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Ordinance 2006-148 UNITED CITY OF YORKVILLE KENDALL COUNTY STATE OF ILLINOIS ORDINANCE NUMBER 2006 -1`{' AN ORDINANCE PROVIDING FOR ISSUANCE OF UNITED CITY OF YORKVILLE, KENDALL COUNTY, ILLINOIS BUSINESS DISTRICT REVENUE BONDS, SERIES 2007 (STORM WATER/WATER IMPROVEMENT PROJECT) I I ADOPTED BY THE CITY COUNCIL l i OF THE UNITED CITY OF YORKVILLE KENDALL COUNTY STATE OF ILLINOIS The 12th day of December, 2006 Published in pamphlet form by authority of the City Council of the United City of Yorkville, Kendall County, Illinois this 12th day of December, 2006. CH12 656639.3 ORDINANCE NO. 2006- AN ORDINANCE PROVIDING FOR ISSUANCE OF UNITED CITY OF YORKVILLE, KENDALL COUNTY, ILLINOIS BUSINESS DISTRICT REVENUE BONDS, SERIES 2007 (STORM WATER/WATER IMPROVEMENT PROJECT) BE IT ORDAINED BY THE CITY COUNCIL OF THE UNITED CITY OF YORKVILLE, KENDALL COUNTY, ILLINOIS, AS FOLLOWS: Section 1. Findings and Declarations. It is found and declared by the City Council of the United City of Yorkville, Kendall County, Illinois (the " City ") as follows: a. The City has previously designated the Kendall Marketplace Business District described more fully in Exhibit A to this Ordinance (the "Business District ") pursuant to Ordinance Number 2006 -141 adopted on December 12, 2006 (the "Designation Ordinance ") and the provisions of the Business District Development and Redevelopment Act, 65 ILCS 5/11 -74.3 et M. (the "Business District Act ") and has otherwise complied with all other conditions precedent required by the Business District Act. b. It is necessary and in the best interests of the City to provide at this time improvements benefiting the Business District consisting of land for civic and recreational use, land underlying a detention pond and a detention pond and retaining wall servicing the Business District, a water system, a fire protection system, and other eligible costs to serve the Business District (the "Improvements "). The City presently estimates the total cost of these Improvements together with costs of borrowing money for that purpose, funding administrative expenses and providing for necessary debt service reserves and capitalized interest (collectively, the "Costs of the Improvements ") to be approximately $10,000,000. C. The City does not have sufficient funds on hand or available from other sources with which to pay the Costs of the Improvements. d. It is in the best interests of the City to issue not to exceed $10,000,000 principal amount of its Business District Revenue Bonds, Series 2007 (Storm Water/Water Improvement Project) (the " Bonds ") as provided in this Ordinance, to pay or provide funds for a portion of the Costs of the Improvements. e. The borrowing of the sum of not to exceed $10,000,000 and the issuance of the Bonds in that amount are for purposes constituting business district project costs in the Business District under the Business District Act. f. After due publication of a notice as required by the Business District Act, public hearings to consider the establishment of the Business District, the approval of a business district development plan for the Business District, the imposition of a retailers' occupation tax and a service occupation tax in the Business District for the planning, CH 12_656639.3 l i execution, and implementation of the business district plan and for the payment of business district project costs as set forth in such plan, and the issuance of obligations by the City to provide for the payment of business district project costs secured by the business district tax allocation fund established pursuant to the Business District Act, were held on October 17, 2006 and October 24, 2006 at 7:00 p.m. Section 2. Issuance of Bonds. The City shall borrow the sum of not to exceed $10,000,000 by issuing the Bonds as provided in this Ordinance. The Bonds which shall be designated "United City of Yorkville, Kendall County, Illinois Business District Revenue Bonds, Series 2007 (Storm Water/Water Improvement Project)," and shall be issued for the purpose of providing a portion of the funds needed for the Costs of the Improvements. The Bonds shall be issued pursuant to the powers of the City pursuant to the Business District Act and the Local Government Debt Reform Act, 30 ILCS 350/1 et seq. (the "Debt Act"). Section 3. Approval of Documents. There have been submitted to the City Council forms of the following documents relating to the issuance of the Bonds: I a. a form of Trust Indenture (the "Indenture ") between the City and The Bank of New York Trust Company, N.A., as Trustee, to be dated as of January 1, 2007, which form of Indenture is attached as Exhibit B to this Ordinance; b. a form of Bond Purchase Agreement (the "Bond Purchase Agreement") among the City, William Blair & Company, L.L.C., as Underwriter (the "Underwriter "), and Cannonball LLC (the "Developer ") to be dated as of the date the offer of the Underwriter to purchase the Bonds is accepted by the City, which form of Bond Purchase Agreement is attached as Exhibit C to this Ordinance; C. a form of Development Agreement between the Developer and the City, which form of Development Agreement is attached as Exhibit D to this Ordinance; and d. a form of the preliminary Limited Offering Memorandum (the "Limited Offerina Memorandum ") used by the Underwriter in its initial offering of the Bonds, which form of Limited Offering Memorandum is attached as Exhibit E to this Ordinance. Such documents are approved as to form and substance and the Mayor and the City Clerk of the City are authorized and directed to execute and deliver and /or authorize the use of such documents on behalf of the City in the forms submitted with such additions, deletions and completions of the same (including the establishment of the terms of the Bonds within the parameters set forth in this Ordinance) as the Mayor and the City Clerk deem appropriate; and when each such document is executed, attested, sealed and delivered on behalf of the City, as provided herein, each such document will be binding on the City; from and after the execution and delivery of each such document, the officers, employees and agents of the City are hereby authorized, empowered and directed to do all such acts and things and to execute all such additional documents as may be necessary to carry out, comply with and perform the provisions of each such document as executed; and each such document shall constitute, and hereby is made, a part of this Ordinance, and a copy of each such document shall be placed in the official records of the City, and shall be available for public inspection at the office of the City Clerk. 2 CH12 656639.3 Either the Mayor or the City Clerk is authorized and directed, subject to the terms of the Bond Purchase Agreement as executed, to execute the final Limited Offering Memorandum in substantially the form of the preliminary Limited Offering Memorandum presented hereto with such changes, additions or deletions as they deem appropriate to reflect the final terms of the Bonds, the Indenture and other matters. Section 4. Bond Terms. The Bonds shall be issued as provided in the Indenture and shall be issued in the principal amount of not to exceed $10,000,000, shall be dated, shall mature, shall bear interest at the rates (not to exceed in any year seven percent (7 %) per annum) and shall be subject to redemption at the times and prices as set forth in the Indenture, and shall be sold to the Underwriter at a purchase price of not less than 98.5% of the principal amount of the Bonds with an original issue discount of not to exceed 2% of the principal amount of the Bonds, all as set forth in the Bond Purchase Agreement. The execution and delivery of the Bond Purchase Agreement by the Mayor and the City Clerk shall evidence their approval of the terms of the Bonds set forth above. Section 5. Execution and Delivery of Bonds. The Mayor and the City Clerk are authorized and directed to execute and deliver the Bonds and, together with other Authorized Officers (as defined in the Indenture), to take all necessary action with respect to the issuance, sale and delivery of the Bonds, all in accordance with the terms and procedures specified in this Ordinance and the Indenture. The Bonds shall be delivered to the Trustee who is directed to authenticate the Bonds and deliver the Bonds to the Underwriter upon receipt of the purchase price for the Bonds. The Bonds shall be in substantially the form set forth in the Indenture. Each Bond shall be executed by the manual or facsimile signature of the Mayor and the manual or facsimile signature of the City Clerk and shall have the corporate seal of the City affixed to it (or a facsimile of that seal printed on it). The Mayor and the City Clerk (if they have not already done so) are authorized and directed to file with the Illinois Secretary of State their manual signatures certified by them pursuant to the Uniform Facsimile Signatures of Public Officials Act, as amended, which shall authorize the use of their facsimile signatures to execute the Bonds. Each Bond so executed shall be as effective as if manually executed. In case any officer of the City whose signature or a facsimile of whose signature shall appear on the Bonds shall cease to be such officer before authentication and delivery of any of the Bonds, that signature or facsimile signature shall nevertheless be valid and sufficient for all purposes, the same as if the officer had remained in office until delivery. The Bonds shall contain a recital that they are issued pursuant to Section 11- 74.3(14) of the Business District Act. Such recital shall be conclusive evidence of the validity of the Bonds and the regularity of their issuance. No Bond shall be valid for any purpose unless and until a certificate of authentication on that Bond substantially in the form set forth in the bond form in the Indenture shall have been duly executed by the Trustee. Execution of that certificate upon any Bond shall be conclusive evidence that the Bond has been authenticated and delivered under this Ordinance. 3 CH12_656639.3 i Section 6. Bonds are Limited Obli;;ations; Sales Taxes; Pledge. The Bonds shall constitute limited obligations of the City, payable from the Sales Taxes (as defined below) imposed in the Business District as provided below. The Bonds shall not constitute the general obligations of the City and neither the full faith and credit nor the unlimited taxing power of the City shall be pledged as security for payment of the Bonds. Pursuant to the Designation Ordinance and in accordance with the Business District Act, the Issuer has imposed a one -half of one percent (0.5 %) retailers' occupation tax and service occupation tax which shall be collected by the Issuer and enforced by Illinois Department of Revenue (the "Sales Taxes "). The Sales Taxes imposed and collected as provided above shall be deposited in the Business District Tax Allocation Fund created pursuant to the Indenture and are appropriated to and are irrevocably pledged to and shall be used only for the purposes set forth in Section 5.3 of the Indenture. Section 7. Special Covenants. The City covenants with the holders of the Bonds from time to time outstanding that it (i) will take all actions which are necessary to be taken (and avoid any actions which it is necessary to avoid being taken) so that interest on the Bonds will not be or become included in gross income for federal income tax purposes under existing law, including without limitation the Internal Revenue Code of 1986, as amended (the " Code "); (ii) will take all actions reasonably within its power to take which are necessary to be taken (and avoid taking any actions which are reasonably within its power to avoid taking and which are necessary to avoid) so that the interest on the Bonds will not be or become included in gross income for federal income tax purposes under the federal income tax laws as in effect from time to time; and (iii) will take no action or permit any action in the investment of the proceeds of the Bonds, amounts held under the Indenture or any other funds of the City which would result in making interest on the Bonds subject to federal income taxes by reason of causing the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code, or direct or permit any action inconsistent with the regulations under the Code as promulgated and as amended from time to time and as applicable to the Bonds. The Mayor, the City Clerk, the City Treasurer and other Authorized Officers of the City are authorized and directed to take all such actions as are necessary in order to carry out the issuance and delivery of the Bonds including, without limitation, to make any representations and certifications they deem proper pertaining to the use of the proceeds of the Bonds and other moneys held under the Indenture in order to establish that the Bonds shall not constitute arbitrage bonds as so defined. The City further covenants with the holders of the Bonds from time to time outstanding that: a. it will take all actions, if any, which shall be necessary in order further to provide for the collection of the Sales Taxes imposed by or pursuant to this Ordinance or the Designation Ordinance; b. it will not take any action which would adversely affect the imposition and collection of the Sales Taxes; and 4 CH12 656639.3 I � C. it will comply with all present and future laws concerning the imposition and collection of the Sales Taxes; in each case so that the City shall be able to pay the principal of and interest on the Bonds as they come due and replenish the Reserve Fund to the Reserve Requirement and it will take all actions necessary to assure the timely collection of the Sales Taxes. Section 8. Additional Authoritv. The Mayor, the City Clerk and the other officers of the City are authorized to execute and deliver on behalf of the City such other documents, agreements and certificates and to do such other things consistent with the terms of this Ordinance as such officers and employees shall deem necessary or appropriate in order to effectuate the intent and purposes of this Ordinance, including, without limitation, to make any representations and certifications they deem proper pertaining to the use of the proceeds of the Bonds in order to establish that the Bonds shall not constitute arbitrage bonds as defined in Section 7 above. Section 9. Severabilitv. If any section, paragraph, clause or provision of this Ordinance (including any section, paragraph, clause or provision of any exhibit to this Ordinance) shall be held invalid, the invalidity of such section, paragraph, clause or provision shall not affect any of the other sections, paragraphs, clauses or provisions of this Ordinance (or of any of the exhibits to this Ordinance). Section 10. Repealer: Effect of Ordinance. All ordinances, resolutions and orders or parts of ordinances, resolutions and orders in conflict with this Ordinance are repealed to the extent of such conflict. The City Clerk shall cause this Ordinance to be published in pamphlet form. This Ordinance shall be effective upon its passage and publication as provided by law. I 5 CH12_656639.3 PASSED BY THE CITY COUNCIL OF THE UNITED CITY OF YORKVILLE, KENDALL COUNTY, ILLINOIS this 12th day of December, 2006. VOTING AYE: VOTING NAY: ABSENT:„� �. ABSTAINED: NOT VOTING: APPROVED: Mayor ATTEST: i2Y, k �I i I I I 6 CH12_656639.3 Exhibit A UNITED CITY OF YORKVILLE KENDALL MARKETPLACE BUSINESS DISTRICT CH12 656639.3 Exhibit B i CH 12_656639.3 i Exhibit C CH12_656639.3 Exhibit D I �I �I I I CH 12_656639.3 Exhibit E i i CH12 656639.3 EXHIBIT A Leaal Description of Property THAT PART OF THE SOUTHEAST QUARTER OF SECTION 19, PART OF THE SOUTH HALF OF SECTION 20 AND PART OF THE NORTHWEST QUARTER OF SECTION 29, TOWNSHIP 37 NORTH, RANGE 7 EAST OF THE THIRD PRINCIPAL MERIDIAN DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHEAST CORNER OF THE SOUTHEAST QUARTER OF SAID SECTION 19; THENCE NORTH 01 DEGREES 13 MINUTES 53 SECONDS WEST, ALONG THE EAST LINE OF SAID SOUTHEAST QUARTER 310.20 FEET; THENCE WESTERLY PERPENDICULAR TO SAID EAST LINE 198.00 FEET; THENCE NORTH 16 DEGREES 23 MINUTES 58 SECONDS WEST, 862.81 FEET; THENCE NORTH 46 DEGREES 51 MINUTES 14 SECONDS EAST, 126.15 FEET; THENCE WESTERLY ALONG A NONTANGENTIAL CURVE TO THE RIGHT WITH A RADIUS OF 25.00 FEET AND A CHORD BEARING OF NORTH 86 DEGREES 29 MINUTES 53 SECONDS WEST, AN ARC LENGTH OF 40.71 FEET; THENCE NORTHWESTERLY ALONG A CURVE TO THE RIGHT WITH A RADIUS OF 950.00 FEET AND A CHORD BEARING OF NORTH 30 DEGREES 00 MINUTES 26 SECONDS WEST, AN ARC LENGTH OF 326.41 FEET; THENCE NORTH 67 DEGREES 35 MINUTES 57 SECONDS EAST, 243.73 FEET; THENCE SOUTHEASTERLY ALONG A NONTANGENTIAL CURVE TO THE LEFT WITH A RADIUS OF 500.00 FEET AND A CHORD BEARING OF SOUTH 31 DEGREES 07 MINUTES 50 SECONDS EAST, AN ARC LENGTH OF 209.70 FEET; THENCE SOUTH 43 DEGREES 08 MINUTES 45 SECONDS EAST, 52.80 FEET; THENCE NORTH 46 DEGREES 51 MINUTES 15 SECONDS EAST, 287.40 FEET; THENCE SOUTH 43 DEGREES 08 MINUTES 45 SECONDS EAST, 80.00 FEET; THENCE NORTH 46 DEGREES 51 MINUTES 15 SECONDS EAST, 162.29 FEET; THENCE NORTH 43 DEGREES 08 MINUTES 45 SECONDS WEST, 7.00 FEET; THENCE NORTH 46 DEGREES 51 MINUTES 15 SECONDS EAST, 60.76 FEET; THENCE NORTHEASTERLY ALONG A CURVE TO THE RIGHT WITH A RADIUS OF 367.00 FEET AND A CHORD BEARING OF NORTH 58 DEGREES 18 MINUTES 15 SECONDS EAST, AN ARC LENGTH OF 146.68 FEET; THENCE NORTH 69 DEGREES 45 MINUTES 15 SECONDS EAST, 121.97 FEET; THENCE NORTHEASTERLY ALONG A CURVE TO THE LEFT WITH A RADIUS OF 433.00 FEET AND A CHORD BEARING OF NORTH 37 DEGREES 51 MINUTES 31 SECONDS EAST, AN ARC LENGTH OF 482.09 FEET; THENCE NORTHEASTERLY ALONG A CURVE TO THE RIGHT WITH A RADIUS OF 25.00 FEET AND A CHORD BEARING OF NORTH 51 DEGREES 23 MINUTES 20 SECONDS EAST, AN ARC LENGTH OF 39.64 FEET; THENCE SOUTH 83 DEGREES 11 MINUTES 08 SECONDS EAST, 763.20 FEET; THENCE SOUTHEASTERLY ALONG A CURVE TO THE RIGHT WITH A RADIUS OF 367.00 FEET AND A CHORD BEARING OF SOUTH 57 DEGREES 07 MINUTES 07 SECONDS EAST, AN ARC LENGTH OF 333.94 FEET; THENCE SOUTH 31 DEGREES 03 MINUTES 05 SECONDS EAST, 123.11 FEET; THENCE SOUTH 58 DEGREES 56 MINUTES 55 SECONDS WEST, 7.00 FEET; THENCE SOUTHEASTERLY ALONG A NONTANGENTIAL CURVE TO THE LEFT WITH A RADIUS OF 440.00 FEET AND A CHORD BEARING OF SOUTH 42 DEGREES 20 MINUTES 40 SECONDS EAST, AN ARC LENGTH OF 173.45 FEET; THENCE NORTH 32 DEGREES 01 MINUTES 21 SECONDS EAST, 80.28 FEET; THENCE SOUTHEASTERLY CHI2 658543.1 ALONG A NONTANGENTIAL CURVE TO THE LEFT WITH A RADIUS OF 360.00 FEET AND A CHORD BEARING OF SOUTH 60 DEGREES 42 MINUTES 59 SECONDS EAST, AN ARC LENGTH OF 101.11 FEET; THENCE SOUTH 68 DEGREES 45 MINUTES 32 SECONDS EAST, 784.84 FEET TO THE CENTER LINE OF CANNONBALL TRAIL; THENCE SOUTH 21 DEGREES 40 MINUTES 31 SECONDS WEST, ALONG SAID CENTER LINE, 331.43 FEET; THENCE SOUTH 21 DEGREES 14 MINUTES 17 SECONDS WEST, ALONG SAID CENTER LINE, 1261.58 FEET; THENCE NORTH 68 DEGREES 45 MINUTES 43 SECONDS WEST, 48.00 FEET; THENCE SOUTH 21 DEGREES 14 MINUTES 17 WEST, 470.00 FEET; THENCE SOUTH 57 DEGREES 14 MINUTES 17 SECONDS WEST, 74.81 FEET TO THE NORTH LINE OF U.S. ROUTE 34; THENCE NORTH 85 j DEGREES 32 MINUTES 10 SECONDS WEST ALONG SAID NORTH LINE, 1983.32 FEET TO THE WEST LINE OF THE NORTHWEST QUARTER OF SAID SECTION 29; THENCE NORTH 01 DEGREES 14 MINUTES 12 SECONDS WEST ALONG SAID WEST LINE, 378.99 FEET TO THE POINT OF BEGINNING, IN THE UNITED CITY OF YORKVILLE, KENDALL COUNTY, ILLINOIS, AND CONTAINING 143.40 ACRES OF LAND MORE OR LESS. PIN 's I 02 -19- 400 -003 02 -29- 100 -001 02 -20 -351 -001 I I i 2 CHI2_658543,1 Em 1 61-r ct � 11 F &L DRAFT 12/01/06 i i TRUST INDENTURE Between UNITED CITY OF YORKVILLE, ILLINOIS and THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee Dated as of January 1, 2007 UNITED CITY OF YORKVILLE, ]KENDALL COUNTY, ILLINOIS BUSINESS DISTRICT REVENUE BONDS, SERIES 2007 (STORM WATER/WATER IMPROVEMENT PROJECT) CH12 650181.4 i TABLE OF CONTENTS Page ARTICLE I DEFINITIONS AND INTERPRETATIONS .............. ............................... 3 Section1.1 Definitions .................................................................... ............................... 3 Section 1.2 Rules of Construction .................................................. .............................12 ARTICLE II THE BONDS 12 Section 2.1 Authorization of Bonds ................................................ .............................12 Section2.2 Terms of Bonds ............................................................ .............................12 Section 2.3 Execution; Limited Obligation .................................. ............................... 13 Section2.4 Authentication ............................................................ ............................... 14 Section2.5 Form of Bonds ........................................................... ............................... 14 Section 2.6 Delivery of Bonds ........................................................ .............................15 Section 2.7 Bonds Mutilated, Lost, Destroyed or Stolen .............. ............................... 15 Section 2.8 Registration, Transfer and Exchange of Bonds; Persons Treated as - Owners......................................................................... .............................16 Section 2.9 Cancellation of Bonds ................................................ ............................... 16 Section2.10 Temporary Bonds ....................................................... ............................... 17 Section 2.11 Additional Bonds ....................................................... ............................... 17 Section2.12 Book -Entry System .................................................... ............................... 17 Section 2.13 Representation Letter ................................................... .............................18 Section 2.14 Transfers Outside Book -Entry System ...................... ............................... 18 Section 2.15 Payments and Notices to the Nominee ........................ .............................19 Section 2.16 Initial Depository and Nominee ................................. ............................... 19 ARTICLE III REDEMPTION OF BONDS ....................................... .............................19 Section 3.1 Terms of Redemption ................ ............................................................... 19 Section 3.2 Selection of Bonds to be Redeemed .......................... ............................... 21 Section 3.3 Notice of Redemption ................................................ ............................... 21 Section 3.4 Payment of Redeemed Bonds .................................... ............................... 22 Section 3.5 Purchase of Bonds; Tenders ....................................... ............................... 23 ARTICLE IV APPLICATION OF BOND PROCEEDS; PLAN OF FINANCING....... 23 Section 4.1 Initial Deposit of Bond Proceeds ............................... ............................... 23 Section 4.2 Establishment and Application of Improvement Fund ............................. 23 Section 4.3 Costs of Issuance Fund .............................................. ............................... 24 ARTICLE V REVENUES AND FUNDS ....................................... ............................... 24 Section 5.1 Pledge of Revenues and Assets .................................. ............................... 24 Section 5.2 Establishment of Funds .............................................. ............................... 25 Section 5.3 Application of Revenues ............................................ ............................... 25 Section 5.4 Application of Debt Service Reserve Fund ............... ............................... 25 Section 5.5 Application of Bond Fund ......................................... ............................... 26 Section5.6 Reserved ..................................................................... ............................... 26 i CH12 650181.4 Section5.7 Reserved ..................................................................... ............................... 27 Section 5.8 Administrative Expense Fund .................................... ............................... 27 Section 5.9 Investment of Funds ................................................... ............................... 27 Section 5.10 Moneys Held for Particular Bonds ............................ ............................... 28 Section 5.11 Funds Held in Trust ................................................... ............................... 28 Section 5.12 Accounting Records ................................................... ............................... 28 Section 5.13 Amounts Remaining in Funds ................................... ............................... 28 Section5.14 Rebate Fund ............................................................... ............................... 28 ARTICLE VI COVENANTS OF ISSUER ...................................... ............................... 29 Section6.1 Payment of Bonds ...................................................... ............................... 29 Section 6.2 Payment of Lawful Charges and Priority of Lien ...... ............................... 29 Section6.3 Tax Covenants ........................................................... ............................... 29 Section 6.4 Compliance with Conditions Precedent ..................... ............................... 29 Section 6.5 Reserved ..................................................................... ............................... 29 i Section 6.6 Further Assurances ........................................:............ ............................... 29 Section 6.7 Powers as to Bonds and Pledge ........................... 30 Section 6.8 Preservation of Revenues; Amendment of Agreements ........................... 30 Section 6.9 Limitations on Liability ............................................. ............................... 30 Section 6.10 Sales Tax and Other Disclosure ................................. ............................... 31 ARTICLE VII DISCHARGE OF INDENTURE ............................... ............................... 31 Section7.1 Defeasance ................................................................. ............................... 31 Section 7.2 Unclaimed Moneys .................................................... ............................... 32 ARTICLE VIII DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND BONDHOLDERS...................................................... ............................... 33 Section 8.1 Events of Default ....................................................... ............................... 33 Section8.2 Remedies .................................................................... ............................... 33 Section 8.3 Other Remedies; Rights of Bondholders ................... ............................... 34 Section 8.4 Representation of Bondholders by Trustee ................ ............................... 34 Section8.5 Action by Trustee ....................................................... ............................... 35 Section 8.6 Accounting and Examination of Records After Default ........................... 35 Section 8.7 Restriction on Bondholder Action ............................. ............................... 35 Section 8.8 Application of Moneys After Default ........................ ............................... 36 Section 8.9 Control of Proceedings .............................................. ............................... 36 Section 8.10 Waivers of Event of Default .............................................................. *....... 37 Section8.11 Subordination ............................................................. ............................... 37 Section 8.12 Termination of Proceedings ....................................... ............................... 37 ARTICLEIX THE TRUSTEE ......................................................... ............................... 37 Section 9.1 Acceptance of Trusts .................................................. ............................... 37 Section 9.2 Fees, Charges and Expenses of Trustee ..................... ............................... 41 Section 9.3 Intervention by Trustee .............................................. ............................... 41 Section 9.4 Merger or Consolidation of Trustee ........................... ............................... 41 Section 9.5 Resignation by Trustee .............................................. ............................... 41 Section 9.6 Removal of Trustee .................................................... ............................... 42 ii CH12 650181.4 Section 9.7 Appointment of Successor Trustee ............................ ............................... 42 Section 9.8 Transfer of Rights and Property to Successor Trustee .............................. 42 Section 9.9 Successor Trustee as Bond Registrar, Custodian of Funds and PayingAgent ........................................................ ............................... . 43 Section 9.10 Appointment of Co- Trustee ....................................... ............................... 43 Section 9.11 Arbitrage Covenants .................................................. ............................... 43 Section 9.12 Compliance with Section 6.10. ARTICLE X SUPPLEMENTAL INDENTURES .......................... ............................... 44 Section 10.1 Supplemental Indentures Effective Upon Acceptance ............................. 44 Section 10.2 Supplemental Indentures Requiring Consent of Bondholders .................. 45 Section 10.3 Consent of Bondholders ............................................. ............................... 45 Section 10.4 Modification by Unanimous Consent ........................ ............................... 46 Section 10.5 Exclusion of Bonds .................................................... ............................... 47 Section 10.6 Notation on Bonds ..................................................... ............................... 47 Section 10.7 Additional Contracts or Indentures ............................ ............................... 47 Section 10.8 Opinion of Bond Counsel Concerning Supplemental Indentures ............. 47 ARTICLE XI MISCELLANEOUS .................................................. ............................... 47 Section 11.1 Evidence of Signatures of Bondholders and Ownership of Bonds........... 47 Section 11.2 Details of Documents Delivered to Trustee ............... ............................... 48 Section 11.3 Preservation and Inspection of Documents ................ ............................... 48 . Section 11.4 No Recourse on Bonds ............................................... ............................... 48 Section 11.5 Severability ................................................................ ............................... 49 Section11.6 Notices ....................................................................... ............................... 49 Section 11.7 Action Required to be Taken on a Non - Business Day ............................. 49 Section 11.8 Parties Interested Herein ............................................ ............................... 49 Section 11.9 Counterparts ................................................................. .............................49 Section 11.10 Applicable Provisions of Law .................................... ............................... 49 EXHIBITA — FORM OF BOND ................................................................ ............................... A -1 EXHIBIT B — DESCRIPTION OF BUSINESS DISTRICT ....................... ............................... B -1 EXHIBIT C — REQUEST FOR PAYMENT ............................................... ............................... C -1 iii CHI2 650181.4 TRUST INDENTURE THIS TRUST INDENTURE, made and entered into as of January 1, 2007, by and between the United City of Yorkville, Kendall County, Illinois (the " Issuer "), a public body corporate and politic organized and existing under the laws of the State of Illinois, and THE BANK OF NEW YORK TRUST COMPANY, N.A., a national banking association organized and existing under the laws of the United States of America and authorized to accept and execute trusts of the character herein set forth, as trustee (the " Trustee "); i WITNESSETH: WHEREAS, the Issuer has by Ordinance Number 2006- designated the Kendall Marketplace Business District (the "Business District "); and WHEREAS, the Issuer has by Ordinance Number 2006- authorized the issuance of its Business District Revenue Bonds, Series 2007 (Storm Water/Water Improvement Project) (the " Bonds ") in the aggregate principal amount of not to exceed $ to finance project costs within the Business District pursuant to the provisions of the Business District Development and Redevelopment Act, 65 ILCS 5/11 -74.3 et sec l. (the "Business District Act "); and WHEREAS, the Issuer has authorized the execution of this Indenture in order to secure the payment of the principal of, premium, if any, and interest on the Bonds and the observance of the covenants and conditions herein contained; and WHEREAS, the Issuer has determined that all things necessary to make the Bonds, when executed by the Issuer and authenticated by the Trustee and issued as in this Indenture provided, the valid, binding and legal obligations of the Issuer according to the import thereof, and to constitute this Indenture a valid assignment and pledge of the Revenues (as hereinafter defined) and other amounts pledged to the payment of the principal of and interest on the Bonds and a valid and binding agreement for the uses and purposes herein set forth, have been duly taken, and the creation, execution and delivery of this Indenture and the creation, execution and delivery of the Bonds, subject to the terms hereof, have in all respects been duly authorized; NOW, THEREFORE, THIS TRUST INDENTURE WITNESSETH: The Issuer, in order to secure the payment of the principal of, premium, if any, and the interest on all Bonds at any time issued and outstanding under this Indenture, according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds are to be issued and received, and in consideration of the premises and of the purchase and acceptance of the Bonds by the owners thereof, and for other valuable consideration, the receipt whereof is hereby acknowledged, does hereby grant, bargain, sell, warrant, convey, confirm, assign, transfer in trust, grant a security interest in, pledge and set over unto the Trustee and to its successors in the trusts hereby created, all and singular, the property of the Issuer, real and personal, hereinafter described, for the benefit of the Bondholders, subject only to the provisions hereof permitting the application thereof for or to the purposes and on the terms and conditions set forth herein (said property being herein sometimes referred to as the "Trust Estate "): CH12 650181.4 i GRANTING CLAUSES , All right, title and interest of the Issuer in and to the proceeds of the sale of the Bonds; All Revenues (as hereinafter defined); All Funds and Accounts (as hereinafter defined) held by the Trustee under this Indenture from time to time and earnings thereon (other than moneys held in the Rebate Fund created under Article V) and subject to application thereof in the manner and for the purposes herein set forth; and All other property which by the express provisions of this Indenture is required to be subject to the lien hereof, and any additional property that, from time to time, by delivery or by writing of any kind, may be subjected to the lien hereof, by the Issuer or by anyone on its behalf, and the Trustee is hereby authorized to receive the same at any time as additional security hereunder; TO HAVE AND TO HOLD all and singular with all privileges and appurtenances hereby given, granted, bargained, sold, conveyed, assigned, pledged, mortgaged and transferred or agreed or intended so to be, whether now owned or hereafter acquired, including any and all additional property that by virtue of any provision hereof or of any indenture supplemental hereto shall hereafter become subject to this Indenture and to the trusts hereby created, unto the Trustee and its successors in trust and assigns forever; IN TRUST, NEVERTHELESS, upon the terms and trusts herein set forth for the equal and proportionate benefit, security and protection of the registered owners from time to time of any of the Bonds authenticated and delivered under this Indenture and issued by the Issuer and outstanding, without preference, priority or distinction as to lien, or otherwise of any series of Bonds over any other series of Bonds or any one Bond over any other Bond by reason of priority in the issue, sale or negotiation thereof, or of any other cause, as herein provided; I PROVIDED, HOWEVER, that if the Issuer, its successors or assigns, shall well and truly pay, or cause to be paid, the principal of, premium, if any, and interest on the Bonds due or to become due thereon, at the times and in the manner mentioned in the Bonds according to the true intent and meaning thereof, or shall provide, as permitted hereby, for the payment thereof by depositing with the Trustee the entire amount due or to become due thereon, and shall well and truly keep, perform and observe all the covenants and conditions pursuant to the terms of this Indenture to be kept, performed and observed by it, and shall pay, cause to be paid or make provision for payment to the Trustee of all sums of money due or to become due in accordance with the terms and provisions hereof, then upon such final payment this Indenture and the rights hereby granted shall cease, determine and be void; otherwise this Indenture shall remain in full force and effect; AND IT IS HEREBY COVENANTED that all of the Bonds shall be issued, authenticated and delivered, and that the Trust Estate shall be held by the Trustee, subject to the further covenants, conditions, uses and trusts hereinafter set forth, and the Issuer agrees and covenants with the Trustee and with the registered owners from time to time of the Bonds, as follows: 2 CH12 650181.4 i ARTICLE I DEFINITIONS AND INTERPRETATIONS Section 1.1 Definitions. Unless the context otherwise requires, the terms defined in this Section shall, for all purposes of this Indenture and of any indenture supplemental hereto, have the following meanings: "Accounting Date" means December 1 of each year, commencing December 1, 2007. "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of the Bonds as determined by the Issuer: the costs of computing the Revenues and of preparing the annual collection schedules; the costs of collecting the Revenues (whether by the Issuer or otherwise); the costs of remitting the Revenues to the Trustee; the costs of the Trustee and any fiscal agent (including its legal counsel) in the discharge of the duties required of it under this Indenture or any trustee or fiscal agent agreement; the costs of the Issuer or its designee in complying with disclosure requirements of applicable federal and state securities laws, including, but not limited to, public inquiries regarding the Revenues; the costs associated with the release of funds from any escrow account; any termination payments owed by the Issuer in connection with any guaranteed investment contract, forward purchase agreement or other investment of funds held under the Indenture; interest on any overdue amounts (other than overdue payments of principal of, or premium or interest on, the Bonds); and amounts advanced by the Issuer for any other administrative purposes relating to the Bonds or the Project, including the reasonable fees of legal counsel of the Issuer incurred in connection with the foregoing. i "Administrative Expense Fund" means the Trust Fund so designated which is described in Section 5.8. "Administrative Expense Fund Reauirement" means, (1) from the Closing Date through December 31, 2007, $ , (2) for each calendar year beginning on and after January 1, 2008, the Administrative Expense Fund Requirement on December 31 of the previous year plus an amount equal to 3% of such Administrative Expense Fund Requirement on December 31 of the previous year. "Attesting Officer" means the City Clerk of the Issuer, or such other officer or official of the Issuer who in accordance with the laws of the State, the Issuer or other governing documents of the Issuer or practice or custom, regularly certifies official acts and records of the Issuer, and includes any assistant or deputy officer to the principal officer or officers exercising such responsibilities. "Authorized Officer" means the Mayor or any other person designated to act on behalf of the Issuer by a certificate signed by the Mayor and filed with the Issuer and the Trustee. "Bankruptcy Code" means the Federal Bankruptcy Code, Title 11 of the United States Code. "Beneficial Owner" means the purchaser of a beneficial interest in the Bonds. 3 CHI2 650181.4 " Bond " means any bond or bonds, as the case may be, authorized under and secured by > this Indenture and issued pursuant to this Indenture. "Bond Counsel" means an attorney at law or a firm of attorneys of recognized expertise in the field of federal income tax matters relating to municipal securities selected by the Issuer. "Bond Fund" means the Fund created and so designated in Section 5.2. "Bondholder" or " holder " or " owner " of any Bond or any similar term shall mean the person in whose name any Bond is registered. "Bond Register" means the registration books of the Issuer maintained by the Trustee as provided in this Indenture on which registration and transfer of the Bonds is to be recorded. "Bond Year" means the period of 12 consecutive months ending on December 31 of each year in which Bonds are or will be Outstanding, provided that the first Bond Year shall commence on the Closing Date and end on December 31, 2007. I "Business Day" means any day other than a Saturday, a Sunday, a day on which banks in the city in which the Principal Office of the Trustee is located are authorized or obligated by law or executive order to close or a day on which the New York Stock Exchange is closed. "Business District" means the Kendall Marketplace Business District within the Issuer created pursuant to the Business District Act and legally described on Exhibit B to this Indenture and incorporated by reference herein. "Business District Act" means the Business District Development and Redevelopment Act, 65 ILCS 5/11 -74.3 et seq. "Business District Sales Tax Account" means the Account created and so designated in Section 5.2. "Business District Sales Taxes" means the one -half of one percent (.5 %) Business District Sales Tax levied by the City in the Business District on sales by retailers and servicemen operating in the Business District, and any tax intended to replace the same as enacted by law or ordinance of the Issuer or any governmental authority. "Business District Tax Allocation Fund" means the "Kendall Marketplace Business District Tax Allocation Fund" created and so designated in Ordinance Number 2006 -_ of the Issuer adopted on December _, 2006 pursuant to the Business District Act. "Closing Date" means the date the Bonds are initially issued and delivered to the original purchaser or purchasers thereof. " Code " means the United States Internal Revenue Code of 1986, as amended, and the Regulations thereunder, or any successor statute, together with corresponding and applicable final, temporary or proposed regulations and revenue rulings issued or amended with respect thereto by the Treasury Department or Internal Revenue Service of the United States, except as 4 CHI2 650181.4 i the Tax Reform Act of 1986 may make the Internal Revenue Code of 1954, as amended (the "1954 Code "), prior to the Tax Reform Act of 1986, applicable to the Bonds and the Project. "Costs of Issuance" means items of expense payable directly or indirectly by or reimbursable to the Issuer and related to the authorization, sale and issuance of the Bonds, including, without limitation, printing costs, costs of reproducing documents, filing and recording fees, fees and charges of the Trustee, fees and expenses of counsel to the Trustee, fees and expenses of Bond Counsel, counsel to the Issuer, counsel to the Developer, and counsel to j the Original Purchaser, underwriting, legal and accounting fees and charges, costs of credit ratings, fees and charges for execution, transportation and safekeeping of Bonds, fees of the Issuer and other costs, charges and fees in connection with the foregoing. "Costs of Issuance Fund" means the Fund created and so designated in Section 5.2. "Counsel's Opinion" means a written opinion, including opinions supplemental thereto, signed by an attorney or firm of attorneys (who may be counsel for the Issuer, the Borrower or Fannie Mae) acceptable to the Trustee. "Debt Service Reserve Fund" means the Fund created and so designated in Section 5.2. "Debt Service Reserve Fund Reauirement" means, on the Closing Date, $ , and as of any date thereafter, an amount equal to 10% of the original principal amount of Bonds Outstanding. "Depositorv" means DTC and its successors and assigns or if (a) the then Depository resigns from its functions as securities depository of the Bonds, or (b) the Issuer discontinues use of the Depository pursuant to Section 2.14, any other securities depository which agrees to follow the procedures required to be followed by a securities depository in connection with the Bonds and which is selected by the Issuer with the consent of the Trustee. "Developer" means Cannonball LLC, an Illinois limited liability company, and its affiliates and their respective successors and assigns. "Development Agreement" means the Development Agreement dated as of , 2007, by and between the Issuer and the Developer, as the same may be amended, modified, amended and restated, and supplemented from time to time. " means The Depository Trust Company, New York, New York. "Event of Default" means any occurrence or event specified in Section 8.1. " Fund " or "Account" means a fund or account created by or pursuant to this Indenture. "Government Obligations" means (i) direct obligations of or obligations fully and unconditionally guaranteed by the United States of America, including, but not limited to, United States Treasury Obligations, Separate Trading of Registered Interest and Principal of Securities (STRIPS) and Coupons Under Book -Entry Safekeeping (CUBES), provided the underlying United States Treasury Obligation is not callable prior to maturity, and (ii) obligations of the 5 CHI2_650181.4 Resolution Funding Corporation, including, but not limited to, obligations of the Resolution > '� Funding Corporation stripped by the Federal Reserve Bank of New York. "Improvement Fund" means the Fund created and so designated in Sections 4.2 and 5.2. I "Improvements" means land for civic and recreational use, land underlying a detention pond and a detention pond and retaining wall servicing the Business District, a water system, a fire protection system, and other eligible costs to serve the Business District. "Indenture" means this Trust Indenture as it may from time to time be amended, modified ' or supplemented by Supplemental Indentures. "Information Services" means Financial Information, Inc. "Daily Called Bond Service." 