 of
the Indenture signed by the Borrower Representative and consented to by the
Credit Provider.

Section 4.3. Establishment of Completion Date. The Completion Date shall be
evidenced to the Trustee mad the Credit Provider by a certificate signed by the
Borrower Representative substantially in the form set forth in Exhibit B hereto.
Notwithstanding the foregoing, such certificate may 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. It shall be the duty
of the Borrower to cause such certificate to be furnished to the Trustee and the
Credit Provider within sixty (60) days after the Project shall have been
completed.

 

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Moneys (including investment proceeds) remaining in the Project Fund on the date
of such certificate may be used, at the direction of the Borrower Representative
with the consent of the Credit Provider, to the extent indicated, for one or
more of the following purposes:

(1) for the payment, in accordance with the provisions of this Agreement, of any
Cost of the Project not theretofore paid, as specified in the above-mentioned
completion certificate, or

(2) for transfer to the Bond Fund, but only if, and to the extent that, the
Trustee and the Issuer have been furnished with an opinion of Bond Counsel to
the effect that such transfer is lawful under the Act and does not adversely
affect the exclusion from Federal gross income of interest on any of the Series
2007A Bonds.

Any moneys (including investment proceeds) remaining in the Project Fund on the
date of the aforesaid certificate and not set aside for the payment of Costs of
the Project as specified in (1) above or transferred to the Bond Fund pursuant
to (2) above shall on such date be deposited by the Trustee in a separate escrow
account and used to pay all or part of the redemption price of Bonds at the
earliest redemption date or dates on which Bonds may be redeemed without the
payment of a premium or, at the option of the Borrower, with the consent of the
Credit Provider, at an earlier redemption date or dates; provided that, until so
used such moneys may also be used, at the direction of the Borrower
Representative, with the consent of the Credit Provider, for one or more of the
following purposes:

(a) to pay all or part of the price of purchasing Bonds on tender, in the open
market or at private sale, at a purchase price not in excess of 100% of the
principal amount of such Bonds plus accrued interest to the date of such
purchase for the purpose of cancellation;

(b) for the payment of qualifying costs of any additional improvements to be
installed or constructed on the Project site, provided that such use of funds is
permitted under the Act; or

(c) for any other purpose permitted by the Act;

provided, that the earnings on the investment of the moneys on deposit in such
escrow account shall be transferred on each interest payment date on the Bonds
to the Bond Fund and shall be used to pay interest on the Bonds coming due on
each interest payment date on the Bonds (or to reimburse the Credit Provider for
draws under the Letter of Credit to pay interest on the Bonds), but no moneys on
deposit in such escrow account may be used for any of the purposes specified in
this paragraph (including the redemption of Bonds) unless and until the Trustee
and the Issuer have been furnished with an opinion of Bond Counsel to the effect
that such use is lawful under the Act and does not adversely affect the
exclusion from gross income for Federal income tax purposes of the interest on
any of the Series 2007A Bonds; and provided further that, until used for one or
more of the foregoing purposes, moneys on deposit in such escrow account may be
invested in investments authorized by Section 4.4 of this Agreement, but may not
be invested to produce a yield on such moneys (computed from the Completion Date
and taking into account any investment of such moneys during the period from the
Completion Date until such moneys were deposited in such escrow account) greater
than the yield on the Bonds from which such proceeds were derived, all as such
terms are used in and determined in accordance with the code and regulations
promulgated thereunder.

 

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In the event the moneys in the Project Fund available for payment of the Costs
of the Project should not be sufficient to pay the costs thereof in full, the
Borrower agrees, to pay directly, or to deposit in the Project Fund moneys
sufficient to pay, the costs of completing the Project as may be in excess of
the moneys available therefor in the Project Fund. THE ISSUER DOES NOT MAKE ANY
WARRANTY, EITHER EXPRESS OR IMPLIED, THAT THE MONEYS WHICH WILL BE PAID INTO THE
PROJECT FUND AND WHICH, UNDER THE PROVISIONS OF THIS AGREEMENT, WILL BE
AVAILABLE FOR PAYMENT OF THE COSTS 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 Project Fund the Borrower should pay or
deposit moneys in the Project Fund for the payment of any portion of the said
Costs of the Project pursuant to the provisions of this Section, it shall not be
entitled to any reimbursement therefor from the Issuer, the Trustee, the Credit
Provider, or from the owners of any of the Bonds, nor shall the Borrower be
entitled to any diminution of the amounts payable under Article V hereof.

Section 4.4. Investment of Moneys. Any moneys held as a part of the Bond Fund or
the Project Fund shall be invested or reinvested by the Trustee, at the
direction of the Borrower Representative as provided in Section 314 of the
Indenture and in the Tax Certificate, to the extent permitted by taw, in
Qualified Investments. Any such investment may be purchased at the offering or
market price thereof at the time of such purchase. The Trustee may make any and
all such investments through its own investment department or through any of the
Trustee’s affiliates or subsidiaries.

The investments so purchased shall be held by the Trustee and shall be deemed at
all times a part of the fund, account or subaccount for which they were made and
the interest accruing thereon and any profit realized therefrom shall be
credited to such fund, account or subaccount and any net losses resulting from
such investment shall be charged to such fund, account or subaccount.

Section 4.5. Operation of the Project. The Borrower will not, nor will it allow
any lessee, sublessee or other user of the Project to, make any material change
in its use of the Project unless the Trustee and the Issuer receive an opinion
of Bond Counsel to the effect that such change will not impair the exclusion of
interest on any Series 2007A Bonds issued from the gross income of holders of
the Series 2007A Bonds for Federal income tax purposes.

The Borrower agrees to operate the Project, or cause any lessee, sublessee or
other user of the Project to operate the Project, as a “project” as contemplated
by the Act and in such a manner that it will not impair the exclusion of
interest on any Series 2007A Bonds issued from gross income of the holders of
the Series 2007A Bonds for Federal income tax purposes.

Upon a transfer, sale or sublease of all or any portion of the Borrower’s
interest in the Project (to the extent permitted hereunder and under the
Reimbursement Agreement), the Borrower will obtain the agreement of the
purchaser, transferee or sublessee of the Project or any interest therein to
comply with the provisions of this Agreement, regardless of whether such
purchaser, transferee or sublessee assumes the obligations of the Borrower under
this Agreement generally.

 

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Section 4.6. Issuer’s and Trustee’s Right of Access to the Project. The Borrower
agrees that during the term of this Agreement the Issuer, the Trustee, the
Credit Provider, and their duly authorized agents shall have the right during
regular business hours, with reasonable notice, to enter upon the premises and
examine and inspect the Project. The Borrower agrees that the Issuer, the
Trustee, the Credit Provider and their duly authorized agents shall have,
subject to such limitations, restrictions and requirements as the Borrower may
reasonably prescribe, such rights of access to the Project.

Section 4.7. Maintenance and Repair; Insurance. The Borrower will maintain the
Project in a reasonably safe and sound operating condition, making from time to
time all reasonably needed material repairs thereto, and shall maintain
reasonable amounts of insurance coverage with respect to the Project and shall
pay all costs of such maintenance, repair and insurance.

Section 4.8. Annual Information for Audit. The Borrower agrees that it will
annually on or before August 15 of each year furnish the Iowa Finance Authority
with a statement of the amount of the Outstanding Bonds as of the immediately
preceding June 30. In addition, the Borrower shall provide the Iowa Finance
Authority with any other information which may from time to time be requested
concerning the Bonds according to the rules and interpretations of the
Governmental Accounting Standards Board required to be disclosed concerning
conduit debt obligations.