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Services, "Called Bond Service," 55 Broad Street, 28th Floor, New York, New York 10004; Moody's Investors Service "Municipal and Government," 5250 77 Center Drive, Suite 150, Charlotte, North Carolina 28217, Attention: Called Bond Department; and Standard & Poor's Ratings Services "Called Bond Record," 25 Broadway, New York, New York 10004; or, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other services providing information with respect to called bonds, or any other such services as the Issuer may designate in writing to the Trustee. "Interest Payment Date" means January 1 and July 1 and of each year, commencing July 1, 2007. - "Interest Requirement" means, as of any particular date of calculation and with respect to Bonds Outstanding on such date of calculation, an amount of money equal to the sum (without duplication) of (a) any interest payable currently on the Bonds which is then due and payable but not yet paid (including, without limitation, to the extent allowed under applicable law, interest on any overdue payments), plus (b) the interest payable currently on the Bonds which will be due and payable on each Interest Payment Date to occur in the next Bond Year. "Investment Obligation" means, to the extent permitted by then applicable Illinois law, the following: (a) bonds, notes, certificates of indebtedness, treasury bills or other securities which are guaranteed by the full faith and credit of the United States of America as to principal and interest; (b) bonds, notes, debentures, or other similar obligations of the United States of America or its agencies, including (i) federal land banks, federal intermediate credit banks, banks for cooperative, federal farm credit banks, or any other entity authorized to issue debt obligations under the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.); (ii) the federal home loan banks and the federal home loan mortgage corporation; and (iii) any other agency created by Act of Congress; (c) interest bearing obligations of any county, township, city, village, incorporated town, municipal corporation or school district, which obligations are 6 CH12 650181.4 registered in the name of the Issuer or held under a custodial agreement at a bank, if such obligations at the time of purchase are in one of the two highest general classifications established by a rating service of nationally recognized expertise in rating bonds of states and their political subdivisions; (d) interest bearing certificates of deposit, interest bearing savings accounts or money market accounts, interest bearing time deposits, or other investments constituting direct obligations of any bank as defined by the Illinois Banking Act which are insured by the Federal Deposit Insurance Corporation or which are with a bank rated in the highest short term rating category established by a nationally recognized rating service; (e) repurchase agreements of government securities which are subject to the Government Securities Act of 1986. The government securities, unless registered or inscribed in the name of the Issuer, shall be purchased through banks or trust companies authorized to do business in the State of Illinois; (f) repurchase agreements (other than those described in clause (e) of this definition of "Investment Obligations ") meeting the following requirements: (i) the securities, unless registered or inscribed in the name of the Trustee, are purchased through banks or trust companies authorized to do business in the State of Illinois; (ii) an Authorized Officer after ascertaining which firm will give the most favorable rate of interest, directs the custodial bank to "purchase "' specified securities from a designated institution. The "custodial bank" is the bank or trust company, or agency of government, which acts for the Trustee in connection with repurchase agreements involving the investment of funds by the Trustee. The State Treasurer may act as custodial bank for the Trustee; (iii) a custodial bank must be a member bank of the Federal Reserve System or maintain accounts with member banks. All transfers of book -entry securities must be accomplished on a Reserve Bank's computer records through a member bank of the Federal Reserve System. These securities must be credited to the Trustee on the records of the custodial bank and the transaction must be confirmed in writing to the Trustee by the custodial bank; (iv) trading partners shall be limited to banks or trust companies authorized to do business in the State of Illinois or to registered primary reporting dealers; (v) the security interest must be perfected; (vi) the Trustee must enter into a written master repurchase agreement which outlines the basic responsibilities and liabilities of both buyer and seller; (vii) the repurchase agreement shall be for periods of 330 days or less; 7 CHI2 650181.4 I (viii) the Authorized Officer must inform the custodial bank in writing , of the maturity details of the repurchase agreement; (ix) the custodial bank must take delivery of and maintain the securities in its custody for the account of the Trustee and confirm the transaction in writing to the Trustee. The custodial undertaking shall provide that the custodian takes possession of the securities exclusively for the Trustee; that the securities are free of any claims against the trading partner; and any claims by the custodian are subordinate to the Trustee's claims to rights to those securities; (x) the obligations purchased by the Trustee may only be sold or presented for redemption or payment by the fiscal agent bank or trust company holding the obligations upon the written instruction of the Trustee or Authorized Officer; and (xi) the custodial bank shall be liable to the Trustee for any monetary loss suffered by the Trustee due to the failure of the custodial bank to take and maintain possession of such securities; (g) short-term obligations of corporations organized in the United States with assets exceeding $500,000,000 if (i) such obligations are rated at the time of purchase in one of the three highest rating categories by at least two standard rating services and which mature not later than 180 days from the date of purchase, (ii) such purchases do not exceed 10% of the corporation's outstanding obligations and (iii) no more than one- third of the Issuer's funds are invested in short-term obligations of such corporation as evidenced by a certificate from an Authorized Officer; and (h) money market mutual funds registered under the Investment Company Act of 1940 as amended invested solely in obligations listed in paragraph (a) and (b) above and in agreements to repurchase such obligations, including those for which the Trustee or an affiliate performs services for a fee, whether as a custodian, transfer agent, investment advisor or otherwise; i together with such other investments as shall from time to time be lawful for the investment of Issuer funds and shall be approved by the holders of fifty -one percent (51 %) of aggregate principal amount of Bonds outstanding; provided that "Investment Obligations" shall not include a financial instrument, commonly known as a "derivative," whose performance is derived, at least in part, from the performance of any underlying asset, including, without limitation, futures, options on securities, options on futures, forward contracts, swap agreements, structured notes and participations in pools of mortgages or other assets. " Issuer " means the United City of Yorkville, Kendall County, Illinois, a municipal corporation of the State or any successor political subdivision which shall hereafter succeed to the powers, duties and functions of the Issuer. " Moody's" means Moody's Investors Service, a Delaware corporation, and its successors and assigns. 8 CH12 650181.4 "Nominee" means the nominee of the Depository, which may be the Depository, as determined from time to time pursuant hereto. "Notice Address" means: (a) As to the Issuer: United City of Yorkville 800 Game Farm Road Yorkville, Illinois 60560 Attention: Mayor (b) As to the Trustee: The Bank of New York Trust Company, N.A. 2 North LaSalle Street, Suite 1020 Chicago, Illinois 60602 Attention: Corporate Trust Department "Officer's Certificate" means a certificate signed by an Authorized Officer or, if such certificate pertains to official action taken by the Issuer or official records of the Issuer, by an Attesting Officer. "Original Purchaser" means William Blair & Company, L.L.C. and its successors and assigns. "Outstanding" means, when used with reference to the Bonds and as of any particular date, all Bonds theretofore and thereupon being delivered except (a) any Bond cancelled by the Trustee or delivered to the Trustee for cancellation; (b) any Bond for the payment or redemption of which either (i) moneys equal to the principal or Redemption Price thereof, as the case may be, with interest currently payable on such Bonds to the date of maturity or redemption date, or (ii) specified types of Investment Obligations or moneys in the amounts, of the maturities and otherwise as described and required under the provisions of Section 7.1, shall have theretofore been deposited with the Trustee in trust (whether upon or prior to maturity or the redemption date of such Bond) and, except in the case of a Bond to be paid at maturity, as to which a Redemption Notice shall have been given or provided for in accordance with Section 3.3, and (c) any Bond in lieu of or in substitution for which another Bond shall have been delivered pursuant to this Indenture. "Participant" means a member of, or a participant in, the Depository. "Principal Installment" means, as of any particular date, an amount of money equal to the sum of (a) the principal amount of Outstanding Bonds which mature on such date, reduced by the aggregate principal amount of such Outstanding Bonds which would at or before such date cease to be Outstanding by reason of the application of Sinking Fund Installments at or before such date, plus (b) the amount of any Sinking Fund Installment payable on such date. 9 CHI2_650181.4 i "Principal Installment Date" means January 1, and each subsequent January 1 of each year thereafter. "Principal Office of the Trustee" means the office of the Trustee located at 2 North LaSalle Street, Suite 1020, Chicago, Illinois 60602, or such other office or offices as the Trustee may designate from time to time, or the office of any successor Trustee where it principally conducts its business of serving as trustee under indentures pursuant to which municipal or governmental obligations are issued. "Principal Requirement" means, as of any particular date and with respect to the Bonds Outstanding on such date, an amount of money equal to the sum (without duplication) of (a) any ' Principal Installment then due and payable on the Bonds but not yet paid, plus (b) any Principal Installment to become due on the Bonds on each Principal Installment Date to occur in the next Bond Year. " Oualified Financial Institution" means any (a) bank or trust company organized under the laws of any state of the United States of America, (b) national banking association, (c) savings bank, savings and loan association or insurance company or association chartered or organized under the laws of any state of the United States of America, (d) federal branch or agency pursuant to the International Banking Act of 1978 or any successor provisions of law, a domestic branch or agency of a foreign bank which branch or agency is duly licensed or authorized to do business under the laws of any state or territory of the United States of America, (e) government bond dealer reporting to, trading with, and recognized as a primary dealer by, the Federal Reserve Bank of New York, (f) securities dealer approved in writing by Fannie Mae, the liquidation of which is subject to the Securities Investors Protection Corporation or other similar corporation and (g), for purposes of subparagraph (g) of the definition of Investment Obligation only, any institution that is qualified to do business in each jurisdiction where it conducts business. "Rating Agency" means S &P or any other nationally recognized securities rating agency rating the Bonds, or such rating agency's successors or assigns. "Rebatable Arbitrage" means the amount (determinable as of the last day of each fifth Bond Year and upon retirement of the last Bond) of arbitrage profits payable to the United States at the times and in the amounts specified in Section 148(f) of the Code and any applicable Regulations. "Rebate Fund" means the Fund created and so designated in Section 5.2. "Record Date" means the 15th day of the month prior to an Interest Payment Date. "Redemption Date" means any date Bonds are redeemed. "Redemption Notice" means the notice of redemption of Bonds required to be mailed by and described in Section 3.3. "Redemption Price" when used with respect to a Bond or portion thereof, means the principal amount of such Bond or portion to be redeemed, plus premium, if any. 10 CH12 650181.4 i "Regulations" means the Income Tax Regulations promulgated or proposed under the Code by the Department of the Treasury, as the same may hereafter be amended, including regulations promulgated by the Department of the Treasury to implement the requirements of Section 148 of the Code. "Renortin;; Period" means, with respect to each State Report, the period of time covered by such report. "Responsible Officer" means any Vice President or Assistant Vice President of the Trustee having regular responsibility for corporate trust matters. "Revenues" means all (a) income derived from the investment of moneys credited to the Funds and Accounts created hereunder (other than from moneys in the Rebate Fund); and (b) all Business District Sales Taxes. " &P " means Standard & Poor's Ratings Services, a division of The McGraw Hill Companies, and its successors and assigns. "Securities Depositories" means The Depository Trust Company, New York, New York, or, in accordance with the then current guidelines of the Securities and Exchange Commission, such other addresses and /or such other securities depositories as the Issuer may designate in writing to the Trustee. "Sinking Fund Installment" means the amount of money (if any) required by this Indenture to be paid on any single date toward the retirement of any particular Bonds prior to the stated maturity date thereof. "State Reports" means the periodic reports provided by the Illinois Department of Revenue to the Issuer providing information which can be disclosed to the public relating to the Business District Sales Taxes for the specific period of time described in such reports. "Supplemental Indenture" means any indenture hereafter duly authorized and entered into between the Issuer and the Trustee amending or supplementing this Indenture in accordance with the provisions hereof. "Tax Agreement" means the Tax Agreement and Certificate executed and delivered by the Issuer in connection with the Bonds. "Tax Event" shall have the meaning assigned to such term in Section 8.14. "Trust Estate" means all the property, rights, moneys, securities and other amounts pledged and assigned to the Trustee pursuant to the GRANTING CLAUSES hereof. " Trustee " means The Bank of New York Trust Company, N.A., or its successors or any other corporation or association resulting from or surviving any consolidation or merger to which it or its successors may be a party and any successor trustee at any time serving as successor trustee hereunder. 11 CH12 650181.4 Section 1.2 Rules of Construction. (a) The singular form of any word used herein, including the terms defined in Section 1.1, shall include the plural, and vice versa, unless the context otherwise requires. The use herein of a pronoun of any gender shall include the correlative words of other genders. (b) All references herein to "Articles," "Sections" and other subdivisions hereof are to the corresponding Articles, Sections or subdivisions of this Indenture as originally executed; and the words herein, hereof, `hereunder, and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof. (c) The headings or titles of the several Articles and Sections hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and shall not limit or otherwise affect the meaning, construction or effect of this Indenture or describe the scope or intent of any provisions hereof. (d) All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles as in effect from time to time. (e) Every "request," "order," "demand," "application," "appointment," "notice," "statement," "certificate," "consent" or similar action hereunder by any party shall, unless the form thereof is specifically provided, be in writing signed by a duly authorized representative of such party with a duly authorized signature. (f) The parties hereto acknowledge that each such party and their respective counsel have participated in the drafting and revision of this Indenture. Accordingly, the parties agree that any rule of construction which disfavors the drafting party shall not apply in the interpretation of this Indenture or any amendment or supplement or exhibit hereto or thereto. ARTICLE II THE BONDS Section 2.1 Authorization of Bonds. In order to provide funds to finance the acquisition, construction, and development of the Project, bonds of the Issuer, to be entitled "United City of Yorkville, Kendall County, Illinois Business District Revenue Bonds, Series 2007 (Storm Water/Water Improvement Project)" are hereby authorized to be issued in an aggregate principal amount of $ and such Bonds shall be issued subject to the terms, conditions and limitations established in this Indenture as hereinafter provided. The Bonds may be executed by or on behalf of the Issuer, authenticated by the Trustee and delivered or caused to be delivered by the Trustee to the original purchasers thereof upon compliance with the requirements set forth in this Indenture. Section 2.2 Terms of Bonds. (a) The Bonds shall be dated as of their date of issuance, and shall bear interest from and including their dated date until maturity or earlier redemption thereof at the 12 CH12 650181.4 I rate(s) per annum set forth in the table below, computed on the basis of a 360 day year consisting of twelve 30 day months, payable on each Interest Payment Date, and shall mature (subject to prior redemption as herein set forth) on the dates and in the principal amounts as set forth below: Maturitv Date Amount Interest Rate January 1, $ % January 1, % (b) The Bonds may be issued only in the form of fully registered Bonds in minimum denominations of $100,000 and $5,000 increments in excess thereof. (c) The Bonds shall bear interest from their date of authentication or from the Interest Payment Date for which interest has been paid or duly provided for, which ever date has most recently occurred; provided, however, if a Bond is authenticated after a Record Date but prior to the next Interest Payment Date to which such Record Date relates, such Bond shall bear interest from such Interest Payment Date provided, however, that if at the time of authentication of any Bond, interest is in default on such Bond, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment. (d) Payment of the principal of and Redemption Price of any Bond shall be made to the person appearing on the Bond Register as the registered owner thereof, upon presentation and surrender thereof by such registered owner at the Principal Office of the Trustee or at such other office as may be designated by the Trustee, and interest payable currently on any Bond shall be paid by the Trustee by check mailed by first class mail, postage prepaid, on each Interest Payment Date to the registered owner as such registered owner's name and address appears on the register kept by the Trustee as of the close of business on the Record Date immediately preceding such Interest Payment Date, or upon a written request, received on or before the Record Date preceding an Interest Payment Date, of a Bondholder of $1,000,000 or more in aggregate principal amount of Bonds, by wire transfer in immediately available funds to an account designated by such Bondholder. The principal of, premium, if any, and interest on the Bonds shall be payable in lawful money of the United States of America. Together with each payment of principal of, premium or interest, the Trustee shall provide to registered owners a notice identifying the appropriate dollar amount of such payments for each CUSIP number, but only if the registered owner owns Bonds with more than one CUSIP number. (e) The Bonds shall be subject to redemption prior to maturity as provided in Article III. (f) All amounts that become due hereunder (including, without limitation, the principal of, premium, interest, and fees and expenses) that are not paid when due shall, to the extent allowed under applicable law, bear interest from such due date until paid at the highest interest rate then applicable on the Bonds at such interest shall be payable when there is sufficient funds on deposit in the appropriate funds to make such payment. Section 2.3 Execution: Limited Obliaation. The Bonds shall be executed in the name of the Issuer by the manual or facsimile signature of an Authorized Officer and its corporate seal 13 CH12 650181.4 a facsimile thereof) shall be thereunto affixed imprinted, impressed, en (or fl � p p � graved or otherwise reproduced and attested to by the manual or facsimile signature of its Attesting Officer, or in such other manner as may be required by law. In case any one or more of the officers of the Issuer who shall have signed or sealed any of the Bonds or whose signature appears on any of the Bonds shall cease to be such officer before the Bonds so signed and sealed shall have been actually authenticated or delivered or caused to be delivered by the Trustee or issued by the Issuer, such Bonds may, nevertheless, be authenticated and issued and, upon such authentication, delivery and issue, shall be as binding upon the Issuer as if the persons who signed or sealed such Bonds or whose signatures appear on any of the Bonds had not ceased to hold such offices until such delivery. Any Bond may be signed and sealed on behalf of the Issuer by such persons as at the actual time of execution of the Bonds shall be duly authorized or hold the proper office in the Issuer, although at the date of issuance and delivery of the Bonds such persons may not have been so authorized or have held such office. The Bonds, together with interest and premium, if any, thereon are not general obligations of the Issuer but are limited obligations payable solely' from the Trust Estate herein pledged to the payment thereof and shall be a valid claim of the respective holders thereof only against the Trust Estate so pledged as aforesaid, which Trust Estate is hereby pledged, assigned and otherwise secured for the equal and ratable payment of the Bonds and shall be used for no other purpose than to pay the principal and Redemption Price of and interest on the Bonds, except as may be otherwise expressly authorized in this Indenture. The Bonds and the interest thereon and all other obligations of the Issuer to pay moneys shall not be deemed to constitute a general debt, liability or obligation of the Issuer or a debt, liability or obligation of the Issuer, the State or any political subdivision thereof, or a pledge of the faith and credit of the Issuer, the State or any political subdivision thereof. The principal of and the interest thereon shall never constitute an indebtedness, liability, general or moral obligation or a pledge of the faith or loan of credit of the Issuer, the State or any political subdivision thereof within the meaning of any constitutional provision or statutory limitation and shall never constitute or give rise to a pecuniary liability or be a charge against the general credit or taxing powers of such body. Section 2.4 Authentication. The Bonds shall bear thereon a certificate of authentication, substantially in the form set forth in Exhibit A hereto and executed by the Trustee. Only Bonds which bear thereon such executed certificates of authentication shall be entitled to any right or benefit under the Indenture, and no Bond shall be valid for any purpose under this Indenture until such certificate of authentication shall have been duly executed by the Trustee. Such certificate of authentication upon any Bond shall be conclusive evidence that the Bond so authenticated has been duly issued under this Indenture and that the holder thereof is entitled to the benefits of this Indenture. Section 2.5 Form of Bonds. The Bonds issued under this Indenture and the Trustee's certificate of authentication thereon shall be substantially in the form as set forth in Exhibit A hereto, in each case with only such variations, omissions and insertions as are permitted or required by this Indenture, and except that provisions indicated in Exhibit A as appearing on either the face or the reverse of the Bonds may appear on either the face or the reverse of the Bonds, or the Bonds may be reproduced on one or more pages without a reverse side, all as the Issuer determines to be appropriate, and the Bonds may have endorsed thereon such legends or 14 CH12 650181.4 text as may be necessary or appropriate to conform to any applicable rules and regulations of any governmental authority or any usage or requirement of law with respect thereto. Section 2.6 Delivery of Bonds. After the execution and delivery of this Indenture, the Issuer shall execute and deliver to the Trustee, and the Trustee shall authenticate, the Bonds and deliver them to the original purchaser or purchasers thereof as directed by the Issuer as hereinafter in this Section provided. Prior to the delivery by the Trustee of any of the Bonds, there shall be filed with the Trustee: (a) a copy, duly certified by an Attesting Officer of the Issuer, of the resolution adopted by the governing body of the Issuer authorizing the issuance of the Bonds and the execution and delivery of this Indenture, the Development Agreement and the Tax Agreement; (b) original executed counterparts of this Indenture, the Development Agreement and the Tax Agreement; (c) a request and authorization to the Trustee on behalf of the Issuer and signed by an Authorized Officer of the Issuer to authenticate and deliver the Bonds to the purchaser or purchasers therein identified, in the denominations and registered in the name or names therein specified, upon payment to the Trustee, but for the account of the Issuer, of a sum specified in such request and authorization; the proceeds of such payment to be paid over to the Trustee to be disbursed as provided in Article IV; (d) the purchase price of the Bonds; (e) the favorable opinion of Foley & Lardner LLP, bond counsel for the Issuer. Section 2.7 Bonds Mutilated. Lost, Destroved or Stolen. If any Bond shall become mutilated, the Issuer, at the expense of the owner of such Bond shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be cancelled by it and delivered to, or upon the order of, the Issuer. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence shall be satisfactory to it and indemnity satisfactory to the Trustee shall be given, the Issuer, at the expense of the owner of such Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor. The Trustee may require payment of a sum not exceeding the actual cost of preparing each new Bond authenticated and delivered under this Section and of the expenses which may be incurred by the Issuer and the Trustee in the premises. Any Bond authenticated and delivered under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the Issuer whether or not the Bond so alleged to be lost, destroyed or stolen shall be at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Indenture with all other Bonds secured by this Indenture. If any such Bond shall have 15 CH12_650181.4 i matured, or is about to mature, instead of issuing a new Bond the Trustee may pay the same without surrender thereof upon receipt of the aforementioned indemnity. i Section 2.8 Registration, Transfer and Exchange of Bonds; Persons Treated as Owners. The Issuer shall cause registration books for the registration and transfer of the Bonds as provided herein to be kept by the Trustee. The Trustee is hereby constituted and appointed the bond registrar and paying agent of the Issuer with respect to the Bonds. I Bonds may be transferred on the Bond Register maintained by the Trustee as bond registrar upon presentation and surrender thereof at the Principal Office of the Trustee, or at such other office of the Trustee as the Trustee may designate, for notation of such transfer on the Bond Register, accompanied by a written instrument of transfer in form satisfactory to the Trustee duly executed by the Bondholder or his duly authorized attorney, subject to successive transfers at the option of the Bondholder. At the option of the Bondholder, Bonds may be exchanged for an equal aggregate principal amount of Bonds of the same interest rate and maturity and of any authorized denomination, upon surrender thereof at the Principal Office of the Trustee and upon payment of the charges hereinafter provided. The Issuer shall cause to be prepared and executed and the Trustee shall authenticate and deliver the Bonds which the Bondholder making the exchange is entitled to receive, bearing numbers not contemporaneously then outstanding. Neither the Issuer nor the Trustee shall be required to transfer or exchange Bonds from the Record Date preceding an Interest Payment Date through and including such Interest Payment Date or from the fifteenth day next preceding any selection of Bonds to be redeemed until the first mailing of any Redemption Notice or to transfer or exchange any Bonds selected for redemption. The cost of any printing of any new Bond and any services rendered or other expenses incurred by the Trustee in connection with any exchange or transfer provided for in this Section shall be paid from the Business District Sales Tax Account, or to the extent no amounts are on deposit in the Business District Sales Tax Account for such purpose, shall be charged to the Issuer. No charge shall be made to any Bondholder for the privilege of registration and transfer as herein provided, but any Bondholder requesting any such registration or transfer shall pay any tax or other governmental charge required to be paid with respect thereto. The person in whose name any Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of the principal or Redemption Price of, or interest on, any such Bond shall be made only to or upon the written order of the Bondholder thereof or his duly authorized attorney, and neither the Issuer nor the Trustee shall be affected by any notice to the contrary, but such registration may be changed as hereinabove provided. Section 2.9 Cancellation of Bonds. Whenever any Outstanding Bond shall be delivered to the Trustee for cancellation pursuant to this Indenture, upon payment of the principal amount and interest represented thereby, for replacement pursuant to Section 2.7 or for transfer or exchange pursuant to Section 2.8, such Bond shall be canceled and destroyed by the Trustee and counterparts of a certificate of destruction evidencing such destruction shall be furnished by the Trustee to the Issuer. I 16 CH12 650181.4 Section 2.10 Temporary Bonds. The Bonds maybe initially issued in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the Issuer and may contain such reference to any of the provisions of this Indenture as may be appropriate. Every temporary Bond shall be executed by the Issuer and be authenticated by the Trustee upon the same conditions and in substantially the same manner as the definitive Bonds. If the Issuer issues temporary Bonds, it will execute and furnish definitive Bonds without delay upon the request of the registered owners of said Bonds, and thereupon the temporary Bonds may be surrendered for cancellation in exchange therefore at the Principal Office of the Trustee, and the Trustee shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Indenture as definitive Bonds authenticated and delivered hereunder. Section 2.11 Additional Bonds. No bonds other than the Bonds authorized in _ Section 2.1 shall be issued under this Indenture, except as provided in Section 2.7 and Section 2.8. Section 2.12 Book -Entry Svstem. The Bonds shall be initially issued in the form of a separate single fully registered Bond (which may be typewritten) for each maturity of the Bonds. Upon initial execution, authentication and delivery, the ownership of each such global Bond shall be registered in the Bond Register in the name of the Nominee as nominee of the Depository. Except as provided in Section 2.14, all of the Outstanding Bonds shall be registered in the Bond Register kept by the Trustee in the name of the Nominee and the Bonds may be transferred, in whole but not in part, only to the Depository, to a successor Depository or to another nominee of the Depository or of a successor Depository. Each global Bond shall bear a legend substantially to the following effect: "UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AS DEFINED IN THE INDENTURE OF TRUST) TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN." With respect to Bonds registered in the Bond Register in the name of the Nominee, the Issuer and the Trustee shall have no responsibility or obligation to any Participant or to any person on behalf of which such a Participant holds a beneficial interest in the Bonds. Without limiting the immediately preceding sentence, the Issuer and the Trustee shall have no responsibility or obligation with respect to (a) the accuracy of the records of the Depository, the Nominee or any Participant with respect to any beneficial ownership interest in the Bonds, (b) the delivery to any Participant, Beneficial Owner or any other person, other than the Depository, of any notice with respect to the Bonds, including any Redemption Notice, (c) the selection by the Depository and the Participants of the beneficial interests in the Bonds to be redeemed in 17 CH12_650181.4 part, or (d) the payment to any Participant, Beneficial Owner or any other person, other than the Depository, of any amount with respect to principal of, premium, if any, or interest on the Bonds. j The Issuer and the Trustee may treat and consider the person in whose name each Bond is registered in the Bond Register as the holder and absolute owner of such Bond for the purpose of payment of principal of, premium, if any, and interest on such Bond, for the purpose of giving Redemption Notices and other notices with respect to such Bond, and for all other purposes whatsoever, including, without limitation, registering transfers with respect to the Bonds. The Trustee shall pay all principal of, premium, if any, and interest on the Bonds only to or upon the order of the respective Bondholders, as shown in the Bond Register kept by the Trustee, or their respective attorneys duly authorized in writing, and all such payments shall be' valid hereunder with respect to payment of principal of, premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. No person other than a Bondholder, as shown in the Bond Register, shall receive a Bond evidencing the obligation to make payments of principal of, premium, if any, and interest pursuant to this Indenture. Upon delivery by the Depository to the Trustee and the Issuer of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to Record Dates, the word Nominee in this Indenture shall refer to such new nominee of the Depository. Section 2.13 Representation Letter. In order to qualify the Bonds for the Depository's book -entry system, any Authorized Officer is hereby authorized to execute, seal, countersign and deliver on behalf of the Issuer to such Depository a letter from the Issuer representing such matters as shall be necessary to so qualify the Bonds (the "Representation Letter "). The execution and delivery of the Representation Letter shall not in any way limit the provisions of Section 2.12 or in any other way impose upon the Issuer any obligation whatsoever with respect to persons having beneficial interests in the Bonds other than the registered owners, as shown in the Bond Register kept by the Trustee. In the written acceptance by the Trustee of the Representation Letter, the Trustee shall agree, and hereby agrees, to take all actions necessary for all representations of the Issuer in the Representation Letter with respect to the Trustee to at all times be complied with. In addition to the execution and delivery of the Representation Letter, any Authorized Officer is hereby authorized to take any other actions, not inconsistent with this Indenture, to qualify the Bonds for the Depository's book -entry program. Section 2.14 Transfers Outside Book -Entry Svstem. If at any time the Depository notifies the Issuer and the Trustee that it is unwilling or unable to continue as Depository with respect to the Bonds or if at any time the Depository shall no longer be registered or in good standing under the Securities Exchange Act of 1934, as amended, or other applicable statute or regulation and a successor Depository is not appointed by the Issuer within 90 days after the Issuer and the Trustee receive notice or become aware of such condition, as the case may be, Section 2.12 shall no longer be applicable and the Trustee shall execute and deliver bonds representing the Bonds as provided below. In addition, the Issuer may determine at any time that the Bonds shall no longer be represented by global bonds and that the provisions of Section 2.12 shall no longer apply to the Bonds. In any such event, the Issuer shall execute and the Trustee shall authenticate and deliver bonds representing the Bonds as provided below. Bonds issued in exchange for global bonds pursuant to this Section shall be registered in such names and delivered in such authorized denominations as the Depository, pursuant to instructions from the 18 CH12 650181.4 i Participants or otherwise, shall instruct the Issuer and the Trustee. The Trustee shall deliver such bonds representing the Bonds to the persons in whose names such Bonds are so registered. If the Issuer determines to replace the Depository with another qualified securities depository, the Issuer shall prepare or cause to be prepared a new fully- registered global bond for each of the maturities of Bonds, registered in the name of such successor or substitute securities depository or its nominee, or make such other arrangements as are acceptable to the Issuer, the Trustee and such securities depository and not inconsistent with the terms of this Indenture. Section 2.15 Pavments and Notices to the Nominee. Notwithstanding any other provision of this Indenture to the contrary, so long as any Bond is registered in the name of the Nominee, all payments with respect to principal of, premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, as provided in the Representation Letter or as otherwise instructed by the Depository. Section 2.16 Initial Devository and Nominee. The initial Depository under this Indenture shall be DTC. The initial Nominee shall be Cede & Co., as nominee of DTC. ARTICLE III REDEMPTION OF BONDS i Section 3.1 Terms of Redemption. The Bonds shall be subject to redemption prior to the stated maturity thereof only as set forth in this Section. i (a) Optional Redemption. The Bonds maturing on and after January 1, 2017 are subject to redemption, in whole or in part, at the option of the Issuer, on any date on or after January 1, 2016 at the Redemption Prices (expressed as percentages of the principal amount) set forth in the table below plus accrued and unpaid interest to the Redemption Date. Redemption Dates (dates inclusive) Redemption Price January 1, 2016 through December 31, 2016 102% January 1, 2017 through December 31, 2017 101% On and after January 1, 2018 100% (b) Special Mandatory Redemption. The Bonds maturing January 1, are subject to mandatory redemption, in whole or in part, by lot, from available monies on deposit in the Improvement Fund on and after January 1, . Any such redemption shall occur on an Interest Payment Date occurring on or after January 1, when monies are transferred to the Bond Fund from the Improvement Fund are in excess of the amount needed to redeem at least one Bond at the Redemption Prices (expressed as percentages of the principal amount) set forth in the table below plus accrued and unpaid interest to the Redemption Date. Whenever the Trustee determines that monies in the Improvement Fund transferred to the Bond Fund are sufficient to effect a redemption pursuant to this Section 3.1(b), the Trustee shall redeem as many Bonds maturing January 1, _ as possible from the monies transferred from the 19 CHI2_650181.4 Improvement Fund at the Redemption Prices (expressed as percentages of the Accreted Value) } set forth below plus accrued and unpaid interest to the Redemption Date. { Redemption Date (dates inclusive) Redemption Price January 1, through December 31, 101% On and after January 1, 100% (c) Mandatory Sinkine Fund Redemption. The Bonds maturing on January 1, are subject to mandatory redemption in part, by lot, from Sinking Fund Installments on each January 1 commencing on January 1, _, at a Redemption Price equal to the principal thereof plus, in each case, accrued and unpaid interest to the date fixed for redemption, without premium, on the respective dates and in the amounts set forth in the following table: Date Amount to be Redeemed January 1, $ January 1, January 1, January 1, January 1, January 1, January 1, (Maturity) (d) Mandatory Sinking Fund Redemption. The Bonds maturing on January 1, are subject to mandatory redemption in part, by lot, from Sinking Fund Installments on each January 1 commencing on January 1, , at a Redemption Price equal to the principal amount thereof plus, in each case, accrued and unpaid interest to the date fixed for redemption, without premium, on the respective dates and in the amounts set forth in the following table: Date Amount to be Redeemed January 1, $ January 1, January 1, January 1, January 1, January 1, January 1, January 1, January 1, (Maturity) (e) If any Bonds are redeemed other than from Sinking Fund Installments, the principal amount of such Bonds that have been redeemed shall be applied to the appropriate Sinking Fund Installments in inverse order of maturity. I 20 CH12 650181.4 Section 3.2 Selection of Bonds to be Redeemed,. Bonds shall be redeemed in inverse order of maturity and within a maturity beginning with the latest Sinking Fund Installment. If less than all of the Bonds of a maturity then Outstanding are to be redeemed, the Trustee shall assign to each Bond of such maturity then Outstanding a distinctive number for each $100,000 and each $5,000 in excess thereof of such maturity and shall select by lot, using such method of selection as the Trustee shall deem proper in its discretion and from the numbers so assigned to such registered Bonds, as many numbers as, at $100,000 and $5,000 in excess thereof shall equal the principal amount of such Bonds of such maturity to be redeemed. The Bonds within such maturity to be redeemed shall be the Bonds to which were assigned numbers so selected, but only so much of the principal amount of each such Bond of such maturity of a denomination of more than $100,000 shall be redeemed as shall equal $5,000 for each number assigned to it and so selected. For the purposes of this Section, Bonds which have theretofore been selected by lot for redemption shall not be deemed Outstanding. Section 3.3 Notice of Redemption. As soon as practicable after (a) receipt by the Issuer of its election to redeem Bonds pursuant to Section 3.1(a), or (b) at any time after January 1, there being on deposit moneys in the Improvement Fund sufficient to redeem Bonds pursuant to Section 3.1(b), the Trustee shall, in accordance with the terms and provisions of the Bonds and hereof, select the Bonds of such maturity or portions thereof to be redeemed and shall give written notice at such time, in the name of the Issuer, of the redemption of Bonds of such maturity, which notice shall specify the complete official name of the Bonds, CUSIP numbers of all Bonds being redeemed, the date of the notice (i.e. the date of general mailing of notices to Bondholders and information services), the redemption date, the Redemption Price, the Trustee's name, principal corporate trust office address, contact person and phone number, the date of issue, interest rate, maturity date and the place or places where amounts due upon such redemption will be payable, and, if less than all of the Bonds of a maturity are to be redeemed, the letters and numbers or other distinguishing marks of such Bonds so to be redeemed and the amount of each Bond called. Such notice shall further state that (1) any redemption pursuant to Section 3.1(a) is conditioned upon the deposit of moneys in an amount equal to the amount necessary to effect the redemption with the Trustee no later than the date that is five (5) Business Days prior to the redemption date, (2) the Issuer retains the right to rescind such notice on or prior to the scheduled redemption date, (3) such notice and optional redemption shall be of no force and effect if such moneys described in clause (1) immediately above are not so deposited with the Trustee or if the notice is rescinded by the Issuer as described in clause (2) immediately above, (3) if moneys are deposited in accordance with clause (1) immediately above and the Issuer does not rescind such notice of redemption, then on such redemption date there shall become due and payable upon each Bond to be redeemed the Redemption Price thereof, or the Redemption Price of the portion of the principal amount thereof to be redeemed in the case of a Bond to be redeemed in part only, together with interest accrued to such date, only upon physical presentation and surrender of such Bond, and that from and after such date interest thereon shall cease to accrue and be payable. Except as otherwise provided in Section 3.2 and below, the Trustee shall mail, by first class mail, a copy of such Redemption Notice, postage prepaid, not less than 30 days and not more than 60 days before the date fixed for redemption, to the registered owner of any Bond all or a portion of which is to be redeemed, at the address appearing upon the Bond Register. 21 CH12_650181.4 I Each Redemption Notice shall also be sent by certified mail, return receipt requested, overnight delivery service or other secure means, postage prepaid, to any holder of $ 1,000,000 or more in aggregate principal amount of Bonds to be redeemed, to certain municipal registered Securities Depositories which are known to the Trustee to be holding Bonds and to at least two of the national Information Services that disseminate securities redemption notices, at least ten days and not more than 45 days, prior to the redemption date, and in the case of the notice to Securities Depositories, when possible, at least two days prior to the mailing of notices required by the first paragraph of this Section. Any registered owner holding at least $1,000,000 in aggregate principal amount of Bonds ' of a maturity may request that the Trustee send an additional copy of any notice (default, redemption or any other correspondence) by first class mail, postage prepaid, to a second address simultaneously with, and in addition to the regular mailing of such notices to registered owners recorded on the books of the Trustee. Failure to give notice by mailing to the holder of any Bond 'designated for redemption or to any Securities Depository or Information Service, failure to receive such notice, any defect of any notice so mailed or the failure to give timely notice of redemption shall not affect the validity of the proceedings for the redemption of any Bond. Any optional redemption pursuant to Section 3.1(a) may be rescinded in whole or in part by the Issuer at any time prior to the fifth Business Day prior to the redemption date if the Issuer delivers to the Trustee a notice of such rescission. The Trustee shall give prompt notice of such rescission to the holders of the Bonds in the same manner as the redemption notice. Any Bonds that are subject to an optional redemption that has been rescinded shall remain Outstanding, and the rescission shall not constitute an Event of Default. Further, in the case of an optional redemption pursuant to Section 3.1(a), the failure of the Issuer to deposit sufficient funds with the Trustee to cause such redemption (in whole or in part) shall not constitute an Event of Default, and the Trustee shall give prompt notice to the holders of the Bonds that such redemption did not occur and that the Bonds called for redemption and not so paid remain Outstanding in the same manner as the redemption notice was given by the Trustee. Section 3.4 Payment of Redeemed Bonds. Notice having been given in the manner provided in Section 3.3, the Bonds or portions thereof called for redemption and specified in said notice shall become due and payable on the redemption date specified in the Redemption Notice at the Redemption Prices thereof applicable on such date, plus unpaid interest on such Bonds or portions thereof accrued to such date, and, upon presentation and surrender thereof at the place or places specified in said notice, such Bonds or portions thereof shall be paid at the Redemption Price plus unpaid interest on such Bonds or portions thereof accrued to such date. If there shall be so called for redemption less than all of a Bond, the Issuer shall execute and cause to be delivered, upon the surrender of such Bond to the Trustee, without charge by the Issuer or the Trustee to the owner thereof, for the unredeemed balance of the principal amount of the Bond so surrendered, a new Bond or Bonds of the same interest rate and maturity of authorized denominations. If, on such redemption date, moneys for the redemption of all the Bonds or portions thereof to be redeemed, together with interest thereon accrued and unpaid to such date, shall be held by or on behalf of the Trustee so as to be available therefore on such date and if a Redemption Notice therefore shall have been given as aforesaid, then from and after such 22 CH12 650181.4 I redemption date interest on the Bonds or portions thereof so called for redemption shall cease to accrue and be payable, and said Bonds shall no longer be considered as Outstanding hereunder. All moneys held by or on behalf of the Trustee for the redemption of particular Bonds shall be held in trust for the account of the holders of the Bonds so to be redeemed. Section 3.5 Purchase of Bonds; Tenders. Unless expressly provided otherwise herein, if at any time moneys are held in the Bond Fund to be used to redeem Bonds, in lieu of such redemption, the Issuer may direct the Trustee to use part or all of such moneys to purchase Bonds of the maturity which would otherwise be subject to redemption from such moneys. The purchase price of such Bonds, excluding accrued interest, shall not exceed the applicable Redemption Price of the Bonds of such maturity which would be redeemed but for the operation of this Section. Any such purchase must be completed prior to the time the Trustee selects Bonds of such maturity for redemption. All Bonds so purchased shall be canceled by the Trustee, and the principal amount so purchased shall be applied as a credit against the Issuer's obligation to redeem such Bonds from such moneys. Savings resulting from the purchase of Bonds at less than their respective redemption prices shall be used to purchase or redeem additional Bonds of the same maturity to the extent permitted by the provisions hereof. The Issuer may direct the Trustee to request the submission of tenders following published notice requesting such submission prior to making the purchases authorized pursuant to the preceding paragraph. The Issuer may specify the maximum and minimum period of time which shall transpire between the date upon which such notice is to be given and the date upon which such tenders are to be accepted. No tenders shall be considered or accepted at any price exceeding the price specified in the preceding paragraph for the purchase of such Bonds. The Issuer (or the Trustee, as the case may be) shall accept bids with the lowest price and in the event the moneys available for purchase pursuant to such tenders are not sufficient to permit acceptance of all tenders and if there shall be tenders at an equal price above the amount of moneys available for purchase, then the Issuer (or the Trustee, as the case may be) shall select by lot, in such manner as it shall determine in its discretion, the Bonds tendered which shall be purchased. ARTICLE IV APPLICATION OF BOND PROCEEDS; PLAN OF FINANCING Section 4.1 Initial Deposit of Bond Proceeds. The proceeds of sale of the Bonds shall, on the Closing Date, be delivered to the Trustee, who shall forthwith deposit $ of such proceeds into the Costs of Issuance Fund, $ of such proceeds representing capitalized interest into the Capitalized Interest Account of the Bond Fund, an amount equal to the Debt Service Reserve Fund Requirement into the Debt Service Reserve Fund, an amount equal to the Administration Expense Fund Requirement into the Administration Expense Fund and the balance of such proceeds into the Improvement Fund. Section 4.2 Establishment and Application of Improvement Fund. The Trustee shall establish, maintain and hold in trust a separate fund designated as the "Improvement Fund." Except as otherwise provided herein, moneys in the Improvement Fund shall be used solely to finance the Project. 23 CH12 650181.4 i i I The Improvement Fund shall consist of the amounts required or permitted to be deposited therein pursuant to any provision hereof and the proceeds of the Bonds shall be deposited therein in the amount set out in Section 4.1 hereof. Payments from the Improvement Fund, shall be made by the Trustee as follows: (A) Payments from the Improvement Fund shall be made only upon receipt by the Trustee of a requisition executed by the Issuer in the form of Request for Payment set forth in Exhibit C. I (B) Upon completion of the Project (as evidenced by a certificate of Issuer delivered to the Trustee), any moneys remaining in the Improvement Fund shall be transferred to the Bond Fund to redeem Bonds pursuant to Section 3.1(b), unless the Issuer directs that such moneys be deposited into the Business District Sales Tax Account, or applied to any other use, accompanied in either case by an opinion of Bond Counsel to the effect that such application will not adversely affect any applicable exemption from federal income taxation of the interest on the Bonds. Notwithstanding anything to the contrary herein, to the extent an Event of Default shall have occurred and be continuing and no other moneys are available under this Indenture to cure such Event of Default, no moneys on deposit in the Improvement Fund shall be applied in accordance with Section 4.2(B). In such event, moneys on deposit in the Improvement Fund shall be applied by the Trustee in accordance with Article VIII. Section 4.3 Costs of Issuance Fund. The Issuer shall, on the Closing Date, cause to be delivered from proceeds of the Bonds, to the Trustee for deposit in the Costs of Issuance Fund, amounts to pay costs incurred in connection with the issuance of the Bonds. The Trustee shall use such funds to pay the Costs of Issuance on the Closing Date or as soon as practicable thereafter in accordance with written instructions to be given to the Trustee by the Issuer, upon delivery to the Trustee of appropriate invoices for such expenses. Any unexpended amounts attributable to deposits made by the Issuer remaining on deposit in the Costs of Issuance Fund three months after the Closing Date shall be transferred to the Improvement Fund. ARTICLE V REVENUES AND FUNDS Section 5.1 Pledge of Revenues and Assets. The pledge and assignment of and the security interest granted in the Trust Estate pursuant to the Granting Clauses hereof for the payment of the principal of, premium, if any, and interest on the Bonds, in accordance with their terms and provisions, and for the payment of all other amounts due hereunder, shall attach, be perfected and be valid and binding from and after the time of the delivery of the Bonds by the Trustee or by any person authorized by the Trustee to deliver the Bonds. The Trust Estate so pledged and then or thereafter received by the Trustee shall immediately be subject to the lien of such pledge and security interest without any physical delivery thereof or further act, and the lien of such pledge and security interest shall be valid and binding and prior to the claims of any and all parties having claims of any kind in tort, contract or otherwise against the Issuer irrespective of whether such parties have notice thereof. 24 CH12 650181.4 i Section 5.2 Establishment of Funds. In addition to the Improvement Fund established under Section 4.2, the Trustee shall establish, maintain and hold in trust the following funds and accounts, each of which shall be disbursed and applied only as herein authorized: i (a) Business District Sales Tax Account of the Business District Tax Allocation Fund; (b) Debt Service Reserve Fund; (c) Bond Fund, including a Capitalized Interest Account; (d) Costs of Issuance Fund; (e) Administrative Expense Fund; and i (f) Rebate Fund. Section 5.3 Application of Revenues. All Revenues shall be deposited by the Trustee, promptly upon receipt thereof, to the Business District Sales Tax Account. On each date specified below for each year the Bonds remain Outstanding, the Trustee shall, out of moneys in the Business District Sales Tax Account, make the following transfers and credit the following amounts to the following Funds, but only to the extent moneys in the Business District Sales Tax Account are then available and only within the limitations hereinafter indicated with respect thereto and only after the Trustee has made the required payment and transfer within such limitation prior in order as mentioned in the following enumeration: First On each Accounting Date, to the Bond Fund, an amount equal to the sum of the Interest Requirement and the Principal Requirement for the next Bond Year to be applied as set forth in Section 5.5; Second On each Accounting Date, to the Administrative Expense Fund, an amount equal to the difference, if any, between the Administrative Expense Fund Requirement for the subsequent calendar year and the amount then in the Administrative Expense Fund, such amounts in such Fund to be applied as set forth in Section 5.8; and Third On each Accounting Date, to the Debt Service Reserve Fund an amount equal to the difference, if any, between the Debt Service Reserve Fund Requirement and the amount then in the Debt Service Reserve Fund to be applied as set forth in Section 5.4. Any Revenues remaining in the Business District Sales Tax Account shall be retained therein and applied at the direction of the Issuer to any purpose authorized by the Business District Act. Section 5.4 Application of Debt Service Reserve Fund. Amounts in the Debt Service Reserve Fund shall be withdrawn by the Trustee and used solely to pay first, on any Interest Payment Date or Principal Installment Date an amount sufficient to satisfy any deficiency in the Bond Fund in accordance with Section 5.5, and second on each Interest Payment Date, any 25 CHI2_650181.4 i I amount required to be deposited in the Rebate Fund to the extent sufficient funds are not otherwise made available to the Trustee for such purposes. At such time as the amounts in the Debt Service Reserve Fund are equal to or greater than the principal of, premium, if any, and interest due on the Outstanding Bonds, such amounts shall be transferred to the Bond Fund. No amount shall be withdrawn from the Debt Service Reserve Fund except as expressly provided in this Section. Section 5.5 Application of Bond Fund. The Trustee shall charge the Bond Fund, on i each Interest Payment Date and Principal Installment Date, respectively, an amount equal to the unpaid interest or principal due on the Bonds on such Interest Payment Date or Principal Installment Date (including, without limitation, to the extent allowed under applicable law, interest on any overdue payments of principal, premium, and interest as provided in Section 2.2 (g)), and shall cause the same to be applied to the payment of such interest or principal, when due. The Trustee, on each Principal Installment Date on which a Sinking Fund Installment is due, shall also charge the Bond Fund the amount necessary for the purchase or the redemption of the Bonds with respect to which such Sinking Fund Installment is due. At the written direction of the Issuer delivered prior to the selection of Bonds for redemption, the Trustee shall apply any money credited to the Bond Fund which has been set aside for the payment of a Sinking Fund Installment to the purchase or the redemption of the Bonds for which such Sinking Fund Installment is due in the manner provided in this paragraph; provided that no Bonds shall be purchased during the period of 30 days next preceding the date of a Sinking Fund Installment established for the Bonds. The purchase price paid by the Trustee (calculated excluding accrued interest but including any brokerage and other charges) for any Bond purchased pursuant to this paragraph shall not exceed the Redemption Price of such Bond applicable upon its redemption through application of the money available for such purchase on the next date on which such Bonds could be redeemed in accordance with its terms by operation of Sinking Fund Installments. All Bonds so purchased by the Trustee shall be cancelled. Not less than 30 nor more than 45 days before the date of each Sinking Fund Installment, the Trustee shall call for redemption Bonds in an aggregate principal amount equal to such Sinking Fund Installment, reduced by the principal amount of Bonds purchased pursuant to the foregoing provisions of this paragraph, and on that date such Sinking Fund Installment is due the Trustee shall apply the money set aside therefore in the Bond Fund to the payment of the Redemption Price of the Bonds so called for redemption. Income realized from the investment or deposit of moneys in the Bond Fund shall be retained in the Bond Fund. No amount shall be withdrawn from the Bond Fund except as expressly provided in this Article V. In the event that the amount credited to the Bond Fund is insufficient to pay interest or a Principal Installment on the Bonds when due, the Trustee shall credit to the Bond Fund the amount of such deficiency by charging the following Funds in the following order of priority: (a) the Business District Sales Tax Account; and (b) the Debt Service Reserve Fund. Section 5.6 Reserved. 26 CH12 650181.4 Section 5.7 Reserved. Section 5.8 Administrative Expense Fund. The Administrative Expense Fund shall be used to pay Administrative Expenses. Moneys on deposit in the Administrative Expense Fund shall be applied to the payment of any Administrative Expenses requested by the Issuer to be paid. All amounts in the Administrative Expense Fund in excess of the Administrative Expense Fund Requirement shall be transferred to, and deposited in, the Business District Sales Tax Account. Section 5.9 Investment of Funds. The moneys held by the Trustee shall constitute trust funds for the purposes hereof. Any moneys attributable to each of the Funds hereunder shall be invested by the Trustee at the written or telephonic direction of the Issuer in Investment Obligations which mature or are redeemable at par on the earlier of (a) 180 days from the date of investment, or (b) the date on which such funds are expected to be needed for the purposes for which they are held. If the Issuer elects to give the Trustee oral investment instructions and the Trustee in its discretion elects to act upon such oral investment instructions, the Trustee's understanding of such oral investment instructions shall be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee's reliance upon and compliance with such oral investment instructions notwithstanding such oral investment instructions conflict or are inconsistent with a subsequent written investment instruction. The Trustee may conclusively rely upon such instructions as to both the suitability and legality of the directed investments. Notwithstanding the foregoing, if the Trustee shall have entered into any investment agreement requiring investment of moneys in any Fund or Account hereunder in accordance with such investment agreement and if such investment agreement constitutes an Investment Obligation, such moneys shall be invested in accordance with such requirements. Such investments may be made through or with the investment or securities department of the Trustee or its affiliates, and the Trustee may charge its ordinary and customary fees for such trades, including cash sweep account fees. Investment Obligations representing an investment of moneys attributable to any Fund shall be deemed at all times to be a part of such Fund, and, except as otherwise may be provided expressly in other Sections hereof, the interest thereon and any profit arising on the sale thereof shall be credited to the Business District Sales Tax Account, and any loss resulting on the sale thereof shall be charged against the Business District Sales Tax Account. Such investments shall be sold at the best price reasonably obtainable whenever it shall be necessary to do so in order to provide moneys to make any transfer, withdrawal, payment or disbursement from such Fund. In the case of any required transfer of moneys to another such Fund, such investments may be transferred to that Fund in lieu of the required moneys if permitted hereby as an investment of moneys in that Fund. All Investment Obligations acquired by the Trustee pursuant hereto shall be purchased in the name of the Trustee and shall be held for the benefit of the holders of the Bonds pursuant to the terms of this Indenture. The Trustee shall take such actions as shall be necessary to assure that such Investment Obligations are held pursuant to the terms of this Indenture and are subject to the trust and security interest herein created. 27 CH12 650181.4 The Trustee shall not be liable or responsible for any loss resulting from any investment made in accordance herewith. The Trustee or its affiliates may act as sponsor, principal or agent r in the acquisition or disposition of investments. The Trustee may commingle investments made under the Funds and Accounts established hereunder, but shall account for each separately. In computing for any purpose hereunder the amount in any Fund on any date, obligations so purchased shall be valued at the lower of cost or par exclusive of accrued interest, and may be so valued as of any time within four days prior to such date. i Although the Issuer recognizes that it may obtain a broker confirmation or written statement containing comparable information at no additional cost, the Issuer hereby agrees that confirmations of permitted investments are not required to be issued by the Trustee for each month in which a monthly statement is rendered. No statement need be rendered for any fund or account if no activity occurred in such fund or account during such month. Section 5.10 Monevs Held for Particular Bonds. The amounts held by the Trustee for the payment of the interest, principal or Redemption Price due on any date with respect to particular Bonds shall, pending such payment, be set aside and held in trust by it for the holders of the Bonds entitled thereto, and for the purposes hereof such interest, principal or Redemption Price, after the due date thereof, shall no longer be considered to be unpaid. Section 5.11 Funds Held in Trust. All moneys held by the Trustee, as such, at any time pursuant to the terms of this Indenture shall be and hereby are assigned, transferred and set over unto the Trustee in trust for the purposes and under the terms and conditions of this Indenture. Section 5.12 Accounting Records. The Trustee shall maintain accurate books and records for all Funds and Accounts established hereunder, and shall furnish to the Issuer annual statements of the activity and assets held in each of the Funds and Accounts established and maintained hereunder. Section 5.13 Amounts Remaining in Funds. After full payment of the Bonds (or provision for payment thereof having been made in accordance with Section 7.1) and full payment of the Administrative Expenses and other amounts required to be paid hereunder, any amounts remaining in any Fund hereunder other than the Rebate Fund shall be paid to the Issuer. Section 5.14 Rebate Fund. The Rebate Fund shall not be subject to the lien or encumbrance of this Indenture, but shall be held in trust for the benefit of the United States of America, and shall be subject to the claim of no other person, including that of the Trustee and Bondholders. The interest on any Investment Obligations representing an investment of moneys in the Rebate Fund and any profit arising from the sale thereof shall be retained in the Rebate Fund. Any moneys deposited therein in accordance with the provisions of this Indenture shall be used for no other purpose than to make payments to the United States Treasury, at the time and in the manner and amount specified in Section 9.11. 1 28 CH12 650181.4 ARTICLE VI COVENANTS OF ISSUER Section 6.1 Payment of Bonds. Subject to the other provisions of this Indenture, the Issuer shall duly and punctually pay or cause to be paid from the Revenues the principal of, premium, if any, and interest on the Bonds, at the dates and places and in the manner described in the Bonds, according to the true intent and meaning thereof. The Bonds are not a general obligation of the Issuer, but are payable solely from the Trust Estate. Section 6.2 Payment of Lawful Charles and Priority of Lien. The Issuer shall pay all taxes and assessments or other municipal or governmental charges, if any, lawfully levied or assessed upon the Issuer in respect of the financing contemplated hereby or upon any revenue therefrom, when the same shall become due, and shall duly observe and comply with all valid requirements of any municipal or governmental authority relative to any part. of the financing contemplated hereby, and shall not create or suffer to be created any lien or charge upon the Trust Estate hereunder prior to or on a parity with the pledge, security interest and lien created hereby for the payment of the principal of, premium, if any, and interest on the Bonds. Section 6.3 Tax Covenants. The Issuer shall not take any action that will cause the interest paid on the Bonds to be includable in gross income for federal income tax purposes. In furtherance of the foregoing covenant, the Issuer hereby particularly covenants and agrees with the holders of the Bonds as follows: (a) No part of the proceeds of the Bonds or any other funds of the Issuer shall be used by the Issuer at any time directly or indirectly to acquire securities or obligations, the acquisition of which, or which in any other manner, would cause any Bond to be an arbitrage bond as defined in Section 148 of the Code and any applicable regulations promulgated thereunder. (b) The Issuer will not take any action or permit or suffer any action to be taken if the result of the same would be to cause the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Code and any applicable regulations promulgated thereunder. (c) At or prior to the Closing Date, the Issuer will enter into the Tax Agreement. Section 6.4 Compliance with Conditions Precedent. Upon the Closing Date, all conditions, acts and things required by law regarding the Issuer to exist, to have happened or to have been performed precedent to or in the issuance of such Bonds shall exist, shall have happened and shall have been performed, and such Bonds, together with all other indebtedness of the Issuer, shall be within every debt and other limit prescribed by law. Section 6.5 Reserved. Section 6.6 Further Assurances. At any time and at all times the Issuer shall, so far as it may be authorized by law, pass, make, do, execute, acknowledge and deliver, all and every 29 CH12 650181.4 i such further resolutions, acts, deeds, conveyances, assignments, transfers and assurances and enter into such further agreements as may be necessary or desirable for the better assuring, conveying, granting, assigning or confirming all and singular the rights in, pledge and grant of a security interest in the Trust Estate hereby pledged or assigned in trust, or intended so to be, or which the Issuer may hereafter become bound to pledge or assign in trust. Section 6.7 Powers as to Bonds and Pledge. The Issuer is duly authorized pursuant to law to authorize and issue the Bonds, to enter into this Indenture and to pledge, assign, transfer and set over unto the Trustee in trust the Trust Estate herein purported to be so pledged, assigned, transferred and set over unto the Trustee in trust hereby in the manner and to the extent provided herein. The Trust Estate so pledged, assigned, transferred and set over in trust is and will be free and clear of any pledge, lien, charge or encumbrance thereon with respect thereto prior to, or of equal rank with, the pledge and assignment in trust created hereby, and all action on the part of the Issuer to that end has been duly and validly taken. The Bonds and the provisions hereof are and will be the valid and binding limited obligations of the Issuer in accordance with their terms and the terms hereof. The Trustee shall at all times, to the extent permitted by law, defend, preserve and protect the pledge and assignment in trust of the Trust Estate created hereby and all the rights of the Bondholders hereunder against all claims and demands of all persons whomsoever. The Bonds and the interest thereon and all other obligations of the Issuer to pay moneys shall not be deemed to constitute a general debt, liability or obligation of the Issuer or a debt, liability or obligation of the Issuer, the State or any political subdivision thereof, or a pledge of the faith and credit of the Issuer, the State or any political subdivision thereof. The principal and the interest thereon shall never constitute an indebtedness, liability, general or moral obligation or a pledge of the faith or loan of credit of the Issuer, the State or any political subdivision thereof within the meaning of any constitutional provision or statutory limitation and shall never constitute or give rise to a pecuniary liability or be a charge against the general credit or taxing powers of such body. Section 6.8 Preservation of Revenues; Amendment of Agreements. The Issuer shall not take any action to reduce the amount of Business District Sales Taxes collected by the Issuer, or to interfere with or impair the pledge and assignment hereunder of the Trust Estate with the prior written consent of the owners of the Bonds and the Trustee. The Issuer also agrees to comply with Section of the Development Agreement entitled "Reporting" and to use its best efforts to obtain from the Illinois Department of Revenue all publicly available information necessary for the Trustee and the Issuer to determine the Business District Sales Taxes, and, within thirty (30) days after receipt of each State Report, the Issuer shall deposit all Business District Sales Taxes it has received from the State of Illinois for the period covered by such State Report in the Business District Sales Tax Account. Section 6.9 Limitations on Liability. Notwithstanding anything in this Indenture or in the Bonds, the Issuer shall not be required to advance any money derived from any source other than the Revenues and other assets pledged under this Indenture for any of the purposes of this Indenture. No agreements or provisions contained in this Indenture, nor any agreement, covenant or undertaking by the Issuer contained in any document executed by the Issuer in connection with the Project, or the issuance, sale and delivery of the Bonds shall give rise to any pecuniary 30 CH12 650181.4 liability of the Issuer or a charge against its general credit, or shall obligate the Issuer financially in any way except from the application of Revenues or proceeds pledged to the payment of the Bonds and the proceeds of the Bonds. No failure of the Issuer to comply with any term, condition, covenant or agreement herein or in any document executed by the Issuer in connection with the Project, or the issuance, sale and delivery of the Bonds shall subject the Issuer to liability for any claim for damages, costs or other financial and pecuniary charge except to the extent that the same can be paid or recovered from the Revenues or other assets pledged to the payment of the Bonds or the proceeds of the Bonds. Section 6.10 Sales Tax and Other Disclosure. The Issuer shall use its best efforts to obtain from the Illinois Department of Revenue such publicly available information relating to the Business District Sales Taxes as may be deemed necessary by the Trustee or the Original Purchaser and that, within thirty (30) days after receipt of such information, the Issuer shall deliver the same to the Trustee and the Original Purchaser. (a) The Issuer shall provide to the Trustee and the Original Purchaser, within ten (10) days of the receipt by the Issuer, a copy of each annual audit of the Issuer. (b) The Issuer shall provide to the Trustee and the Original Purchaser, within thirty (30) days after receipt thereof, any public information related to the Business District Sales Taxes received by the Issuer from the Illinois Department of Revenue. (c) The Issuer shall provide to the Trustee and the Original Purchaser, within thirty (30) days after receipt thereof, any quarterly construction progress reports and any tenant schedules, including lease expirations received from the Developer. I (d) The Trustee shall make available to the Issuer, the Original Purchaser and any holder of the Bonds, within ten (10) days of receipt of any request by the Issuer, the Original Purchaser or any holder of the Bonds, monthly account statements and all information received by the Trustee under this Section 6.10. (e) Both the Trustee and the Original Purchaser are hereby authorized to deliver and provide any information received by it pursuant to this Section 6.10 to any holder or holders of the Bonds. (f) The Original Purchaser shall be deemed a third party beneficiary for purposes of this Section 6.10. ARTICLE VII DISCHARGE OF INDENTURE Section 7.1 Defeasance. If all Bonds shall be paid and discharged as provided in this Section, then all obligations of the Trustee and the Issuer under this Indenture with respect to all Bonds shall cease and terminate, except only (i) the obligation of the Trustee to pay or cause to be paid to the owners thereof all sums due with respect to the Bonds and to register, transfer and exchange Bonds pursuant to Section 2.7 and Section 2.8, (ii) the obligation of the Issuer to pay the amounts owing to the Trustee under Section 9.2, and (iii) the obligation of the Issuer to 31 CH12 650181.4 comply with Section 6.3 and Section 9.11. Any funds held by the Trustee at the time of such y termination which are not required for payment to Bondholders or for payment to be made by the Issuer, shall be paid as provided in Section 5.13. j Any Bond or portion thereof in an authorized denomination shall be deemed no longer Outstanding under this Indenture if paid or discharged in any one or more of the following ways: (i) by well and truly paying or causing to be paid the principal of and interest on such Bond which have become due and payable; or (ii) by depositing with the Trustee, in trust, cash which, together with the amounts then on deposit in the Business District Sales Tax Account and the Bond Fund and dedicated to this purpose, is fully sufficient to pay when due all principal of, and premium, if any, and interest on such Bond to the maturity or earlier redemption date thereof; or (iii) by depositing with the Trustee, in trust, any investments listed in subparagraph (a) under the definition of Investment Obligation in Section 1.1 in such amount as in the written opinion of a certified public accountant will, together with the interest to accrue on such Investment Obligation without the need for reinvestment, be fully sufficient to pay when due all principal of, and premium, if any, and interest on such Bond to the maturity or earlier redemption date thereof, notwithstanding that such Bond shall not have been surrendered for payment. (b) Notwithstanding the foregoing, no deposit under clauses (ii) and (iii) of subsection (a) above shall be deemed a payment of such Bond until the earlier to occur of- (i) if such Bond is by its terms subject to redemption within 45 days, proper notice of redemption of such Bond shall have been previously given in accordance with Section 3.3 to the holder thereof or, in the event such Bond is not by its terms subject to redemption within 45 days of making the deposit under clauses (ii) and (iii) of subsection (a) above, the Issuer shall have given the Trustee irrevocable written instructions to mail by first -class mail, postage prepaid, notice to the holder of such Bond as soon as practicable stating that the deposit required by clauses (ii) or (iii) of subsection (a) above, as applicable, has been made with the Trustee and that such Bond is deemed to have been paid and further stating such redemption date or dates upon which money will be available for the payment of the principal of and accrued interest thereon; or (ii) the maturity of such Bond. (c) The Trustee shall be entitled to receive a report from a nationally recognized accounting firm to provide for the payment of all Bonds to be defeased pursuant to this Section. Section 7.2 Unclaimed Monevs. Anything herein to the contrary notwithstanding, and subject to applicable escheatment laws of the State, any moneys held by the Trustee in trust for 32 CH12 650181.4 the payment and discharge of any of the Bonds which remain unclaimed for two years after the date when such Bonds have become due and payable, either at maturity or by call for redemption, if such moneys are held by the Trustee at said date, or for two years after the date of deposit of such moneys if deposited with the Trustee after the date when such Bonds became due and payable, shall be paid by the Trustee to the Issuer as its absolute property and free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the holders of such Bonds shall look only to the Issuer for the payment thereof; provided, however, that before being required to make any such payment to the Issuer, the Trustee shall cause to be mailed to the holders of such Bonds, at their addresses shown on the Bond Register, notice that said moneys remain unclaimed and that, after a date named in said notice, which date shall be not less than 30 nor more than 60 days after the date of mailing such notice, the balance of such moneys then unclaimed will be paid to the Issuer; and provided further, that the provisions of this Section shall not apply to the extent disposition of any moneys so held by the Trustee shall be governed by any laws applicable to the Trustee or the Issuer dealing with the disposition of such unclaimed property. ARTICLE VIII DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND BONDHOLDERS Section 8.1 Events of Default. Each of the following shall constitute an Event of Default under this Indenture: (a) Failure to pay the principal of, premium, if any, or interest on any of the Bonds when due, whether at maturity or upon call for redemption (including Bonds called or to be called for redemption from Sinking Fund Installments) or upon the maturity thereof by declaration; or (b) Default in the observance or performance of any other covenant, agreement or condition on the part of the Issuer in this Indenture and the continuation of such default for a period of 90 days after written notice to the Issuer from the Trustee or the registered owners of at least 25% in aggregate principal amount of the Bonds Outstanding at such time specifying such default and requiring the same to be remedied. The Trustee will immediately notify the Issuer and the Bondholders after a Responsible Officer obtains knowledge or receives notice of the occurrence of an Event of Default or an event which would become an Event of Default with the passage of time or the giving of notice, or both. Section 8.2 Remedies. Upon the occurrence of an Event of Default the Trustee may, and upon the written request of the holders of 25% in aggregate principal amount of Bonds then Outstanding affected by the Event of Default and upon receipt of indemnity satisfactory to it shall, proceed to protect and enforce its rights and the rights of the holders of the Bonds by a suit, action or special proceeding in equity or at law, by mandamus or otherwise, either for the specific performance of any covenant or agreement contained herein or in aid or execution of any power herein granted or for any enforcement of any proper legal or equitable remedy as the 33 CH12 650181.4 i l Trustee, being advised by counsel, shall deem most effective to protect and enforce the rights aforesaid. During the continuance of an Event of Default, all moneys received by the Trustee under this Indenture from the Issuer or from any other source shall be applied by the Trustee in accordance with the terms of Section 8.8 hereof. Any judgment against the Issuer shall be enforceable only against the amounts pledged pursuant to this Indenture. There shall not be authorized any deficiency judgment against any assets of, or the general credit of, the Issuer. The Bonds shall not be subject to acceleration upon the occurrence of an Event of Default. Section 8.3 Other Remedies: Rights of Bondholders. No right or remedy by the terms of this Indenture conferred upon or reserved to the Trustee (or to the Bondholders) is intended to be exclusive of any other right or remedy, but each and every such right and remedy shall be cumulative and shall be in addition to any other right or remedy given to the Trustee or to the Bondholders hereunder or now or hereafter existing at law or in equity; provided, however, that in no event shall the Bonds be subject to acceleration as a result of the occurrence of an Event of Default. No delay or omission to exercise any right or power accruing upon any default or Event of Default shall impair any such right or power or shall be construed to be a waiver of any such default or Event of Default or acquiescence therein and every such right and power may be exercised from time to time as often as may be deemed expedient. No waiver of any default or Event of Default hereunder, whether by the Trustee or by the Bondholders, shall extend to or shall affect any subsequent default or Event of Default or shall impair any rights or remedies consequent thereon. Section 8.4 Representation of Bondholders by Trustee. The Trustee is hereby irrevocably appointed (and the Bondholders, by accepting and holding their Bonds, shall be conclusively deemed to have so appointed the Trustee and to have mutually covenanted and agreed, each with the other, not to revoke such appointment) the true and lawful attorney in fact of the Bondholders with power and authority, in addition to any other powers and rights heretofore granted the Trustee, at any time in its discretion to make and file, in any proceeding in bankruptcy or judicial proceedings for reorganization or liquidation of the affairs of the Issuer, either in the respective names of the Bondholders or on behalf of all the Bondholders as a class, any proof of debt, amendment of proof of debt, petition or other document, to receive payment of any sums becoming distributable to the Bondholders, and to execute any other papers and documents and do and perform any and all such acts and things as may be necessary or advisable in the opinion of the Trustee in order to have the respective claims of the Bondholders against the Issuer allowed in any bankruptcy or other proceeding. In the enforcement of any rights and remedies hereunder, the Trustee in its own name and as trustee of an express trust on behalf of and for the benefit of the holders of all Bonds, shall be 34 CH12 650181.4 entitled to sue for, enforce payment on and receive any and all amounts then or during any Event of Default becoming, and at any time remaining, due from the Issuer for principal, premium, if any, interest or other moneys, under any provision hereof or of the Bonds, and unpaid, with interest on overdue payments at the rate or rates of interest specified in such Bonds, together with any and all costs and expenses of collection and of all proceedings hereunder and under j such Bonds, without prejudice to any other right or remedy of the Trustee or of the Bondholders. Section 8.5 Action by Trustee. All rights of action hereunder or upon any of the Bonds enforceable by the Trustee may be enforced by the Trustee without the possession of any of the Bonds, or the production thereof at the trial or other proceedings relative thereto, and any such suit, action or proceeding instituted by the Trustee may be brought in its name for the ratable benefit of the holders of such Bonds subject to the provisions hereof. In any action, suit or other proceeding by the Trustee, the Trustee shall be paid Administrative Expenses in accordance with Section 9.2. Section 8.6 Accounting and Examination of Records After Default. The Issuer covenants with the Trustee and the Bondholders that, if an Event of Default shall have happened and shall not have been remedied, the books of record and account of the Issuer relating to the Bonds and the Project shall at all times during normal business hours be subject to the inspection and use of the Trustee and of its agents and attorneys. Section 8.7 Restriction on Bondholder Action. No holder of any Bond shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement of any provision hereof or for the execution of any trust hereunder or for any other remedy hereunder, unless (a)(i) such holder previously shall have given to the Issuer and the Trustee written notice of the Event of Default on account of which such suit, action or proceeding is to be instituted, and (ii) after the occurrence of such Event of Default, a written request shall have been made of the Trustee to institute such suit, action or proceeding by the holders of not less than 25% in aggregate principal amount of the Bonds then Outstanding and there shall have been offered to the Trustee security and indemnity satisfactory to it against the costs and liabilities to be incurred therein or thereby, and (iii) the Trustee shall have been enjoined or restrained from complying or shall have refused or neglected or otherwise failed to comply with such request within a reasonable time; or (b)(i) such holder previously shall have obtained the written consent of the Trustee to the institution of such suit, action or proceeding, and (ii) such suit, action or proceeding is brought for the ratable benefit of the holders of all Bonds subject to the provisions hereof. Nothing in this Article contained shall affect or impair the right of any Bondholder to enforce the payment of the principal of, premium, if any, and interest on his or her Bonds or the obligation of the Issuer to pay the principal of, premium, if any, and interest on each Bond to the holder thereof, at the time and place and from the source expressed in such Bonds and pursuant to the terms of the Bonds and this Indenture. No holder of any Bond shall have any right in any manner whatever by his or her action to affect, disturb or prejudice the pledge of Revenues or of any other moneys, funds or securities 35 CH12_650181.4 hereunder, or, except in the manner and on the conditions in this Section provided, to enforce , any right or duty hereunder. Section 8.8 Apulication of Monevs After Default. All moneys collected by the Trustee at any time pursuant to this Article shall, except to the extent, if any, otherwise directed by a court of competent jurisdiction, be credited by the Trustee to the Business District Sales Tax Account. Such moneys so credited to the Business District Sales Tax Account and all other moneys from time to time credited to the Business District Sales Tax Account shall at all times be held, transferred, withdrawn and applied as prescribed by the provisions of Article V and this Section. ns of Section 8.11 in he Subject in all instances to the provisions t event that at an time the J p � Y moneys credited to the Bond Fund, or any other funds held by the Issuer or the Trustee available for the payment of interest or principal then due with respect to the Bonds, shall be insufficient for such payment, such moneys and funds (other than funds held for the payment or redemption of particular Bonds as provided in Section 5.9) shall be applied as follows: (a) Only in the event that there has been an Event of Default hereunder pursuant to Section 8.1(a), for payment of all amounts due to the Trustee incurred in performance of its duties under this Indenture and the other documents executed in connection therewith, including, without limitation, to the payment of all Administrative Expenses of the Trustee incurred in exercising any remedies under this Indenture and the other documents executed in connection herewith. (b) After payment of the amount requested to be paid under Section 8.8 (a), First To the payment to the persons entitled thereto of all installments of interest then due in the order of the maturity of such installments, and, if the amount available is not sufficient to pay in full any installment, then to the payment thereof ratably, according to the amounts due on such installment, to the persons entitled thereto, without any discrimination or preference; and Second To the payment to the persons entitled thereto of the unpaid principal of and premium, if any, on any Bonds which shall have become due, whether at maturity or by call for redemption, in the order in which they became due and payable, and, if the amount available is not sufficient to pay in full all the principal of and premium, if any, on the Bonds so due on any date, then to the payment of principal ratably, according to the amounts due on such date, to the persons entitled thereto, without any discrimination or preference and then to the payment of any premium due on the Bonds, ratably, according to the amounts due on such date, to the persons entitled thereto, without any discrimination or preference. Section 8.9 Control of Proceedinas. In the case of an Event of Default, the holders of a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, subject to the provisions of Section 8.7, by an instrument in writing executed and delivered to the Trustee, to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee; provided, 36 CH12 650181.4 however, that the Trustee shall have the right to decline to follow any such direction if the Trustee shall be advised by counsel that the action or proceeding so directed may not be taken lawfully, or if the Trustee in good faith shall determine that the action or proceeding so directed would involve the Trustee in personal liability or otherwise adversely affect the Trustee or be unjustly prejudicial to Bondholders not parties to such direction. Section 8.10 Waivers of Event of Default. The Trustee shall waive any Event of Default hereunder and its consequences upon the written request of the holders of a majority in aggregate principal amount of all Bonds then Outstanding with respect to which there is an Event of Default; provided, however, that there shall not be waived (a) any default in the payment of the principal amount of any Bonds at the date of maturity specified therein, at the due date of any Sinking Fund Installment or upon proceedings for mandatory redemption, or (b) any default in the payment when due of the interest or premium, if any, on any such Bonds, unless prior to such waiver or rescission all arrears of interest, with interest (to the extent permitted by law) at the rate borne by the Bonds in respect of which such Event of Default shall have occurred on overdue installments of interest or all arrears of payments of principal of or premium, if any, when due (whether at the stated maturity thereof, at the due date of any Sinking Fund Installment or upon proceedings for mandatory redemption) as the case may be, and all expenses of the Trustee in connection with such monetary default, shall have been paid or provided for, and in case of any such waiver or rescission, the Issuer, the Trustee and the Bondholders shall be restored to their former positions and rights hereunder respectively. No such waiver or rescission shall extend to any subsequent or other default, or impair any right consequent thereto; and no delay or omission of the Trustee or of any Bondholders to exercise any right or power accruing upon any Event of Default shall impair any right or power or shall be construed to be a waiver of any such Event of Default, or acquiescence therein. Section 8.11 Subordination. No claim for interest on any of the Bonds which claim in any way at or after maturity shall have been transferred or pledged by the holder thereof separate and apart from the Bond to which it relates, unless accompanied by such Bond, shall be entitled in case of an Event of Default hereunder to any benefit by or from this Indenture except after the prior payment in full of the principal of and premium, if any, on all of the Bonds then due and of all claims for interest then due not so transferred or pledged. Section 8.12 Termination of Proceedinizs. In case any proceeding taken by the Trustee on account of any Event of Default shall have been discontinued or abandoned for any reason or determined adversely to the Trustee, then in every such case the Issuer, the Trustee and the Bondholders shall be restored to their former positions and rights hereunder, respectively, and all rights, remedies, powers and duties of the Trustee shall continue as though no such proceeding had been taken. ARTICLE IX THE TRUSTEE Section 9.1 Acceptance of Trusts. The Trustee hereby accepts the trusts imposed upon it by this Indenture, and agrees to perform said trusts, but only upon and subject to the following 37 CH12 650181.4 express terms and conditions and no implied covenants or conditions shall be read into this Indenture against the Trustee: (a) The Trustee, prior to the occurrence of an Event of Default and after the curing of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default has occurred (which has not been cured or waived) the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a reasonable person would exercise or use under the circumstances in the conduct of his or her own affairs. (b) The Trustee may execute any of the trusts or powers hereof and perform any of its duties by or through attorneys, agents, receivers or employees but shall not be answerable for the conduct of the same if appointed with reasonable care, and shall be entitled to advice of counsel concerning all matters of the trusts hereof and the duties hereunder, and may in all cases pay such reasonable compensation to all such attorneys, agents, receivers and employees as may reasonably be employed in connection with the trusts hereof. The Trustee may act upon the opinion or advice of any attorneys (who may be the attorney or attorneys for the Issuer) approved by the Trustee in the exercise of reasonable care. The Trustee shall not be responsible for any loss or damage resulting from any action or non action taken in good faith in reliance upon such opinion or advice. (c) The Trustee shall not be responsible for any recital herein, or in the Bonds (except in respect to the certificate of the Trustee endorsed on the Bonds), or for insuring the Project or collecting any insurance moneys, or for the registration, filing or recording or re registration, refiling or rerecording of this Indenture or any financing statements or continuations thereof relating hereto or thereto or for the validity of the execution by the Issuer of this Indenture or of any supplements hereto or instruments of further assurance, or for the sufficiency of the security for the Bonds issued hereunder or intended to be secured hereby, or for the value or title of the Project or otherwise as to the maintenance of the security hereof. The Trustee shall not be bound to ascertain or inquire as to the performance or observance of any covenants, conditions or agreements on the part of the Issuer, except as hereinafter set forth; but the Trustee may require of the Issuer full information and advice as to their performance of the covenants, conditions and agreements aforesaid. The Trustee acknowledges it has assumed certain duties of the Issuer under the Tax Agreement. (d) The Trustee shall not be accountable for the use of any Bonds authenticated or delivered hereunder. The Trustee may become the owner of Bonds secured hereby with the same rights which it would have if not Trustee hereunder. To the extent permitted by law, the Trustee may act as depository for, and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Bondholders or to effect or aid in any reorganization growing out of the enforcement of the Bonds or this Indenture, whether or not any such committee shall represent the holders of a majority in aggregate principal amount of the Bonds Outstanding. (e) The Trustee shall be protected in acting under any notice, request, consent, certificate, order, affidavit, letter, facsimile transmission, telegram or other paper or document 38 CH12 650181.4 believed to be genuine and correct and to have been signed or sent by the proper person or persons. Any action taken by the Trustee pursuant to this Indenture upon the request, authority or consent of any person who at the time of making such request or giving such authority or consent is the owner of any Bond, shall be conclusive and binding upon all future owners of the same Bond and upon Bonds issued in exchange therefore or in place thereof. (f) As to the existence or nonexistence of any fact or as to the sufficiency or validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely (unless other evidence in respect thereof is herein specifically prescribed) upon an Officer's Certificate as sufficient evidence of the facts therein contained and prior to the occurrence of an Event of Default of which the Trustee has been notified as provided in subsection (h) of this Section, or of which by said subsection it is deemed to have notice, shall also be at liberty to accept an Officer's Certificate to the effect that any particular dealing, transaction or action is necessary or expedient, but may at its discretion secure such further evidence deemed necessary or advisable, but shall in no case be bound to secure the same. The Trustee may accept a certificate signed by an Attesting Officer of the Issuer as conclusive evidence that a resolution of the governing body of the Issuer has been duly adopted and is in full force and effect. 