Section 4.9. No Warranty by Issuer. THE BORROWER RECOGNIZES THAT THE ISSUER HAS
NOT MADE AN INSPECTION OF THE PROJECT OR OF ANY FIXTURE OR OTHER ITEM
CONSTITUTING A PORTION THEREOF, AND THE ISSUER MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED OR OTHERWISE, WITH RESPECT TO THE SAME OR THE
LOCATION, USE, DESCRIPTION, DESIGN, MERCHANTABILITY, FITNESS FOR USE FOR ANY
PARTICULAR PURPOSE, CONDITION OR DURABILITY THEREOF, OR AS TO THE ISSUER’S OR
BORROWER’S TITLE THERETO OR OWNERSHIP THEREOF OR OTHERWISE, IT BEING AGREED THAT
ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY THE BORROWER. IN THE EVENT OF ANY
DEFECT OR DEFICIENCY OF ANY NATURE IN THE PROJECT OR ANY FIXTURE OR OTHER ITEM
CONSTITUTING A PORTION THEREOF, WHETHER PATENT OR LATENT, THE ISSUER SHALL HAVE
NO RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO. THE PROVISIONS OF THIS
SECTION 4.9 HAVE BEEN NEGOTIATED AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND
NEGATION OF ANY WARRANTIES OR REPRESENTATIONS BY THE ISSUER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE PROJECT OR ANY FIXTURE OR OTHER ITEM CONSTITUTING A PORTION
THEREOF, WHETHER ARISING PURSUANT TO THE UNIFORM COMMERCIAL CODE OF THE STATE OF
IOWA OR ANOTHER LAW NOW OR HEREAFTER IN EFFECT OR OTHERWISE.

 

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ARTICLE V.

PAYMENTS

Section 5.1. Repayment. (a) Principal, Premium and Interest. As evidence of its
obligation to repay the Loan made hereunder by the Issuer, the Borrower will
issue its Series 2007B Note in the original principal amount of $24,000,000.
When and if the Series 2007A Bonds are issued, the Borrower will issue its
Series 2007A Note in a principal amount equal to the principal amount of any
Series 2007A Bonds issued. At such time, the Borrower’s Series 2007B Note will
be reduced in a like principal amount. The Notes shall be dated the date of
their respective issuance and delivery and shall mature on May I, 2042, except
as the provisions hereinafter set forth with respect to prepayment may become
applicable thereto. The Notes shall bear interest on the unpaid principal amount
thereof from the date of the Notes at such rates equal to the interest rates
from time to time borne by the Bonds, calculated on the same basis and to be
paid at the same times as interest on the Bonds is calculated and paid from time
to time. The Notes shall be subject to prepayment as herein provided. Payments
of the principal of and premium, if any, and interest on the Notes shall be made
in lawful money of the United States of America in federal or other immediately
available funds. The Notes shall be in substantially the same forms as Exhibit C
and Exhibit D attached hereto and made a part hereof. The Issuer and the
Borrower agree that the Notes shall be payable to the Trustee. The Borrower
covenants and agrees that the payments of principal of, premium, if any, and
interest on the Notes shall at all times be sufficient to pay when due the
principal of, premium, if any, and interest on the Bonds; provided, that the
Excess Amount (as hereinafter defined) held by the Trustee in the Bond Fund on a
payment date shall be credited against the payment due on such date; and
provided further, that, subject to the provisions of the immediately following
sentence, if at any time the amount held by the Trustee in the Bond Fund should
be sufficient (and remain sufficient) to pay on the dates required the principal
of, premium, if any, and interest on the Bonds then remaining unpaid, the
Borrower shall not be obligated to make any further payments under the
provisions of this Section 5.1(a) or on the Notes. Notwithstanding the
provisions of the preceding sentence, if on any date the Excess Amount held by
the Trustee in the Bond Fund is insufficient to make the then required payments
of principal (whether at maturity or upon redemption prior to maturity or
acceleration), premium, if any, and interest on the Bonds on such date, the
Borrower shall forthwith pay such deficiency. The term “Excess Amount” as of any
interest payment date shall mean the amount in the Bond Fund on such date in
excess of the amount required for the payment of the principal of the Bonds
which theretofore has matured at maturity or on a date fixed for redemption and
premium, if any, on such Bonds in all cases where Bonds have not been presented
for payment and paid, or for the payment of interest which has theretofore come
due in all cases where interest checks have not been presented for payment and
paid.

If the Borrower shall fail to pay any installment of principal of, premium, if
any, or interest on the Notes or under this Section 5.1 (a), the installment so
in default shall continue as an obligation of the Borrower until the amount so
in default shall have been fully paid, and the Borrower agrees to pay the same
with interest thereon until paid (to the extent legally enforceable) at a rate
equal to the rate borne by the Bonds from time to time from the due date thereof
until paid. If the Borrower defaults in any payment required by this Section,
the Borrower will pay interest (to the extent allowed by law) on such amount
until paid at the rate provided for in the Bonds.

 

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(b) Purchase Price. The Borrower agrees to pay to the Tender Agent (or if the
Bonds are in the Book Entry System, the Trustee) amounts sufficient to pay the
purchase price of Bonds on each Purchase Date and Mandatory Tender Date pursuant
to the Indenture, provided the Borrower shall receive a credit for the amount of
remarketing or Letter of Credit proceeds available for such purpose in the Bond
Fund on each such date.

(c) Borrower to Make up Deficiencies. In furtherance of the foregoing, so long
as any Bonds are outstanding, the Borrower agrees to pay, or cause to be paid,
all amounts required to prevent any deficiency or default in any payment of the
principal or purchase price of, premium, if any, or interest on the Bonds,
including any deficiency caused by an act or failure to act by the Trustee, the
Borrower, the Issuer or any other person.

(d) Assignment. All amounts payable under this Section by the Borrower are
assigned by the Issuer to the Trustee pursuant to the Indenture for the benefit
of the Bondholders. The Borrower consents to such assignment. Accordingly, the
Borrower will pay, or cause to be paid, directly to the Trustee (or in the case
of the purchase price of Bonds when the Bonds are not in a Book Entry System, to
the Tender Agent) at its principal corporate trust office all payments payable
by the Borrower pursuant to this Section without defense or set-off by reason of
any dispute between the Borrower and the Issuer or the Trustee.

(e) Payments under Reimbursement Agreement. The Borrower will pay all amounts
owing to the Credit Provider under the Reimbursement Agreement directly to the
Credit Provider when due and no such payment shall be made to the Trustee.

(f) Credit. In the event that the Trustee is authorized and directed to draw
moneys under the Letter of Credit in accordance with the provisions of the
Indenture to the extent necessary to pay the principal of, premium, if any, and
interest on the Bonds and the purchase price of Bonds if and when due, any
moneys derived from a drawing under the Letter of Credit shall constitute a
credit against the obligations of the Borrower to make corresponding payments on
the Notes and under subsections (a) and (b) of this Section 5.1.

Section 5.2. Additional Payments. The Borrower agrees to pay the following
within 30 days after receipt of a bill therefor:

(a) The reasonable fees and expenses of the Issuer, including attorneys’ fees
and expenses, in connection with this Agreement and the Bonds, such fees and
expenses to be paid directly to the Issuer or as otherwise directed in writing
by the Issuer.

(b) (i) The reasonable fees and expenses of the Trustee, the Tender Agent and
all other fiduciaries and agents serving under the Indenture (including any
expenses in connection with any redemption of the Bonds), and (ii) all
reasonable fees and expenses, including attorneys’ fees, of the Trustee for any
extraordinary services rendered by it under the Indenture. All such fees and
expenses are to be paid directly to the Trustee or other fiduciary or agent for
its own account as and when such fees and expenses become due and payable.