'j (g) The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty and it shall not be answerable for other than its own negligence or willful misconduct. (h) The Trustee shall not be required to take notice or be deemed to have notice of any default or Event of Default hereunder except a default in payment when due of the principal of, premium, if any, or interest on any Bond or the failure of the Issuer to file with the Trustee any documents required by this Indenture, to be so filed subsequent to the issuance of the Bonds unless the Trustee shall be specifically notified in writing of such default or Event of Default by the Issuer or by the holders of at least 25% in aggregate principal amount of Bonds then Outstanding and all notices or other instruments required by this Indenture to be delivered to the Trustee must, in order to be effective, be delivered at the Principal Office of the Trustee, and in the absence of such notice so delivered the Trustee may conclusively assume there is no default or Event of Default except as aforesaid. (i) At any and all reasonable times the Trustee and its duly authorized agents, attorneys, experts, engineers, accountants and representatives shall have the right fully to inspect any and all of the property herein conveyed, including the Project and all books, papers and records of the Issuer pertaining to the Project and the Bonds, and to take such memoranda from and in regard thereto as may be desired, provided that such inspection be made and any such memoranda be taken and used on a basis that will insure the confidentiality thereof and of any results thereof. 0) The Trustee shall not be required to give any bond or surety in respect of the execution of the trusts and powers or otherwise in respect of the premises granted in this Indenture. (k) Notwithstanding anything elsewhere in this Indenture contained, the Trustee shall have the right, but shall not be required, to demand, in respect of the authentication 39 CH12 650181.4 of any Bonds, the withdrawal of any cash, the release of any property or any action whatsoever within the purview of this Indenture, any showings, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, in addition to that by the terms hereof required as a condition of such action by the Trustee, deemed desirable for the purpose of establishing the right of the Issuer to the authentication of any Bonds, the withdrawal of any cash, the release of any property or the taking of any other action by the Trustee, but the resolutions, opinions, certificates and other instruments provided for in this Indenture may be accepted by the Trustee as conclusive evidence of the facts and conclusions stated therein and shall be full warranty, protection and authority to the Trustee for the release of property and the withdrawal of cash hereunder. (1) Before taking any action under Article VIII of this Indenture the Trustee may require that a satisfactory indemnity bond or other indemnity satisfactory to the Trustee be furnished for the reimbursement of all expenses to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from its negligence or willful default by reason of any action so taken. (m) All moneys received by the Trustee, until used, applied or invested as herein provided, shall be held in trust for the purposes for which they were received but need not be segregated from other funds except to the extent required by law. (n) The immunities extended to the Trustee also extend to its directors, officers, employees and agents. (o) The Trustee's rights to immunities and protection from liability hereunder and its rights to payment of its Administrative Expenses shall survive its resignation or removal and the final payment or the defeasance of the Bonds (or the discharge of the Bonds or the defeasance of the lien of this Indenture). (p) None of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur individual financial liability in the performance of any of its duties or in the exercise of any of its rights or powers. (q) The Trustee shall have no responsibility, opinion or liability with respect to any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds. (r) The Trustee agrees to accept and act upon instructions or directions pursuant to this Indenture sent by unsecured e-mail, facsimile transmission or other similar unsecured electronic methods, provided, however, that (a) the Issuer, subsequent to such transmission of written instructions, shall provide the originally executed instructions or directions to the Trustee in a timely manner, (b) such originally executed instructions or directions shall be signed by a person as may be designated and authorized to sign for the Issuer or in the name of the Issuer, by an authorized representative of the Issuer, and (c) the Issuer shall provide to the Trustee an incumbency certificate listing such designated persons, which incumbency certificate shall be amended whenever a person is to be added or deleted from the listing. If the Issuer elects to give the Trustee e-mail or facsimile instructions (or instructions by 40 CH 12_650181.4 a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee's understanding of such instructions shall be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee's reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. The Issuer agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk of interception and misuse by third parties. Section 9.2 Fees, Charges and Expenses of Trustee,. Notwithstanding any provision to the contrary herein, the Trustee shall be entitled to payment and reimbursement for reasonable fees for its services rendered hereunder and all advances, counsel fees and other expenses reasonably made or incurred by the Trustee (including any co Trustee) in connection with such services which shall be paid from time to time as provided in Section 5.4 from moneys available therefore. Upon an Event of Default under Section 8.1(a), but, only upon such an Event of Default, the Trustee shall have a lien upon the Trust Estate for extraordinary fees, charges and expenses incurred by it. The Issuer shall indemnify and save harmless the Trustee against any liabilities which the Trustee may incur in the exercise and performance of its powers and duties hereunder, and under the Tax Agreement which are not due to its own negligence or willful misconduct, and to reimburse the Trustee for any Administrative Expenses of the Trustee to the extent they exceed funds available under this Indenture for the payment thereof, subject only to the right of the Issuer to contest the reasonableness of any such fees or the necessity for any such expenses. The Trustee shall continue to perform its duties and obligation hereunder until such time as its resignation or removal is effective pursuant to Section 9.5 or Section 9.6, respectively. Section 9.3 Intervention by Trustee. In any judicial proceeding to which the Issuer is a party and which in the opinion of the Trustee and its counsel has a substantial bearing on the interests of owners of the Bonds, the Trustee may intervene on behalf of the Bondholders and shall do so if requested in writing by the owners of at least 25% in aggregate principal amount of Bonds then Outstanding, subject to receipt of indemnity as provided in Section 9.1(1). The rights and obligations of the Trustee under this Section are subject to receipt of any approval of a court of competent jurisdiction which may be required by law as a condition to such intervention. Section 9.4 Meraer or Consolidation of Trustee. Any corporation or association into which the Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, ipso facto shall be and become successor Trustee hereunder and vested with all of the title to the Trust Estate and all the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding. Section 9.5 Resignation by Trustee. The Trustee and any successor Trustee may at any time resign from the trusts hereby created by giving 30 days' written notice to the Issuer, and such resignation shall only take effect upon the appointment, pursuant to Section 9.7, of, and acceptance by, a successor Trustee. The successor Trustee shall give notice of such succession 41 CH12_650181.4 by first class mail, postage prepaid, to each Bondholder at the address of such Bondholder shown > on the Bond Register. Section 9.6 Removal of Trustee. The Trustee may be removed at any time by an instrument or concurrent instruments in writing delivered to the Trustee and signed by the Issuer (or if an Event of Default shall have occurred and be continuing, by the owners of a majority in aggregate principal amount of the Bonds then Outstanding, in which event such instrument or instruments in writing shall also be delivered to the Issuer) provided that such removal shall not take effect until the appointment of a successor Trustee by the Issuer (or by the Bondholders). Section 9.7 Apuointment of Successor Trustee. In case at any time the Trustee or any successor thereto shall resign or shall be removed or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or if a receiver, liquidator or conservator of such Trustee or of its property shall be appointed, or if any public officer shall take charge or control of such Trustee or of its property or affairs, a successor may be appointed by the Issuer or if the Issuer is in default hereunder, by the holders of a majority in aggregate principal amount of the Bonds then Outstanding, excluding any Bonds held by or for the account of the Issuer, by an instrument or concurrent instruments in writing signed by such Bondholders, or their attorneys duly authorized in writing, and delivered to such successor Trustee, notification thereof being given to the Issuer and the predecessor Trustee. If in a proper case no appointment of a successor Trustee shall have been made pursuant to the foregoing provisions of this Section within 45 days after the Trustee shall have given to the Issuer written notice as provided in Section 9.5 or after the occurrence of any other event requiring or authorizing such appointment, the Trustee or any Bondholder may apply to any court of competent jurisdiction to appoint a successor. The court may thereupon, after such notice, if any, as such court may deem proper and prescribe, appoint a successor Trustee. Any Trustee appointed under the provisions of this Section shall be a bank or trust company or a national banking association, having its principal office within or without the State, having trust powers, with prior experience as trustee under indentures under which revenue bonds are issued, and having a capital and surplus acceptable to the Issuer, willing and able to accept the office on reasonable and customary terms in light of the circumstances under which the appointment is tendered and authorized by law to perform all the duties imposed upon it hereby, if there be such an institution meeting such qualifications willing to accept such appointment. Section 9.8 Transfer of Rights and Pro to Successor Trustee. Any successor Trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor Trustee, and also to the Issuer, an instrument accepting such appointment, and thereupon such successor Trustee, without any further act, deed or conveyance, shall become fully vested with all moneys, estates, properties, rights, powers, duties and obligations of such predecessor Trustee, with like effect as if named herein as such Trustee, but the Trustee ceasing to act shall nevertheless, on the written request of the Issuer, or the successor Trustee, execute, acknowledge and deliver such instruments of conveyance and further assurance and do such other things as reasonably may be required for more fully and certainly vesting and confirming in such successor Trustee all the right, title and interest of the predecessor Trustee in and to any properties held by it under this Indenture, and shall pay over, assign and deliver to the successor Trustee any money or other 42 CH12 650181.4 property subject to the trusts and conditions herein set forth. Should any deed, conveyance or instrument in writing from the Issuer be required by such successor Trustee for more fully and certainly vesting in and confirming to such successor Trustee any such moneys, estates, properties, rights, powers and duties, any and all such deeds, conveyances and instruments in writing, on request, and so far as may be authorized by law, shall be executed, acknowledged and delivered by the Issuer. Section 9.9 Successor Trustee as Bond Registrar, Custodian of Funds and Paving Agent In the event of a change in the Trustee, the Trustee which has resigned or been removed shall cease to be bond registrar and custodian of the Funds and Accounts created under this Indenture and paying agent for the Bonds and the successor Trustee shall become such registrar, custodian and paying agent. Section 9.10 Appointment of Co- Trustee. It is the purpose of this Indenture that there shall be no violation of any laws of any jurisdiction (including particularly the laws of the State) denying or restricting the right of banking corporations or associations to transact business as trustee in such jurisdiction. It is recognized that in case of litigation under this Indenture, and in particular in case of the enforcement hereof on default, or in case the Trustee deems that by reason of any present or future law of any jurisdiction it may not exercise any of the powers, rights or remedies herein granted to the Trustee or hold title to the properties, in trust, as herein provided, or take any other action which may be desirable or necessary in connection therewith, it may be necessary that the Trustee appoint an additional individual or institution as a separate or co trustee. The following provisions of this Section are adopted to these ends. The Trustee is hereby authorized to appoint an additional individual or institution as a separate or co trustee hereunder, without the necessity of further authorization or consent, in which event each and every remedy, power, right, claim, demand, cause of action, immunity, estate, title, interest and lien expressed or intended by this Indenture or the Tax Agreement to be exercised by or vested in or conveyed to the Trustee with respect thereto shall be exercisable by and vest in such separate or co trustee but only to the extent necessary to exercise such powers, rights and remedies, and every covenant and obligation necessary to the exercise thereof by such separate or co trustee shall run to and be enforceable by either of them. Should any instrument in writing from the Issuer be required by the separate trustee or co trustee appointed by the Trustee for more fully and certainly vesting in and confirming to him or it such properties, rights, powers, trusts, duties and obligations, any and all such instruments in writing shall, on request of the Trustee, be executed, acknowledged and delivered by the Issuer. In case any separate trustee or co Trustee, or a successor to either, shall die, become incapable of acting, resign or be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such separate trustee or co trustee, so far as permitted by law, shall vest in and be exercised by the Trustee until the appointment of a successor to such separate trustee or co trustee. Section 9.11 Arbitrate Covenants. I (a) Moneys and securities held by the Trustee in the Rebate Fund are not pledged or otherwise subject to any security interest in favor of the Trustee to secure the Bonds 43 CH12 650181.4 or any other payments required to be made hereunder or any other document executed and delivered in connection with the issuance of the Bonds. (b) Moneys in the Rebate Fund shall be held separate and apart from all other Funds and Accounts established under this Indenture and shall be separately invested and reinvested at the written direction of the Issuer by the Trustee in Investment Obligations. The interest accruing thereon and any profit realized therefrom shall be credited to the Rebate Fund, and any loss resulting therefrom shall be charged to the Rebate Fund. The Trustee shall sell and reduce to cash a sufficient amount of such Investment Obligations whenever the cash balance in the Rebate Fund is insufficient for its purposes. (c) The Issuer hereby covenants to provide for the calculation of and rebate to the federal government, in accordance with the Code, excess investment earnings to the extent required by section 148(f) of the Code. (d) In order to provide for the administration of this Section, the Trustee may provide for the employment of independent attorneys, accountants and consultants compensated on such reasonable basis as the Trustee may deem appropriate and in addition and without limitation of the provisions of Section 9.1, the Trustee may rely conclusively upon and be fully protected from all liability in relying upon the opinions, determinations, calculations and advice of such attorneys, accountants and consultants employed hereunder. (e) The Issuer shall be responsible for any fees and expenses incurred by the Issuer or the Trustee under or pursuant to this Section. (f) Withdrawals from the Rebate Fund may be made to the extent the rebate analyst determines that amounts on deposit therein exceed amounts required to be on deposit therein pursuant to this Section. All amounts so withdrawn shall be transferred to the Business District Sales Tax Account. (g) The provisions of this Section may be amended or deleted from this' Indenture upon receipt by the Issuer and the Trustee of an opinion of Bond Counsel that such amendment or deletion will not adversely affect the exclusion of the interest on the Bonds from gross income for federal income tax purposes. Any moneys on deposit in the Rebate Fund may be applied by the Trustee as permitted in such opinion. Section 9.12 Compliance with Section 6.10. The Trustee hereby covenants to comply with the requirements contained in Section 6.10. ARTICLE X SUPPLEMENTAL INDENTURES Section 10.1 Supplemental Indentures Effective Upon Acceptance. For any one or more of the following purposes and at any time or from time to time, the Issuer and the Trustee may enter into a Supplemental Indenture which, upon the execution and delivery thereof by an 44 CH12 650181.4 Authorized Officer and by the Trustee, without the necessity of consent of the Bondholders, shall be fully effective in accordance with its terms: (a) To add to the covenants or agreements of the Issuer herein contained other covenants or agreements to be observed by the Issuer or to otherwise revise or amend this Indenture in a manner which are /is not materially adverse to the interests of the Bondholders; (b) To add to the limitations or restrictions herein contained other limitations or restrictions to be observed by the Issuer which are not contrary to or inconsistent with the provisions hereof as theretofore in effect; (c) To surrender any right, power or privilege reserved to or conferred upon the Issuer herein, provided that the surrender of such right, power or privilege is not contrary to or inconsistent with the covenants and agreements of the Issuer contained herein and is not materially adverse to the interests of the Bondholders; (d) To confirm, as further assurance, any pledge of the Trust Estate hereunder and the subjection to any lien on or pledge of the Trust Estate created or to be created hereby; (e) To appoint a co trustee or successor Trustee or co trustee; (f) To cure any ambiguity, supply any omission or cure or correct any defect or inconsistent provision herein; and (g) To insert such provisions clarifying matters or questions arising hereunder as are necessary or desirable and are not materially adverse to the interests of the Bondholders. Section 10.2 Sunnlemental Indentures Requiring Consent of Bondholders. In addition to those amendments to the Indenture which are authorized by Section 10. 1, any modification or amendment of the Indenture, in any particular, may be made by a Supplemental Indenture with the written consent, given as hereinafter provided in Section 10.3, of the holders of at least two thirds in aggregate principal amount of the Bonds Outstanding at the time such consent is given; provided, however, that no such modification or amendment shall (a) permit a change in the terms of redemption or maturity of the principal of any Outstanding Bond or an extension of the date for payment of any installment of interest thereon or a reduction in the principal of, premium, if any, or the rate of interest on any Outstanding Bond without the consent of the holder of such Bond, (b) reduce the proportion of Bonds the consent of the holders of which is required to effect any such modification or amendment, (c) permit the creation of a lien on the Trust Estate pledged under this Indenture prior to or on a parity with the lien of this Indenture, (d) deprive the holders of the Bonds of the lien created by this Indenture upon the Trust Estate (except as expressly provided in this Indenture), without (with respect to (b) through (d)) the consent of the holders of all Bonds then Outstanding, or (e) change or modify any of the rights or obligations of the Trustee without the written consent thereto of the Trustee. Section 10.3 Consent of Bondholders.. The Issuer and the Trustee may, at any time, execute and deliver a Supplemental Indenture making a modification or amendment permitted by the provisions of Section 10.2, to take effect when and as provided in this Section. A copy of such Supplemental Indenture (or brief summary thereof or reference thereto in a form approved 45 CH12 650181.4 i t I by the Trustee), together with a request to Bondholders for their consent thereto in form satisfactory to the Trustee, shall be mailed by the Trustee to the Bondholders. Such Supplemental Indenture shall not be effective unless there shall have been filed with the Trustee (a) the written consents of the holders of the proportion of Outstanding Bonds specified in ' stating that such 'on 10.2 and a Counsel's Opinion Sects (b) Op g Supplemental Indenture has been duly and lawfully entered into by the Issuer in accordance with the provisions of this Indenture, is authorized or permitted by the provisions of this Indenture, and, when effective, will be valid and binding upon the Issuer. Each such consent of the Bondholders shall be effective only if accompanied by proof of the holding, at the date of such consent, of the Bonds with respect to which such consent is given, which proof shall be such as is permitted by Section 11.1. A certificate or certificates by the Trustee that it has examined such proof and that such proof is sufficient under the provisions of Section 11.1 shall be conclusive that the consents have been given by the holders of the Bonds described in such certificate or certificates. Any such consent shall be binding upon the holder of the Bonds giving such consent and upon any subsequent holder of such Bonds and of any Bonds issued in exchange therefore (whether or not such subsequent holder thereof has notice thereof). At any time after the holders of the required proportion of Bonds shall have filed their consents to such Supplemental Indenture, the Trustee shall make and file with the Issuer a written statement that the holders of such required proportion of Bonds have filed and given such consents. Such written statement shall be conclusive that such consents have been so filed and have been given. Within 90 days after filing such statement, the Trustee shall mail to the Bondholders a notice stating in substance that such Supplemental Indenture (which may be referred to as a Supplemental Indenture executed by the Issuer on a stated date, a copy of which is on file with the Trustee) has been consented to by the holders of the required proportion of Bonds and will be effective as provided in this Section, but failure to mail such notice shall not prevent such Supplemental Indenture from becoming effective and binding as in this Section provided. The Trustee shall file with the Issuer proof of the mailing of such notice to Bondholders. A record, consisting of the papers required or permitted by this Section to be filed with the Trustee, shall be proof of the matters therein stated. Such Supplemental Indenture making such modification or amendment shall be deemed conclusively binding upon the Issuer, the Trustee and the holders of all Bonds upon the execution thereof and the filing by the Trustee with the Issuer of the statement that the required proportion of Bondholders have consented thereto. The Issuer may conclusively rely upon the Trustee's determination that the requirements of this Section have been satisfied. Section 10.4 Modification by Unanimous Consent. Notwithstanding anything contained in the foregoing provisions of this Article, the terms and provisions hereof and the rights and obligations of the Issuer and the holders of the Bonds hereunder, in any particular, may be modified or amended in any respect upon execution and delivery of a Supplemental Indenture by the Issuer and the Trustee making such modification or amendment and the consent to such Supplemental Indenture of the holders of all of the Bonds then Outstanding, such consent to be given and proved as provided in Section 10.3 except that no notice to Bondholders shall be required; provided, however, that no such modification or amendment shall change or modify any of the rights or obligations of the Trustee without the written assent thereto of the Trustee, in addition to the consent of the Bondholders. 46 CHI2_650181.4 Section 10.5 Exclusion of Bonds. Bonds owned or held by or for the account of the Issuer or the Borrower shall be excluded and shall not be deemed Outstanding for the purpose of consent or other action or any calculation of Outstanding Bonds provided for in this Article, unless all of the Bonds are owned or held by or for the account of the Issuer or the Borrower. In the event that not all of the Bonds are owned or held by or for the account of the Issuer or the Borrower, then neither the Issuer nor the Borrower, as the case may be, shall be entitled with respect to such Bonds to give any consent or take any other action provided for in this Article. At the time of any consent or other action under this Article, in the event that any Bonds (but not all of the Bonds) are then owned by or for the account of the Issuer, the Issuer shall furnish to the Trustee an Officer's Certificate, upon which the Trustee may rely, describing all Bonds so to be excluded. The Trustee shall be obligated to exclude as aforesaid only such Bonds as are shown by the Bond Register or are otherwise known by the Trustee to be so owned or held. Section 10.6 Notation on Bonds. Bonds delivered after the effective date of any action taken as provided in this Article may, and if the Trustee so determines shall, bear a notation by endorsement or otherwise in form approved by the Issuer and the Trustee as to such action, and in that case upon demand of the holder of any Bond Outstanding at such effective date and presentation of such Bond for such purpose at the Principal Office of the Trustee, suitable notation shall be made on such Bond by the Trustee as to any such action. If the Issuer or the Trustee shall so determine, new Bonds notated as in the opinion of the Trustee and the Issuer may be required to conform to such action shall be prepared and delivered, and upon demand of the holder of any Bond then Outstanding, shall be exchanged, without cost to such Bondholder, for Bonds of the same series, designation, maturity and interest rate then Outstanding upon surrender of such Bonds. Section 10.7 Additional Contracts or Indentures. The Issuer, so far as it may be ,authorized by law, may enter, and if requested by the Trustee, shall enter into additional contracts or indentures with the Trustee giving effect to any modification or amendment of this Indenture as provided in this Article. Section 10.8 Opinion of Bond Counsel Concerning Supplemental Indentures. The Trustee shall not execute or consent to any Supplemental Indenture unless prior to the execution and delivery thereof the Trustee shall have received the written opinion of Bond Counsel to the effect that the modifications or amendments effected by such Supplemental Indenture will not adversely affect the exclusion of interest on the Bonds from gross income for federal income tax purposes or adversely affect the exemption of interest of the Bonds from personal income taxation by the State and are authorized and permitted under the provisions of this Indenture. i ARTICLE 3a I MISCELLANEOUS Section 11.1 Evidence of Signatures of Bondholders and Ownership of Bonds. Any request, consent, revocation of consent or other instrument which this Indenture may require or permit to be signed and executed by Bondholders may be in one or more instruments of similar tenor, and shall be signed or executed by such Bondholders in person or by their attorneys duly authorized in writing. Proof of the execution of any such instrument, or of an instrument 47 CH12 650181.4 ' I appointing or authorizing any such attorney, or the holding by any person of any Bonds, shall be pp g sufficient for any purpose hereof if made in the following manner or in any other manner j satisfactory to the Trustee which may nevertheless in its discretion require further or other proof in cases where it deems the same desirable: (a) The fact and date of the execution by any Bondholder or his or her attorney of any such instrument (other than the Bond) may be proved (i) by the certificate of a notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state in which he or she purports to act that the person signing such instrument acknowledged to him or her the execution thereof, or by the affidavit of a witness of such execution, duly sworn to before such a notary public or other officer, or (ii) by the certificate, which need not be acknowledged or verified, of an officer of a bank, trust company or duly licensed securities broker or dealer satisfactory to the Trustee that the person signing such instrument acknowledged to such bank, trust company, broker or dealer the execution thereof; (b) The authority of a person or persons to execute any such instrument on behalf of a corporate Bondholder may be established without further proof if such instrument is authorized by a corporate resolution (a copy of which shall be delivered to the Trustee) and signed by a person purporting to be the president or a vice president of such corporation; and (c) The holding of Bonds, the amount, numbers and other identification thereof, and the date of holding the same, shall be proved by the Bond Register. Any request, consent or other instrument executed by the registered owner of any Bond shall bind all future owners of such Bond in respect of anything done or suffered to be done hereunder by the Issuer or the Trustee in accordance herewith in reliance on such request, consent or other instrument. i Section 11.2 Details of Documents Delivered to Trustee. Matters required to be stated in any document signed by any Authorized Officer or in any accountant's certificate, Counsel's Opinion or Officer's Certificate may be stated in separate documents of the required description or may be included in one or more thereof. Section 11.3 Preservation and Inspection of Documents. All reports, certificates, statements and other documents received by the Trustee under the provisions hereof shall be retained in its possession and shall be available at all reasonable times for the inspection of the Issuer, or any Bondholder and their agents and representatives, any of whom may make copies thereof, but any such reports, certificates, statements or other documents may, at the election of the Trustee, be destroyed or otherwise disposed of at any time six years after such date as the pledge of the Trust Estate created hereby shall be discharged as provided in Section 7.1. Section 11.4 No Recourse on Bonds. All covenants, stipulations, promises, agreements and obligations of the Issuer contained in this Indenture shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the Issuer and not of any of its officers or employees or members of its governing body, past, present or future, in his or her individual capacity, and no recourse shall be had for the payment of the principal of, premium, if any, or interest on the Bonds or for any claim based thereon or hereunder against any such officer or 48 CH12 650181.4 employee of the Issuer or member of its governing body or any natural person executing the Bonds. Section 11.5 Severabilitv. If any one or more of the provisions, covenants or agreements in this Indenture on the part of the Issuer or the Trustee to be performed should be illegal, inoperative, unenforceable or contrary to law, then such provision or provisions, covenant or covenants, agreement or agreements, shall be deemed severable from the remaining provisions, covenants and agreements, and shall in no way affect the validity of the other provisions hereof or of the Bonds. Section 11.6 Notices. Any provision in this Indenture relative to the mailing of a notice or other paper to Bondholders shall be fully complied with if it is mailed, postage prepaid, to the Trustee and to each registered owner of any Bonds then Outstanding at the address of such registered owner appearing upon the Bond Register. Whenever in this Indenture the giving of j notice by mail or otherwise is required, the giving of such notice may be waived in writing by the person entitled to receive such notice and in any such case the giving or receipt of such notice shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. Any notice, request, complaint, demand, communication or other paper to the Issuer or the Trustee, shall be sufficiently given and shall be deemed given when delivered or mailed by first class mail, postage prepaid, or sent by telecopy, addressed to the appropriate Notice Address. Any such person may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent. Section 11.7 Action Required to be Taken on a Non - Business Day. In any case where any Interest Payment Date, any other date fixed for the payment of interest on or principal of the Bonds, any maturity date or any date fixed for redemption of any Bonds, shall be a day other than a Business Day, then any payment of interest or principal (and premium, if any) required to be made on such date need not be taken or made on such date but may be taken or made on the next succeeding Business Day with the same force and effect as if made or taken on the date herein otherwise provided and, in the case of any payment date, no interest shall accrue for the period from and after such date. i Section 11.8 Parties Interested Herein. Nothing in this Indenture expressed or implied is intended or shall be construed to confer upon, or to give to, any person, other than the Issuer, the Trustee, and the holders of the Bonds, any right, remedy or claim under or by reason hereof, and any covenants, stipulations, obligations, promises and agreements in this Indenture contained by and on behalf of the Issuer shall be for the sole and exclusive benefit of the Issuer, the Trustee, and the holders of the Bonds. Section 11.9 Counterparts. This Indenture may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 11.10 Applicable Provisions of Law. The laws of the State shall be applicable to the interpretation and construction of this Indenture, except that if the Principal Office of the 49 CH12 650181.4 Trustee at any time serving as such under this Indenture shall not be located in the State, then matters pertaining to the rights, duties and responsibilities of the Trustee, to the extent not specifically governed by the Act, shall be determined by the laws of the jurisdiction where the Principal Office of the Trustee is located. i i I 50 CH12 650181.4 r IN WITNESS WHEREOF, the Issuer has caused this Indenture to be executed on its behalf by its Authorized Officers and the Trustee, to evidence its acceptance of the trusts created hereunder, has caused this Indenture to be executed in its name by its duly authorized signatories, all as of the day and year first above written. UNITED CITY OF YORKVILLE, KENDALL COUNTY, ILLINOIS By: Its: (SEAL) ATTEST: ,I By: Title: THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee i i By: Its: (SEAL) ATTEST: By: Authorized Signatory 51 CH12 650181.4 EXHIBIT A FORM OF BOND I I _ i CH12 650181.4 i EXHIBIT B DESCRIPTION OF BUSINESS DISTRICT a 1 I I j I B -1 CHI2 650181.4 EXIMIT C REQUEST FOR PAYMENT I TO: The Bank of New York Trust Company, N.A., Trustee 2 North LaSalle Street, Suite 1020 Chicago, Illinois 60602 RE: $ United City of Yorkville Kendall County, Illinois Business District Revenue Bonds, Series 2007 (Storm Water/Water Improvement Project) Amount Requested: I i Total Disbursements to Date: 1. The United City of Yorkville, Kendall County, Illinois (the " Issuer "), hereby requests that United City of Yorkville, Kendall County, as Trustee (the "Trustee ") under the Indenture of Trust dated as of January 1, 2007 (the "Indenture "), by and between the Issuer and the Trustee relating to the Issuer's Business District Revenue Bonds, Series 2007 (Storm Water/Water Improvement Project), disburse on the Amount Requested above from the Improvement Fund (as such term is defined in the Indenture; all capitalized terms used herein and not otherwise defined shall have the meanings given such terms in the Indenture.) 2. In connection with the requested disbursement, the Issuer hereby certifies, represents and warrants that: (a) It has received evidence that the Developer has executed and delivered loan documents providing it with appropriate bank financing. (b) The Issuer and the Developer have each complied with all requirements under the Development Agreement relating to the disbursement request. (c) No portion of the amount being requested to be disbursed was set forth in any previous request for payment. By: Issuer Representative C -1 CH12 650181.4 t( C rl UNITED CITY OF YORKVILLE KENDALL COUNTY, ILLINOIS Business District Revenue Bonds Series 2007 BOND PURCHASE AGREEMENT ,2007 United City of Yorkville, Illinois Cannonball, LLC 800 Game Farm Road c/o The Harlem Irving Companies, Inc. Yorkville, Illinois 60560 4104 N. Harlem Avenue, Suite 220 Chicago, IL 60706 Ladies and Gentlemen: i The undersigned, William Blair & Company L.L.C. (the "Original Purchaser"), offers to enter into the following agreement (this "Contract ") with the United City of Yorkville, Kendall County, Illinois (the "City "), which upon acceptance by the City of this offer, and approval of this Contract by the Developer (as defined below) will be binding upon each of the City, the Developer and the Original Purchaser. Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in the Indenture (as hereinafter defined) and the Series 2007 Limited Offering Memorandum (as hereinafter defined). This offer is made subject to your mutual acceptance on or before 3:00 P.M., Chicago time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Original Purchaser upon notice delivered to the City and the Developer at the addresses set forth above at any time prior to the acceptance hereof by the City and the Developer. This offer is also subject to the following provisions: 1. Definitions For purposes of this Contract, the following terms have the meanings specified in this section, unless another meaning is plainly intended: (A) "Act" means the Business District Development and Redevelopment Act of the State of Illinois, as amended. (B) "Ancillary Agreements" means the Bond Ordinance, the Indenture, the Series 2007 Tax Compliance Certificate and Agreement, the Series 2007 Limited Offering Memorandum, the Development Agreement, and all other agreements and certificates executed and delivered in connection with the issuance and sale of the Series 2007 Bonds. (C) "Bond Ordinance" means Ordinance No. adopted by the corporate authorities of the City on 2007, authorizing the issuance of the Series 2007 Bonds. (D) "Business Day" means any day other than a Saturday, Sunday, legal holiday or a day on which banking institutions are required or authorized by law to be closed in the City of Chicago or the State of Illinois or a day on which the New York Stock Exchange is closed. (E) "Business District" means the Kendall Marketplace Business District created by Ordinance No. 2007 - of the City generally located at the northwest corner of the intersection of Illinois Route 34 and Cannonball Trail in the United City of Yorkville. (F) "City" means the United City of Yorkville, Kendall County, Illinois. (G) "City Information" means the descriptions and information contained in the Series 2007 Limited Offering Memorandum under the captions "INTRODUCTORY STATEMENT ", "PLAN OF FINANCE" (excluding information under the subcaptions "— Developer Loans" and "— Developer Equity"); "THE DEVELOPMENT AGREEMENT "; "THE CITY''; "THE BUSINESS DISTRICT AND BUSINESS DISTRICT SALES TAX'; "CONTINUING INFORMATION —The City"; "NO LITIGATION —The City"; "NO RATING ", "AUTHORIZATION" and "MISCELLANEOUS." (H) "Closing" means the Closing as defined in Section 2(B) herein held on the Closing Date. (I) "Closing Date" means , 2007, or such earlier or later date as the City, the Developer and the Original Purchaser shall mutually agree upon and refers to the date on which the City causes the Trustee to deliver the Series 2007 Bonds to the Original Purchaser and the Series 2007 Bonds are paid for by the Original Purchaser pursuant to this Contract. (J) "Code" means the Internal Revenue Code of 1986, as amended. (K) "Contract" means this Bond Purchase Agreement. (L) "Designating Ordinance" means Ordinance No. 2006- _ adopted by the corporate authorities of the City on , 2006, designating the United City of Yorkville Kendall Marketplace Business District. i (M) "Developer" means Cannonball LLC, an Illinois limited liability- company. I (l) "Development Agreement" means the Development Agreement dated , 2007 between the City and the Developer. (0) "Developer Information" means the descriptions and information in the Series 2007 Limited Offering Memorandum under the captions "INTRODUCTORY STATEMENT ", except the penultimate and ultimate paragraphs therein, "ESTIMATED SOURCES AND USES OF FUNDS "; "PLAN OF FINANCE "; "THE DEVELOPMENT AGREEMENT "; "SUMMARY OF THE PROJECT "; "THE DEVELOPER "; "RISK FACTORS;" "CONTINUING INFORMATION —The Developer"; and "NO LITIGATION —The Developer." (P) "Governmental Body" means any federal, state, municipal, or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign. (Q) "Indenture" means the Trust Indenture dated as of 1, 2007 between the City and the Trustee pursuant to which the Series 2007 Bonds will be issued. (R) "Notice Beneficial Holders" has the meaning given in the Indenture. (S) "Original Purchaser' ' means William Blair & Company L.L.C. (T) "Plans" means the plans and specifications pursuant to which the Project will be constructed. (U) "Pledged Business District Sales Taxes" means the moneys and funds pledged to the payment of the Series 2007 Bonds pursuant to the Bond Ordinance and the Indenture. -2- 14517482\V-4 (V) "Preliminary Series 2007 Limited Offering Memorandum" means the Preliminary Series 2007 Limited Offering Memorandum of the City (including any Appendix thereto) relating to the Series 2007 Bonds dated December 2007. (W) "Project" means the project development as defined in the Series 2007 Limited Offering Memorandum. (X) "Series 2007 Bonds" means the United City of Yorkville Business District Revenue Bonds, Series 2007. (Y) "Series 2007 Limited Offering Memorandum" means the Series 2007 Limited Offering Memorandum of the City (including each Appendix thereto) relating to the Series 2007 Bonds dated , 2007. (Z) "Series 2007 Tax Compliance Certificate and Agreement" means the Tax Compliance Certificate and Agreement dated the Closing Date, executed by the City and the Trustee in connection with the Series 2007 Bonds. (AA) "Trustee" means The Bank of New York Trust Company, N.A., as Trustee under the Indenture. I 2. Purchase and Sale of the Bonds. (A) Sale of Bonds. Upon the terms and conditions and upon the basis of the representations, warranties and agreements herein, the Original Purchaser hereby agrees to purchase from the City for a limited offering, and the City hereby agrees to sell to the Original Purchaser for such purpose, all, but not less than all, of the Series 2007 Bonds for a purchase price of $ , which reflects an underwriters' discount of $ The Series 2007 Bonds shall be due and shall bear interest as set forth on Exhibit A hereto. The Series 2007 Bonds shall be issued pursuant to the Bond Ordinance. The Series 2007 Bonds shall be dated, shall mature on such dates and in such amounts, shall bear interest at such rates, shall be offered at the initial offering prices and shall be subject to such other terms and conditions, all as described in the Series 2007 Limited Offering Memorandum, the Bond Ordinance and the Indenture. (B) Closing The purchase and sale of the Series 2007 Bonds shall take place on or before 12:00 p.m. CST on the Closing Date at the offices of Foley & Lardner LLC, Chicago, Illinois. At the Closing, as defined below, the Original Purchaser will accept the delivery of the Series 2007 Bonds duly executed by the City, together with other documents herein mentioned, and will make payment therefor as provided herein by immediately available funds payable to the order of the Trustee for the account of the City. The payment for the Series 2007 Bonds and delivery of the Series 2007 Bonds, as herein described, is herein called the "Closing." 3. City's Pre - Closing Deliveries. (A) Prior to the Closing Date, the City shall have delivered or caused to be delivered to the Original Purchaser an executed copy of the Series 2007 Limited Offering Memorandum, executed on behalf of the City by its Mayor. (B) Prior to the Closing Date, the City shall have delivered or caused to be delivered to the Original Purchaser a certified copy of the Bond Ordinance and such other ordinances of the City -3- 14517482\V-4 I which shall include the authorization of the execution, delivery and performance of this Contract, the Series 2007 Bonds and the other Ancillary Agreements to which the City is a party, among other things, together with such reasonable number of copies of each of the foregoing as the Original Purchaser shall request. (C) The City hereby authorizes any and all of the material described above in Subsections A and B of this Section 3 and the Ancillary Agreements, the information contained in the Series 2007 Limited Offering Memorandum (and the Preliminary Series 2007 Limited Offering Memorandum) and the Bond Ordinance and all other instruments, documents and agreements delivered pursuant to Section 8 of this Contract or in connection with the transactions contemplated hereby, for use in connection with the offering and sale of the Series 2007 Bonds. The City hereby ratifies, approves, and consents to the use and distribution by the Original Purchaser, prior to or after the date hereof, of the Series 2007 Limited Offering Memorandum (and the Preliminary Series 2007 Limited Offering Memorandum) in connection with the offering of the Series 2007 Bonds. The City hereby agrees to furnish such information, execute such instruments and take such other action at the expense of and in cooperation with the Original Purchaser as the Original Purchaser may deem reasonably necessary in order to qualify the Series 2007 Bonds for offering and sale under the "Blue Sky" or other securities laws and regulations of such states and other jurisdictions of the United States as the Original Purchaser may designate; provided, however, that the City shall not be required to execute a special or general consent to service of process or qualify as a foreign corporation in connection with any such qualification in any jurisdiction. 4. Representations and Warranties of the Citv. The City represents and warrants to and agrees with the Original Purchaser that: (A) Cam. The City is a non -home rule unit and a municipal corporation duly organized, validly existing and in good standing under the laws and the Constitution of the State of Illinois. The City is authorized and empowered by the Act and the Bond Ordinance and such other ordinances of the City as have been duly adopted by the City, to enter into the transactions contemplated by this Contract, each of the Bond Ordinance and Designating Ordinance, the Series 2007 Limited Offering Memorandum, and the Ancillary Agreements to which the City is or is to be a party. The adoption of the Bond Ordinance and the execution, delivery and performance by the City of this Contract, the Ancillary Agreements to which the City is or is to be a party and the issuance of the Series 2007 Bonds are within the legal right, power and authority of the City, have been duly and validly authorized by all necessary proceedings of the City, and such execution, delivery and performance by the City as of the date of this Contract and as of the Closing Date do not and will not contravene, or constitute a breach of or default (with due notice or the passage of time or both) under, any provision of law, ordinance or regulation applicable to the City, or any provision of the municipal code or other rules and procedures of the City, or any judgment, order, decree, agreement or instrument binding on it or, except as described in the Series 2007 Limited Offering Memorandum, result in the creation of any lien or other encumbrance on any asset of the City. This Contract and the Bond Ordinance each constitutes, and the Ancillary Agreements to which the City is or is to be a party, when executed and delivered by the City and any other parties thereto, will constitute valid and binding agreements of the City enforceable against the City in accordance with their respective terms, except to the extent limited by bankruptcy, reorganization, or other similar laws affecting creditors' rights generally and by the availability of equitable remedies, and the Series 2007 Bonds, when issued and delivered by the City in accordance with this Contract and the Bond Ordinance will have been duly authorized and issued and will constitute valid and binding obligations of the City enforceable against the City in accordance with their terms, except to the extent limited by bankruptcy, reorganization, or other similar laws affecting the enforcement of creditors' rights generally and by the availability of equitable remedies. When delivered to and paid for by the Original Purchaser at the Closing in accordance with the provisions of this Contract, the Series 2007 Bonds will -4- 14517482 \V-4 conform in all material respects to the description thereof contained in the Series 2007 Limited Offering Memorandum. (B) Use of Proceeds. The City will not take or omit to take any action which will in any way cause or result in the proceeds from the sale of the Series 2007 Bonds being applied other than as provided in the Bond Ordinance, the Indenture and as described in the Series 2007 Limited Offering Memorandum. Such proceeds will not be used by the City in a manner that would cause the Series 2007 Bonds to be "arbitrage bonds" within the meaning of the Code, or any successor thereto, and the applicable regulations promulgated or proposed thereunder. (C) Governmental Authorization. All authorizations, consents and approvals of any Governmental Body required in connection with the execution and delivery by the City of, or in connection with the performance by the City of its obligations under, the Series 2007 Bonds, the Bond Ordinance, this Contract, or the Ancillary Agreements to which the City is or is to be a party, have been obtained and are in full force and effect, or will be obtained prior to Closing and will be in full force and effect as of the Closing Date. To the best knowledge of the City, all authorizations, consents and approvals of any Governmental Body required in connection with the construction or operation of the Project by the City have been obtained and are in full force and effect as of the Closing Date. (D) Limited Offering Memorandum. The City Information is, and as of the date of the Closing, will be, true and correct in all material respects and such descriptions and information in the Series 2007 Limited Offering Memorandum, as of its date and as of the Closing Date will not contain an untrue, incorrect or misleading statement of a material fact; and such descriptions and information in the Series 2007 Limited Offering Memorandum do not, as of its date and as of the Closing Date will not omit to state a material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading. (E) No Liens or Encumbrances. Other than as specifically set forth in the Series 2007 Limited Offering Memorandum, there are no existing liens, claims, charges or encumbrances on or rights to any funds, revenues or interests pledged pursuant to the Bond Ordinance which are senior to, or on a parity with, the claims of the holders of the Series 2007 Bonds. Other than as specifically disclosed in the Series 2007 Limited Offering Memorandum, the City has not entered into any contract or arrangement of any kind, and there is no existing, pending, threatened, or anticipated event or circumstance that might give rise to any lien, claim, charge or encumbrance on or right to the assets, properties, funds, or interests pledged pursuant to the Bond Ordinance which would be prior to, or on a parity with, the claims of the holders of the Series 2007 Bonds. The City is lawfully entitled to receive, pledge and assign all amounts or revenues which have been pledged or assigned as security for the payment of the principal of and interest on the Series 2007 Bonds. (F) No Litigation. Except as described in the Series 2007 Limited Offering Memorandum, as of the date of this Contract and as of the Closing Date (i) there is no action, suit, proceeding or investigation, at law or in equity, before or by any court or any governmental agency or public board or body, pending against the City or, to the knowledge of the City, threatened against the City, to restrain or enjoin, or threatening or seeking to restrain or enjoin, the issuance, sale or delivery of the Series 2007 Bonds or the delivery by the City of any of the Ancillary Agreements to which the City is a party, or the collection of Pledged Business District Sales Taxes, or in any way contesting or affecting the validity of the Series 2007 Bonds, or any of the Ancillary Agreements to which the City is a party, or in any way questioning or affecting (w) the proceedings under which the Series 2007 Bonds are to be issued, (x) the validity or enforceability of any provision of the Series 2007 Bonds, the Bond Ordinance, the Designating Ordinance or this Contract, (y) the authority of the City to collect the Pledged Business District Sales Taxes, or to perform its obligations hereunder or with respect to the Series 2007 Bonds, or to consummate any of the transactions set forth in the Ancillary Agreements to which it is or is to be a -5- 14517482\V-4 party as contemplated hereby or by the Bond Ordinance, or the Series 2007 Limited Offering Memorandum, (z) the legal existence of the City, or the title of its Board of Trustees or officers to their offices, and (ii) there is no action, suit, proceeding or investigation, at law or in equity, before or by any court or any governmental agency or public board or body, pending against the City or, to the knowledge of the City, threatened against the City, involving any of the property or assets within the City which may result in any material adverse change in the Pledged Business District Sales Taxes, assets or the financial condition of the City or the proposed construction or operation of the Project by the Developer pursuant to the Development Agreement. (G) Certificates. Any certificate signed by an authorized officer of the City and delivered to the Original Purchaser and/or the Trustee shall be deemed a representation and covenant by the City to the Original Purchaser and/or the Trustee as to the statements made therein. (H) The Ordinances. Each of the Bond Ordinance and the Designating Ordinance is in full force and effect, and has not been amended, modified, revoked or repealed. 5. Representations and Warranties of the Developer. j The Developer represents and warrants to and agrees with the Original Purchaser and the City that: I (A) Organization and Power. The Developer is a duly organized and validly existing limited liability company and is in good standing under the laws of the State of Illinois, and has all powers and authority and all governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted and to enter into and perform its obligations under this Contract, and all Ancillary Agreements to which it is or is to be a party. (B) Authorization of Agreements, Etc. This Contract and the Ancillary Agreements to which the Developer is a party have each been duly authorized, executed and delivered by the Developer and constitute the legal, valid and binding agreement of the Developer enforceable against the Developer in accordance with their respective terms; provided that the enforceability of such Agreements may be limited by bankruptcy, reorganization, insolvency and similar laws affecting the enforcement of creditors' rights and remedies generally, as applied in the event of bankruptcy, reorganization or insolvency of the Developer and to equitable remedies. The Developer has duly authorized all necessary action to be taken by it for (i) approval of the Developer Information and (ii) the execution and delivery of this Contract and the Ancillary Agreements to which the Developer is or is to be a party, and any and all other agreements and documents as may be required to be executed or delivered by the Developer in order to effectuate the transactions contemplated herein and therein. (C) Development Agreement. Any and all of the conditions precedent to the obligations of the Developer arising under the Development Agreement have been satisfied or waived by the City. (D) No Material Change. Other than as disclosed in the Series 2007 Limited Offering Memorandum or except as previously disclosed to the Original Purchaser, (i) the Developer has not incurred any material liabilities or entered into any material transactions other than in the ordinary course of business and (ii) there has been no material adverse change in the business, financial position, prospects or results of operations of the Developer, which would affect the Developer's ability to perform its obligations pursuant to this Contract or the Ancillary Agreements, to the extent to which the Developer is or is to be a party to such agreement. -6- 14517482 \V- i (E) Noncontravention. The execution, delivery and performance by the Developer of its obligations under this Contract and the Ancillary Agreements to which the Developer is a party do not, and to the Developer's knowledge, will not contravene, or constitute a default under, any provision of applicable law or regulation or organizational documents of the Developer or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Developer, and will not result in the creation of any lien or other encumbrance upon any asset of the Developer except as set forth in the Series 2007 Limited Offering Memorandum. (F) Governmental or Corporate Consents. No consent or approval is required to be obtained from, and no action need be taken by, or document filed with, any Governmental Body or corporate entity in connection with the execution or delivery by the Developer of this Contract or any Ancillary Agreement to which the Developer is or is to be a party, or, if any such action is required, the same has been duly taken, is in full force and effect and constitutes valid and sufficient consent or approval therefor, except for those which are customarily obtained during construction of the Project. The Developer has no reason to believe any such consent or approval will not be obtained in due course. (G) No Litieation. Except as described in the Series 2007 Limited Offering Memorandum, there is no action, suit, proceeding or investigation, at law or in equity, before or by any court or any governmental agency or public board or body, pending against the Developer, in which the Developer is a party or, to the knowledge of the Developer overtly threatened in writing against the Developer, (i) contesting or in any way relating to (a) the construction and development of the Project, (b) the generation of Revenues or the transactions contemplated by the issuance of the Series 2007 Bonds or as otherwise described in the Series 2007 Limited Offering Memorandum or (ii) which in any way contests the existence or power of the Developer or the validity or enforceability of the Series 2007 Bonds, the Ancillary Agreements, this Contract or the Series 2007 Limited Offering Memorandum or which if adversely determined could have a material adverse effect on the Developer. i i R Limited Offerine Memorandum. The Developer Information contained in the Series 2007 Limited Offering Memorandum is true and correct in all material respects as of the date hereof and as of the date hereof does not contain any untrue statements of a material fact or omit to state a material fact necessary to be stated therein in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (1) Use of Proceeds. The Developer will not take or omit to take any action which will in any way cause or result in the proceeds of the sale of the Series 2007 Bonds being applied in a manner other than as provided in the Bond Ordinance and the Indenture and as described in the Series 2007 Limited Offering Memorandum. Such proceeds will not be used by the Developer in a manner that would cause the Series 2007 Bonds to be "arbitrage bonds" within the meaning of the Code, or any successor thereto, and the applicable regulations promulgated or proposed thereunder. No Default. No default or event of default on the part of the Developer has occurred and is continuing, and no event has occurred and is continuing which with the lapse of time or the giving of notice, or both, would constitute a default or an event of default on the part of the Developer under this Contract, the Ancillary Agreements to which the Developer is a party, or any other material agreement or material instrument to which the Developer is a party or by which the Developer is or may be bound. (K) Approvals. The Developer has received and is in good standing with respect to any applicable certificates, licenses, inspections, franchises, consents, immunities, permits, authorizations and approvals, governmental or otherwise, necessary to conduct and to continue to conduct its business as heretofore conducted by it and to own or lease and operate its properties as now owned or leased by it. Except as set forth in the Limited Offering Memorandum, the Developer has obtained any applicable -7- 14517482\V-4 I I I i certificates, licenses, inspections, franchises, consents, immunities, permits, authorizations and approvals, governmental or otherwise, necessary to construct the Project, except for final platting and engineering to be completed as part of the Project, and those the nature of which cannot be given until construction of the Improvements are sufficiently underway. (L) Certificates. Any certificate signed by an authorized representative of the Developer and delivered to the City or the Original Purchaser shall be deemed a representation and warranty by the Developer to the City and the Original Purchaser as to the statements made by Developer therein. (M) Environmental Representation. To the best of the Developer's knowledge, no toxic or hazardous substances, including without limitation, asbestos, and the group of organic compounds known as polychlorinated biphenyls, have been generated, treated, stored or disposed of, or otherwise deposited in or located on the site which includes the Business District and no activity has been undertaken at the site which includes the Business District which could: (i) cause the Project or any part thereof to become a hazardous waste treatment, storage or disposal facility within the meaning of, or otherwise bring such property within the ambit of, the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq. ( "RCRA" ), or any other similar state law or local ordinance; (ii) cause a release or threatened release of hazardous materials, wastes or substances from the site or any part thereof within the meaning of, or otherwise bring such property or any part thereof within the ambit of, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C., Sections 9601 -9657 ( "CERCLA "), or any similar state law or ordinance or any other environmental law; i (iii) cause the discharge of pollutants or effluents into any water source or system, or the discharge into the air of any emissions, which would require a permit under the Federal Water Pollution Control Act, 33 U.S.C., Section 1251 et seq., or the Clean Air Act, 41 U.S.C., Section 7401 et seq., or any similar state law or local ordinance; or (iv) support a claim or cause of action under RCRA, CERCLA or any other federal, state or local environmental statutes, regulations, ordinances or other environmental regulatory requirements. (1) No Challenizes. The Developer agrees that it will not bring any suit, action or proceeding which challenges the establishment of the Business District, the levy, extension and collection of the Business District Sales Taxes, the validity of the Series 2007 Bonds or the proceedings relating to the Series 2007 Bonds. (0) Development Status. To Developer's knowledge, the legal description and boundaries of the Business District have not changed from those reflected in the Designation Ordinance. The Developer has obtained approval from the City for, and intends to develop or cause to be developed in the Business District a shopping center with approximately 820,000 square feet of gross building area. (P) Completion of Construction. The Developer have sufficient financial resources together with the proceeds of the Series 2007 Bonds, including cash, marketable securities, outside equity or bank loans to complete the Project, as proposed in the Series 2007 Limited Offering Memorandum. -8- 14517482 \V-4 i (Q) Form of Bond and Indenture. The Developer approves the form and terms of the Bonds and the Indenture and agrees that the issuance of such Bonds satisfies the terms and conditions of the Development Agreement relating to the City's obligation to issue the Bonds. 6. Representations and Warranties and Agreements of the Original Purchaser. (A) Limited Offering. The Original Purchaser agrees to make a limited offering of the Series 2007 Bonds to a limited number of institutional investors at a price or prices (or yield or yields) not in excess of the offering price or prices (or not lower than the yield or yields) set forth on the cover page of the Series 2007 Limited Offering Memorandum. (B) Limited Offering Memorandum. The descriptions and information contained in the Series 2007 Limited Offering Memorandum under the captions "UNDERWRITING" and the first two grammatical sentences under the caption "LIMITED OFFERING" are, and as of the date of the Closing will be, true and correct in all material respects and such descriptions and information in the Series 2007 Limited Offering Memorandum, as of its date and as of the Closing Date will not contain an untrue, incorrect or misleading statement of a material fact; and such descriptions and information in the Series 2007 Limited Offering Memorandum do not, as of its date and as of the Closing Date will not omit to state a material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading. 7. Termination of the Purchase Contract. The Original Purchaser shall have the right to cancel its obligation to purchase the Series 2007 Bonds, if, between the date hereof and the date of Closing, (i) legislation shall be enacted, or actively considered for enactment, by the Congress or recommended by the President of the United States to the Congress for passage, or favorably reported for passage to either House of the Congress by any committee of such House to which such legislation has been referred for consideration, a decision by a court of the United States or the United States Tax Court shall be rendered, or a ruling, regulation or official statement by or on behalf of the Treasury Department of the United States, the Internal Revenue Service or other agency or department of the United States shall be made or proposed to be made which has the purpose or effect, directly or indirectly, of imposing federal income taxes upon interest on the Series 2007 Bonds; (ii) any other action or event shall have transpired which has the purpose or effect, directly or indirectly, of materially adversely affecting the federal income tax consequences of any of the transactions contemplated in connection herewith or contemplated by the Series 2007 Limited Offering Memorandum, or, in the reasonable opinion of the Original Purchaser, such action or event pertaining to the federal income tax consequences referenced above materially adversely affects the market for the Series 2007 Bonds or the sale, at the contemplated offering price or prices (or yield or yields), by the Original Purchaser of the Series 2007 Bonds; (iii) legislation shall be enacted, or actively considered for enactment by the Congress, with an effective date on or prior to the date of Closing, or a decision by a court of the United States shall be rendered, or a ruling or regulation by the Securities and Exchange Commission or other governmental agency having jurisdiction over the subject matter shall be made, the effect of which is that (A) the Series 2007 Bonds are not exempt from the registration, qualification or other requirements of the Securities Act of 1933, as amended and as then in effect, or the Securities Exchange Act of 1934, as amended and as then in effect, or (B) the Indenture is not exempt from the registration, qualification or other requirements of the Trust Indenture Act of 1939, as amended and as then in effect; (iv) a stop order, ruling or regulation by the Securities and Exchange Commission shall be l issued or made, the effect of which is that the issuance, offering or sale of the Series 2007 Bonds, as contemplated herein and in the Series 2007 Limited Offering Memorandum, is in violation of any provision of the Securities Act of 1933, as amended and as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect; (v) there shall occur any event which in the reasonable judgment of the Original Purchaser either -9- 14517482W -4 I I (A) makes untrue, incorrect or misleading in any material respect any statement or information contained in the Series 2007 Limited Offering Memorandum or (B) is not reflected in the Series 2007 Limited Offering Memorandum but should be reflected therein in order to make the statements and information contained therein not misleading in any material respect and, in either such event, the City or the Developer refuse to permit the Series 2007 Limited Offering Memorandum to be supplemented to correct or supply such statement or information, or the effect of the Series 2007 Limited Offering Memorandum as so corrected or supplemented is such as, in the reasonable judgment of the Original Purchaser, would materially adversely affect the market for the Series 2007 Bonds or the sale, at the contemplated offering price or prices (or yield or yields), by the Original Purchaser of the Series 2007 Bonds; (vi) there shall occur any outbreak of hostilities or any regional, national or international calamity or crisis or a financial crisis and the effect is such as, in the reasonable judgment of the Original Purchaser, would materially adversely affect the market for or the marketability of the Series 2007 Bonds or obligations of the general character of the Series 2007 Bonds; (vii) a general suspension of trading on the New York Stock Exchange is in force; (viii) a general banking moratorium is declared by federal or state authorities; (ix) there occurs any material adverse change in the affairs, operations or financial conditions of the City, except as set forth or contemplated in the Series 2007 Limited Offering Memorandum or in the affairs, operations or financial condition of the Developer; (x) the Series 2007 Limited Offering Memorandum is not executed, approved and delivered in accordance with Section 3 above; (xi) in the reasonable judgment of the Original Purchaser, the market price of the Series 2007 Bonds, or the market price generally of obligations of the general character of the Series 2007 Bonds, might be adversely affected because: (A) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange, or (B) the New York Stock Exchange or other national securities exchange, or any governmental authority, shall impose, as to the Series 2007 Bonds or similar obligations, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of, underwriters; (xii) a war involving the United States of America shall have been declared, or any conflict involving the armed forces of any country shall have escalated, or any other international, national or regional emergency relating to or affecting the effective operation of government or the financial community shall have occurred, which, in the reasonable judgment of the Original Purchaser, materially adversely affects the market for the Series 2007 Bonds or of obligations of the general character of the Series 2007 Bonds; (xiii) any litigation shall be instituted, pending or threatened to restrain or enjoin the issuance, sale or delivery of the Series 2007 Bonds or in any way protesting or affecting any authority for or the validity of the Series 2007 Bonds, the Bond Ordinance, the existence or powers of the City, or any event described or contemplated by the Series 2007 Limited Offering Memorandum; (xiv) there shall have occurred a default with respect to the debt obligations of, or the institution of proceedings under any federal bankruptcy laws by or against, any state of the United States or any city or political subdivision of any state, the effect of which, in the reasonable judgment of the Original Purchaser, would materially adversely affect the ability of the Original Purchaser to market the Bonds. 8. Conditions of Closing. The Original Purchaser' obligation to purchase the Series 2007 Bonds under this Contract is subject to the performance by the City and the Developer of their respective obligations hereunder at and prior to the Closing Date, to the accuracy in all material respects of the representations and warranties of the City and the Developer contained herein as of the Closing Date, and to the following conditions, including the delivery of such documents as are enumerated herein in form and substance satisfactory to the Original Purchaser and its counsel as of the Closing Date: (A) Ordinances in Effect and Citv in Compliance Therewith. At the time of the Closing (i) each of the Bond Ordinance and the Designating Ordinance shall be in full force and effect, and shall not have been amended, modified or supplemented since the date hereof, except as may have -10- 14517482 \V-4 been agreed to in writing by the Original Purchaser, and the City shall have duly adopted and there shall be in full force and effect such additional ordinances or agreements .as shall be, in the opinion of Bond Counsel, necessary in connection with the transactions contemplated hereby and (ii) the City shall perform or have performed all of its obligations required under or specified in this Contract with regard to the Series 2007 Bonds or the Bond Ordinance to be performed at, simultaneously with or prior to the Closing. (B) Opinion of Bond Counsel. The Original Purchaser shall have received an unqualified approving legal opinion dated the Closing Date as to the Series 2007 Bonds, addressed to the Original Purchaser, the Developer, the City and the Trustee, from Foley & Lardner LLC, Bond Counsel, satisfactory in form and substance to the Original Purchaser. (C) Opinion of Original Purchaser's Counsel. The Original Purchaser shall have received a favorable opinion dated the Closing Date, addressed to the Original Purchaser, from Sonnenschein Nath & Rosenthal LLP, satisfactory in form and substance to the Original Purchaser. I (D) Opinion of Counsel to the City. The Original Purchaser shall have received a favorable opinion dated the Closing Date, addressed to the Original Purchaser, Bond Counsel, the Developer and the Trustee, from John Wyeth, Esq., counsel to the City, satisfactory in form and substance to the Original Purchaser. (E) Opinions of Counsel to the Developer. The Original Purchaser shall have received favorable opinions dated the Closing Date, addressed to the Original Purchaser, the City, the Trustee and Bond Counsel from the [Developer's general counsel and] from Polsky & Associates Ltd., special counsel to the Developer, satisfactory in form and substance to the Original Purchaser. I (F) Performance. No Default. Each of the City and the Developer shall have performed and complied with all agreements and conditions herein required to be performed or complied with by each of them prior to or on the Closing Date, and at the time of the Closing no event of default or default shall have occurred and be continuing with respect to the Ancillary Agreements or the Series 2007 Bonds. (G) Ancillary Agreements. At the Closing Date, (i) all of the Ancillary Agreements shall be in full force and effect, shall have been duly executed and copies delivered to the Original Purchaser by, and shall constitute valid and binding agreements of, the parties thereto, shall not have been amended, modified or supplemented except as may have been agreed to in writing by the Original Purchaser and there shall be no defaults or events of default thereunder and (ii) the proceeds of the sale of the Series 2007 Bonds shall be applied or deposited with the Trustee for application as described in the Bond Ordinance and the Series 2007 Limited Offering Memorandum. (I) Closing Certificate of Mavor of the Citv. The City shall have delivered to the Original Purchaser a certificate dated the Closing Date, addressed to the Original Purchaser and the Trustee signed by the Mayor of the City in form and substance reasonably satisfactory to the Original Purchaser. (1) Officer's Certificate of the Developer. The Developer shall have delivered to the Original Purchaser a certificate dated the Closing Date, addressed to the Original Purchaser signed by an authorized officer of the Developer and of the manager of the Developer in form and substance satisfactory to the Original Purchaser. -11- 14517482\V-4 (J) The Series 2007 Bonds. The Series 2007 Bonds shall have been duly authorized, executed, authenticated, delivered, and the proceeds from the sale thereof applied, in accordance with the provisions of the Bond Ordinance. (K) Trustee's Certificate. The Original Purchaser shall have received a certificate dated the Closing Date of an authorized officer of the Trustee, addressed to the Original Purchaser in form_ and substance satisfactory to the Original Purchaser. (L) Form 8038 -G. The Original Purchaser shall have received a copy of the completed Form 8038 -G of the Internal Revenue Service executed by the City. (M) Officers' Certificates. The Original Purchaser shall have received any and all certificates required to be furnished by the provisions of any Ancillary Agreement to be obtained or furnished by the City and the Developer at or prior to Closing. (l) Specimen Bonds. The Original Purchaser shall have received specimen Series 2007 Bonds. (0) Certified Conies of Ordinances. The Original Purchaser shall have received certified copies of the Bond Ordinance, the Designating Ordinance. The Bond Ordinance shall include authorization for execution and delivery of this Contract. (P) Financing. The Developer shall have delivered evidence, upon the request of and satisfactory to the Original Purchaser, which may be in the form of financial statements, equity commitments, or loan commitments, demonstrating that the Developer has cash, marketable securities, outside equity or bank financing to complete the Project. (Q) SSA Bonds. All of the conditions precedent to the closing of the sale of the SSA Bonds by the Original Purchase pursuant to Section 8 of that certain Bond Purchase Agreement dated the date hereof shall have bee satisfied. (R) Additional Opinions, Certificates, etc. The Original Purchaser shall have received such additional legal opinions, certificates, proceedings, instruments and other documents as the Original Purchaser, the City or their respective counsel may deem reasonably necessary or desirable. All of the opinions, letters, certificates, instruments and other documents mentioned in this Contract shall be deemed to be in compliance with the provisions of this Contract only if they are satisfactory in form and substance to the Original Purchaser. If there shall be a failure to satisfy the conditions of the Original Purchaser' obligations contained in this Contract or if the Original Purchaser's obligations to purchase the Series 2007 Bonds shall be terminated for any reason permitted by this Contract, this Contract shall terminate, and the Original Purchaser, the City and the Developer shall not have any further obligations hereunder. 9. Chances Affecting the Limited Offernm Memorandum.. At any time prior to the Closing, the City and the Developer agree to supplement or amend the Series 2007 Limited Offering Memorandum whenever requested by the Original Purchaser when, in the reasonable judgment of the Original Purchaser and the City, such supplement or amendment is required. No amendment or supplement to the Series 2007 Limited Offering Memorandum shall be made without the approval of the Original Purchaser. After the Closing and so long as the Original Purchaser or any participating dealer shall be offering Series 2007 Bonds, but not later than 90 days after the date of this -12- 14517482\V-4 Contract if any event shall occur as a result of which it is necessary to amend or supplement the Series 2007 Limited Offering Memorandum in order to make the statements therein, in light of the circumstances under which they are made, not misleading, the City will so advise the Original Purchaser. In any such case, the City and the Developer shall cooperate in the preparation, execution and delivery of either amendments to the Series 2007 Limited Offering Memorandum or supplemental information so that the statements in the Series 2007 Limited Offering Memorandum, as so amended or supplemented will not, in light of the circumstances under which such statements were made, be misleading. The cost of providing such amendments or supplements shall be paid by the City. 10. Payment of Expenses The Original Purchaser shall be under no obligation to pay any expenses incident to the issuance of the Series 2007 Bonds. All fees, costs and expenses associated with the issuance of the Series 2007 Bonds, including without limitation, the fees and disbursements of legal counsel, professional fees, printing and the costs associated with the CUS1P number for the Series 2007 Bonds shall be disbursed and paid by the Trustee from the proceeds of the Series 2007 Bonds. 11. Notices Except as otherwise provided in this Contract, whenever notice is required to be given pursuant to the provisions of this Contract, such notice shall be in writing and shall be mailed by first class mail postage prepaid. 12. Law Governing. j This Contract shall be construed in accordance with and governed by the laws of the State of Illinois. i I 13. Headings. The headings of the paragraphs and subparagraphs of this Contract are inserted for convenience only and shall not be deemed to constitute a part of this Contract. i 14. Countemarts. I This Contract may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 15. Parties and Interests. This Contract is made solely for the benefit of the City, the Original Purchaser and the Developer, including the successors and assigns of the Original Purchaser, and no other person, partnership, association or corporation shall acquire or have any rights hereunder or by virtue hereof. 16. Indemnification. (a) The City agrees to indemnify and hold harmless the Original Purchaser, each director, trustee, member, officer, partner, employee or agent of the Original Purchaser and each person, if any, who has the power, directly or indirectly, to direct or cause the direction of the management and policies of the Original Purchaser, pursuant to the Original Purchaser's regulations or Bylaws, or who controls the Original Purchaser within the meaning of Section 20 of the Exchange Act or Section 15 of the Securities Act, from and against any and all losses, claims, damages, liabilities or expenses whatsoever caused by -13- 14517482 \V-4 I any untrue or misleading, or allegedly untrue or misleading, statement of a material fact contained in that portion of the Series 2007 Limited Offering Memorandum constituting the City Information, or in any amendment or supplement thereto with regard to that portion of the Series 2007 Limited Offering Memorandum, or caused by any omission or alleged omission to state in that portion of the Series 2007 Limited Offering Memorandum constituting the City Information a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; the City shall not be liable under this paragraph if the person asserting any such loss, claim, damage or liability purchased Series 2007 Bonds from the Original Purchaser, if delivery to such person of the Series 2007 Limited Offering Memorandum, or any amendment or supplement thereto, would have been a valid defense to the action from which such loss, claim, damage or liability arose and if the Series 2007 Limited Offering Memorandum, amendment of or supplement was not delivered to such person by or on behalf of the Original Purchaser. In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to the preceding paragraph, such person (the "indemnified party ") shall promptly notify the City in writing, and ,the City shall promptly assume the defense thereof, including the employment of counsel chosen by'the City and approved by the Original Purchaser and shall pay the reasonable fees and disbursements of such counsel related to such proceeding. If any of the indemnified parties is advised by counsel that there may be legal defenses available to such indemnified party which are adverse to or in conflict with those available to the City or another indemnified party, the City shall not have the right to assume the defense of such indemnified party, but the City shall be responsible for the reasonable fees and expenses of counsel retained by such indemnified party in assuming its own defense, and provided also that if the City shall have failed to assume the defense of such action or to retain counsel satisfactory to the Original Purchaser within a reasonable time after notice of the commencement of such action, the reasonable fees and expenses of counsel retained by the indemnified parties shall be paid by the City. Notwithstanding, and in addition to, any of the foregoing, any one or more of the indemnified parties shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless the City and the indemnified party shall have mutually agreed to the retention of such counsel. Such firm shall be designated in writing by the indemnified party. The City shall not be liable for any settlement of any proceeding effected without its written consent, but, if settled with such written consent of the City or if there shall be a final judgment for the plaintiff, the City agrees to indemnify the indemnified party from and against any loss, damage, cost, expense or liability by reason of such settlement or judgment. (b) The Developer agrees to indemnify, defend and hold harmless (a) the Original Purchaser, each director, trustee, member, officer, agent or employee and each person, if any, who has the power, directly or indirectly, to direct or cause the direction of the management and policies of the Original Purchaser, pursuant to the Original Purchaser's regulations or Bylaws, or who controls the Original Purchaser within the meaning of Section 20 of the Exchange Act or Section 15 of the Securities Act, by contract or otherwise, and (b) the City, each director, trustee, member, officer, agent or employee and each person, if any, who has the power, directly or indirectly, to direct or cause the direction of the management and policies of the City (collectively called the "Section 16(b) Indemnified Parties "), from and against any and all losses, claims, damages, liabilities or expenses to the extent caused by or arising out of any untrue statement or misleading statement or alleged untrue statement or alleged misleading statement of a material fact (unless such allegation is (i) made by the Original Purchaser or the City, as the case may be, and (ii) such allegation is proven or otherwise determined to be false) contained in any of the Developer Information, or caused by any omission or alleged omission to state in the Developer Information a material fact required to be stated in the Developer Information or necessary to make the statements in the Developer Information, in the light of the circumstances under which they were made, not misleading. -14- 14517452 \V4 In case any claim shall be made or any action shall be brought against one or more of the Section 16(b) Indemnified Parties desiring to seek indemnification pursuant to this Section 16(b), the Section 16(b) Indemnified Parties seeking indemnity shall promptly notify the Developer in writing, and the Developer shall promptly assume the defense thereof, including the employment of counsel chosen by the Developer and approved by the Original Purchaser and the City, which approval will not be unreasonably withheld, and the payment of all expenses and disbursements of such counsel related to such defense. If any of the Section 16(b) Indemnified Parties is advised by counsel that there may be legal defenses available to it which are adverse to or in conflict with those available to the Developer or any other Section 16(b) Indemnified Party, or that the defense of such Section 16(b) Indemnified Party should be handled by separate counsel, the Developer shall not have the right to assume the defense of such Section 16(b) Indemnified Party, but shall be responsible for the reasonable fees and expenses of counsel retained by such Section 16(b) Indemnified Party in assuming its own defense, and provided also that if the Developer shall have failed to assume the defense of such action or to retain counsel satisfactory to the Original Purchaser and the City within a reasonable time after notice of the commencement of such action, the fees and expenses of counsel retained by the Section 16(b) Indemnified Parties shall be paid by the Developer. Notwithstanding, and in addition to, any of the foregoing, and subject to the approval of the Developer, which approval will not be unreasonably withheld, any one or more of the Section 16(b) Indemnified Parties shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Section 16(b) Indemnified Party or Parties unless the employment of such counsel has been specifically authorized, in writing, by the Developer, or unless such retention is specifically authorized herein. The Developer shall not be liable for any settlement of any proceeding effected without its written consent, but, if settled with such written consent or if there shall be a final judgment for the plaintiff, the Developer agree to indemnify the Section 16(b) Indemnified Parties from and against any loss, damage, cost, expense or liability by reason of such settlement or judgment. (c) In order to provide for just and equitable contribution in circumstances in which the I indemnification provided for in this Section 16 is due in accordance with its terms but is for any reason held by a court to be unavailable to the Original Purchaser, the City or the Developer or unenforceable on grounds of policy or otherwise, the Developer and the Original Purchaser shall contribute to the aggregate losses, claims, damages, fines and liabilities (including any investigation, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claims asserted, but after deducting any contribution received by the Developer or the Original Purchaser from persons other than the Developer or the Original Purchaser who may be liable for contribution, such parties hereby agreeing to seek contribution from such persons) to which the Developer and the Original Purchaser may be subject in such proportion so that the Original Purchaser is responsible for that portion represented by the percentage that the underwriting fee bears to the offering price appearing on the cover page of the Series 2007 Limited Offering Memorandum, and the Developer is responsible for the balance; provided, however, in no case shall the Original Purchaser be responsible for any amount in excess of the amount of said underwriting fee received to such date and provided, further, that no person found guilty of fraudulent misrepresentation, error or omission shall be entitled to contribution (or costs of defense) from any person who was not found guilty of fraudulent misrepresentation, error or omission. For purposes of this Subsection 16(c), each partner, member, associate and employee of the Original Purchaser or the Developer and each person who controls the Original Purchaser or the Developer shall have the same rights to contribution as the Original Purchaser or the Developer subject to the provisions in the preceding sentence relating to fraudulent misrepresentations. Any party entitled to contribution will promptly after receipt of notice of commencement of any action, threatened action, suit or proceeding against such party or parties under this Subsection 16(c), notify such party or parties from whom contribution may be sought, but the omission to so notify such party or parties shall not relieve the party or parties from whom contribution may be sought from any other obligation it or they may have otherwise under this Subsection 16(c). Any -15- 14517482\V-4 notice given pursuant to Subsections 16(a) or (b) hereof shall be deemed to include notice under this Subsection 16(c). 17. Further Reports. I I (a) The City agrees to provide the financial reports and information described in the Indenture and the Development Agreement which it has covenanted to provide to the Trustee, to the Original Purchaser and any Bondholder upon written request. (b) During construction of the Project, the Developer agrees to provide on a quarterly basis, an updated report showing all tenants within the portions of the Business District owned by the Developer or an affiliate of the Developer that have signed leases. Such report shall include each tenant's name, the amount of square feet under lease, and the lease expiration date. In addition, such report shall provide the aggregate amount of square footage for which there are signed letters of intent and leases that have been sent out to tenants for execution, as well as a notification of any sale of any property within the Business District that is owned by the Developer or their affiliates. (c) The Developer agrees that for so long as the Series 2007 Bonds are outstanding, it will include and incorporate into any agreement of conveyance or lease for any portion of the Business District, the obligation of any purchaser or lessee thereunder to complete, execute and deliver to the City the Release Form (attached as Exhibit G to the Development Agreement). 18. Amendment or Assignment. This Contract may not be amended except through the written consent of all of the parties hereto and is not assignable. 19. Survival of Representations. Warranties, Agreements and Obligations. Each respective representation, warranty and agreement of the City, the Developer and the Original Purchaser shall remain operative and in full force and effect, regardless of any investigations made by or on behalf of the Original Purchaser, the Developer, and the City and shall survive the Closing. This Section 19, the obligations of the City under Sections 9, 10, 16 and 17 hereof, the obligations of the Original Purchaser under Section 16 hereof and the obligations of the Developer under Sections 16 and 17 hereof shall survive any termination of this Contract pursuant to its terms. 20. Severabilitv. If any provision of this Contract shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions, or in all cases because it conflicts with any other provision or provisions or any constitution or statute or rule of public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatever. The invalidity of any one or more phrases, sentences, clauses or sections in this Contract shall not affect the validity of the remaining portions of this Contract, or any part hereof. [SIGNATURES FOLLOW] -16- 14517482\V-4 Very truly Yours, WILLIAM BLAIR & COMPANY By: Its: Accepted and agreed to by the undersigned as of the date first above written. CANNONBALL, LLC an Illinois limited liability company By: THE HARLEM IRVING COMPANIES B: Y Its: UNTIED CITY OF YORKVILLE i By: Its: Mayor i I �I -17- 14517482 \V11 i Exhibit A MATURITY SCHEDULE i I 1 Maturity Principal Amount Interest Rate i 1 { i A -1 DEVELOPMENT AGREEMENT RON -t KENDALL MARKETPLACE 4 -'' Between the - UNITED CITY OF YORKVILLE, Ii .. NOIS and CANNONBALL° -- LC Dated as of;_' - I 2006 STORM WATER /WATE . -I PROVE NT PROJECT TABLE OF CONTENTS ARTICLE I - DEFINITIONS ............................................. ............................... 2 ARTICLE II - DESIGNATION OF DEVELOPER ............... ............................... 5 ARTICLE III - CONSTRUCTION OF DEVELOPMENT PROJECT .................... 5 3.1 Construction Schedule ............................................... ............................... 5 3.2 Developer to Construct the Project ....................... .. . ......... ........... 6 3.3 Storm Water Water Improvement Project ;: ....................... 6 3.4 Construction Contracts; Insurance .......................... n M. ................................ 6 3.5 Governmental Approvals .. ............................... _ - . �......................... 6 3.6 Concept Site Plan .............. ............................... ...., ..................... 6 3.7 Construction Plans ..... ............................... - .......... .................. 6 -: 3.8 Certificate of Substantial Completion ...... .: ........... ............ 7 3.9 Fees .............. ............................... ..... .................. z W �.......... 