 

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(c) The fees and expenses of the Remarketing Agent in accordance with the terms
of the Remarketing Agreement.

(d) All other reasonable fees and expenses incurred in connection with the
issuance of the Bonds.

Section 5.3. Prepayments. The Borrower may (and during the term of the Letter of
Credit, only with the prior written consent of the Credit Provider) prepay to
the Trustee all or any part of the amounts payable under Section 5.1 at the
times and subject to the conditions that Bonds are subject to redemption as
described in the Bonds and the Indenture. A prepayment shall not relieve the
Borrower of its obligations under this Agreement until all the Bonds have been
paid or provision for the payment of all the Bonds has been made in accordance
with the Indenture. In the event of a mandatory redemption of the Bonds, the
Borrower agrees to prepay, or cause to be prepaid, all amounts necessary for
such redemption.

Section 5.4. Obligations of Borrower Unconditional. The obligations of the
Borrower to make the payments required by Sections 5.1 and 5.3 and to perform
its other agreements contained in this Agreement and the Notes shall be absolute
and unconditional. Until the principal of and interest on the Bonds shall have
been fully paid or provision for the payment of the Bonds made in accordance
with the Indenture, the Borrower (a) will not suspend or discontinue any
payments provided for in Section 5.1 hereof, (b) will perform all its other
agreements in this Agreement and the Notes and (c) will not terminate this
Agreement for any cause including any acts or circumstances that may constitute
failure of consideration, destruction of or damage to the Project, commercial
frustration of purpose, any change in the laws of the United States or of the
State or any political subdivision of either or any failure of the Issuer to
perform any of its agreements, whether express or implied, or any duty,
liability or obligation arising from or connected with this Agreement or the
Notes.

Section 5.5. Letter of Credit. The Borrower shall provide for the delivery of a
Letter of Credit meeting the requirements of Section 401(a) of the Indenture to
the Trustee simultaneously with the original issuance and delivery of the Bonds.
The Borrower may provide for the delivery of an Alternate Credit Facility in
substitution or replacement for the then current Letter of Credit but only in
accordance with Section 401 of the Indenture. The Borrower agrees that, after
the issuance of the Bonds, it will not at any time pledge, or grant a lien on or
security interest in, any property as security for its reimbursement obligations
under the Reimbursement Agreement to the Credit Provider or the issuer or
provider of the Letter of Credit unless the Borrower has furnished to the
Trustee and the Issuer an opinion of Bond Counsel stating that such action will
not adversely affect the exclusion of interest on any Series 2007A Bonds issued
from gross income for Federal income tax purposes.

 

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ARTICLE VI.

SPECIAL COVENANTS AND AGREEMENTS

Section 6.1. Maintenance of Existence. Subject to additional conditions set
forth in the Reimbursement Agreement, the Borrower agrees that during the term
of this Agreement and so long as any Bond is outstanding, that it will maintain
its existence as a limited liability company, will continue to be a limited
liability company in good standing under the laws of the State, will not
dissolve or otherwise dispose of all or substantially all of its assets and will
not consolidate with or merge into another legal entity or permit one or more
other legal entities to consolidate with or merge into it, or sell or otherwise
transfer to another legal entity all or substantially all its assets as an
entirety and dissolve, unless (a)(i) in the case of any merger or consolidation,
the Borrower is the surviving entity and (ii) no event which constitutes, or
which with the giving of notice or the lapse of time or both would constitute an
Event of Default shall have occurred and be continuing immediately after such
merger or consolidation, or (b)(i) the surviving, resulting or transferee legal
entity is organized and existing under the laws of the United States, a state
thereof or the District of Columbia, and (if not the Borrower) assumes in
writing all the obligations of the Borrower under this Agreement, (ii) no event
which constitutes, or which with the giving of notice or the lapse of time or
both would constitute an Event of Default shall have occurred and be continuing
immediately after such merger, consolidation or transfer, and (iii) the Borrower
shall cause such other entity, if not an Iowa entity, to qualify to do business
as a foreign entity in the State and to remain so qualified continuously during
the term hereof.

Section 6.2. Reports. No later than ninety (90) days after written request by
the Trustee, the Borrower shall provide copies of its financial statements and
any and all records relating to the Project to the Trustee.

Section 6.3. Payment of Taxes. The Borrower will pay and discharge promptly all
lawful taxes, assessments and other governmental charges or levies imposed upon
the Project, or upon any part thereof, as well as all claims of any kind
(including claims for labor, materials and supplies) which, if unpaid, might by
law become a lien or charge upon the Project; provided that the Borrower shall
not be required to pay any such tax, assessment, charge, levy or claim (i) if
the amount, applicability or validity thereof shall currently be contested in
good faith by appropriate proceedings promptly initiated and diligently
conducted, (ii) if the Borrower shall have set aside on its books reserves
(segregated to the extent required by generally accepted accounting principles)
with respect thereto deemed adequate by the Borrower; and (iii) if failure to
make such payment will not impair the use of the Project by the Borrower.

Section 6.4. Arbitrage. The Borrower covenants with the Issuer and for and on
behalf of the purchasers and owners of any Series 2007A Bonds issued from time
to time outstanding that so long as any of the Series 2007A Bonds remain
outstanding, moneys on deposit in any fund in connection with the Series 2007A
Bonds, whether or not such moneys were derived from the proceeds of the sale of
the Bonds or from any other sources, will not be used in a manner which will
cause the Series 2007A Bonds to be “arbitrage bonds” within the meaning of
Section 148 of the Code, and any lawful regulations promulgated thereunder, as
the same exist on this date, or may from time to time hereafter be amended,
supplemented or revised. The Borrower also covenants for the benefit of the
Bondholders to comply with all of the provisions of the Tax Certificate. The
Borrower reserves the right, however, to make any investment of such moneys

 

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permitted by State law, if, when and to the extent that said Section 148 or
regulations promulgated thereunder shall be repealed or relaxed or shall be held
void by final judgment of a court of competent jurisdiction, but only if any
investment made by virtue of such repeal, relaxation or decision would not, in
the written opinion of Bond Counsel, result in making the interest on the Series
2007A Bonds includable in the federal gross income of the owners of the Series
2007A Bonds.

Section 6.5. Borrower Obligation with Respect to Exclusion of Interest Paid on
the Series 2007A Bonds. Promptly after the Borrower first becomes aware of a
determination of taxability as provided in Section 601(c) of the Indenture with
respect to any Series 2007A Bonds issued, the Borrower shall give written notice
thereof to the Issuer, the Trustee, the Remarketing Agent and the Credit
Provider.

This Section 6.5 shall survive any assignment or termination of this Agreement.

Section 6.6. Recording and Maintenance of Liens. The Borrower will, at its own
expense, take all necessary action to maintain and preserve the liens and
security interest of this Agreement and the Indenture so long as any principal
installment of, premium, if any, or interest on the Bonds remains unpaid.

The Borrower will, forthwith after the execution and delivery of this Agreement,
the Notes and Indenture, and thereafter from time to time, cause the Indenture
(including any amendments thereof and supplements thereto), 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 perfect and protect the lien and security interest therein
granted to the Trustee to the rights of the Issuer assigned under the Indenture,
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 necessary for such publication,
perfection and protection. Except to the extent it is exempt therefrom, 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, filing and acknowledgement 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 Agreement, the Notes and
Indenture and such instruments of further assurance.

The Issuer shall have no responsibility for the preparation, filing or recording
of any instrument, document or financing statement or for the maintenance of any
security interest intended to be perfected thereby. At the request of the
Borrower, the Issuer will execute such instruments as may be reasonably
necessary in connection with such filing or recording.

Section 6.7. Compliance with Laws. The Borrower shall, through the term of this
Agreement and at no expense to the Issuer, promptly comply or cause compliance
with all laws, ordinances, orders, rules, regulations and requirements of duly
constituted public authorities which may be applicable to the Project or to the
repair and alteration thereof, or to the use or manner of use of the Project. It
shall not be a breach of this covenant, however, if the Borrower fails to comply
with such laws, rules and regulations during any period in which it shall in
good faith diligently contest the validity or applicability thereof and no
proceeding shall have been

 

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commenced or unstayed binding order issued which has a material adverse effect
on the operations (financial or otherwise), business or properties of the
Borrower arising out of such contest.

Section 6.8. Continuing Disclosure. The Borrower hereby covenants and agrees
that it will comply with and carry out all of the provisions of the Continuing
Disclosure Requirements (as defined in the Indenture). Notwithstanding any other
provision of this Agreement, failure of the Borrower to comply with the
Continuing Disclosure Requirements shall not be considered an Event of Default;
however, any Bondholder or the Trustee may (and, at the request of any
underwriter of the Bonds required to comply with Securities and Exchange
Commission Rule 15c2-12(b)(5) or the Holders of at least 25% aggregate principal
amount in Outstanding Bonds, the Trustee shall, to the extent indemnified to its
satisfaction) take such actions as may be necessary and appropriate, including
seeking specific performance by court order, to cause the Borrower to comply
with its obligations under this Section 6.8.

 

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ARTICLE VII.

NO RECOURSE TO ISSUER; INDEMNIFICATION

Section 7.1. No Recourse to Issuer. The Bonds constitute special obligations of
the Issuer, payable solely from the revenues pledged to the payment thereof
pursuant to this Agreement and the Indenture, and do not now and shall never
constitute an indebtedness or a loan of the credit of the Issuer, the State of
Iowa or any political subdivision thereof within the meaning of any
constitutional or statutory provision whatsoever. The Issuer has no taxing
power. Neither the Issuer, nor any commissioner, member, director, officer,
employee or agent of the Issuer nor any person executing the Bonds shall be
liable personally for the Bonds or be subject to any personal liability or
accountability by reason of the issuance of the Bonds. No recourse shall be had
for the payment of the principal of, premium, if any, and interest on any of the
Bonds or for any claim based thereon or upon any obligation, covenant or
agreement contained in any of the Bond Documents against any past, present or
future member, officer, agent or employee of the Issuer, or any incorporator,
commissioner, member, officer, employee, director or trustee of any successor
corporation, as such, either directly or through the Issuer or any successor
corporation, under any rule of law or equity, statute or constitution or by the
enforcement of any assessment or penalty or otherwise, and all such liability of
any such incorporator, commissioner, member, officer, employee, director, agent
or trustee as such is hereby expressly waived and released as a condition of and
consideration for the execution of the Bond Documents to which the Issuer is a
party and the issuance of the Bonds.

Section 7.2. Indemnification.

(a) The Borrower will, to the fullest extent permitted by law, protect,
indemnify and save the Issuer, the State and the Trustee and their officers,
agents, and employees and any person who controls the Issuer within the meaning
of the Securities Act of 1933, harmless from and against all liabilities,
losses, damages, costs, expenses (including attorneys’ fees and expenses of the
Issuer), taxes, causes of action, suits, claims, demands and judgments in
connection with the transaction contemplated by this Agreement or arising from
or related to the issuance or sale of the Bonds, including but not limited to:

(i) any injury to or death of any person or damage to property in or upon the
Project or growing out of or connected with the use, non-use, condition or
occupancy of the Facilities or any part thereof, including any and all acts or
operations relating to the acquisition or installation of property or
improvements. The foregoing indemnification obligations shall not be limited in
any way by any limitation on the amount or type of damages, compensation or
benefits payable by or for the Borrower, customers, suppliers or affiliated
organizations under any Workers’ Compensation Acts, Disability Benefit Acts or
other employee benefit acts;

(ii) violation of any agreement, provision or condition of this Agreement, the
Bonds or the Indenture, except a violation by the party seeking indemnification;

 

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(iii) violation by the Borrower of any contract, agreement or restriction which
shall have existed at the commencement of the Term of this Agreement or shall
have been approved by the Borrower;

(iv) violation by the Borrower of any law, ordinance, court order or regulation
affecting the Project or a part thereof or the ownership, occupancy or use
thereof;

(v) any statement or information relating to the expenditure of the proceeds of
the Bonds contained in the Tax Certificate or similar document furnished by the
Borrower to the Issuer or Trustee which, at the time made, is misleading, untrue
or incorrect in any material respect;

(vi) any untrue statement or alleged untrue statement of a material fact
contained in any offering material relating to the sale of the Bonds (as from
time to time amended or supplemented) or arising out of or based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, or failure to properly register or otherwise qualify the sale of the
Bonds or failure to comply with any licensing or other law or regulation which
would affect the manner whereby or to whom the Bonds could be sold; and

(vii) with respect to the Trustee, from and against any and all costs, claims,
liabilities, losses or damages whatsoever (including reasonable costs and fees
of counsel, auditors or other experts), asserted or arising out of or in
connection with the acceptance or administration of the trusts established
pursuant to the Indenture, except costs, claims, liabilities, losses or damages
resulting from the negligence or willful misconduct of the Trustee, including
the reasonable costs and expenses (including the reasonable fees and expenses of
its counsel) of defending itself against any such claim or liability in
connection with its exercise or performance of any of its duties hereunder and
of enforcing this indemnification provision.

(b) Promptly after receipt by the Issuer or any such other indemnified person,
as the case may be, of notice of the commencement of any action with respect to
which indemnity may be sought against the Borrower under this Section, such
person will notify the Borrower in writing of the commencement thereof, and,
subject to the provisions hereinafter stated, the Borrower shall assume the
defense of such action (including the employment of counsel, who shall be
counsel subject to the approval of the Issuer, which approval shall not be
unreasonably withheld, and the payment of expenses). Insofar as such action
shall relate to any alleged liability with respect to which indemnity may be
sought against the Borrower, the Issuer or any such other indemnified person
shall have the right to employ separate counsel of their own choice in any such
action and to participate in the defense thereof, and the fees and expenses of
such counsel shall be at the expense of the Borrower. The Borrower shall not be
liable to indemnify any person for any settlement of any such action effected
without its consent.

(c) Notwithstanding the fact that it is the intention of the parties hereto that
the Issuer shall not incur any pecuniary liability by reason of the terms of
this Agreement or the undertakings required of the Issuer hereunder, by reason
of the issuance of the

 

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Bonds, by reason of the execution of the Indenture or by reason of the
performance of any act requested of the Issuer by the Borrower, including all
claims, liabilities or losses arising in connection with the violation of any
statutes or regulation pertaining to the foregoing; nevertheless, if the Issuer
should incur any such pecuniary liability, then in such event the Borrower shall
indemnify and hold the Issuer harmless against all claims, demands or causes of
action whatsoever, by or on behalf of any person, firm or corporation or other
legal entity arising out of the same or out of any offering statement or lack of
offering statement in connection with the sale or resale of the Bonds and all
costs and expenses incurred in connection with any such claim or in connection
with any action or proceeding brought thereon, and upon notice from the Issuer,
the Borrower shall defend the Issuer in any such action or proceeding. All
references to the Issuer in this Section 7.2 shall be deemed to include its
commissioners, directors, members, officers, employees, and agents.

The obligations of the Borrower under this Section 7.2 shall survive any
assignment or termination of this Agreement, the resignation or removal of the
Trustee and the payment and discharge of the Bonds.

 

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ARTICLE VIII.