7 3.10 Quarterly /Annual Reporting........ ..... ........................... 7 ARTICLE IV- PAYMENT OF DEVELOPER OSTSa:. ............................... 8 4.1 City's Obligation to Pay Developer .............. .... ............................... 8 4.2 Reimbursements Limited to Storm Water /Wa _r. mprovement Costs; Developer's Right to Substitue .. .. .,..: ............................... 8 .......... .... ARTICLE V - BUSINESS DISTRIC REY NUE BONI2S� .. ............................... 8 5.1 Bond Ordinances: Pledged Taxe T ...... .. ...... ............................... 8 5.2 Application of Reven .mss ......... . . ......... ....... ............................... 9 5.3 Issuance of Bonds . .... : _ ........ ............1; ............ ............................... 9 I 5.4 Conditions of Is_ ce ... .......... ....................... ............................... 9 5.5 City's Bond Eses ...... ............ ................... ............................... 9 i 5.6 Disbursements l evel,o = _ ....................... ............................... 9 erti 1 5.6.1 Initial C :........................... ............................... 9 5.6.2 S . se ,. mt Ce Cates of Storm Water /Water Improvement Costs 10 `. _ 5.7 Matuty o _ ........ ............................... 10 5.8 Co ration in Issuani of Bonds ....................... ............................... 10 ART--, CLE VI - COLLECTION #AND USE OF REVENUES . ............................... 10 6.1 Cr `" s': - n of Fund-N, ................................................ ............................... 10 6.2 Coope •on in De . mining Revenues ...................... ............................... 11 6.3 Rel i cif Sale .................................................. ............................... 11 6.4 Confidenti 'e nf_.. ation .......................................... ............................... 11 6.5 Obligation t .= eport Pledged Revenues ..................... ............................... 12 ARTICLE VII - 'GENERAL PROVISIONS ........................ ............................... 12 7.1 Successors and Assigns ........................................... ............................... 12 7 .1.1 Binding Affect .................................................. ............................... 12 7.1.2 Assignment or Sale .......................................... ............................... 12 7.2 Remedies ................................................................. ............................... 13 7.3 Force Maj eure .......................................................... ............................... 13 7.4 Notices ................................................................... ............................... 14 7.5 Insurance; Damage or Destruction of Project ............ ............................... 15 7.6 Inspection 16 7.7 Choice of Law ........................................................... ............................... 17 7.8 Entire Agreement; Amendment ................................. ............................... 17 7.9 Counterparts ............................................................ ............................... 17 7.10 Severability ............................................................ ............................... 17 7.11 Representatives Not Personally Liable ..................... ............................... 17 7.12 Indemnification ...................................................... ............................... 17 7.12.1 Invalidity ................................ ............................... ................. 17 7.12.2 Damage or Injury .............. ............................... t ............. 17 7.12.3 Personal Liability .............................................. 18 7.13 Survival ............................... ............................... k... 7i = ................. 18 7.14 Legal Opinion ....................... ............................... .... ................. ..... 7.15 Term .......................... .:............................. ....... .......... 18 .._ 7.16 Conflict ............................ ............................... .. - ............ � _ ......... 18 ARTICLE VIII - REPRESENTATIONS OF THE�fkkTIES . � ... 8.1 Representations of the City .................. ..... ............... ...... 18 8.2 Representations of the Developer ... ........ :..... :.. - ....... 18 I i 2 S: \Client Data \Harlem Irving Development \06009 \Documents \06 -11 -29 Development Agreement Project Business District V3.doc November 29, 2006 EXHIBITS EXHIBIT A Legal Description of the Property EXHIBIT B Legal Description of the Business District EXHIBIT C Storm Water /Water Improvement Costs to be paid with Business District Bond Proceeds EXHIBIT D Form of Certificate of Substantial Completion EXHIBIT E Form of Certificate of Storm Water /Water Imi ©vement Costs EXHIBIT F Concept Site Plan EXHIBIT G Form of Power of Attorney j DEVELOPMENT AGREEMENT THIS DEVELOPMENT AGREEMENT is made and entered into as of this _ day of . 2006, by and between the UNITED CITY OF YORKVILLE, Kendall County, Illinois, an Illinois Municipal Corporation duly organized and existing as a non -home rule unit of government under Section 7, Article VII of the 1970 Constitution of the State of Illinois, and CANNONBALL LLC, an Illinois limited liability company. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in Article I of this Agreement. RECITALS - A. As a non -home rule unit of government dul, th 9 wed under Section 7, Article VII of the 1970 Constitution of the State of Illinois, the Ghas the power to regulate for the protection of the public health, sa orals 'mod welfare of its inhabitants, and pursuant thereto, has the power c age privade- velopment in Zio order to enhance the local tax base, create employment _opportunities axf� cAnter into contractual agreements with private parties irk- er to achieve these goal: d ' B. As a non -home rule unit of government the Constitution of the State of Illinois, and under the provisions of the Bus 'e�ss District Development and Redevelopment Act, 65 ILCS 5/ 11 -7,� seq. the Ci� s the authority to cause the creation of a business district, tNorro evyf retailers arz ation tax and service occupation tax within the district, to - -" A is ue- Xonds an d pledge a portion of its other revenues to facilitate the fi anck : 10 : ' usiness district project, all in accordance with the distric - C. The Develo " - -r propose . to cons ct an approximately 820,000 square foot mix of retail stores : " stauranand office' _ ice and an on -site water system, fire protection system a�n F a k er irk : ay.� ents .. --the intersection of Illinois Route 34 and Cannonball Trail in the .0 s�es — _ the Concept Site Plan. D. odd- nduce : Developer to undertake the Project and the Storm J Water / ester Improv .- t Probe -�i ` e City desires to cause the creation of a business distr'e ursuant to ` usines' istrict Development and Redevelopment Act and, pu ereto, to imse a certain sales tax within the Business District, to issue the Busr " -ess District Revenue Bonds, to pledge the Business District Sales Tax, to the retirement ,o the Business District Revenue Bonds, and to expend the proceeds from the sale of B ids to facilitate the financing of the Storm Water /Water Improvement E. On , 2006, the Corporate Authorities adopted Ordinance No. 2006 - "An Ordinance Designating United City of Yorkville Kendall Marketplace Business District" making all of the findings required under the Business District Act to cause the creation of the Business District, approving the District Plan, and imposing a retailers' occupation tax and service occupation tax within such business district, and on , 2006 in furtherance of the District Plan adopted Ordinance No. 2006- "An Ordinance Providing For the Issuance Of United City of Yorkville, Kendall County, Illinois Business District Revenue Bonds, Series 2007. i i Now, therefore, in consideration of the premises and promises contained herein and i other good and valuable consideration, the adequacy and sufficiency of which are ' hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS As used in this Agreement, including the Recitals hereto which kby this reference are incorporated herein, the following words and terms shall have 6 wing meanings: "Act" means the Business District Act. Agreement. means this Development Agreern as the e may be from time to time modified amended or supplemented in _ ri'b the hereto. PP Y P - "Bond Counser means Foley & Lardne =1rLP, or4an attorney at lad ` r a firm of attorneys acceptable to the City of nati�tla recag > zed standing in matters pertaining to the tax- exempt nature of interest orx o�l gations issued by states and their political subdivisions duly admitted to the practice law before the highest court of any state of the United State of Am' rica or the is of Columbia. "Bonds" means the Business DIstrnc 12` venue Bon "Bond Ordinance" eans Ordinance "An Ordinance Providing for the Issuanc_ aF meted City oYorkville,< Kendall County, Illinois Business District Revenue Bond ,F eries 07 (StormWater /Water Improvement Project). "Bond Proceeds ean a gross ca'. proceeds from the sale of the Business District Revenue Bond '�befo a.. a .:oIssuance Costs, together with any interest earned thereon. - "B si .. ness As rict" rn s A district within the City created pursuant to the Busin ss District Ac d leg y described on Exhibit B attached hereto and inca = . _ District by referen - ereirl�whose boundaries are coterminous with the Property. "Buse ess Dist nc Act" means the Business District Development and Redevelopme _ Act, 65 CS 5/ 11 -74.3 et seq "Business strict Plan" means the United City of Yorkville Kendall Marketplace Bus. District Development Plan dated October 12, 2006 and revised November 21, 2006, prepared by Ehlers & Associates, Inc. "Business District Ordinance" means Ordinance No. 2006- "An Ordinance Designating United City of Yorkville Kendall Marketplace Business District," making all of the findings required under the Business District Act to cause the creation of the Business District, approving the District Plan, and imposing a retailers' occupation tax and service occupation tax within such business district. 2 S: \Client Data \Harlem Irving Development \06009 \Documents \06 -11 -29 Development Agreement Project Business District V3.doc November 29, 2006 "Business District Revenue Bond Indenture" means the Trust Indenture dated as of 2006, by and between the City and the Business District Revenue Bond Trustee pursuant to which the Business District Revenue Bonds were issued. "Business District Revenue Bond Trustee" means The Bank of New York Trust Company, N. A., and its successors and assigns, as trustee for the Business District Revenue Bonds. i "Business District Revenue Bonds" means any oblrgations secured by the ,nom i Business District Sales Tax Revenues and authorized andf'rsstzed by the City to fund all or a portion of the Storm Water /Water Improvemenf, costs ii - accordance with the Business District Act and this Agreement. - "Business District Sales Tax Revenues''Vmeans the Business °District Sales Tax. } "Business District Sales Tax" means y -tl"gre Y 'ilf of one percent (.5 %) Business District Sales Tax levied by the City in tWusiness District on sales by retailers and servicemen operating e Property, W any tax intended to replace the same as enacted by law or ordiiza. Fof the City o ._-,_,governmental authority during the Term of this Agreement. -` "Certificate of Storm j Water/Wa e_ mpro' nt Costs" means a document substantially in the fooxhibit attached { ereto and incorporated herein provided by the Deve per I 10proveme e City Kira accordance with this Agreement and evidencing Storm V r /Watern: C i s incurred or to be incurred by the Developer and eligbefor pa ;, ent under- the terms of this Agreement and the Business District Act. "Ce _zr a - Subs antiai Completion" means a document substantially in the ford Exhibit D attached%mao and incorporated herein by reference, issued by the De Loper to the in a_ ordance with this Agreement and evidencing the De off. 's substanti tisfa ' 'on of all material obligations and covenants to cons tru t a Storm Wat _ • Water Improvement Project as set forth in the Concept Site Plan. "City" s = e United City of Yorkville, Kendall County, Illinois, an Illinois Municipal Corpora R. n and a. non -home rule unit of government duly organized and existing under th1970 Constitution of the State of Illinois. "City Attorney" means John Wyeth, or an attorney at law or a firm of attorneys acceptable to the City of recognized standing in matters of municipal law duly admitted to the practice of law before the highest court of the State of Illinois. "Closing Date," means . 2007 or such earlier date as the City, the Developer and the Underwriter of the Bonds shall mutually agree upon and refers to the transaction at which the Bonds are delivered by the City to the Underwriter, the 3 S: \Client Data \Harlem Irving Development \06009 \Documents \06 -11 -29 Development Agreement Project Business District V3.doc November 29, 2006 I proceeds are available to be paid to the Developer, and this Agreement is fully executed. "Concept Site Plan" means, collectively, those documents set forth in Exhibit F, attached hereto and incorporated herein by reference, depicting the conceptual program for construction of the Project, as modified by the Developer from time to time. "Construction Plans" means plans, drawings, specifldati`ons and related documents, and construction schedules for the construction of the Project, together with all supplements, amendments or corrections, subm>tteby the Developer and approved by the City in accordance with and as required this'' - reement. "Corporate Authorities" means the City C City.' "Developer" means CANNONBALL LLC as1 Illinois = limited liability ompany, or '= `m� its permitted successors or assigns in interest. v� � "Governmental Approvals" means all plat appi s, re- zoning or other zoning changes, the PUD Ordinance, IDOT approvals, site P, Ian approvals, conditional use permits, variances, building permits ,, Mo,�ther subdivision - zonng, or similar approvals required for the implementation of tl contemplated Proj and consistent with the Concept Site Plan and this Agreement. . "Issuance Cost me=s & all ca _ s reasonably incurred by the City in furtherance of the issu ce of tie Bond:including without limitation the fees and expenses of financi dvisors axe <_' consult s e City's attorneys (including issuer's ., zsel), t City's ad u�lstrativ an e fees and expenses (including and BoncV fees and costs of pl I : g4cOhl iff tsj u94erwriters' discounts and fees, the costs of printing any Bonds and at official sta€ements relating thereto, the costs of credit enhancement `.. _ apiti interest, debt service reserves and the fees of any rating a ency ratin =an . Bonds `Indenture" me .: the Business District Revenue Bond Indenture. "Ne $ roceeds" rrieans the proceeds derived from the issuance of the Bonds, net of any Issu ce Co.. Q s. "Pledged W l ee - nue" means the Business District Sales Tax Revenue. "Project" means the construction of approximately 820,000 square feet of retail space, restaurants, and office space and all work necessary to prepare the Property for the contemplated Project as described in this Agreement as approved or amended by the Concept Site Plan, and all other work reasonably necessary to effectuate the intent of this Agreement. "Property" means approximately One Hundred Forty (140) acres of real property (including without limitation all options held by third parties, fee interests, 4 S: \Client Data \Harlem Irving Development \06009 \Documents \06 -11 -29 Development Agreement Project Business District V3.doc November 29, 2006 leasehold interests, tenant -in- common interests and such other like or similar interests) and existing improvements necessary for the implementation of the contemplated Project as legally described on Exhibit A hereto by this reference incorporated herein. "PUD Ordinance" means Ordinance No. passed by the Corporate Authorities of the City granting a special use for planned unit development for the Property and related matters. "Request For Payment" means the document attached to the Indenture as Exhibit by which the City shall request a paymen Proceeds from the 3. .= Trustee in order to reimburse the Developer for Sto Water plater Improvement Costs. P et Storm Water/Water Improvements mMis those improverfients listed on =_ Exhibit C hereto constituting the improvement§ to be paid for from th roceeds of the Bonds and benefiting the Business Distrie = "Trustee" means the Business District Reverie r and Trustee. A' ffl "Underwriter" means Willi Blair & Comparirany firm of nationally recognized underwriters chosen by tM 1 u ARTI TE II ESIGNATIO F DEVET PER The City hereby selee s the Demo oper to c _iistruct or cause the construction of the Project and the S aterjWater Improents in accordance with the Concept Site Plan, this Agreeme X Tubftdrnrr ental Approvals. Provided that the Bonds have first been issued an sold, the Developer hereby accepts such designation and agrees to _ -_ _use- #1e comIetion of the Project and the Storm Water /Water Improvers nts in aceelydance v'v th`e terms and conditions hereof. )V ARTICLE III CO st— RUCTION OF DEVELOPMENT PROJECT 3.1 nstruction Schedule. The Developer shall commence construction of the Project wi On Aundred Twenty (120) days of the later to occur of (a) Developer obtaining all sec - , E ary permits and Governmental Approvals; or (b) six (6) months after execution o : is Agreement, and shall substantially complete construction of the following approximate square of retail, restaurant and commercial space comprising the Project as follows: November, 2007 90,000 square feet of anchor space; August, 2008 464,000 square feet (including approximately 280,000 square feet of anchor space); October, 2008 81,500 square feet; March, 2009 149,000 square feet; and 5 S: \Client Data \Harlem Irving Development \06009 \Documents \06 -11 -29 Development Agreement Project Business District V3.doc November 29, 2006 , October, 2009 35,000 square feet, all subject to force majeure as set forth in Section 7.3 below. 3.2 Developer to Construct the Project. The Developer shall commence or cause the commencement of the construction of the Project in accordance with the terms of this Agreement and the Concept Site Plan. To the extent of any inconsistency among the foregoing, the parties agree that the Concept Site Plan shall govern so long as performance in accordance therewith does not violate Govr- nmental Approvals. The Developer shall complete or cause the completion of the = - t in accordance with the terms of and the schedule set forth in Section 3.1 offiis Agreement. 3.3 Storm Water /Water Improvement Projec The velloper, on behalf of the City, shall cause the Storm Water /Water Improvements to bedrstructed for the benefit of the Business District, in accordance wi ._t°Yielerms of this Agreement. The City acknowledges that by a supermaj ority voted of the Corporate Autlitis, it does not intend to design, bid or construct the Storer ;Water /eater, Improvements. The City agrees that since the Storm Water /Water 1inpro emeniti fare to be paid for by the Business District Tax, that the Developer shalYcon :, - c fhe Storm Water /Water Improvements using subcontractors and materialmeselected from time to time by the Developer, in its sole discretion gwithout advertisi ig for bids as permitted by the provisions of 65 ILCS 5/8 -9 -1 of UA.. nais Municipal de-, City, by entering into this Agreement agrees to waive t1 r q went to biany contracts entered into between the Developer and subcontractors fo.installatioiiof the Storm Water /Water zy Improvements. All Storm Viaater /Wate �roveme. �s; -to be constructed hereunder shall be constructed in substarctal accordance with y final plans approved by the City. Such Storm Watt /Water` 66roveme s shall be all as approved by the City and in accordance with, ILSpplicabl aws, ordina_ ces, rules and regulations. The Storm Water /Water Imgrov`__ents � all be co - cted in a good, workmanlike and commercially reasonab=_ 3.4 . fi sts_ action - 9 - tracts; Insurance. The Developer may enter into or cause to be entere Ito one nQre construction contracts to complete the Project and - eStorm Water ater Im: rovement Project. Prior to the commencement of conk - .-' ion of any por of either Project, the Developer shall obtain or shall require that any its contr actors obtains workers' compensation, comprehensive public liability and; }uilder's HAT insurance coverage in commercially reasonable amounts and shall del evidence of such insurance to the City. Approvals. The City agrees to employ 3.5 Gove nmental Appro ty gr p y reasonable and good faith effort oo cooperate with the Developer and to process and timely consider and respond to all applications for the Governmental Approvals as received, all in accordance with the applicable City ordinances and laws of the State of Illinois. 3.6 Concept Site Plan. The Concept Site Plan is hereby approved in accordance with applicable City ordinances and codes. 3.7 Construction Plans. The Construction Plans for the Project and the Storm Water /Water Improvement Project shall be prepared by a professional engineer 6 S: \Client Data \Harlem Irving Development \06009 \Documents \06 -11 -29 Development Agreement Project Business District V3.doc November 29, 2006 i - or architect licensed to practice in the State of Illinois and the Construction Plans and all construction practices and procedures with respect to the Project and the Storm Water /Water Improvement Project shall be in substantial conformity with all applicable state and local laws, ordinances and regulations. In conjunction with obtaining a building permit for the commencement of construction of the Project and the Storm Water /Water Improvement Project, the Developer shall submit Construction Plans for approval by the City in sufficient completeness and detail to show that construction will be in conformance with the Concept Site Plan d, this Agreement. 3.8 Certificate of Substantial Completion. Promptly after substantial completion of the Storm Water /Water Improvement PiyJ6Qffh.the Developer shall furnish to the City a Certificate of Substantial Completion. Tj � City shall, within tom .., thirty (30) days following delivery of the Certificate = off S stantial�Gampletion, carry out such inspections as it deems necessary to veDtoz%f §-reasonabl :satisfaction the accuracy of the certifications contained in the G_ertificate of Substantl 4Co`mpletion. The Certificate of Substantial Completion shalll5d deerrfed accepted by thlCty unless, within thirty (30) days following delivery of the Cdrtific.A64.of Substantiff Completion, the City furnishes the Developer with specific wrt�en, {tjeofions to the status of the Storm Water /Water Improvements, describing suobjections and the measures required to correct such objections i reasonable e 1 Upon acceptance of the Certificate of Substantial CompletioM1 -,City or upon apse of thirty (30) days ., after delivery thereof to the City with ='t an: -`_ ten objections thereto, the Developer may record the Certificate of Substantial m _ letlon with the Kendall County .i Recorder of Deeds, and the same shalV o _ fitute e dence of the satisfaction of the Developers agreements regard t = construction of the Storm Water /Water Improvements. The Cdrtificate ubstan Completion shall be in substantially the .:; form attached as E bit D, at ched her,. . d incorporated by reference herein. < V _.._. The City acknowledgeand agr . s that it shlI'not deliver the certificate referred to in Section 4.2(B) of theme ...:' `is enue Bond Indenture certifying that the Storm Water /Water Imp ME 'e ent t is completed until the Developer has delivered trr`eficate o bstantial Completion and such Certificate has been accepted the C Fees. Oth an c stomary tap fees, no fee or charge of any description includin :, _. _ ithout limita n, building permits, plan review, inspection fees, or other regulatory or chargeshall be imposed on Developer or on the development and use of the P - ur � s, as of the date of this Agreement, such fee or charge is an < existence andi3 lected by the City on a uniform basis from all owners, users, and petitioners o' ,, roperty within the City. The City shall not increase the amount of any fee or utility sf s, application fees, or user fees during the Term of this Agreement unless such increases are (i) made generally applicable to all owners and users of property within the City and (ii) reasonably related to increased costs incurred by the City in providing the services for which such fee is assessed. 3.10 Quarterly /Annual Reporting. During construction of the Project, the Developer shall deliver quarterly construction progress reports to the Trustee and the Underwriter. After the Certificate of Substantial Completion is accepted, the Developer 7 S: \Client Data \Harlem Irving Development \06009 \Documents \06 -11 -29 Development Agreement Project Business District V3.doc November 29, 2006 I shall deliver to the Trustee and the Underwriter, annual schedules of tenants and lease expiration dates for the Project. ARTICLE IV PAYMENT OF DEVELOPER COSTS 4.1 City's Obligation to Pay Developer. The City agrees to pay Developer for the verified Storm Water /Water Improvement costs in the am unt as set forth on Exhibit C, attached hereto and by this reference incorporatr�in, as may be adjusted pursuant to this Article IV. Subject to the terms o -f'e Bond Ordinance, the Indenture and this Agreement, the City agrees to issue thSusness District Revenue Bonds and to pay the Developer for verified Storm Wat /WateiY °Improvement Costs pursuant to Section 3.3 above, from Net Proceeds from th Busin istrict Revenue Bonds in an amount equal to Six Million Seven HuidTe Seventy Oz3housand Two - -r Hundred Eighty Nine Dollars ($6,771,2811 f�or verified Storm..:1 rt .er /Water Improvement costs as provided in Article V o Agreement. 4.2 Reimbursements Limited to Stonnv ..star/ ... titer Improvement Costs; Developer's Right to Substitute. Nothing in this 'gr�e�ment shall obligate the City to issue Bonds to pay Developer for ar% orm Water /vii Improvement cost that does j .r not qualify for payment under the Biff xiess District Ac Z'h. eveloper shall, at the - = I City's request, provide itemized construcfo � :loan draws,ixvoices, or receipts or, in IV the case of the acquisition of land, evidence tha-�h Developer has acquired fee title to such land and evidence oulsition �.: rice kne total £�` � of such land reasonably c requested by the City to con . g at any $D ch cost i. so incurred and does so qualify. Each such request sll be i the form of a Certificate of Storm Water /Water Improvement Costs d accompanied by a . certification by the Developer that such cost is eligible for : p ant or - eimburseme= t under the Business District Act. The parties agree that each ofca�"�t%' °: "- -' sts set forth in Exhibit C shall constitute Storm Water /Water Imovement cos #s which are eligible for payment or reimbursesr e z ;ac ordari� ,wi the Business District Act and this Agreement. If the Ci ngineer d1 ermines F any cost identified as a Storm Water /Water Impr . ent cost is' a rei :ursable cost under the Act, the City shall so notify the A61oper in writin - withid thirty (30) days as provided in Section 5.6 of this Agreemen g identifying tTineligible cost and the basis for determining the cost to be ineligible, ;%ereupon th _ eveloper shall have the right to contest such determination and /or iden ffff* and s 1 tute other Storm Water /Water Improvement costs with a supplemental a 'cat to for payment. ARTICLE V BUSINESS DISTRICT REVENUE BONDS 5.1 BondOrdinance: Pledged Taxes. The City has adopted the BondOrdinance for the Business District Revenue Bonds, subject to the provisions of Section 5.3, and has provided for the designation of a Trustee. The Business District Revenue Bonds shall be secured by a pledge of the Business District Sales Tax 8 S: \Client Data \Harlem Irving Development \06009 \Documents \06 -11 -29 Development Agreement Project Business District V3.doc November 29, 2006 Revenues. The Indenture provides for the segregation and deposit of the Pledged Revenue. 5.2 Application of Revenues. The Business District Sales Tax Revenues shall first be applied to the retirement of the Business District Revenue Bonds and then, to extent there are any excess Business District Sales Tax Revenues, in accordance with the BondOrdinance and the Indenture. 5.3 Issuance of Bonds. The City agrees to issue theBori� pursuant to the Business District Act in an amount to be determined by the derwriter based on the amount of Business District Sales Tax Revenue projeecteM be deposited in the various funds and accounts as provided for in the Bond!@ and the Indenture; provided, however, in no event shall the aggregat NetProceed.sf the Business District Revenue Bonds initially deposited in the I% r vergent Fund ;m — defined in the � Indenture, created under the Bond Ordinance eq1T al an amount less t1i k ix Million Seven Hundred Seventy One Thousand Two Hundred EiY�ty,Nine DollaYS6,771,289) from the Business District Revenue Bond sadditivrto such Nei Proceeds for Storm Water /Water Improvement costs, the amounk,;.of - &Ae l nds shall be sufficient to pay for all Issuance Costs associated with issuing d Bonds as provided in the Bond Ordinance. The Bonds shall not lie- general obligi -tiblis of the City and shall be secured solely by the Pledged Reveries :. N . ither this Agropment nor the Bonds shall constitute a full faith and credit obligaaari ci ,, : LL_ J City. 5.4 Conditions of Jssuance. + e Ci o:bli g ation to issue the Bonds - described in Section 5.31xpressly crltingent o a bond opinion from Foley & Lardner LLP opining ttha the Bo�s are b6kg issued in accordance with the Business District Act, and that Ehe interes ereon is erupt from federal taxation. 5.5 City's Boil .'= Espensri -T dministration of the Bonds has resulted and will result in expenses :for the Ci Any Trustee's fees or legal fees for a legal opinion to beeor1 by thond holders, due and owing as of the Closing Date shall be paid. m p - . eds. 5E;:C Disbursements to °Developer. - .6.1. Initi Certificate. Ten (10) days prior to the Closing Date, the Develo m mayeliver to the City a Certificate of Storm Water /Water Improverriextvosts covering eligible Storm Water /Water Improvement costs incurred b:. a Developer prior to the Closing Date and to be paid to the Developer the Closing Date. The City shall accept or reject such Certificate within three (3) business days after receipt thereof and shall, on the Closing Date, submit a Request For Payment to the Trustee for the Bonds with instructions to reimburse, the Developer, or the party designated by the Developer in the amount set forth therein upon receipt. The City's acceptance or rejection of the initial Certificate shall be in writing, and in the case of a rejection, shall specifically state the reasons for such rejection. If the City rejects all or any portion of the initial Certificate of Storm Water /Water Improvement Costs, Developer shall have the right to identify and substitute 9 S: \Client Data \Harlem Irving Development \06009 \Documents \06 -11 -29 Development Agreement Project Business District V3.doc November 29, 2006 i I eligible Storm Water /Water Improvement costs. If the City fails to accept or reject the Certificate of Storm Water /Water Improvement Costs within such three (3) day, period after submission by Developer, the initial Certificate shall be deemed to have been accepted by the City and payment shall be made by the Trustee to the Developer. I 5.6.2. Subsequent Certificates of Storm Water /Water Improvement Costs. Thereafter, the City shall, within ten (10) days aft _ r acceptance by the City of each Certificate of Storm Water /Water Improve nen.VTRCosts, submit a Request For Payment to the Trustee for the Bo, with instructions to �. s reimburse the Developer, or the party designated lily -1 Hk Developer, for such construction advances in the amount set forth there (a "Construction ice'-` Payment j . The City shall accept or reJ ect '- each Cei�#icate of Storm Water /Water Improvement Costs submitted ,byI eloper witltrzhirty (30) days after submission by the Developer. Such „acceptance or rejection4'b th City of �._ each Certificate shall be in writing, ffld in the case of a rejection, shall Az specifically state the reasons for such __pJection _ 'If the City � ..a rejects p Y � §�:�. � � re J an Y Certificate of Storm Water/Water ImproveiUht_0osts- submitted by Developer, Developer shall have the right to identif - d substitute eligible Storm Water /Water Improvement cotes. If the City to accept or reject the Certificate of Storm Water /VAT t r Improvement eosts^vithin thirty (30) days �. -1:,_ after submission by Developer; the�`res t ng Constfaktion Payment(s) shall be deemed to have been accepted "by the n the thirty -first (31St) day after submission of the Certificate of S�Water;.. afer Improvement Costs by the Developer. Constr> ction %Paymen s shall be issued no more than once every month until all. Cori auction P Vl ents as are required by this Agreement .. have been pai`& The Ci covenants�to pay to Developer, or its designee, all .„ -. amounts rec61VF_d by tl City from t1 rTrustee pursuant to each Request For Payment relatingd.etea >t� °'Storm Water /Water Improvement Costs submitted by the Developer up& - Yeceipt thereof. r .._.. 5:'T'' Matuntvf Son 5... .,_he final maturity of the Bonds shall not exceed the maxi 'um term pernis'ble uneFthe Business District Act. The Bonds shall bear intefe,M- such rates, shall be s bject to redemption and shall have such terms as the City dial etermine in its sole discretion. 5.8 operat in the Issuance of Bonds. The Developer covenants to cooperate and '4 ff e All reasonable actions necessary to assist the City and Bond Counsel, the UnU_ rater and the City's financial advisor in the preparation of offering statements, privy placement memorandum or other disclosure documents and all other documents necessary to market and sell the Bonds. ARTICLE VI COLLECTION AND USE OF REVENUES 6.1 Creation of Fund. The City agrees to cause its Director of Finance or other financial officer to maintain the funds required by the Bond Ordinance, the Business District Ordinance and the Indenture including such further accounts or 10 S: \Client Data \Harlem Irving Development \06009 \Documents \06 -11 -29 Development Agreement Project Business District V3.doc November 29, 2006 sub- accounts as are required therein, by this Agreement or as the Director of Finance of the City may deem appropriate in connection with the administration of the fund pursuant to this Agreement. Subject to the requirements of the Business District Act, the City will promptly upon receipt thereof deposit all Business District Sales Taxes in the fund or in such other accounts as required under the Bond Ordinance and Indenture. 6.2 Cooperation in Determining Revenues. The Ciand the Developer agree to cooperate and take all reasonable actions necessaroause the Pledged Revenues to be paid into the funds and accounts as provideei in the Bond Ordinance and Indenture, including the City's enforcement and col leianof all such payments through all reasonable and ordinary legal means of enforcement: 6.3 Reporting of Sales. To further assis - ;t�e -�Gity in calculag the 11 z a- Business District Sales Tax Revenues, the Devel der or its successors) "i' Sincerest as owner or owner(s) of the Property shall, so long_a„s any Bonds are outstanding, use all reasonable efforts to cause businesses operaf e PP perty, to properly collect and report any Business District Sales Tax even' . 11iee�reloper shall satisfy this i requirement b making a good faith effort to cause q y g g e.fee title holder of the Property to include the obligation to execute apower of attornhorization to release sales tax information to the City in the for a ibit G withi any -deed conveying a portion of the Property and into any lease a .., into witl many tenant. The City shall file the reporting forms within seven (7 ays receipt thereof with the Illinois Department of Revenue. Except�as provi d this the Developer shall have no obligation to enforce or co ee et e: paymen %�of Business District Sales Tax Revenue by I any "retailer or servicere r ' 6.4 Confi7en al Information. � City acknowledges and agrees that information to be provl�ded bt1�gYti'vners- d lessees hereunder is proprietary and valuable information and at any dlsclo�sure or unauthorized use thereof will cause irreparable e owners and lessees, and to the extent permitted by state or federal Ja includ ;but no 1 e to Section 7(1)(g) of the Illinois Freedom of Informon Act, the °_. agree...., = o hold in confidence all sales figures and other info � _i� 'on provided byte State of Illinois, or any owner or lessee of a portion of the Pr ?e - ,_.or obtained froirl��any such owner's or lessee's records in connection with this Agreemen " * 054- - d in connec ion therewith, the City shall not copy any such information except as ne fo��ssemination to the City's agents or employees as permitted hereinafter. 1iAWCi%'s all be permitted to disclose such information (i) to its agents or employees whoa ; e reasonably deemed by the City to have a need to know such information for p4rposes of this Agreement; provided, that such agents and employees shall hold in confidence such information to the extent required of the City hereunder or (ii) to the extent required by order of court or by state or federal law. The confidentiality requirements of this Agreement shall survive any expiration, termination or cancellation of this Agreement and shall continue to bind the City, its successors, assigns and legal representatives for a period of five (5) years from the termination, expiration or cancellation of this Agreement. The City shall promptly notify Developer and any affected owner or lessee as to a Freedom of Information Act request and the commencement of any legal action in regard thereto such that 11 S: \Client Data \Harlem Irving Development \06009 \Documents \06 -11 -29 Development Agreement Project Business District V3.doc November 29, 2006 Developer and /or any such owner or lessee shall have a meaningful opportunity to object to the release of any such confidential information and to take such action as such owner or lessee deems necessary in order to protect against the release of such confidential information. 6.5 Obligation to Report Pledged Revenues. Any purchaser or transferee of the Property, and any lessee or other user of the Property, shall use all reasonable efforts to timely furnish to the City such documentation as is required by Section 6.3 hereof. So long as any Bond is outstanding, such obligati o 1 -All be a covenant ' running with the land and shall be enforceable as if such pi4- aser, transferee, lessee or other user of such real property were originally a p and bound by this Agreement. S ARTICLE VII GENERAL PROVISIONS 7.1 Successors and Assigns.%� 7.1.1 Binding Affect. This Agreemes �: shall be binding on and shall inure to the benefit of the p ties named herein, and their respective heirs, administrators, executors, per a x presentativess ccessors and assigns. ` °. 7.1.2 Assignment or Sale. Air ;o>i-�� any of the Property or any interest therein mad e sold, tlaerred; B mbered, leased, or otherwise disposed of at any�ibLnd the hts of they Developer named herein or any T ,,; successors in ine est un . er this Agreement or any part hereof may be assigned at any time before, durin r after redevelopment of the contemplated Project, whereupone arty disposing of it�iterest in the Property or assigning its interest under M e Ftn't- be thereafter released from further obligation under thi= , greemeri t al ough any such Property so disposed of or to r'ad _ M uch inter et pertains shall remain subject to the terms and cans or Agreexxl . % provided that until substantial completion of the ° ntemplate d ' o, °pct, thghts, duties and obligations of the Developer under 's Agreement all no - be assigned in whole or in part without the prior en approval the City, which approval shall not be unreasonably witl% ld, conditioned or delayed upon a reasonable demonstration by the Deve of throposed transferee's or assignee's experience and financial capabill :A. undertake and complete such portions of the Project and perform the Develo s obligations under this Agreement, all in accordance with this Agreemen Notwithstanding anything herein to the contrary, the City hereby approves, and no prior consent shall be required in connection with: (a) the right of the Developer to encumber or collaterally assign its interest in the Property or any portion thereof to secure loans, advances or extensions of credit to finance or from time to time refinance all or any part of the Project costs, or the right of the holder of any such encumbrance or transferee of any such collateral assignment (or trustee or agent on its behalfl to transfer such interest by foreclosure or transfer in lieu of foreclosure under such encumbrance or collateral assignment; or (b) the right of Developer to assign the Developer's 12 S: \Client Data \Harlem Irving Development \06009 \Documents \06 -11 -29 Development Agreement Project Business District V3.doc November 29, 2006 rights, duties and obligations under this Agreement to any parry related to the Developer by one of the relationships described in Section 267(b) of the United States Internal Revenue Code of 1986, as amended; provided that in each such event (i) the Developer named herein (Cannonball LLC) shall remain liable hereunder for the substantial completion of the contemplated Project and shall be released from such liability hereunder only upon substantial completion of the contemplated Project and (ii) the Developer provides to the City thirty (30) days' advance written notice of the proposed assignment ortransfer. Fh 7.2 Remedies. Except as otherwise provided in ths..�kgreement and subject ms _ to the Developer's and the City's respective rights of termmat a in the event of any default in or breach of an term or conditions of this A menu... .either or an Y �` - � �. P�Y� Y successor, the defaulting or breaching party (or successor shall,: written notice from the other party specifying such default or bre_ae pr' iceed imme`_. at to cure or remedy such default or breach, and shall, in and event, within thirty °Q)ciays after receipt of notice, commence to cure or remedy' -such default or breach. : ri the event that the defaulting or breaching parry (or successor) -1 lbgently and iii good faith commences to cure or remedy such default or bread i A igAunable to cure or remedy such default or breach within thirty (30) days aftereipt of notice, the defaulti ec ng or breaching party (or successor) shall to the end o' uch thirty (30) days, provide notice to the other party that it has 1rr�� o . _faith commem,edT o cure or remedy such default or breach, whereupon the del b & breaching party (or successor) shall have an additional ninety (90) days to cure or' :e such default or breach. In case such cure or remedy is not.,taken or no� diligently tirsued, or the default or breach t : WY shall not be cured or remrl��diedpnor to the of thadditional ninety (90) day period, the remedy to the ag ri =ved p z hall be set forth below: (i) If the "D' `eloper , in breach Mf this Agreement, the City's sole and exclusive remea a` "acictuy, shall be to suspend payments to the Developer under tliisAgreemen nail the Developer has cured or substantially cured'su gl1--breach ,a which time payments to the Developer under this Apr ement s11IM— resume..... _ F ifs_ If the City '4gri breach of this Agreement, the Developer may pursue any a,all legal andguitable remedies available to it as a result of such breach, in g withou imitation termination of this Agreement or proceedings to comp pecific rformance. 7.3 Forc_.= :1Vlajeure. Neither the City nor the Developer nor any successor in interest shall be Znsidered in breach or default of their respective obligations under this Agreement, and times for performance of obligations hereunder shall be extended in the event of any delay caused by force majeure, including without limitation, damage or destruction by fire or casualty; strike; lockout; civil disorder; war; restrictive government regulations; lack of issuance of any permits and /or legal authorization by the governmental entity necessary for the Developer to proceed with construction of the work or any portion thereof; delay in commencement or completion of any and all work to be performed by others that affects Developer's ability to commence or complete the Project; shortage or delay in shipment of material or fuel; 13 S: \Client Data \Harlem Irving Development \06009 \Documents \06 -11 -29 Development Agreement Project Business District V3.doc November 29, 2006 i i acts of God; unusually adverse weather or wet soil conditions; or other like causes beyond the parties' reasonable control, including without limitation any litigation, court order or judgment resulting from any litigation affecting the validity of the Business District Plan, the contemplated Storm Water /Water Improvement Project or the Bonds, the PUD Ordinance, this Agreement, or eminent domain actions; provided that such event of force majeure shall not be deemed to exist as to any matter initiated or sustained by either party to this Agreement in bad faith, and further provided that the party claiming the benefits of this Section 7.3 notifies the other in writing within thirty (30) days of the commencement of such claimed event of__ oTCeqnajeure. 7.4 Notices. Any notice, demand or other commUni ation required by this Agreement to be given by either party hereto to the otheshall b writing and shall be sufficiently given or delivered if (i) dispatched by cert. Ned Unite States first class mail, postage prepaid, (ii) sent by a nationally reddgnfi�ed overnig ourier, or (iii) delivered personally: (i) In the case of the Developer, twv Cannonball LLC —. c/o The Harlem IrvinCompanies, Inc. Attu' = 1Vlanaging Direcof Real Estate 410 7 y�y� o3-tlHarlem Aven Norrte, IIn'G0706 With a copy to: Cannon al Y ° C s � % c/o The Hrlem Irving Companies, Inc. - Gene Counsel 104 NorthHlem Avenue Norridge, IL .-0706 With Polsky & Associates, Ltd. ;2 N. Michigan Avenue Af _ lst Floor Chicago, IL 60601 (ii) he cas . of the City, to: - United City of Yorkville, Illinois Office of the Mayor 800 Game Farm Road Yorkville, Illinois 60560 And United City of Yorkville, Illinois Office of the Treasurer 800 Game Farm Road Yorkville, Illinois 60560 14 S: \Client Data \Harlem Irving Development \06009 \Documents \06 -11 -29 Development Agreement Project Business j District V3.doc November 29, 2006 With a copy to: Foley & Lardner LLP Attn: Christopher N. Knight 321 N. Clark Street Suite 2800 Chicago, Illinois 60610 or to such other address(es) with respect to either party as that,: aty may, from time to time, designate in writing and forward to the other as pro /d paragraph. 7.5 Insurance; Damage or Destruction of Projedt The Developer shall provide and maintain, or cause to be provided and maintained,a the Developer's own expense, during the Term of the Agreement (or as otherwise s "" pi below), the insurance coverages and requirements specified be ©= in- Caring all op rations related to the Agreement. R (a) Throughout the Term of the Agreement V. W Commercial General Liabilitv In rance (Primary and Umbrella) I SON Commercial Genera Miability Insuranc —ot equivalent with limits of not less than l;M` OO per occurrence for bodily injury, personal injury, }:� ' p j ry, an; _ probe .- amage liability. Coverages shall i h n'- = premises include the folloi and operations, . _ A}: ' prodctspleted ;operations, independent contractors, sep ation oifyinsureds ; .defense, and contractual liability (with no rimltation a dflrsement)., __The City is to be named as an additional insured o - a primary, on- contributory basis for any liability ari ' directl_.: midi =etly from the work. (b) Cons - W Cortlrxlercial eral•Liability Insurance (Primary and Umbrella) Commercial General Liability Insurance or equivalent with limits of n less than $2,000,000 per occurrence for bodily injury, pertoial injury, and property damage liability. Coverages shall i - ude the following: All premises and operations, products / completed operations (for a minimum of two (2) years following project completion), explosion, collapse, underground, independent contractors, separation of insureds, defense, and contractual liability (with no limitation endorsement). The City is to be named as, an additional insured on a primary, non- contributory basis for any liability arising directly or indirectly from the work. (ii) Builders Risk Insurance i 15 S: \Client Data \Harlem Irving Development \06009 \Documents \06 -11 -29 Development Agreement Project Business District V3.doc November 29, 2006 j When the Developer or its contractor undertakes any construction, including improvements, betterments, and /or repairs, the Developer shall provide, or cause to be provided All Risk Builders Risk Insurance at replacement cost for materials, supplies, equipment, machinery and fixtures that are or will be part of the permanent facility. Coverages shall include but are not limited to the following: collapse, boiler and machinery if applicable. The City shall be named as an a'- ditional insured and loss payee. (c) Post - Constructions (i) Post - construction, throughout the ,rin of the A.eement, All Risk Property Insurance, including ents and betterments in the amount of full replacem €rit value of the PropeN�Coverage extensions shall include btxtiness interruption /loss Wf ents, flood and boiler and machine c e,, The City is to be named g ppli '. an additional insured on a prtazy ;ton contributory basis. (d) Other Requirements _- _ -. The Developer will furnish the OR ' original Certificate "s of Insurance evidencing the required coverage to be in force ' . th� - t of th s Agreement, and Renewal "- Certificates of Insurance, o.. such simila le, Bence, # # ie coverages have an expiration or renewal date occurr rl d�rf ig the Tenn of this. Agreement. The receipt of any certificate does not conMitute agreement b --the City that the insurance requirements in the Agreement 1 been full Amet or that .the insurance policies indicated on the certificate are in compliance withall Agreemerequirements. The insurance shall prove - for 60 day" prior written notice to be given to the City in .