ASSIGNMENT

Section 8.1. Assignment by Borrower. This Agreement may not be assigned by the
Borrower without consent of the Issuer and the Trustee, except that the Borrower
may without any consent assign to any surviving, resulting or transferee entity
its rights under this Agreement as provided by Section 6.1 of this Agreement.

Section 8.2. Assignment by Issuer. As security for the payment of the Bonds, the
Issuer will assign and pledge to the Trustee all right, title and interest of
the Issuer in and to this Agreement, including the right to receive payments
hereunder (except the rights, including, without limitation, the right to
receive payment of expenses, fees, indemnification and the rights to make
determinations and receive notices, and as herein provided under Sections 5.2,
7.1, 7.2,9.3 and 10.7 hereof), and hereby directs the Borrower to make said
payments directly to the Trustee. The Borrower hereby assents to such assignment
and pledge and will make payments directly to the Trustee without defense or
set-off by reason of any dispute between the Borrower and the Issuer or the
Trustee, and hereby agrees that its obligation to make payments hereunder and to
perform its other agreements contained herein are absolute and unconditional.

 

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ARTICLE IX.

DEFAULTS AND REMEDIES

Section 9.1. Events of Default. The occurrence and continuation of any one of
the following shall constitute an Event of Default hereunder:

(a) failure by the Borrower to pay any amounts required to be paid as principal,
premium, if any, or interest under this Agreement or the Notes, including,
without limitations, Section 5.1(a) or Section 5.2(b) hereof, on the dates and
in the manner specified therein or herein; or

(b) failure by the Borrower to observe or perform any material covenant,
condition or agreement on its part to be observed or performed in this
Agreement, other than as referred to in subsection (a) above, for a period of
sixty (60) days after written notice, specifying such failure and requesting
that it be remedied, is given to the Borrower by the Issuer, the Trustee or the
Credit Provider, unless the Trustee and the Credit Provider shall agree in
writing to an extension of such time prior to expiration; or

(c) the dissolution or liquidation of the Borrower or the filing by the Borrower
of a voluntary, petition in bankruptcy, or failure of the Borrower to promptly
lift any execution, garnishment or attachment of such consequence as wilt impair
its ability to carry on its obligations hereunder, or an order for relief under
Title 7, 11 or 13 of the United States Bankruptcy Code, as amended from time to
time, is entered against the Borrower, or a petition or answer proposing the
entry of an order for relief against the Borrower under Title 7, 11 or 13 of the
United States Bankruptcy Code, as amended from time to time, or reorganization,
arrangement or debt readjustment under any present or future federal bankruptcy
act or any similar federal or state law shall be filed in any court and such
petition or answer shall not be discharged within sixty (60) days after the
filing thereof, or the Borrower shall fail generally to pay its debts as they
become due, or a custodian (including without limitation a receiver, trustee,
assignee for the benefit of creditors or liquidator of the Borrower) shall be
appointed for or take possession of all or a substantial part of its properties
and shall not be discharged within sixty (60) days after such appointment or
taking possession, or the Borrower shall consent to or acquiesce in such
appointment or taking possession, or assignment by the Borrower for the benefit
of its creditors, or the entry by the Borrower into an agreement of composition
with its creditors, for its reorganization, arrangement or debt readjustment
under any present or future federal bankruptcy act or any similar federal or
state laws; provided, that the term “dissolution or liquidation of the
Borrower,” as used in this subsection (c), shall not be construed to include the
cessation of the limited liability company existence of the Borrower resulting
either from a merger or consolidation of the Borrower into or with another
domestic limited liability company or a dissolution or liquidation of the
Borrower following a transfer of all or substantially all of its assets as an
entirety, under the conditions permitting such actions contained in Section 6.1
hereof; or

(d) any warranty, representation or other statement made by or on behalf of the
Borrower contained herein, or in any document or certificate furnished by the
Borrower in compliance with or in reference hereto, is false or misleading in
any material respect; or

 

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(e) an “Event of Default” shall occur and be continuing under the Indenture.

Section 9.2. Remedies on Default. Whenever any Event of Default shall have
occurred and be continuing hereunder, the Issuer or the Trustee may take any one
or more of the following remedial steps:

(a) The Issuer or the Trustee with the written consent of the Credit Provider
(provided the Credit Provider is not in default of its obligation under the
Letter of Credit) may exercise any right, power or remedy permitted to it by law
as a holder of the Notes, and shall have in particular, without limiting the
generality of the foregoing, the right to declare the entire principal and all
unpaid interest accrued on the Notes to the date of such declaration and any
premium the Borrower shall have become obligated to pay to be immediately due
and payable, if concurrently with or prior to such notice the unpaid principal
of and all unpaid accrued interest and premium on the Bonds have been declared
to be due and payable under the Indenture, and upon such declaration the Notes
and the unpaid accrued interest thereon and such premium shall thereupon become
forthwith due and payable in an amount sufficient to pay the principal of,
premium, if any, and interest on the Bonds under Section 802 of the Indenture,
without presentment, demand or protest, all of which is hereby expressly waived.
The Borrower shall forthwith pay to the Trustee the entire principal of,
premium, if any, and interest accrued on the Notes.

(b) The Issuer or the Trustee, as applicable, shall waive, rescind and annul
such declaration and the consequences thereof, when any declaration of
acceleration on the Bonds has been waived, rescinded and annulled pursuant to
and in accordance with Section 804 of the Indenture.

(c) The Issuer or the Trustee may take whatever action at law or in equity may
appear necessary or desirable to collect the payments and other amounts then due
and thereafter to become due or to enforce the performance and observance of any
obligation, agreement or covenant of the Borrower under this Agreement.

In case the Issuer or the Trustee shall have proceeded to enforce its fights
under this Agreement or the Notes, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to the Issuer or the Trustee, as the case may be, then and in every such case
the Borrower, the Issuer and the Trustee shall be restored respectively to their
several positions and rights hereunder and under the Notes, and all rights,
remedies and powers of the Borrower, the Issuer and the Trustee shall continue
as though no such proceeding had been taken, except as provided for in any court
order.

In case there shall be pending proceedings for the bankruptcy of the Borrower
under the federal bankruptcy laws or any other applicable law, or in case a
receiver or trustee shall have been appointed for the property of the Borrower,
or in the case of any other similar judicial proceedings relative to the
Borrower, or to the property of the Borrower, the Trustee shall be entitled and
empowered, by intervention in such proceedings or otherwise, to file and prove a

 

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claim or claims for the whole amount owing and unpaid pursuant to this Agreement
and the Notes and, in ease of any judicial proceedings, to file such proofs of
claim and other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee allowed in such judicial proceedings relative to
the Borrower, its creditors or its property, and to collect and receive any
moneys or other property payable or deliverable on any such claims, and to
distribute the same after the deduction of charges and expenses; and any
receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized to make such payments to the Trustee, and to pay to the Trustee any
amount due it for compensation and expenses, including reasonable attorneys’
fees incurred by it up to the date of such distribution.

Section 9.3. Agreement to Pay Attorneys’ Fees and Expenses. In the event the
Issuer or the Trustee should employ attorneys or incur other expenses for the
collection of the payments due under this Agreement or the Notes or the
enforcement of the performance or observance of any obligation or agreement on
the part of the Borrower contained herein, the Borrower agrees that it will on
demand therefor pay to the Issuer or the Trustee the reasonable fees of such
attorneys and such other expenses so incurred by the Issuer or the Trustee.