- _ emu,_ .- the event e we-_- axs-Subst - Ehally changed, canceled, or non - renewed. Any ._ all deductib 1 .& .. r self in red retentions on referenced insurance coverages shat _ borne by the Deve oper The Deve open shall requ_ a the general contractor, and all subcontractors to provide the insuranc quire __ erein. 7.6 Insg ion. The City may conduct such periodic inspections of the construction of tl e Project as may be generally provided in the building code of the City. The Developer shall not unreasonably deny the City and its officers, employees, agents and independent contractors the right to inspect, upon request, all architectural, engineering, demolition, construction and other contracts and documents pertaining to the construction of the Project as the City determines is reasonable and necessary to verify the Developer's compliance with the terms of this Agreement. 16 S: \Client Data \Harlem Irving Development \06009 \Documents \06 -11 -29 Development Agreement Project Business District V3.doc November 29, 2006 7.7 Choice of Law. This Agreement shall be deemed to have been fully j executed, made by the parties in, and governed by the laws of the State of Illinois without regard to its conflicts of laws provisions for all purposes and intents. 7.8 Entire Agreement; Amendment. The parties agree that this Agreement constitutes the entire agreement between the parties and that no other agreements or representations other than those contained in this Agreement have been made by the parties. This Agreement shall be amended only in writing and =_effective when signed by the authorized agents of the parties. 7.9 Counterparts. This Agreement is execute.AM.5ipltiple counterparts, each of which shall constitute one and the same instrurAM. 7.10 Severability. In the event any term 0-- islon of this A.eement is held to be unenforceable by a court of competent jur, Ction, the remaindef��hall continue :_ in full force and effect, to the extent the rem nder c be given effec M- 1thout the invalid provision. -_ 7.11 Representatives Not Personally Liable. No elected or appointed official, agent, employee or represerliye of the City fall be personally liable to the Developer in the event of any defaultioeach by any pyunder this Agreement, or for any amount which may become die to arty or o obligations under the terms of this Agreement. This provisiohall"nop ply Y J67 o the opinion to be given by the City Attorney. _ 7.12 Indemnifie on. ^ . - e indemnifications and covenants contained in this Section shall surviverA rminationfor expiraticiz_f this Agreement. 7.12. _ lidit for the opinion of the City Attorney as provided for in Sec oa 7.14 greement, the City and its governing body member v i --ers, ages employees and independent contractors shall not be Iiat e to thel3e er oper 01 .da Ylages or otherwise in the event that all or any part � the Busines n-n'strict - Act, or any ordinance adopted in connection with ither the .Law a the Act, this Agreement or the Business District Plan, is 46 ar ed invalid o nconstitutional in whole or in part by the final (as to which all ri s of appe ave expired or have been exhausted) judgment of any court of co tent ju�sdiction, and by reason thereof either the City is prevented .. from pertarmjpk any of the covenants and agreements herein or the Developer is preven4 r om enjoying the rights and privileges hereof. 7.12.2 Damage or Injury. The City and its governing body members, officers, agents, employees and independent contractors shall not be liable for any damage or injury to the persons or property of the Developer or its officers, agents, employees, independent contractors or any other persons who may be about the Property or the Project except for matters arising out of the gross negligence or willful misconduct of the City and its governing body members, officers, agents, attorneys, employees and independent contractors. 17 S: \Client Data \Harlem Irving Development \06009 \Documents \06 -11 -29 Development Agreement Project Business District V3.doc November 29, 2006 7.12.3 Personal Liability. All covenants, stipulations, promises, agreements and obligations of the City contained herein shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the City and not of any of its governing body members, officers, agents, employees or independent contractors in their individual capacities. 7.13 Survival. Notwithstanding the expiration or termination or breach of this Agreement by either party, the agreements contained in Sections 7.7, 7.8, 7.9, 7.10, 7.13, and 7.16 and Article VIII of this Agreement shal except as otherwise expressly set forth herein, survive such expiration or B ey termination of this Agreement by either party. .. 7.14 Legal Opinion. As of the effectiv_ d fe of tl =City's ordinance authorizing the execution of this Agreement, the CAttorney still provide the Developer, Developer's Counsel and the City's B n 1 Counsel with an op Dn "in a form mutually agreeable to each of them. If the Business District has not beerfbmled as of the date of the City Attorney's opinion, thenAR City At orney shall also issue one or more subsequent opinions, in a form acceptable t(*Qeve1opei�-s Counsel and the City's Bond Counsel regarding the Business District. 7.15 Term. The term of thisg dement shall commence on the Closing Date and shall terminate upon the retireien��`e Bonds sunless earlier terminated p _ ;> pursuant to the provisions of this Agreement. ` - ' AM r4 _, E -... 7.16 Conflict. In the event' ofany incons�s ency or Econflict between the terms of this ��. Agreement and the Bo_. d�Ordina e, the tev= s of the Bond Ordinance shall control. AR�T�LC.E VIII REPRESENTATIQI�l S OF THE PARTIES 8.1 Re�.Presentati f the =City The City hereby represents and warrants that (i) it hasfull constitute% and��vful right, power and authority, under current aPRAGN law, to exec and d eliver and perform the terms and obligations of this Agreemen and the Indenture, including without limitation the right, power and authority issue and sMel the Bonds, (ii) all of the foregoing have been or will be, upon adopta =• of the A, . inances authorizing the issuance of the Bonds, duly and validly autho - approved by all necessary City proceedings, findings and actions, (iii) this" ement constitutes the legal, valid and binding obligation of the City, enforceable ;gin accordance with its terms, and (iv) it will pay to the Developer, or its designee, all amounts received from the Trustee pursuant to each Request For Payment in accordance with the terms of this Agreement. 8.2 Representations of the Developer. The Developer hereby represents and warrants it has full power to execute and deliver and perform the terms and obligations of this Agreement and all of the foregoing has been duly and validly authorized by all necessary proceedings. This Agreement constitutes the legal, valid and binding obligation of the Developer, enforceable in accordance with its terms. 18 S: \Client Data \Harlem Irving Development \06009 \Documents \06 -11 -29 Development Agreement Project Business District V3.doc November 29, 2006 (The remainder of this page intentionally left blank.) WIN V P 19 S: \Client Data\Harlem Irving Development\06009\Documents\06-11-29 Development Agreement Project Business District V3.doc November 29, 2006 i IN WITNESS WHEREOF, the City and the Developer have caused this Agreement to be executed in their respective names and the City has caused its seal to be affixed thereto, and attested as to the date first above written. "CITY" UNITED CITY OF YORKVILLE, ILLINOIS B '. Mayor (SEAL).. Attest: ' _. City Clerk_ .. "DEVELOPER" CANNONEiILTLTC, an Illin ig.11 mi ced liability company X By: The Ha&1hem Irsnrxg onpariies, Inc. _ $y ' itle: [SIGNATURE PAGE TO DEVELOPMENT AGREEMENT] I i STATE OF ILLINOIS ) )SS COUNTY OF KENDALL ) On this _ day of , 200 me appeared to me personally known, who, being by me duly sworn, did say that he is the Mayor of the UNITED CITY OF YORKVILLE, ILLINOIS, a political subdivision of the State of Illinois, and that the seal affixed to the foregoing instrument is the seal of said City, and said instrument was signed and sealed in behalf of said City by authority of its City Council, and said acknowledged said instrument to be the free act and deed of said City. , IN TESTIMONY WHEREOF, I have hereunto set my haft d affixed my official seal in the County and State aforesaid, the day and year fifft a _e written. N.o`ary Public (SEAL) My Commission Expires: q i I I I STATE OF ) I )SS COUNTY OF ) On this _ day of , 200 me appeared , to me personally Down, who, being by me duly sworn, did say that he is the of THE HARLEM IRVING COMPANIES, an Illinois corporation, and a of CANNONBALL LLC, an Illinois limited liability company and that he is authorized to sign the instrument on behalf of said company, and acknowledge i to me that he IN executed the within instrument as said company's free act and,�dd Y IN TESTIMONY WHEREOF, I have hereunto set m _- i nd affixed my official seal in the County and State aforesaid, the day and year fist abo `:written. b 63'!Y �; l�I ©tary Pdbl " (SEAL) My Commission Expires: EXHIBIT A I LEGAL DESCRIPTION OF THE PROPERTY THAT PART OF THE SOUTHEAST QUARTER OF SECTION 19, PART OF THE SOUTH HALF OF SECTION 20 AND PART OF THE NORTHWEST QUARTER OF SECTION 29, TOWNSHIP 37 NORTH, RANGE 7 EAST OF THE THIRD PRINCIPAL MERIDIAN DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHEAST CORNER OF THE SOUTHEAST QU`ER OF SAID SECTION 19; THENCE NORTH 01 DEGREES 13 MINUTES 53 SECOND54ES;'1:k, ALONG THE EAST LINE OF SAID SOUTHEAST QUARTER 310.20 FEET; THENOiV,ESTERLY PERPENDICULAR TO SAID EAST LINE 198.00 FEET; THENCE N RF_ ?16 DEGREES 23 _ 4� MINUTES 58 SECONDS WEST, 862.81 FEET; THENCE NORTH4 DEGREESS, 51 MINUTES 14 SECONDS EAST, 126.15 FEET; THENCE WESTERLY ALO1�,G 1 ONTAN6iENTIAL CURVE TO a� a =a THE RIGHT WITH A RADIUS OF 25.00 FEET AND A CHOMITBRA�tING OF NQRTH 86 DEGREES 29 MINUTES 53 SECONDS WEST, AN ARGJENGTH OF 40.71 FEET ;'.CE NORTHWESTERLY ALONG A CURVE TO THE RIGI WITH`t� OF 950.00EET AND A CHORD BEARING OF NORTH 30 DEGREES 00 T S26-. ONDS WEST, N ARC LENGTH OF 326.41 FEET; THENCE NORTH 67 DEGRE I. 57 SECONDS EAST, 243.73 FEET; THENCE SOUTHEASTERLY ALONG A NON`J NGENTIAL CURVE TO THE LEFT WITH A RADIUS OF 500.00 FEET AND t CHORD BEARING% #.SOUTH 31 DEGREES 07 MINUTES 50 SECONDS EAST, AN ARC hW_P � OF 209.70 FE I TIIENCE SOUTH 43 DEGREES 08 MINUTES 45 SECONDS EAS 52:80 T; THENCF°FORTH 46 DEGREES 51 MINUTES 15 SECONDS EAST, 287.40 FEET; THENWkOUTH 41DEGREES 08 MINUTES 45 ,_. SECONDS EAST, 80.00 FEET; ONCE NORJF 4 -BEG' E MINUTES 15 SECONDS EAST, . -=, 162.29 FEET; THENCE NOR- GREES 0 'MINUTES SECONDS WEST, 7.00 FEET; THENCE NORTH 46 DELI ES 51 TES 15 SECONDS EAST, 60.76 FEET; THENCE NORTHEASTERLY ALONG A CUR - - TO THE R GHT WITH A RADIUS OF 367.00 FEET AND A CHORD BEARING O I TH 58 Di ES 18 MIl [7TES 15 SECONDS EAST, AN ARC LENGTH OF 146.68 FEE 1 @I T I 9,-D GREES 45 MINUTES 15 SECONDS EAST, 121.97 FEET; THENCE NO TERL DYING A CURVE TO THE LEFT WITH A RADIUS OF 433.00 FEpQCHOREARING OF NORTH 37 DEGREES 51 MINUTES 31 SECONDS EAST, ATW C LE NCI F 482.0 - EE ; THENCE NORTHEASTERLY ALONG A CURVE TO THE ZRIG T WI TH A RADI_ S OF 2S:ET AND A CHORD BEARING OF NORTH 51 DEG 23 MINUTES 2(-. CONDS AST, AN ARC LENGTH OF 39.64 FEET; THENCE SOUTH � DEGREES 11 TES 08 SECONDS EAST, 763.20 FEET; THENCE SOUTHEAS jRLY ALONG CURVE TO THE RIGHT WITH A RADIUS OF 367.00 FEET AND A CHORD BEAR:G OF SO, _ 57 DEGREES 07 MINUTES 07 SECONDS EAST, AN ARC LENGTH OF 333 9 EE F- THENCE SOUTH 31 DEGREES 03 MINUTES 05 SECONDS EAST, 123.11 FEET; THEN. 58 DEGREES 56 MINUTES 55 SECONDS WEST, 7.00 FEET; Y _ THENCE SOU THE RLY ALONG A NONTANGENTIAL CURVE TO THE LEFT WITH A RADIUS OF 440.00 FEET AND A CHORD BEARING OF SOUTH 42 DEGREES 20 MINUTES 40 SECONDS EAST, AN ARC LENGTH OF 173.45 FEET; THENCE NORTH 32 DEGREES 01 MINUTES 21 SECONDS EAST, 80.28 FEET; THENCE SOUTHEASTERLY ALONG A NONTANGENTIAL CURVE TO THE LEFT WITH A RADIUS OF 360.00 FEET AND A CHORD BEARING OF SOUTH 60 DEGREES 42 MINUTES 59 SECONDS EAST, AN ARC LENGTH OF 101.11 FEET; THENCE SOUTH 68 DEGREES 45 MINUTES 32 SECONDS EAST, 784.84 FEET TO THE CENTER LINE OF CANNONBALL TRAIL; THENCE SOUTH 21 DEGREES 40 MINUTES 31 SECONDS WEST, ALONG SAID CENTER LINE, 331.43 FEET; THENCE SOUTH 21 DEGREES 14 MINUTES 17 SECONDS WEST, ALONG SAID CENTER LINE, 1261.58 FEET; THENCE NORTH 68 DEGREES 45 MINUTES 43 SECONDS WEST, 48.00 FEET; THENCE SOUTH 21 DEGREES 14 MINUTES 17 WEST, 470.00 FEET; THENCE SOUTH 57 DEGREES 14 MINUTES 17 SECONDS 1 WEST, 74.81 FEET TO THE NORTH LINE OF U.S. ROUTE 34; THENCE NORTH 85 DEGREES 32 J MINUTES 10 SECONDS WEST ALONG SAID NORTH LINE, 1983.32 FEET TO THE WEST LINE OF THE NORTHWEST QUARTER OF SAID SECTION 29; THENCE NORTH 01 DEGREES 14 MINUTES 12 SECONDS WEST ALONG SAID WEST LINE, 378.99 FEET TO THE POINT OF BEGINNING, IN THE UNITED CITY OF YORKVILLE, KENDALL COUNTY, ILLINOIS, AND CONTAINING 143.40 ACRES - A Aw AN 2 S: \Client Data \Harlem Irving Development \06009 \Documents \06 -11 -29 Development Agreement Project Business District V3.doc November 29, 2006 EXHIBIT B LEGAL DESCRIPTION OF THE BUSINESS DISTRICT THAT PART OF THE SOUTHEAST QUARTER OF SECTION 19, PART OF THE SOUTH HALF OF SECTION 20 AND PART OF THE NORTHWEST QUARTER OF SECTION 29, TOWNSHIP 37 NORTH, RANGE 7 EAST OF THE THIRD PRINCIPAL MERIDIAN DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHEAST CORNER OF THE SOUTHEAST QUARTER OF SAID SECTION 19; THENCE NORTH 01 DEGREES 13 MINUTES 53 SECONDS�ST, ALONG THE EAST LINE OF SAID SOUTHEAST QUARTER 310.20 FEET; THENCE) 8 PLY PERPENDICULAR TO SAID EAST LINE 198.00 FEET; THENCE NOHgH 16 DEGREES 23 MINUTES 58 SECONDS WEST, 862.81 FEET; THENCE NORTH 4.7ECRIES 51 MINUTES 14 __ SECONDS EAST, 126.15 FEET; THENCE WESTERLY ALONG ANONTANGENTIAL CURVE TO .= THE RIGHT WITH A RADIUS OF 25.00 FEET AND A CHORD BEARING OMNORTH 86 DEGREES 29 MINUTES 53 SECONDS WEST, AN ARC 40.71 FENTHENCE NORTHWESTERLY ALONG A CURVE TO THE RIGH FWITH A RADIUS OF 950 AND A CHORD BEARING OF NORTH 30 DEGREES 00 MINUTES 26 SECONDS WEST, AN ARC LENGTH OF 326.41 FEET; THENCE NORTH 67 M AtES 35 M TES 57 SECO NDS EAST, 243.73 FEET; THENCE SOUTHEASTERLY ALONG A N - r VGEN ';IAL CURVE TO THE LEFT WITH A RADIUS OF 500.00 FEET AND A CHORD BEARIQQF SOUTH 31 DEGREES 07 MINUTES 50 SECONDS EAST, AN ARC LENGTH OF 209.70 FT; THENCE SOUTH 43 >z DEGREES 08 MINUTES 45 SECONDS EAT ,,O FEET; THECIQRTH 46 DEGREES 51 MINUTES 15 SECONDS EAST, 287.40 FEET, ,SOUTH 43 `DEGREES 08 MINUTES 45 SECONDS EAST, 80.00 FEET; THENCE NORTH 46 T1REES 51TINUTES 15 SECONDS EAST, tt < v �• +s•- 162.29 FEET; THENCE NORTH 43 DEGREES`0.8 TESL 'CONDS WEST, 7.00 FEET; THENCE NORTH 46 DEGREES:= �'UTES 15 CONDST, 60.76 FEET; THENCE -.. NORTHEASTERLY ALONA CUR; TO THE3GHT WITH A RADIUS OF 367.00 FEET AND A CHORD BEARING OF 0RTH 58 DF�REES 18 MINUTES 15 SECONDS EAST, AN ARC LENGTH OF 146.68 F. _ TI]F_NCORTH 69 DEL'iREES 45 MINUTES 15 SECONDS EAST, 121.97 FEET; THENCE NO = -HE Y�LON A CURVE TO THE LEFT WITH A RADIUS ?u: OF 433.00 FEET AND A CHO..EA C`}�NORTH 37 DEGREES 51 MINUTES 31 SECONDS EAST, AN ARC - E I r OF 4 0 FEET; THENCE NORTHEASTERLY ALONG A CURVE TO THE RIGIVITIA =IDIUS OF 2i:0 FEET AND A CHORD BEARING OF NORTH 51 DEGREE�23 MINUTESi2(ECONI4ST, AN ARC LENGTH OF 39.64 FEET; THENCE SOU3 DEGREES 11 ES 0&SECONDS EAST, 763.20 FEET; THENCE SO TERLY ALONG CURVE TO THE RIGHT WITH A RADIUS OF 367.00 FEET AND A CHORD BH G OF SOU 57 DEGREES 07 MINUTES 07 SECONDS EAST, AN ARC LENGTH O = °; 94 FEET; NCE SOUTH 31 DEGREES 03 MINUTES 05 SECONDS EAST, 123.11 FEET; T CE Q°UTH 58 DEGREES 56 MINUTES 55 SECONDS WEST, 7.00 FEET; THENCE SOUTHE ALONG A NONTANGENTIAL CURVE TO THE LEFT WITH A RADIUS OF 440.00 FEET AND A CHORD BEARING OF SOUTH 42 DEGREES 20 MINUTES 40 SECONDS EAST, AN ARC LENGTH OF 173.45 FEET; THENCE NORTH 32 DEGREES 01 MINUTES 21 SECONDS EAST, 80.28 FEET; THENCE SOUTHEASTERLY ALONG A NONTANGENTIAL CURVE TO THE LEFT WITH A RADIUS OF 360.00 FEET AND A CHORD BEARING OF SOUTH 60 DEGREES 42 MINUTES 59 SECONDS EAST, AN ARC LENGTH OF 101.11 FEET; THENCE SOUTH 68 DEGREES 45 MINUTES 32 SECONDS EAST, 784.84 FEET. TO THE CENTER LINE OF CANNONBALL TRAIL; THENCE SOUTH 21 DEGREES 40 MINUTES 31 SECONDS WEST, ALONG SAID CENTER LINE, 331.43 FEET; THENCE SOUTH 21 DEGREES 14 MINUTES 17 SECONDS WEST, ALONG SAID CENTER LINE, 1261.58 FEET; THENCE NORTH 68 DEGREES 45 MINUTES 43 SECONDS WEST, 48.00 FEET; THENCE SOUTH 21 DEGREES 14 MINUTES 17 WEST, 470.00 FEET; THENCE SOUTH 57 DEGREES 14 MINUTES 17 SECONDS I i WEST, 74.81 FEET TO THE NORTH LINE OF U.S. ROUTE 34; THENCE NORTH 85 DEGREES 32 MINUTES 10 SECONDS WEST ALONG SAID NORTH LINE, 1983.32 FEET TO THE WEST LINE OF THE NORTHWEST QUARTER OF SAID SECTION 29; THENCE NORTH 01 DEGREES 14 MINUTES 12 SECONDS WEST ALONG SAID WEST LINE, 378.99 FEET TO THE POINT OF BEGINNING, IN THE UNITED CITY OF YORKVILLE, KENDALL COUNTY, ILLINOIS, AND CONTAINING 143.40 ACRES I I I ' 2 I S: \Client Data \Harlem Irving Development \06009 \Documents \06 -11 -29 Development Agreement Project Business District V3.doc November 29, 2006 EXHIBIT C STORM WATER /WATER IMPROVEMENT COSTS TO BE PAID FROM BUSINESS DISTRICT BOND PROCEEDS Storm Water /Water Improvement Project improvements include (i) the land to be dedicated to the City for civic arid;. recreational use; (ii) a portion of the land underlyin 3 _ detention pond and a portion of the detention poncjrrd }t' retaining wall servicing a portion of the Project;.(. the . =} fV construction of an on -site water system; (iv) th construction of an on -site fire protection system; mod (v) _- general contractor fees, design fees, and builder's` s insurance costs associated with such Improvements. = - Total Eligible Project Costs - $7,771,289 Total Funded Project Costs $ 6,771,289 N t 1 _P 2. ` II I Ili EXHIBIT D i i CERTIFICATE OF SUBSTANTIAL COMPLETION The undersigned, CANNONBALL, LLC, an Illinois limited liability company (the "Developer"), pursuant to that certain Development Agreement dated as of 2006, between the UNITED CITY OF YORKVILLE, Illinois (the "City's and the Developer (the "Agreement"), hereby certifies to the City as follows: 1. That as of , the construction of th o mWater /Water j Improvement Project (as that term is defined in the Aeement) has been substantially completed in accordance with the A- re men 2. The work has been performed in accordance with the C _ struction Plans t . - -� (as those terms are defined in the Agreement) J , 3. The Developer is issuing this Certificate of Aubstantial Corn e on to the City in accordance with the Agreemen to evidence ft e. Developers satisfaction of all material obligations and covenants wi:e�pect to such Project. I 4. The acceptance or the failure of the City to- bject in writing to this Certificate within thirty (30) dstYxe date of deliveaf this Certificate to the City (which written objection, if`Any, rnMstrbe deliverer to the Developer prior to the end of such thirty (30) days) s hall evi ee stisfaction of the AW Developer's agreementsand covenants perfo� the work and complete the W. Storm Water /WateLrT mp o, _ement Pi 'ect Project. = s- Upon such acc by he City, th&W- Oveloper may record this Certificate in 4 , I the office of the Kendall ount ec or rd der of Deeds. This Certificate is given without prejudice to any rights ag n f tl n p_ar6AIiich exist as of the date hereof or which may subseque - come in eing. Terms not otherwise defined herein shall have the meaning._ - uch terull in the Agreement. I I I I IN WITNESS WHEREOF, the undersigned has hereunto set his/her hand this day of CANNONBALL LLC, an Illinois limited liability company By: THE HARLEM IRVING COMPANIES BY: Title: ACCEPTED: UNITED CITY OF YORKVILLE, ILLINOIS By: Name: Title: (Insert Notary F. 5 s) and Legal Desc v*ption) EXHIBIT E CERTIFICATE OF STORM WATER/WATER IMPROVEMENT COSTS TO: United City of Yorkville, Illinois Office of Treasurer Yorkville, Illinois Attention: Re: -'ed to such Terms not otherwise defined herein shall have--_g. aning as. b terms in the Development Agreement dated as of. 2006 (thJ44greementj, A Er l _.? Wut�- between the City and CANNONBALL LLC, an Illinois limited liability compt , giy (the "Developer"). In connection with said Agree Una' rsigned here 4W b47iitates and certifies that: 1. Each item listed on Schedule I hereto is-,reimbursable Storm Water/Water Improvement colt and was incurre 'Ut connection with the W -44V . . . . . . construction of the Storm a t er-z, mprovemeli�lg,�oject. I QL 2. These Storm Water /Water`tinp of have been paid by the . r Developer and are gj zp ftursable uff` the Bu g s District Act, the Bond are Ordinance and thp� gree t snot previously been paid or 3. Each listed o _01 reimbursed "fro ne from, e Fund or any money derived from any fund established p Ordinance, and no part thereof has been i A in any -ther certificate previously filed with the City. There ot bee with or served upon the Developer any notice of y lien, right o-. . e- n or a achment upon or claim affecting the right of any on, firm or co ration to receive payment of the amounts stated in this re u. t, except to e extent any such lien is being contested in good faith. 5. ork which payment or reimbursement is requested has been performe cordance with the Concept Site Plan and the Agreement. 6. If any cost item to be reimbursed under this Certificate is deemed not to constitute a reimbursable Storm Water/Water Improvement cost within the meaning of the Business District Act, the Developer shall have the right to substitute other eligible Storm Water/Water Improvement costs for payment hereunder as are eligible under the application statutory authority. 7. The Developer is not in default or breach of any material term or condition of the Agreement beyond the applicable cure period, if any. Dated this day of By: CANNONBALL LLC, an Illinois limited liability company By: THE HARLEM IRVING COMPANIES Name: Title: Approved for Payment this day of UNITED CITY OF YORKVILLE, ILLINOIS By: Aw., Name: Title: A 2 S: \Client Data\Harlern Irving Development\06009\Documents\06-11-29 Development Agreement Project Business District V3.doc November 29, 2006 i SCHEDULEI STORM WATER /WATER IMPROVEMENT COSTS i I I - I ♦ 1 x y I,t a .Y 5 y ! F � i '"' '..__ ! 1• •i .. W �J� � . • � j �- - J C.YNDUL. PRDI[CI' DATA 1� n epM, rx.+:ercxrw> . _ } , ' •• ,orgy uK.nwn Ana_... a vu.a r. W e a ',` � �44rd�1 "ka .'mrcx'mag�n��..- �' =�n�h� �,�. �,� f $ :!q t ; %S�� C �ar,�nw�+�U� —•a. rn..tur Gr�' ... . a �`. ' � ' _+ •.'— g �� run rrn....... ,..... I. anaa6 7 } ; iJ� � r •�1- W ^' yy � ItIKrtIb R�N.I,4A _. ♦h•MM AKM45 OW M LX A— n J - 1 ••M -�� y` % M[}'1]IAi ATf DATA M ~ H •"�� `�• Al,� _ : / pew -'�rJ rogn.mow,,........�rvwu .Qi:. I 'r:. fr.. 9 1, ,: K " �. 1 „�! :1 ,...., •vo�a rlunY rum..��- '�i il, rll?: :a��. NFr4 11t �'! I` R I !` r rAaw ".,w�___.r•euAOr �+ •r. • `1 * �}� 7 .i • x nranvAkli y.nl,lq- ...,..•,. -.._ z C+' W W �• �, , >'� � ar� ,,: �.1 i. „ �,� ��, j ;� ' i 1 '. r ; ' } a. — V ,..v • _ t � y w � �u nix •: � '.'. ': f j 1 x' + / ...a, nw _.._.. ,W.3W Aau ^ ___. .x."n ♦ larA IIW[IINiwN. O i x �',rm. A Q Sy C (—Jt e), rlfi�j 0f V `1 /� y r 1, ♦ • ��, [ti .�� ” .� ' J � +. ,wualrrwrMlrA�..:rP�ur.wD �. ..w ia"rri ° rc�gµ.. g Wrrs+r r , "B4'rIAR+ : I UnA:1aln., 'ai19k19p ��jjjJJJ '''a ti's- p .... Isusrna'twl im.M - - r:.uuo wl• k'i11R , :li � � I rum uu_. -... -� .r:lo•nACUr' "w�l ' 1 '�' � . ,,, r A y } , � .. i . ° � A . lJlri n r r � 1 +'R�.�� p .:♦,.�.,, .o� �� _ — = Y\y J u�Trxl�'._RPIri'h6" �J r� N� „y � �blOiJipl- . \ �_� ni 1041 RA9TJh 1xRIWIP.,... -.W Col. �!. " r�' °s Ii ; + d RM1j.y ••��`. fma t.; °Yd°I• I "9 �.il !� , wa rix4r .airn.:..___:.m T may ..................... -...._ Y Iml Ma. aw . , ' ♦ . � ^r {o,A,,ru4c nln4Yglu r^ r e '”- �^.- .- •= ,C +++-- , .+ --'- r' _ .... _ ., - _- Li-^..3'— _ � �� ..wr+u„wlrA s v� 9r1EpcAN: II ♦ J a '_. -_._ , -• - -_ f T$i„- knllRrr rRMrNO....._ a'atu! K .m . , rtnun nWro 4r no,.•A.+ �i W .a ... �, 1 -. :a _ : = - rR.dpt55 O SITE PLAN .,m mxln'r� la usrtw .w rcda•uu ..i _ .... - ' 'S P`7 uu ,a.ro .. >� `ircw+u nnw.rtu • 1„ .:.:e w.. -,, ,,,,,,,,_r � "° ;rSSr°�w'.''+ ��••i` .Ynlllw }. . nsra"aa. nn. rvm.l.r,:! wwv ro re q' rem iNq' MV +OW ry�ji,IWin `�'� a iwr:K 41 .or rp.l '+alY, EXHIBIT G AUTHORIZATION TO RELEASE SALES TAX INFORMATION i The undersigned Taxpayer hereby authorizes the Illinois Department of Revenue ( "IDOR ") to disclose to the designated city, the amount of the local government's share of sales tax received on behalf of the taxpayer. Reporting for a period beginning with tax collected by the department during , (beg irrng month/ year) and ending with tax collected by the department in endin ° girth ear Provided, however, that only taxes for the store identified._'_... ow= Y . be disclosed and not receipts from the Taxpayer's other locations, if any. This information is to be released to the United Ci b_ Yorkville, attn: Eljrk, Finance j Officer, BUSINESS INFORMATION: T (Illinois Business Tax Number) ! R • (Taxpayer /Business Name) _ (Address) (City, Town Villa e or Ca ' TAXPAYER: The und: b =si ned o 1 a ,:n wner /authorized officer of this business. By: _ (Signs _ > e) (Print Name (Title) (Telephone Number) Note: All requests must have a beginning and ending date. Incomplete requests will be returned to the local government. �944 161 T PREIDE NARY LDHTED OFFERING MEMORANDUM DATED , 2006 s NEW ISSUE BOOK-ENTRY ONLY NOT RATED sy °o In the opinion of Foley & Lar&w LLP, Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions .,y .0 and assuming among other matters, compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax y ° b purposs under Section 103 of the Internal Revenue Code of 1986, as amended In the opinion of Bond Counsel, interest on the Bonds is not a .y sp c re erence item ar oses o the ederal individual or co orate alternative minimum taxes, altho such interest is included in .?, sP f preference f PuP f f rP g adrusted cu rrent 4. a of Dlinois income e corporat es. Bond Counsel express noopinion alterna gardin any other tax consequences related to ownership or disposition of, or p ° >, the accrual or receipt of interest on, the Bonds. See the heading "TAX MATTERS " a � S °w o 3 Adak $8,675,000` m UNITED CITY OF YORKVELLE Kendall County, Illinois H H Business District Revenue Bonds, Series 2007 o v „ (Storm Water/Water Improvement Project) H u p � C 7 ° a o Dated: Date of Issuance Due: As shown below is B U i y tr This Limited Offering Memorandum is being furnished solely for consideration by prospective sophisticated purchasers of the United N r+ c ti City of Yorkville, Kendall County, Business District Revenue Bonds, Series 2007 (Storm Water/Water Improvement Project) (the "Series 2007 vq o Bonds') with substantial financial resources and the experience and financial expertise to understand and evaluate the high degree of risk inherent S G a in this investment. Purchase of the Series 2007 Bonds will constitute an investment secured solely by a pledge of the Revenues (as defined herein) N c '�°—� and certain other amounts held in funds established pursuant to the Trust Indenture (as defined herein). The purchase of the Series 2007 Bonds is v an investment subject to a high degree of risk, including the risk of non payment of principal and interest See "Risk Factors" herein _ e B The Series 2007 Bonds are issuable only as fully registered bonds without coupons and, when issued, will be registered in the name o E " o Cede & Co., as nominee of The Depository Trust Company, New York, New York CDTC'). Individual purchases will be made in book entry form t: o ii only, in principal amounts of $100,000 or integral multiples of $5,000 in excess thereof. Beneficial Owners of the Series 2007 Bonds will not e u w receive physical certificates representing their interest in the Series 2007 Bonds purchased. Principal of, premium, if any, and interest (payable on January 1 and July 1 of each year, commencing July 1, 2007) on the Series 2007 Bonds are payable by The Bank of New York Trust Company, N.A., as Trustee, to DTC, which will remit such principal, premium, if any, and interest to DTC's Participants, who in turn will be responsible for m .5 o remitting such payments to the Beneficial Owners of the Series 2007 Bonds, as described herein. y L O The Series 2007 Bonds are subject to optional, mandatory and special mandatory redemption prior to maturity as set forth O m herein. THE BONDS ARE BEING ISSUED PURSUANT TO THE BUSINESS DISTRICT ACT OF THE STATE OF ILLINOIS, AS -a = AMENDED, AND, IN THE OPINION OF FOLEY & LARDNER LLP, CHICAGO, ILLINOIS, BOND COUNSEL, WILL CONSTITUTE VALID AND LEGALLY BINDING LIMITED OBLIGATIONS OF THE UNITED CITY OF YORKVILLE, ILLINOIS (THE "CITY') $ 'o PAYABLE SOLELY AND ONLY FROM THE REVENUES (AS DEFINED HEREIN) AND AMOUNTS ON DEPOSIT IN CERTAIN OF JIM c u FUNDS ESTABLISHED AND MAINTAINED PURSUANT TO THE INDENTURE, AS SET FORTH HEREIN. THE BONDS, TOGETHER t~ WITH THE INTEREST THEREON, ARE LIMITED OBLIGATIONS OF THE CITY, PAYABLE SOLELY FROM THE REVENUES AND e OTHER MONEYS DEPOSITED IN CERTAIN FUNDS AND ACCOUNTS ESTABLISHED PURSUANT TO THE INDENTURE. THE BONDS DO NOT CONSTITUTE GENERAL OBLIGATIONS OF THE CITY AND NEITHER THE FULL FAITH AND CREDIT NOR THE UNLIMITED TAXING POWER OF THE CITY SHALL BE PLEDGED AS SECURITY FOR THE PAYMENT OF THE BONDS. NO `o w 3 HOLDER OF ANY BOND SHALL HAVE THE RIGHT TO COMPEL THE EXERCISE OF ANY TAXING POWER OF THE CITY (OTHER THAN THE IMPOSITION OF THE BUSINESS DISTRICT SALES TA? FOR PAYMENT OF THE PRINCIPAL AMOUNT OF, PREMIUM, o g IF ANY, OR INTEREST ON THE SERIES 2007 BONDS. u � c = .? $ % Term Bonds Due January 1, 20_ Price: % $ % Term Bonds Due January 1, 20_ Price: % S h ti E The Bonds are subject to redemption prior to maturity as set forth herein. h v The Bonds are offered when, as and if issued, subject to prior sale, withdrawal or modification of the offer without notice, the approving .E legal opinion of Foley & Lardner LLP, Chicago, Illinois, Bond Counsel, and certain other conditions. See "TAX MATTERS" herein and Appendix F hereto. Certain legal matters will be passed upon for the Underwriter by Sonnenschein Nath & Rosenthal LLP, Chicago, Illinois, for the o Developer by Polsky & Associates Ltd., Chicago, Illinois, and for the City by John Wyeth, Esq., Yorkville, Illinois. It is expected that the Bonds will o 2 .2 be available for delivery to DTC in New York New York on or about , 2007. ;s d The date of this Limited Offering Memorandum is 2007. � E b H 'a char e ' Prelunmary, subject to g . LIM rE D OFFERING MEMORANDUM This Limited Offering Memorandum is being furnished by the United City of Yorkville, Kendall County, Illinois (the "City") to a limited number (35 or less) of sophisticated investors or registered investment companies under the Investment Company Act of 1940 solely for the purpose of each investor's consideration of the purchase of the Series 2007 Bonds described herein, and is not to be used for any other purpose or made available to anyone not directly concerned with the decision regarding such purchase. This Limited Offering Memorandum does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Series 2007 Bonds by any person, in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. Interested investors are being provided the opportunity to ask such questions and examine such documents and records as they may desire, and are advised to contact the Underwriter to secure further information concerning the Series 2007 Bonds. No dealer, broker, salesman or other person has been authorized to give any information or to make any representation other than as contained in this Limited Offering Memorandum in connection with the limited offering described herein, and, if given or made, such information or representation must not be relied upon as having been authorized. In accordance with, and as part of, its responsibilities to investors under the federal securities laws, as applied to the facts and circumstances of this transaction, the Underwriters have reviewed the information in this Limited Offering Memorandum, but does not guarantee the accuracy or completeness of such information. Neither the delivery, of this Limited Offering Memorandum nor the sale of any of the Series 2007 Bonds shall imply that the information herein is correct as of any time subsequent to the date hereof. This Limited Offering Memorandum should be considered in its entirety and no one factor should be considered more or less important than any other by reason of its position in this Limited Offering Memorandum. Where statutes, reports, agreements or other documents are referred to herein, reference should be made to such statutes, reports, agreements or other documents for more complete information regarding the rights and obligations of parties thereto, facts and opinions contained therein and the subject matter thereof. The Series 2007 Bonds have not been registered under the Securities Act of 1933, as amended, in reliance upon exemptions contained in such act. The registration or qualification of the Series 2007 Bonds in accordance with the applicable provisions of securities laws of the states in which the Series 2007 Bonds have been registered or qualified and the exemption from registration or qualification in other states cannot be regarded as a recommendation thereof. Neither these states nor any of their agencies have passed upon the merits of the Series 2007 Bonds or the accuracy or completeness of this Limited Offering Memorandum. Any representation to the contrary may be a criminal offense. THE SERIES 2007 BONDS HAVE RISK CHARACTERISTICS WHICH REQUIRE CAREFUL ANALYSIS AND CONSIDERATION BEFORE A DECISION TO PURCHASE IS MADE. THE SERIES 2007 BONDS SHOULD BE PURCHASED BY INVESTORS WHO HAVE ADEQUATE EXPERIENCE TO EVALUATE THE MERITS AND RISKS OF THE SERIES 2007 BONDS. PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THE CONTENTS OF THIS LIMITED OFFERING MEMORANDUM OR ANY PRIOR OR SUBSEQUENT COMMUNICATION FROM THE UNDERWRITERS, THEIR AFFILIATES, OFFICERS AND EMPLOYEES OR ANY PROFESSIONAL ASSOCIATED WITH THIS OFFERING AS INVESTMENT OR LEGAL ADVICE. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN COUNSEL, ACCOUNTANT AND OTHER ADVISORS AS TO FINANCIAL, LEGAL AND RELATED MATTERS CONCERNING THE INVESTMENT DESCRIBED HEREIN. 14516318 \V -3 UNITED CITY OF Yo RKVILLE , ILLINOIS MAYOR Arthur F. Prochaska, Jr. CITY ALDERMEN Joseph Besco Jason Leslie Jim Bock Marty Munns Valerie Burd Rose Spears Paul James Dean Wolfer TREASURER I William Powell j ' i i CITY ADNIINISTRATOR John Crois DIRECTOR OF PUBLIC WORKS Eric Dhuse i FINANCE DIRECTOR Susan Mika CITY CLERK Jacquelyn Milschewski PROFESSIONAL SERVICES BOND COUNSEL FINANCIAL ADVISOR Foley & Lardner LLP Speer Financial, Inc. Chicago, Illinois Chicago, Illinois TRUSTEE The Bank of New York Trust Company N.A. Chicago, Illinois CITY'S COUNSEL John Justin Wyeth, Esq. Yorkville, Illinois 145163181V -3 i TABLE OF CONTENTS INTRODUCTORYSTATEMENT ................................................................................. ..............................1 THE SERIES 2007 BONDS ................2 General Description of the Series 2007 Bonds ........................................................... ..............................2 i NoAdditional Bonds .............................................................. ..............................2 Redemption................................................................................. ............................... Book -Entry-Only System ............................................................................................ ..............................6 ESTIMATED SOURCES AND USES OF FUNDS ....................................................... ..............................9 PLANOF FINANCE ...................................................................................................... ..............................9 DEBT SERVICE REQUIREMENTS .. ............................... ........ .............................10 ' SECURITY AND SOURCE OF PAYMENT FOR THE SERIES 2007 BONDS : ...... ............................... 10 General....................................................................................................................... .............................10 BusinessDistrict Sales Tax ........................................................................................ .............................10 PledgedFunds ........................................................................................................... ..............................1 l Covenants of the City ...........................13 ........................... ............................... Investmentof Funds ................................................................................................... .............................15 THEDEVELOPMENT AGREEMENT ........................................................................ .............................15 General....................................................................................................................... .............................15 Fees............................................................................................................................ .............................16 Paymentof Developer Costs ...................................................................................... .............................16 Bonds and Business District Sales Taxes .................................................................. .............................16 Revenues.................................................................................................................... .............................16 Assignmentor Sale of Property ................................................................................. .............................17 SUMMARYOF THE PROJECT ................................................................................... .............................17 General.......... ............................... ... .............................18 SiteImprovements ..................................................................................................... .............................18 BusinessDistrict Improvements ................................................................................ .............................19 Zoning........................................................................................................................ ..................... .........19 Construction .......... ............................... Mechanical................................................................................................................. .............................19 Interior....................................................................................................................... .............................19 RetailInline Properties .............................................................................................. .............................20 LandSales .................................................................................................................. .............................20 LeaseTenants ............................................................................................................. .............................20 Small -shop Boutique Boulevard ................................................................................ .............................21 ConstructionManager ................................................................................................ .............................22 PropertyManagement ................................................................................................ .............................22 Environmental Site Assessment ................................................................................. .............................22 ProjectFinancing ....................................................................................................... .............................22 SitePlan ..................................................................................................................... .............................23 THEDEVELOPER ........................................................................................................ .............................24 THECTI' Y ...................................................................................................................... .............................26 CityGovernment and Services .................................................................................. .............................26 Transportation............................................................................................................ .............................27 YorkvillePublic Library ............................................................................................ .............................27 CommunityLife ......................................................................................................... .............................27 Education................................................................................................................... .............................27 Socioeconomic Information ........................ ............................... Housing...................................................................................................................... .............................29 Income....................................................................................................................... .............................30 i 14516318 \V -3 WealthIndicators ....................................................................................................... ............................. RetailActivity ............................................................................................................ ............................. THE BUSINESS DISTRICT AND BUSINESS DISTRICT SALES TAXES .............. .............................34 TheBusiness District Act .......................................................................................... .............................34 BusinessDistrict Sales Taxes .................................................................................... .............................35 Collectionof Taxes .................................................................................................... .............................36 Establishment of the Business District ....................................................................... .............................36 RISKFACTORS ............................................................................................................ .............................37 LimitedSource of Funds ............................................................................................ .............................37 Failure to Sell or Lease Property to Retailers ............................................................ .............................37 InformationNot Verified .......................................................................................... .............................37 Failureto Develop Properties .................................................................................... ..........................:..37 Riskof Construction ................................................................................................. .............................. 8 Riskof Occupancy ..................................................................................................... ............................. Risk of Changes in Market Conditions, Changes in General Economic Conditions and Future ................... ............................ Rik of Natural Disaster ............................................................... ............ 8 Risk of Anchor Purchase Agreement Terminations or Discontinued Operations .... ..............................3 8 Failure to Achieve Business District Sales Tax Projections ..................... Local, State and Federal Land Use Regulations ........................................................ .............................39 LandDevelopment Costs ........................................................................................... .............:............... Zoning Approvals and Building Permits ................................................................... .............................39 TaxRevenues ............................................................................................................. ............................. Bankruptcy.......................................................................................... ............................. Limitation on Remedies; No Acceleration ................................................................. .............................40 j LimitedSecondary Market ........................................................................................ ............................. SecondaryMarket and Prices ..................................................................................... ............................. Lossof Tax Exemption .............................................................................................. ............................. Risk of Legislative and Judicial Changes .................................................................. .............................41 ReportingRequirements ............................................................................................ ............................. PROJECTIONS............................................................................................................ ............................... 41 UNDERWRITING......................................................................................................... ............................. LIMITEDOFFERING ................................................................................................... ............................. LEGALOPINIONS ....................................................................................................... ............................. TAXEXEMPTION ........................................................................................................ ............................. CONTINUINGINFORMATION .................................................................................. .............................44 TheCity ..................................................................................................................... ............................. TheDeveloper ............................................................................................................ .......................:..... FINANCIAL ADVISOR ......................: ......45 ................................................................. ............................... LIMITEDOFFERING ................................................................................................... ............................. NOLITIGATION .......................................................................................................... ............................. TheCity ..................................................................................................................... ............................. TheDeveloper ............................................................................................................ ............................. NoRating ....................................................................................................................... ............................: Miscellaneous................................................................................................................. ............................. Authorization....................... ............................... .....47 ii APPENDICES APPENDIX A - Trust Indenture APPENDIX B - Development Agreement APPENDIX C - Business District Sales Tax Revenue Projections APPENDIX D - Bond Opinion I I� i I I 111 $8,675,000 UNTIED CITY OF YORKVIILLE Kendall County, Illinois Business District Revenue Bonds, Series 2006 (Storm Water/Water Improvement Project) INTRODUCTORY STATEMENT This Limited Offering Memorandum, which includes the cover page and Appendices attached hereto, is provided to famish information in connection with the issuance and sale by the United City of Yorkville, Kendall County, Illinois (the "City") of $8,675,000 aggregate principal amount of Business District Revenue Bonds, Series 2006 (Storm Water/Water Improvement Project) due January 1, 2027 (as the "Series 2007 Bonds "). The Series 2007 Bonds will be issued by the City pursuant to (i) the Business District Development and Redevelopment Act of the State of Illinois, 65 ILCS 5/11 -74.3 et seq. (the "Business District Act"), (ii) Ordinance Number 2006 - of the City adopted on , 2006 (the "Bond Ordinance ") providing for the issuance of the Series 2007 Bonds; and (iii) the Trust Indenture dated as of January 1, 2007 (the "Trust Indenture ") between the City and The Bank of New York Trust Company, N.A., as trustee (the "Trustee "). The Series 2007 Bonds will be issued as fully registered bonds without coupons in book -entry only form in denominations of $100,000 or any integral multiple of $5,000 in excess thereof. Capitalized terms used but not defined herein shall have the meanings given such terms in the Trust Indenture. See "APPENDIX A —Trust Indenture." The proceeds of the Series 2007 Bonds will be used by the City to: (i) make a deposit to the Debt Service Reserve Fund for the Series 2007 Bonds in an amount equal to of the principal amount of the Series 2007 Bonds (the "Debt Service Reserve Fund Requirement"); (ii) make a deposit to the j Administrative Expense Fund; (iii) pay capitalized interest on the Series 2007 Bonds through July 1, 2008, (iv) fund certain costs of issuing the Series 2007 Bonds; and (v) deposit the balance of the proceeds of the Series 2007 Bonds to the Improvement Fund. See "THE SERIES 2007 BONDS." The amount deposited into the Improvement Fund, together with the interest earnings thereon, will be used to pay qualifying costs under the Business District Act of Cannonball, LLC, an Illinois limited liability company (the "Developer"), for improvements benefiting the Kendall Marketplace Business District (the `Business District'). The Business District was established by the City pursuant to Ordinance No. 2006 -_ of the City adopted on December 2006. See "THE BUSINESS DISTRICT" and "SUMMARY OF PROJECT — Business District Improvements." The Business District is situated on the northwest comer of the intersection of Illinois Route 34 and Cannonball Trail in the City. The Developer proposes to develop a mix of retail stores, restaurants and office space within the Business District called Kendall Marketplace (the "Project"). The Project consists of approximately 143 acres of land with 822,000 square feet of gross leasable area. See "THE DEVELOPER" and "SUMMARY OF THE PROJECT." The Series 2007 Bonds will be secured solely by (i) the Business District Sales Taxes generated in the Business District, (ii) the amounts held in the funds and accounts under the Trust Indenture, including the Debt Service Reserve Fund, and ( iii) the investment income interest, profits and other income derived from the investment thereof. See "SECURITY AND SOURCE OF PAYMENT FOR THE SERIES 2007 BONDS — Business District Sales Taxes." Preliminary; subject to change. 