Section 9.4. No Remedy Exclusive. No remedy herein conferred upon or reserved to
the Issuer or the Trustee is intended to be exclusive of any other available
remedy or remedies, but each and every such remedy shall be cumulative and shall
be in addition to every other remedy given under this Agreement and the
Indenture now or hereafter existing at law or in equity or by statute. No delay
or omission to exercise any fight or power and accruing upon any Event of
Default hereunder shall impair any such right or power or shall be construed to
be a waiver thereof, but any such fight and power may be exercised from time to
time and as often as may be deemed expedient. In order to entitle the Issuer to
exercise any remedy reserved to it in this Article IX, it shall not be necessary
to give any notice other than such notice as may be herein expressly required.
Such rights and remedies as are given the Issuer hereunder shall also extend to
the Trustee, and the Trustee and the owners from time to time of the Bonds shall
be deemed third party beneficiaries of all covenants and agreements contained
herein.

Section 9.5. No Additional Waiver Implied by One Waiver. In the event any
agreement contained in this Agreement should be breached by the Borrower and
thereafter waived by the Issuer or the Trustee, such waiver shall be limited to
the particular breach so waived and shall not be deemed to waive any other
breach hereunder.

 

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ARTICLE X.

MISCELLANEOUS

Section 10.1. Notices. All notices or other communications hereunder shall be
sufficiently given and shall be deemed given when delivered or mailed as
provided in the Indenture.

Section 10.2. Binding Effect. This Agreement shall inure to the benefit of and
shall be binding upon the Issuer, the Borrower and their respective successors
and assigns, subject, however, to the limitations contained in Section 6.1.

This Agreement shall be in full force and effect from the date hereof, and shall
continue in effect until the payment in full of all principal of, premium, if
any, and interest on the Bonds, or provision for the payment thereof shall have
been made pursuant to Article XII of the Indenture, all fees, charges and
expenses of the Issuer, the Trustee, the Tender Agent, and the Remarketing Agent
have been fully paid or provision made for such payment (the payment of which
fees, charges, indemnities and expenses shall be evidenced by a written
certification of the Borrower that it has fully paid all such fees, charges,
indemnities and expenses) and all other amounts due hereunder have been duly
paid or provision made for such payment. All representations, certifications and
covenants by the Borrower as to the indemnification of various parties and the
payment of fees and expenses of the Issuer as described in Section 7.2 hereof,
and all matters affecting the tax-exempt status of the Series 2007A Bonds shall
survive the termination of this Agreement.

Section 10.3. Severability. If any provision of this Agreement shall be
determined to be unenforceable at any time, that shall not affect any other
provision of this Agreement or the enforceability of that provision at any other
time.

Section 10.4. Amendments. After the issuance of the Bonds, this Agreement may
not be effectively amended or terminated without the written consent of the
Trustee (and, if the Letter of Credit is in effect, the Credit Provider) and in
accordance with the provisions of the Indenture.

Section 10.5. Right of Borrower to Perform Issuer’s Agreements. The Issuer
irrevocably authorizes and empowers the Borrower to perform in the name and on
behalf of the Issuer any agreement made by the Issuer in this Agreement or in
the Indenture which the Issuer fails to perform in a timely fashion if the
continuance of such failure could result in an Event of Default. This Section
will not require the Borrower to perform any agreement of the Issuer.

Section 10.6. Expiration of Rights of Credit Provider. It is expressly
understood that any and all provisions of this Agreement for notices or the
furnishing of documents, information or reports to the Credit Provider and the
necessity of obtaining the consent of the Credit Provider to any modifications,
amendments or supplements to this Agreement or waivers of any of the provisions
hereof shall cease and terminate and be of no further force and effect when
(a) the Letter of Credit is not in effect and no amounts are due and payable by
the Borrower to the Credit Provider under the Reimbursement Agreement, or
(b) the Credit Provider is in default on any of its obligations to pay drawings
under the Letter of Credit submitted in conformity with the terms of the Letter
of Credit.

 

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Section 10.7. Limitation of Liability. No recourse shall be had for the payment
of the principal of, premium, if any, and interest on the Bonds or for any claim
based thereon or upon any obligation, covenant or agreement contained in this
Agreement against any past, present or future commissioner, director, member,
officer or employee of the Issuer, as such, either directly or through the
Issuer or any successor corporation, under any rule of law or equity, statute or
constitution or by the enforcement of any assessment or penalty or otherwise,
and all such liability of any such incorporator, commissioner, director, member,
officer, employee or trustee as such is hereby expressly waived and released as
a condition of and consideration for the execution of this Agreement and the
issuance of the Bonds.

It is understood and agreed by the Borrower and the Bondowners that no covenant,
provision or agreement of the Issuer herein or in the Bonds or in any other
document executed by the Issuer in connection with the issuance, sale and
delivery of the Bonds, or any obligation herein or therein imposed upon the
Issuer or breach thereof, shall give rise to a pecuniary liability of the Issuer
or a charge against its general credit or general fund or shall obligate the
Issuer financially in any way except with respect to the application of revenues
under this Agreement, and the proceeds of the Bonds. No failure of the Issuer to
comply with any term, condition, covenant or agreement therein shall subject the
Issuer to liability for any claim for damages, costs or other financial or
pecuniary charges except to the extent that the same can be paid or recovered
from this Agreement or revenues therefrom or proceeds of the Bonds. No execution
on any claim, demand, cause of action or judgment shall be levied upon or
collected from the general credit or general funds of the Issuer. In making the
agreements, provisions and covenants set forth herein, the Issuer has not
obligated itself except with respect to this Agreement and the application of
revenues hereunder as hereinabove provided. The Bonds constitute special
obligations of the Issuer, payable solely from the revenues pledged to the
payment thereof pursuant to this Agreement and the Indenture, and do not now and
shall never constitute an indebtedness or a loan of the credit of the Issuer,
the State of Iowa or any political subdivision thereof within the meaning of any
constitutional or statutory provision whatsoever. The Issuer has no taxing
power. It is further understood and agreed by the Borrower and the Holders that
the Issuer shall incur no pecuniary liability hereunder and shall not be liable
for any expenses related hereto. If, notwithstanding the provisions of this
Section, the Issuer incurs any expense, or suffers any losses, claims or damages
or incurs any liabilities, the Borrower will indemnify and hold harmless the
Issuer from the same and will reimburse the Issuer for any legal or other
expenses incurred by the Issuer in relation thereto, and this covenant to
indemnify, hold harmless and reimburse the Issuer shall survive delivery of and
payment for the Bonds.

Section 10.8. Indenture Provisions. The Indenture provisions concerning the
Bonds and the other matters therein are an integral part of the terms and
conditions of the loan made by the Issuer to the Borrower pursuant to this
Agreement and the execution of this Agreement shall constitute conclusive
evidence of approval of the Indenture by the Borrower to the extent it relates
to the Borrower. Additionally, the Borrower agrees that, whenever the Indenture
by its terms imposes a duty or obligation upon the Borrower, such duty or
obligation shall be binding upon the Borrower to the same extent as if the
Borrower were an express party to the Indenture, and the Borrower hereby agrees
to carry out and perform all of its obligations under the Indenture as fully as
if the Borrower were a party to the Indenture.

Section 10.9. Applicable Law. This Agreement is governed by the laws of the
State of Iowa, without regard to the choice of taw rules of the State of Iowa.
Venue for any action under

 

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this Agreement to which the Issuer is a party shall lie within the district
courts of the State of Iowa, and the parties hereto consent to the jurisdiction
and venue of any such court and hereby waive any argument that venue in such
forums is not convenient.

Section 10.10. Captions; References to Sections. The captions in this Agreement
are for convenience only and do not define or limit the scope or intent of any
provisions or Sections of this Agreement. References to Articles and Sections
are to the Articles and Sections of this Agreement, unless the context otherwise
requires.

Section 10.11. Complete Agreement. This Agreement represents the entire
agreement between the Issuer and the Borrower with respect to its subject
matter.

Section 10.12. Termination. When no Bonds are Outstanding under the Indenture,
the Borrower and the Issuer shall not have any further obligations under this
Agreement; provided that the Borrower’s covenants in Sections 5.2, 6.4, 6.5, 7.2
and 9.3 and the provisions of Section 5.3 with respect to mandatory redemption
of the Bonds shall survive so long as any Bond remains unpaid.

Section 10.13. Counterparts. This Agreement may be signed in several
counterparts. Each will be an original, but all of them together constitute the
same instrument.

Section 10.14. Non-Recourse. Notwithstanding anything to the contrary contained
herein or elsewhere in the other documents executed by the Borrower in
connection with the Bonds, it is understood and agreed that the Issuer wilt look
solely to the Borrower for payment of the obligations hereunder and not to the
members of the Borrower; provided, however:

(a) nothing in this Section shall be or be deemed to be a release or impairment
of such obligations or preclude the Issuer from suing pursuant to this
Agreement;

(b) this Section shall not release the members of the Borrower from liability to
the Issuer for the application of any funds received by the members of the
Borrower in violation of the covenants contained in this Agreement or in any
other document executed in connection herewith;

(c) this Section shall not preclude the Issuer from securing a judgment from any
party who subsequently assumes the payment of the obligations hereunder or as
against any other person or persons or entity who may hereafter become liable
for the payment of such obligations; and

(d) nothing contained herein is intended to relieve, release, discharge or
affect in any way the personal liability of any third party to the Issuer,
including any guarantors, for payment of the Borrower’s obligations or
otherwise.

 

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IN WITNESS WHEREOF, the Issuer and the Borrower have caused this Agreement to be
executed in their respective names, by their duly authorized officers for and on
their behalf, as of the date first above written.

 

IOWA FINANCE AUTHORITY By:  

/s/ Bret L. Mills

Its Executive Director

WINDSOR ON THE RIVER, LLC, a Delaware

limited liability company

By:  

/s/ Christopher G. Zock

  Christopher G. Zock, its Manager

 

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EXHIBIT A

DESCRIPTION OF THE PROJECT

The Project consists of the refinancing of existing indebtedness relating to the
acquisition and the financing of the rehabilitation of a multi-family housing
facility to be known as Windsor on the River, consisting of approximately 424
units and functionally related and subordinate facilities at a site located at
2200 Buckingham Drive in Cedar Rapids, Linn County, Iowa.

 

A-1

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EXHIBIT B

FORM OF COMPLETION CERTIFICATE

COMPLETION CERTIFICATE

 

TO:    The Bank of New York Trust Company, N.A., as Trustee FROM:   
                        , as Borrower Representative RE:    Loan Agreement dated
as of the 1st day of May, 2007, between Iowa Finance Authority (the “Issuer”)
and Windsor on the River, LLC (the “Borrower”)

Capitalized terms used herein are defined in the Loan Agreement or the Indenture
of Trust dated as of May 1, 2007 between the Issuer and The Bank of New York
Trust Company, N.A., as trustee.

The undersigned does hereby certify as follows:

1. The rehabilitation of the Project have been substantially completed in
accordance with the plans, specifications and work orders therefor as of
                ,          (the “Completion Date “), and all labor, services,
materials and supplies used in connection therewith have been paid for other
than costs and expenses for which payment has been withheld.

2. The Costs of the Project have been paid in full except for those not yet due
and payable or for which payment has been withheld, which are described below
and for which moneys for payment thereof are being held in the Project Fund.

Costs of the Project not yet due and payable or for which payment has been
withheld:

 

DESCRIPTION    AMOUNT      $                

TOTAL

   $                

3. At least 95% of the costs previously disbursed and to be disbursed from the
Project Fund are Qualified Costs of Construction, and all of such costs are
costs permitted by the Act.

This certificate is given without prejudice to any rights against third parties
which exist at the date hereof or which may subsequently come into being.

Executed this      day of             , 20    .

 

By  

 

  Borrower Representative

 

B-1

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EXHIBIT C

PROMISSORY NOTE (SERIES 2007A)

FOR VALUE RECEIVED, intending to be legally bound hereby, Windsor on the River,
LLC (the “Borrower”), hereby promises to pay to The Bank of New York Trust
Company, N.A., or its successors and assigns (the “Trustee”), in lawful money of
the United States of America in federal or other immediately available funds,
the principal amount of                      Million Dollars ($            ) due
on May 1, 2042, and to pay interest from the date hereof on the unpaid principal
balance hereof at such rates equal to the interest rates from time to time borne
by the Series 2007A Bonds (as hereinafter defined), calculated during the Weekly
Period (as defined in the Indenture hereinafter referred to) on the basis of a
calendar year consisting of 365 or 366 days, as the case may be, and calculated
on the actual number of days elapsed, and calculated during the Semi-Annual
Period and the Multi-Annual Period (as each is defined in the Indenture
hereinafter referred to) on the basis of a calendar year consisting of 360 days
of twelve (12) thirty (30) day months, payable in lawful money of the United
States of America in federal or other immediately available funds (i) during
said Weekly Period on the first Business Day (as defined in the Indenture
hereinafter referred to) of each calendar month, (ii) during said Semi-Annual
Period the first Business Day following any Semi-Annual Period and (iii) during
said Multi-Annual Period the first Business Day of every sixth calendar month in
a Multi-Annual Period, commencing with the first Business Day of the seventh
calendar month occurring within such Multi-Annual Period, and the first Business
Day following such Multi-Annual Period, until said principal amount is paid.

This Promissory Note shall bear interest on any overdue installment of principal
hereof, premium, if any, or interest hereon (to the extent legally enforceable)
at a rate equal to the interest rate borne by this Promissory Note, from time to
time, from the due date thereof until paid.

This Promissory Note is issued pursuant to the Loan Agreement dated as of May 1,
2007, by and between the Iowa Finance Authority (the “Issuer”) and the Borrower,
and is issued in consideration of the loan made thereunder and to evidence the
obligations of the Borrower set forth in Section 5.1(a) thereof. The Borrower
covenants and agrees that the payments of principal hereof and premium, if any,
and interest hereon will be sufficient to enable the Borrower to pay when due
the principal of, premium, if any, and interest on the issued and outstanding
amount of the Variable Rate Demand Multifamily Housing Revenue Bonds (Windsor on
the River, LLC Project), Series 2007A (the “Series 2007A Bonds”), issued
pursuant to the Indenture of Trust dated as of May 1, 2007, by and between the
Issuer and the Trustee.

Each payment of principal of, premium, if any, and interest on this Promissory
Note shall at all times be sufficient to pay the total amount of principal of
(whether at maturity or upon acceleration or prior redemption), premium, if any,
and interest due on the Series 2007A Bonds on the same date. The total payments
to be made by the Borrower hereunder shall be sufficient to pay when due the
principal of (whether at maturity or upon acceleration or prior redemption),
premium, if any, and interest on the Series 2007A Bonds; provided, that the
Excess Amount (as hereinafter defined) held by the Trustee in the Bond Fund (as
defined in the Agreement) on a payment date shall be credited against the
payment due on such date; and provided further, that, subject to the provisions
of the immediately following sentence, if at any time the amount held

 

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by the Trustee in said Bond Fund should be sufficient (and remain sufficient) to
pay at the times required the principal of, interest and premium, if any, on the
Series 2007A Bonds then remaining unpaid, the Borrower shall not be obligated to
make any further payments under the provisions of the preceding sentence. If on
any day the Excess Amount held by the Trustee in said Bond Fund is insufficient
to make the then required payments of principal of (whether at maturity or upon
redemption prior to maturity or acceleration), interest and premium, if any, on
the Series 2007A Bonds on such date, the Borrower shall forthwith pay such
deficiency. The term “Excess Amount” as of any interest payment date shall mean
the amount in said Bond Fund on such date in excess of the amount required for
payment of the principal of the Series 2007A Bonds which theretofore has matured
at maturity or on a date fixed for redemption and premium, if any, on such
Series 2007A Bonds in all cases where Bonds have not been presented for payment
and paid, or for the payment of interest which has theretofore come due in all
cases where interest cheeks have not been presented for payment and paid.

This Promissory Note is entitled to the benefit and is subject to the conditions
of the Agreement. The obligations of the Borrower to make the payments required
hereunder shall be absolute and unconditional, without any defense or without
right of set-off, counterclaim or recoupment by reason of any default by the
Issuer under the Agreement or under any other agreement among the Borrower, the
Issuer or the Trustee, or out of any indebtedness or liability at any time owing
to the Borrower by the Issuer or the Trustee, or for any other reason.

This Promissory Note is subject to mandatory prepayment and optional prepayment
as a whole or in part, as provided in the Agreement.

In certain events, on the conditions, in the manner and with the effect set out
in the Agreement, the principal installments of this Promissory Note may be
declared due and payable before the stated maturity thereof, together with
accrued interest thereon.

Reference is hereby made to the Agreement for a complete statement of the terms
and conditions under which the maturity of the principal installments of this
Promissory Note may be accelerated and to the exculpatory provision of
Section 10.14 of the Agreement which shall apply with equal force and effect to
this Promissory Note.

 

C-2

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IN WITNESS WHEREOF, the Borrower has executed and delivered this Promissory Note
as of May     , 2007.

 

WINDSOR ON THE RIVER, LLC, a Delaware limited liability company By:  

 

  Christopher G. Zock, its Manager

 

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EXHIBIT D

PROMISSORY NOTE (SERIES 2007B)

FOR VALUE RECEIVED, intending to be legally bound hereby, Windsor on the River,
LLC (the “Borrower”), hereby promises to pay to The Bank of New York Trust
Company, N.A or its successors and assigns (the “Trustee”), in lawful money of
the United States of America in federal or other immediately available funds,
the principal amount of                      Million Dollars
($                    ) due on May 1, 2042, and to pay interest from the date
hereof on the unpaid principal balance hereof at such rates equal to the
interest rates from time to time borne by the Series 2007B Bonds (as hereinafter
defined), calculated during the Weekly Period (as defined in the Indenture
hereinafter referred to) on the basis of a calendar year consisting of 365 or
366 days, as the case may be, and calculated on the actual number of days
elapsed, and calculated during the Semi-Annual Period and the Multi-Annual
Period (as each is defined in the Indenture hereinafter referred to) on the
basis of a calendar year consisting of 360 days of twelve (12) thirty (30) day
months, payable in lawful money of the United States of America in federal or
other immediately available funds (i) during said Weekly Period on the first
Business Day (as defined in the Indenture hereinafter referred to) of each
calendar month, (ii) during said Semi-Annual Period the first Business Day
following any Semi-Annual Period and (iii) during said Multi-Annual Period the
first Business Day of every sixth calendar month in a Multi-Annual Period,
commencing with the first Business Day of the seventh calendar month occurring
within such Multi-Annual Period, and the first Business Day following such
Multi-Annual Period, until said principal amount is paid.

This Promissory Note shall bear interest on any overdue installment of principal
hereof, premium, if any, or interest hereon (to the extent legally enforceable)
at a rate equal to the interest rate borne by this Promissory Note, from time to
time, from the due date thereof until paid.

This Promissory Note is issued pursuant to the Loan Agreement dated as of May 1,
2007, by and between the Iowa Finance Authority (the “Issuer”) and the Borrower,
and is issued in consideration of the loan made thereunder and to evidence the
obligations of the Borrower set forth in Section 5.1(a) thereof. The Borrower
covenants and agrees that the payments of principal hereof and premium, if any,
and interest hereon will be sufficient to enable the Borrower to pay when due
the principal of, premium, if any, and interest on the issued and outstanding
amount of the Taxable Variable Rate Demand Multifamily Housing Revenue Bonds
(Windsor on the River, LLC Project), Series 2007B (the “Series 2007B Bonds”),
issued pursuant to the Indenture of Trust dated as of May 1, 2007, by and
between the Issuer and the Trustee.

Each payment of principal of, premium, if any, and interest on this Promissory
Note shall at all times be sufficient to pay the total amount of principal of
(whether at maturity or upon acceleration or prior redemption), premium, if any,
and interest due on the Series 2007B Bonds on the same date. The total payments
to be made by the Borrower hereunder shall be sufficient to pay when due the
principal of (whether at maturity or upon acceleration or prior redemption),
premium, if any, and interest on the Series 2007B Bonds; provided, that the
Excess Amount (as hereinafter defined) held by the Trustee in the Bond Fund (as
defined in the Agreement) on a payment date shall be credited against the
payment due on such date; and provided further, that, subject to the provisions
of the immediately following sentence, if at any time the amount held

 

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by the Trustee in said Bond Fund should be sufficient (and remain sufficient) to
pay at the times required the principal of, interest and premium, if any, on the
Series 2007B Bonds then remaining unpaid, the Borrower shall not be obligated to
make any further payments under the provisions of the preceding sentence. If on
any day the Excess Amount held by the Trustee in said Bond Fund is insufficient
to make the then required payments of principal of (whether at maturity or upon
redemption prior to maturity or acceleration), interest and premium, if any, on
the Series 2007B Bonds on such date, the Borrower shall forthwith pay such
deficiency. The term “Excess Amount” as of any interest payment date shall mean
the amount in said Bond Fund on such date in excess of the amount required for
payment of the principal of the Series 2007B Bonds which theretofore has matured
at maturity or on a date fixed for redemption and premium, if any, on such
Series 2007B Bonds in all cases where Bonds have not been presented for payment
and paid, or for the payment of interest which has theretofore come due in all
cases where interest checks have not been presented for payment and paid.

This Promissory Note is entitled to the benefit and is subject to the conditions
of the Agreement. The obligations of the Borrower to make the payments required
hereunder shall be absolute and unconditional, without any defense or without
right of set-off, counterclaim or recoupment by reason of any default by the
Issuer under the Agreement or under any other agreement among the Borrower, the
Issuer or the Trustee, or out of any indebtedness or liability at any time owing
to the Borrower by the Issuer or the Trustee, or for any other reason.

This Promissory Note is subject to mandatory prepayment and optional prepayment
as a whole or in part, as provided in the Agreement.

In certain events, on the conditions, in the manner and with the effect set out
in the Agreement, the principal installments of this Promissory Note may be
declared due and payable before the stated maturity thereof, together with
accrued interest thereon.

Reference is hereby made to the Agreement for a complete statement of the terms
and conditions trader which the maturity of the principal installments of this
Promissory Note may be accelerated and to the exculpatory provision of
Section 10.14 of the Agreement which shall apply with equal force and effect to
this Promissory Note.

 

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IN WITNESS WHEREOF, the Borrower has executed and delivered this Promissory Note
as of May     , 2007.

 

WINDSOR ON THE RIVER, LLC, a Delaware limited liability company By:  

 

  Christopher G. Zock, its Manager

 

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The right, title and interest of Iowa Finance Authority, in and to the amounts
receivable hereunder (except for the Unassigned Rights) have been assigned and
pledged to The Bank of New York Trust Company, N.A., as Trustee, pursuant to the
Indenture of Trust dated as of May 1, 2007, from Iowa Finance Authority to said
Trustee.