14516318 \V -3 THE BONDS ARE BEING ISSUED PURSUANT TO THE BUSINESS DISTRICT TAX LAW OF THE STATE OF ILLINOIS, AS AMENDED, AND, IN THE OPINION OF BOND COUNSEL, WILL CONSTITUTE VALID AND LEGALLY BINDING LIMITED OBLIGATIONS OF THE CITY PAYABLE SOLELY AND ONLY FROM THE BUSINESS DISTRICT SALES TAXES AND AMOUNTS ON DEPOSIT IN CERTAIN OF THE FUNDS ESTABLISHED AND MAINTAINED PURSUANT TO THE INDENTURE, AS SET FORTH HEREIN. THE BONDS, TOGETHER WITH THE INTEREST THEREON, ARE LIMITED OBLIGATIONS OF THE CITY, PAYABLE SOLELY FROM THE COLLECTION OF THE BUSINESS DISTRICT SALES TAXES AND OTHER MONEYS DEPOSITED IN CERTAIN FUNDS AND ACCOUNTS ESTABLISHED PURSUANT TO THE INDENTURE, AND ANY DEPOSITS MADE TO THE DEBT SERVICE FUND FROM TRANSFERS FROM THE TRUSTEE FOR THE CITY'S BUSINESS DISTRICT ACT REVENUE BONDS, SERIES 2006. THE BONDS DO NOT CONSTITUTE GENERAL OBLIGATIONS OF THE CITY AND NEITHER THE FULL FAITH AND CREDIT NOR THE UNLIMITED TAXING POWER OF THE CITY SHALL BE PLEDGED AS SECURITY FOR THE PAYMENT OF THE BONDS. NO HOLDER OF ANY BOND SHALL HAVE THE RIGHT TO COMPEL THE EXERCISE OF ANY TAXING POWER OF THE CITY (OTHER THAN THE IMPOSITION OF THE BUSINESS DISTRICT SALES TAX) FOR PAYMENT OF THE PRINCIPAL AMOUNT OF, PREMIUM, IF ANY, OR INTEREST ON THE SERIES 2007 BONDS. A copy of any document or agreement referred to herein may be obtained upon request from William Blair & Company, L.L.C. (the "Underwriter"). - THE SERIES 2007 BONDS General Description of the Series 2007 Bonds The Series 2007 Bonds will be dated as of their date of issuance, and shall bear interest from and including their dated date until maturity or earlier redemption thereof at the rate(s) per annum set forth on the cover page of this Limited Offering Memorandum payable on each January 1 and July 1, commencing July 1, 2007 (each, an "Interest Payment Date "), and shall mature (subject to prior redemption) on the dates and in the principal amounts as set forth on the cover page hereof. The Series 2007 Bonds will be issued only as fully registered bonds without coupons in book -entry form, initially in authorized denominations of $100,000 or any integral multiple of $5,000 in excess thereof. i The Depository Trust Company, New York, New York ( "DTC "), will act as securities depository for the Series 2007 Bonds. Principal of, premium, if any, and interest on the Series 2007 Bonds will be paid by the Trustee directly to DTC, which will remit such principal, premium, if any, and interest to DTC's Participants, who, in turn will be responsible for remitting such payments to the Beneficial Owners of the Series 2007 Bonds. See "THE SERIES 2007 BONDS - Book -Entry-Only System." Interest on the Series 2007 Bonds will be compounded or paid in lawful money of the United States of America and calculated on the basis of a 360 -day year composed of twelve 30 -day months. No Additional Bonds No additional bonds other than those described herein and in the Trust Indenture shall be issued. i 2 Redemption The Series 2007 Bonds will be subject to redemption prior to their stated maturity as set forth in the Trust Indenture as generally described in this Limited Offering Memorandum. i Optional Redemption. The Series 2007 Bonds maturing on and after January 1, 20_ are subject to optional redemption prior to maturity at the option of the City, in whole or in part, on any date on or after January 1, 2016, at a redemption price (expressed as a percentage of the principal amount of the below, plus accrued and aid interest to the date of unpaid Series 2007 Bonds to be redeemed), as set forth , p p redemption Redemption Dates _ Red emptio n Prices January 1, 2017 through December 31, 2017 102% January 1, 2018 through December 31, 2018 101% January 1, 2019 and thereafter 100% Special Mandatory Redemption. The Series 2007 Bonds maturing January 1, 20_ are subject to mandatory redemption, in whole or in part, by lot, from available monies on deposit in the Improvement Fund on and after January 1, 20_. The Residual Fund and the Improvement Fund are funds established pursuant to the Trust Indenture. Any such redemption shall occur on an Interest Payment Date occurring on or after January 1, 20_ when monies are transferred to the Bond Fund from the Improvement Fund j are in excess of the amount needed to redeem at least one Bond at the Redemption Prices (expressed as percentages of the principal amount of the Series 2007 Bonds to be redeemed) set forth in the table below plus and unpaid interest to the Redemption Date. Whenever the Trustee determines that monies in the Improvement Fund transferred to the Bond Fund or are sufficient to effect a special mandatory redemption, the Trustee will redeem as many Series 2007 Bonds maturing January 1, 20_ as possible from the monies transferred from the Improvement Fund at the Redemption Prices (expressed as percentages of the principal amount of the Series 2007 Bonds to be redeemed) set forth below plus accrued and unpaid interest to the Redemption Date. Redemption Dates Redemption Prices January 1, 20_ through 101% December 31, 20_ January 1, 20_ and thereafter 100% Mandatory Sinking Fund Redemption, January 1, 20 Bonds. The Series 2007 Bonds maturing on January 1, 20_ are subject to mandatory redemption in part, by lot, from Sinking Fund Installments on each January 1 commencing on January 1, 20 ___, at a Redemption Price equal to the principal amount of the Series 2007 Bonds to be redeemed plus, in each case accrued and unpaid interest to the date fixed for redemption, without premium, on the respective dates and in the amounts set forth in the following table: 3 Redemption Date Principal Amount to be { (January 1) Redeemed *Maturity j Mandatory Sinking Fund Redemption, January 1, 20 Bonds. The Series 2007 Bonds maturing on January 1, 20_ are subject to mandatory redemption in part, by lot, from Sinking Fund Installments on each January 1 commencing on January 1, 20 at a Redemption Price equal to the principal amount of the Series 2007 Bonds to be redeemed plus, in each case, accrued and unpaid interest to the date fixed for redemption, without premium, on the respective dates and in the amounts set forth on the following table: Redemption Date Principal Amount to be I (January 1) Redeemed $ �I i I *Maturity If any Series 2007 Bonds are redeemed other than from Sinking Fund Installments, the principal amount of such Series 2007 Bonds that have been redeemed will be applied to the appropriate Sinking Fund Installments in inverse order of maturity. Selection of Series 2007 Bonds to be Redeemed The Series 2007 Bonds will be redeemed in inverse order of maturity and within a maturity beginning with the latest Sinking Fund Installment. If less than all of Series 2007 Bonds of a maturity then outstanding are to be redeemed, the Trustee will assign to each Series 2007 Bond of such maturity then outstanding a distinctive number for each $100,000 and each $5,000 in excess thereof of the principal amount of such Series 2007 Bond of such maturity and shall select by lot, using a method of selection that the Trustee has deemed proper and from the numbers assigned to the registered Series 2007 Bonds, as many numbers as, at $100,000 and $5,000 in excess thereof of the principal amount for each number, that equal the principal amount of the Series 2007 Bonds of a maturity that is to be redeemed. Redemption Provisions, Notice of Redemption As soon as practicable after (a) receipt by the City of its election to redeem Bonds pursuant to the Optional Redemption or at any time after January 1, 20_ there being on deposit moneys in the 4 i Improvement Fund sufficient to redeem Bonds pursuant to "Special Mandatory Redemption," the Trustee will, in accordance with the terms and provisions of the Series 2007 Bonds and the Trust Indenture, select the Series 2007 Bonds of such maturity or portions thereof to be redeemed and will give written notice at such time, in the name of the City, of the redemption of Series 2007 Bonds of such maturity, which notice shall specify the complete official name of the Series 2007 Bonds, CUSIP numbers of all Series 2007 Bonds being redeemed, the date of the notice (i.e. the date of general mailing of notices to Bondholders and information services), the redemption date, the Redemption Price (as defined in the Trust Indenture), the Trustee's name, principal corporate trust office address, contact person and phone number, the date of issue, interest rate, maturity date and the place or places where amounts due upon such redemption will be payable, and, if less than all of the Series 2007 Bonds of a maturity are to be redeemed, the letters and numbers or other distinguishing marks of such Series 2007 Bonds so to be redeemed and the amount of each Series 2007 Bond called. Such notice shall further state that (1) any redemption pursuant to the paragraph entitled "Optional Redemption" herein is conditioned upon the deposit of moneys in an amount equal to the amount necessary to effect the redemption with the Trustee no later than the date that is five (5) Business Days prior to the redemption date, (2) the City retains the right to rescind such notice on or prior to the scheduled redemption date, (3) such notice and optional redemption shall be of no force and effect if such moneys described in clause (1) immediately above are not so deposited with the Trustee or if the notice is rescinded by the City as described in clause (2) immediately above, (3) if moneys are deposited in accordance with clause (1) immediately above and the City does not rescind such notice of redemption, then on such redemption date there shall become due and payable upon each Bond to be redeemed the Redemption Price thereof, or the Redemption Price of the portion of the principal amount fo the Series 2007 Bonds to be redeemed in the case of a Series 2007 Bond to be redeemed in part only, together with interest accrued to such date, only upon physical presentation and surrender of such Bond, and that from and after such date interest thereon shall cease to accrue and be payable. i Except as otherwise provided in the Trust Indenture, the Trustee will mail, by first -class mail, a copy of such redemption notice, postage prepaid, not less than 30 days and not more than 60 days before the date fixed for redemption, to the registered owner of any Series 2007 Bond all or a portion of which is to be redeemed, at the address appearing upon the Bond Register. Each redemption notice will also be sent by certified mail, return receipt requested, overnight delivery service or other secure means, postage prepaid, to any holder of $1,000,000 or more in aggregate principal amount of Series 2007 Bonds to be redeemed, to certain municipal registered Securities Depositories which are known to the Trustee to be holding Bonds and to at least two of the national Information Services that disseminate securities redemption notices, at least ten days and not more than 45 days' to the redemption date, and in the case of the notice to Securities Depositories, when possible, at least two days prior to the mailing of notices required by the first paragraph of this Section. i Any registered owner holding at least $1,000,000 in principal amount of Bonds of a maturity may request that the Trustee send an additional copy of any notice (default, redemption or any other correspondence) by first class mail, postage prepaid, to a second address simultaneously with, and in addition to the regular mailing of such notices to registered owners recorded on the books of the Trustee. Failure to give notice by mailing to the holder of any Series 2007 Bond designated for redemption or to any Securities Depository or Information Service, failure to receive such notice, any defect of any notice so mailed or the failure to give timely notice of redemption shall not affect the validity of the proceedings for the redemption of any Bond. Any optional redemption pursuant to the paragraph entitled "Optional Redemption" above may be rescinded in whole or in part by the City at any time prior to the fifth Business Day prior to the redemption date if the City delivers to the Trustee a notice of such rescission. The Trustee shall give 5 prompt notice of such rescission to the holders of the Bonds in the same manner as the redemption notice. ' Any Bonds that are subject to an optional redemption that has been rescinded shall remain Outstanding, and the rescission shall not constitute an Event of Default. Further, in the case of an optional redemption pursuant to entitled "Optional Redemption" above, the failure of the City to deposit sufficient funds with the Trustee to cause such redemption (in whole or in part) shall not constitute an Event of Default, and the Trustee shall give prompt notice to the holders of the Bonds that such redemption did not occur and that the Bonds called for redemption and not so paid remain Outstanding in the same manner as the redemption notice was given by the Trustee. Purchase in Lieu of Redemption If at any time moneys are held in the Bond Fund to be used to redeem Series 2007 Bonds, in lieu of such redemption, the City may direct the Trustee to use part or all of such moneys to purchase Series 2007 Bonds of the maturity which would otherwise be subject to redemption from such moneys. The purchase price of such Series 2007 Bonds, excluding accrued interest, shall not exceed the applicable Redemption Price of the Series 2007 Bonds of such maturity which would be redeemed but for the operation of this paragraph. Any such purchase must be completed prior to the time the Trustee selects Series 2007 Bonds of such maturity for redemption. All Series 2007 Bonds so purchased shall be canceled by the Trustee, and the principal amount so purchased shall be applied as a credit against the City's obligation to redeem such Series 2007 Bonds from such moneys. Savings resulting from the purchase of Series 2007 Bonds at less than their respective redemption prices shall be used to purchase or redeem additional Series 2007 Bonds of the same maturity to the extent permitted by the provisions hereof. Book Entry-Only System THE INFORMATION IN THIS SECTION HAS BEEN FURNISHED BY THE DEPOSITORY TRUST COMPANY. NO REPRESENTATION IS MADE BY THE UNDERWRITERS, THE CITY OR THE DEVELOPER AS TO THE COMPLETENESS OR ACCURACY OF SUCH INFORMATION OR AS TO THE ABSENCE OF MATERIAL ADVERSE CHANGES IN SUCH INFORMATION SUBSEQUENT TO THE DATE HEREOF. NO ATTEMPT HAS BEEN MADE BY THE UNDERWRITERS, THE CITY OR THE DEVELOPER TO DETERMINE WHETHER DTC IS OR WILL BE FINANCIALLY OR OTHERWISE CAPABLE OF FULFILLING ITS OBLIGATIONS. NEITHER THE CITY NOR THE BOND REGISTRAR AND PAYING AGENT WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR THE PERSONS FOR WHICH THEY ACT AS NOMINEES WITH RESPECT TO THE SERIES 2007 BONDS, OR FOR ANY PRINCIPAL, PREMIUM, IF ANY, OR INTEREST PAYMENT THEREOF. The Depository Trust Company ( "DTC "), New York, New York, will act as securities depository for the Series 2007 Bonds. The Series 2007 Bonds will be issued as fully- registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully- registered Bond certificate will be issued for the Series 2007 Bonds, in the aggregate principal amount of such issue, and will be deposited with DTC. DTC, the world's largest depository, is a limited - purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants ( "Direct Participants ") deposit with DTC. I 6 DTC also facilitates the post trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations.. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation ( "DTCC "). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, FICC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( "Indirect Participants "). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of Series 2007 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2007 Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond (`Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from i DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2007 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Series 2007 Bonds, except in the event that use of the book -entry system for the Series 2007 Bonds is discontinued. To facilitate subsequent transfers, all Series 2007 Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2007 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2007 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Series 2007 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Series 2007 Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the Series 2007 - Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Series 2007 Bonds may wish to ascertain that the nominee holding the Series 2007 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Series 2007 Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 7 Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Series 2007 Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Series 2007 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Series 2007 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detailed information from City or Trustee, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC nor its nominee, Trustee, or City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the Series 2007 Bonds at any time by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, Bond certificates are required to be printed and delivered. I The City may decide to discontinue use of the system of book -entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered. The information in this section concerning DTC and DTC's book -entry system has been obtained from sources that the City believes to be reliable, but City takes no responsibility for the accuracy thereof. The City may decide to discontinue use of the system of book -entry transfers through DTC (or a successor securities depository). In that event, the Bond certificates will be printed and delivered. THE TRUSTEE, ANY PAYING AGENT, THE DEVELOPER AND THE CITY WELL NOT HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY PARTICIPANT, ANY PERSON CLAIMING A BENEFICIAL OWNERSHIP INTEREST IN ANY SERIES 2007 BOND UNDER OR THROUGH DTC OR ANY PARTICIPANT, OR ANY u rB zK PERSON THAT IS NOT SHOWN ON THE REGISTRATION BOOKS OF THE TRUSTEE AS BEING -A BONDOWNER, WITH RESPECT TO THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY PARTICIPANT, THE PAYMENT BY DTC OR ANY PARTICIPANT OF ANY AMOUNT IN RESPECT OF PRINCIPAL OF OR PREMIUM, IF ANY, OR INTEREST ON ANY SERIES 2007 BOND, ANY NOTICE THAT IS REQUIRED TO BE GIVEN TO BONDOWNERS UNDER THE BOND ORDINANCE (EXCEPT IN CONNECTION WITH CERTAIN NOTICES OF DEFAULT AND REDEMPTION AND ANY NOTICES REQUIRED IN CONNECTION WITH CONTINUING DISCLOSURE REQUIREMENTS, IF APPLICABLE), THE SELECTION BY DTC OR ANY PARTICIPANT OF ANY PERSON TO RECEIVE PAYMENT IN THE EVENT OF A PARTIAL REDEMPTION OF THE SERIES 2007 BONDS, OR ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC OR ITS NOMINEE AS THE REGISTERED OWNER OF THE SERIES 2007 BONDS. 8 ESTIMATED SOURCES AND USES OF FUNDS Series 2006 Bonds Sources: Bond Proceeds $8,675,000 Interest Earnings Total Uses: Land Acquisition Public Improvements On -site Improvements Off -site Improvements Other Developer Costs Capitalized Interest Debt Service Reserve Costs of Issuance Total Interest earnings are calculated assuming earnings of 3% on the Reserve Fund and 1% on the Improvement Fund I PLAN OF FINANCE i i The proceeds of the Series 2007 Bonds will be used by the City to: (i) make a deposit to the Debt Service Reserve Fund for the Series 2007 Bonds in an amount equal to the Debt Service Reserve Fund Requirement; (ii) make deposit to the Administrative Expense Fund; (iii) pay capitalized interest on the Series 2007 Bonds through July 1, 2008, (iv) fund certain costs of issuing the Series 2007 Bonds; and (v) deposit the balance of the proceeds of the Series 2007 Bonds to the Improvement Fund. The amount deposited into the Improvement Fund, together with the interest earnings thereon, will be used to pay qualifying costs under the Business District Act of the Developer for improvements benefiting the Business District. See "SUMMARY OF THE PROJECT — Business District Improvements." i I i I I 9 DEBT SERVICE REQUIREMENTS 1, The following table sets forth the debt service schedule for the Series 2007 Bonds based on the maturity and interest rate set forth on the cover of this Limited Offering Memorandum, assuming no redemptions other than mandatory sinking fund redemptions are made: Debt Service Requirements Bond Year Ending Principal Interest Annual 2007 2008 2008 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 SECURITY AND SOURCE OF PAYMENT FOR THE SERIES 2007 BONDS General The Series 2007 Bonds and the interest thereon are limited obligations of the City secured and payable solely from the Revenues. "Revenues" include (i) the Business District Sales Taxes as and when received by the City, and (ii) investment income with respect to any moneys held by the Trustee in the funds created pursuant to the Trust Indenture. The term "Revenues" does not include any moneys or investments or investment income in the Rebate Fund. Business District Sales Tax The Series 2007 Bonds are secured by, among other things, the Business District Sales Taxes. "Business District Sales Taxes" means the one -half of one percent (0.5 %) Business District Sales Tax levied by the City in the Business District on sales by retailers and servicemen operating in the Business 10 District, and any tax intended to replace the same as enacted by law or ordinance of the City or any governmental authority. The imposition of the Business District Sales Taxes was authorized by the corporate authorities by Ordinance No. , adopted at a meeting held on , 2006. Pledged Funds In addition to the Improvement Fund, the Trustee will establish the following funds and accounts: Business District Sales Tax Account of the Business District Tax Allocation Fund; Debt Service Reserve Fund; Bond Fund, including a Capitalized Interest Account; Costs of Issuance Fund; Administrative Expense Fund; and Rebate Fund. 1 Application of Revenues. The City will deposit all Business District Sales Taxes with the Trustee j within 30 days of receipt and availability of report thereof. All Revenues will be deposited by the Trustee into the Business District Sales Tax Account. On each date specified below for each year Series 2007 Bonds remain Outstanding, the Trustee will, out of moneys in the Business District Tax Account, make the following transfers and credit the following amounts to the following Funds, but only to the extent moneys in the Business District Tax Account are then available and only within the limitations hereinafter indicated with respect thereto and only after the Trustee has made the required payment and transfer within such limitation prior in order as mentioned in the following enumeration: First On each Accounting Date ( "Accounting Date" means December 1 of each year, commencing December 1, 2007), to the Bond Fund, an amount equal to the sum of the Interest Requirement and the Principal Requirement (as such terms are defined in the Trust Indenture) for the next Bond Year to be applied as set forth in the Trust Indenture; Second On each Accounting Date, to the Administrative Expense Fund, an amount equal to the difference, if any, between the Administrative Expense Fund Requirement for the subsequent calendar year and the amount then in the Administrative Expense Fund, such amounts in such Fund to be applied as set forth in the Trust Indenture; and Third On each Accounting Date, to the Debt Service Reserve Fund an amount equal to the difference, if any, between the Debt Service Reserve Fund Requirement and the amount then in the Debt Service Reserve Fund to be applied as set forth below. Any Revenues remaining in the Business District Sales Tax Account shall be retained therein and applied at the direction of the Issuer to any purpose authorized by the Business District Act. Application of Debt Service Reserve Fund. Amounts in the Debt Service Reserve Fund will be withdrawn by the Trustee and used solely to pay first, on any Interest Payment Date or Principal Installment Date an amount sufficient to satisfy any deficiency in the Bond Fund, and second on each Interest Payment Date, any amount required to be deposited in the Rebate Fund to the extent sufficient funds are not otherwise made available to the Trustee for such purposes. At such time as the amounts in the Debt Service Reserve Fund are equal to or greater than the principal of, premium, if any, and interest due on the Outstanding Bonds, such amounts shall be transferred to the Bond Fund. No amount will be withdrawn from the Debt Service Reserve Fund except as expressly provided in the Trust Indenture. 11 Application of Bond Fund. The Trustee will charge the Bond Fund, on each Interest Payment Date and Principal Installment Date, respectively, an amount equal to the unpaid interest or Accreted Value due on the Series 2007 Bonds on such Interest Payment Date or Principal Installment Date (including, without limitation, to the extent allowed under applicable law, interest on overdue payments of Accreted Value, premium, and interest to the extent provided in the Trust Indenture), and shall cause the same to be applied to the payment of such interest or Accreted Value, when due. The Trustee, on each Principal Installment Date on which a Sinking Fund Installment is due, will also charge the Bond Fund the amount necessary for the purchase or the redemption of the Series 2007 Bonds with respect to which such Sinking Fund Installment is due. At the written direction of the City delivered prior to the selection of Series 2007 Bonds for redemption, the Trustee shall apply any money credited to the Bond Fund which has been set aside for the payment of a Sinking Fund Installment to the purchase or the redemption of the Series 2007 Bonds for which such Sinking Fund Installment is due in the manner provided in this paragraph; provided that no Series 2007 Bonds shall be purchased during the period of 30 days next preceding the date of a Sinking Fund Installment established for the Series 2007 Bonds. The purchase price paid by the Trustee (calculated excluding accrued interest but including any brokerage and other charges) for any Series 2007 Bond purchased pursuant to this paragraph shall not exceed the Redemption Price of such Series 2007 Bond applicable upon its redemption through application of the money available for such purchase on the next date on which such Series 2007 Bonds could be redeemed in accordance with its terms by operation of Sinking Fund Installments. All Series 2007 Bonds so purchased by the Trustee shall be cancelled. Not less than 30 nor more than 45 days before the date of each Sinking Fund Installment, the Trustee will call for redemption Bonds in an aggregate Accreted Value amount equal to such Sinking Fund Installment, reduced by the Accreted Value of Bonds purchased pursuant to the foregoing provisions of this paragraph, and on that date such Sinking Fund Installment is due the Trustee shall apply the money set aside therefore in the Bond Fund to the payment of the Redemption Price of the Series 2007 Bonds so called for redemption. Income realized from the investment or deposit of moneys in the Bond Fund shall be retained in the Bond Fund. No amount will be withdrawn from the Bond Fund except as expressly provided in the Trust Indenture. In the event that the amount credited to the Bond Fund is insufficient to pay interest or a Principal Installment on the Series 2007 Bonds when due, the Trustee shall credit to the Bond Fund the amount of such deficiency by charging the following Funds in the following order of priority: (a) the Business District Sales Tax Account; and (b) the Debt Service Reserve Fund. Improvement Fund. The Trustee shall establish, maintain and hold in trust a separate fund designated as the "Improvement Fund." Except as otherwise provided in the Trust Indenture, moneys in the Improvement Fund shall be used solely to finance the Improvements. The Improvement Fund shall consist of the amounts required or permitted to be deposited therein pursuant to any provision of the Trust Indenture and the proceeds of the Bonds shall be deposited therein in the amount set out in the Trust Indenture. Payments from the Improvement Fund shall be made by the Trustee as follows: (a) Payments from the Improvement Fund shall be made only upon receipt by the Trustee of a requisition executed by the City in the form of Request for Payment set forth in Exhibit B to the Trust Indenture; (b) Upon completion of the Improvements (as evidenced by a certificate of Issuer delivered to the Trustee), any moneys remaining in the Improvement Fund shall be transferred to the Bond Fund to redeem Series 2007 Bonds pursuant to the Trust Indenture, unless the City directs that such moneys be 12 deposited into the Business District Sales Tax Account, or applied to any other use, accompanied in either case by an opinion of Bond Counsel to the effect that such application will not adversely affect any applicable exemption from federal income taxation of the interest on the Series 2007 Bonds. Administrative Expense Fund. The Administrative Expense Fund shall be used to pay Administrative Expenses. Moneys on deposit in the Administrative Expense Fund shall be applied to the payment of any Administrative, Expenses requested by the Issuer to be paid. All amounts in the Administrative Expense Fund in excess of the Administrative Expense Fund Requirement shall be transferred to, and deposited in, the Business District Sales Tax Account. Cost of Issuance Fund. The City will, on the Closing Date, cause to be delivered from funds proceeds of the Series 2007 Bonds, to the Trustee for deposit in the Costs of Issuance Fund, amounts to pay costs incurred in connection with the issuance of the Series 2007 Bonds. The Trustee shall use such funds to pay the Costs of Issuance on the Closing Date or as soon as practicable thereafter in accordance with written instructions to be given to the Trustee by the City, upon delivery to the Trustee of appropriate invoices for such expenses. Any unexpended amounts attributable to deposits made by the City remaining on deposit in the Costs of Issuance Fund three months after the Closing Date shall be transferred to the Improvement Fund. Rebate Fund. The Rebate Fund shall not be subject to the lien or encumbrance of the Trust Indenture, but shall be held in trust for the benefit of the United States of America, and shall be subject to the claim of no other person. The interest on any Investment Obligations representing an investment of moneys in the Rebate Fund and any profit arising from the sale thereof shall be retained in the Rebate Fund. Any moneys deposited therein in accordance with the provisions of the Trust Indenture shall be used for no other purpose than to make payments to the United States Treasury, at the time and in the manner and amount specified in the Trust Indenture. Moneys Held for Particular Bonds. The amounts held by the Trustee for the payment of the interest, Accreted Value or Redemption Price due on any date with respect to particular Series 2007 Bonds will, pending such payment, be set aside and held in trust by it for the holders of the Series 2007 Bonds entitled thereto, and for the purposes hereof such interest, Accreted Value or Redemption Price, after the due date thereof, shall no longer be considered to be unpaid. Amounts Remaining in Funds. After full payment of the Series 2007 Bonds (or provision for payment thereof having been made in accordance with the Trust Indenture) and full payment of the Administrative Expenses and other amounts required to be paid under the Trust Indenture, any amounts remaining in any Fund under the Trust Indenture other than the Rebate Fund shall be paid to the City. Covenants of the City Pursuant to the Trust Indenture, the City has covenanted for the benefit of the owners of the Series 2007 Bonds (the `Bondowners ") that: Payment of Bonds. Subject to the provisions of the Trust Indenture, the City will pay or cause to be paid from the Revenues the Accreted Value of, premium, if any, and interest on the Series 2007 Bonds, at the dates and places and in the manner described in the Series 2007 Bonds, according to the true intent and meaning thereof. The Series 2007 Bonds are not a general obligation of the City, but are payable solely from the Trust Estate. The "Trust Estate" means all the property, rights, moneys, securities and other amounts pledged and assigned to the Trustee pursuant to the Trust Indenture. 13 i Payment of Lawful Charges and Priority of Lien. The City will pay all taxes and assessments or 1 other municipal or governmental charges, if any, lawfully levied or assessed upon the City in respect of the financing contemplated hereby or upon any revenue therefrom, when the same shall become due, and shall duly observe and comply with all valid requirements of any municipal or governmental authority relative to any part of the financing contemplated in the Trust Indenture, and shall not create or suffer to be created any lien or charge upon the Trust Estate prior to or on a parity with the pledge, security interest and lien created in the Trust Indenture for the payment of the Accreted Value of, premium, if any, and interest on the Series 2007 Bonds. Tax Covenants. The City shall not take any action that will cause the interest paid on the Series 2007 Bonds to be includable in gross income for federal income tax purposes. No part of the proceeds of the Series 2007 Bonds or any other funds of the City shall be used by the City at any time directly or indirectly to acquire securities or obligations, the acquisition of which, or which in any other manner, would cause any Series 2007 Bond to be an arbitrage bond as defined in Section 148 of the Code and any applicable regulations promulgated thereunder. The City will not take any action or permit or suffer any action to be taken if the result of the same would be to cause the Series 2007 Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Code and any applicable regulations promulgated thereunder. I At or prior to the Closing Date, the City will execute and deliver a tax agreement. Preservation of Revenues. The City will not take any action to reduce the amount of Business District Sales Taxes collected by the City, or to interfere with or impair the pledge and assignment under the Trust Indenture of the Trust Estate with the prior written consent of the Bondholders and the Trustee. The City also agrees to comply with Section _ of the Development Agreement entitled "Reporting" and to use its best efforts to obtain from the Illinois Department of Revenue all publicly available information necessary for the Trustee and the City to determine the Business District Sales Taxes, and, within thirty (30) days after receipt of each state report, the City shall deposit all Business District Sales Taxes it has received from the State of Illinois for the period covered by such state report with the Trustee and promptly upon receipt by the Trustee, the Trustee shall deposit all such Business District Sales Taxes in the Business District Sales Tax Account. Sales Tax Disclosure. a) The City will use its best efforts to obtain from the Illinois Department of Revenue such publicly available information relating to the Business District Sales Taxes as may be deemed necessary by the Trustee or the Underwriter and that, within thirty (30) days after receipt of such information, the City shall deliver the same to the Trustee and the Underwriter. b) The City shall provide to the Trustee and the Underwriter, within ten (10) days of receipt by the City, a copy of each annual audit of the City. C) The City shall provide to the Trustee and the Underwriter, within thirty (30) days after receipt thereof, any public information relating to the Business District Sales Taxes received by the City from the Illinois Department of Revenue. d) The City shall provide to the Trustee and the Underwriter, within thirty days (30) after receipt thereof, any quarterly construction progress reports and any tenant schedules, including lease expirations received from the Developers. 14 i e) The Trustee shall make available to the City, the Underwriter and any Bondholder, within ten (10) days of receipt of any request by the City, the Underwriter or any Bondholder, monthly account statements and all information received by the Trustee in connection with Section 6.10 of the Trust Indenture. f) Both the Trustee and the Underwriter are authorized pursuant to the Trust Indenture to deliver and provide any information received pursuant to Section 6.10 of the Trust Indenture to the any Bondholders. Investment of Funds Moneys on deposit in the various Funds and Accounts established under the Trust Indenture shall be invested from time to time in Investment Obligations pursuant to and solely at the direction of the City to the Trustee, either by written, telephonic, or oral investment instructions from the City, all of which shall be deemed controlling. If the Trustee shall have entered into any investment agreement requiring the investment of monies in any Fund or Account established under the Trust Indenture in accordance with such investment agreement and if such investment agreement constitutes an Investment Obligation, such monies shall be invested in accordance with such requirements. Such investments may be made through or with the investment or securities department of the Trustee or its affiliates, and the Trustee may charge its ordinary and customary fee for such trades, including cash sweep account fees. See "APPENDIX B —Trust Indenture," for the definition of "Investment Obligations." i THE DEVELOPMENT AGREEMENT Set forth below is a description of certain of the terms of Development Agreement between the City and the Developer. Such description of any such terms does not purport to be comprehensive or definitive and is qualified in its entirety by reference to the complete form of the Development Agreement included as APPENDIX B to this Limited Offering Memorandum. Capitalized terms that are used but not defined in this section "THE DEVELOPMENT AGREEMENT" have the meanings set forth in the Development Agreement included as APPENDIX B to this Limited Offering Memorandum. I General The Developer is required to commence construction of the Project within 120 days of the later to occur of (a) Developer obtaining all necessary permits and Governmental Approvals; or (b) 6 months after execution of the Development Agreement, and is obligated to substantially complete construction of the following approximate square feet of retail, restaurant and commercial space comprising the Project as follows: November, 2007 90,000 square feet of anchor space August, 2008 464,000 square feet (including approximately 280,000 square feet of anchor space) October, 2008 81,500 square feet March, 2009 149,000 square feet October, 2009 35,000 square feet The Project is to be constructed in accordance with the terms of the Development Agreement and the Concept Site Plan included as part of the Development Agreement. The Developer may enter into or cause to be entered into one or more construction contracts to complete the Project. 15 Fees Other than customary tap fees, no fee or charge of any description including, without limitation, building permits, plan review, inspection fees, or other regulatory fees or charges, will be imposed on the Developer or on the development and use of the Property unless, as of the date of the Development j Agreement, such fee or charge is in existence and being collected by the City on a uniform basis from all owners, users, and petitioners of property within the City. The City will not increase the amount of any fee or utility fees, application fees, or user fees during the term of the Development Agreement unless such increases are (i) made generally applicable to all owners and users of property within the City and (ii) reasonably related to increased costs incurred by the City in providing the services for which such fee is assessed. The Developer agrees to deliver quarterly construction progress reports to the Trustee and the Underwriter. Payment of Developer Costs The City agrees to pay the Developer for the verified Business District Improvement costs in the amount set forth in the Development Agreement. Subject to the terms of the Bond Ordinances, the Development Agreement and the Indenture, the City agrees to issue the Business District Sales Tax Bonds and to pay the Developer net proceeds in an amount equal to $6,771,289 for verified Business District Improvement costs as provided the Development Agreement. Nothing in the Development Agreement will obligate the City to issue Bonds to pay the Developer for any Business District Improvement cost that does not qualify for payment under the Business District Act. The Developer will, at the City's request, provide itemized construction loan draws, invoices, or receipts or, in the case of the acquisition of land, evidence that the Developer has acquired fee title to such land and evidence of the total acquisition price of such land, reasonably requested by the City to confirm that any such cost is so incurred and does so qualify. - I Bonds and Business District Sales Taxes The Business District Revenue Bonds will be secured by a pledge of the Business District Sales Tax Revenues. The Indenture provides for the segregation and deposit of the Business District Sales Taxes. The Business District Sales Tax Revenues will first be applied to the retirement of the Business District Revenue Bonds and then, to extent there are any excess Business District Sales Tax Revenues, in accordance with the Bond Ordinance and the Indenture. Revenues.. The City agrees to cause its Director of Finance or other financial officer to maintain the funds required by the Bond Ordinances and Indenture including such further accounts or sub - accounts as are required in the Development Agreement, by the Development Agreement or as the Director of Finance of the City may deem appropriate in connection with the administration of the fund pursuant to the Development Agreement. Subject to the requirements of the Act, the City will promptly upon receipt thereof deposit all Business District Sales Taxes in the fund or in such other accounts as required under the Bond Ordinances and Indenture. The City and the Developer agree to cooperate and take all reasonable actions necessary to cause the Pledged Revenues to be paid into the funds and accounts as provided in the Bond Ordinance, including the City's enforcement and collection of all such payments through all reasonable and ordinary legal means of enforcement. 16 To further assist the City in calculating the Business District Sales Tax Revenues, the Developer (or its successor(s) in interest as owner or owner(s) of the Property will, so long as any Bonds are outstanding, use all reasonable efforts to cause businesses operating on the Property, to properly collect and report any Business District Sales Tax Revenue. The Developer will satisfy this requirement by making a good faith effort to cause the fee title holder of the Property to include the obligation to execute a power of attorney authorization to release sales tax information to the City within any deed conveying a portion of the Property and into any lease entered into with any tenant. The City will file the reporting forms within seven (7) days after receipt thereof with the Illinois Department of Revenue. The Developer generally will have no obligation to enforce or collect the payment of Business District Sales Tax Revenue by any "retailer or servicemen." Any purchaser or transferee of the Property, and any lessee or other user of the Property, will use all reasonable efforts to timely furnish to the City such documentation as is required by the Development Agreement. So long as any Bond is outstanding, such obligation will be a covenant running with the land and will be enforceable as if such purchaser, transferee, lessee or other user of such real property were originally a party to and bound by the Development Agreement. i Assignment or Sale of Property All or any part of the Property or any interest in the Development Agreement may be sold, transferred, encumbered, leased, or otherwise disposed of at any time, and the rights of the Developer or any successors in interest under the Development Agreement may be assigned at any time before, during or after redevelopment of the Project, whereupon the party disposing of its interest in the Property or assigning its interest under the Development Agreement will be released from further obligation under the Development Agreement (although any such Property so disposed of or to which such interest pertains will remain subject to the terms and conditions of the Development Agreement), provided that until substantial completion of the Project, the rights, duties and obligations of the Developer under the Development Agreement cannot be assigned in whole or in part without the prior written approval of the City, which approval will not be unreasonably withheld, conditioned or delayed upon a reasonable demonstration by the Developer of the proposed transferee's or assignee's experience and financial capability to undertake and complete such portions of the Project and perform the Developer's obligations under the Development Agreement, all in accordance with the Development Agreement. Notwithstanding anything above to the contrary, no prior consent will be required in connection with: (a) the right of the Developer to encumber or collaterally assign its interest in the Property or any portion thereof to secure loans, advances or extensions of credit to fmance or from time to time refinance all or any part of the Project costs, or the right of the holder of any such encumbrance or transferee of any such collateral assignment (or trustee or agent on its behalf) to transfer such interest by foreclosure or transfer in lieu of foreclosure under such encumbrance or collateral assignment; or (b) the right of Developer to assign the Developer's rights, duties and obligations under the Development Agreement to certain related parties; provided that in each such event (i) the Developer will remain liable for the substantial completion of the Project and will be released from such liability hereunder only upon substantial completion of the Project and (ii) the Developer provides to the City 30 days' advance written notice of the proposed assignment or transfer. SUMMARY OF THE PROJECT The information provided in this section "SUMMARY OF TBE PROJECT" has been included because it may be considered relevant to an informed evaluation and analysis of the Series 2007 Bonds. No assurance can be given that the development of the Project will occur as described below. No assurance can be given that the development of the Project will be completed or that it will occur in a 17 i timely manner or in the configuration described herein. The Series 2007 Bonds and Revenues are not personal obligations of any land owners or the Developer. The Series 2007 Bonds are secured solely by the Revenues and certain other amounts on deposit with the Trustee. See "SECURITY AND SOURCE OF PAYMENT FOR THE SERIES 2007 BONDS." The Series 2007 Bonds will finance a portion of the construction of the Improvements necessary for the Project. General The Project will be located at the northwest comer of Route 34 (Veterans Parkway) and Cannonball Trail in Yorkville, Illinois. The site is generally rectangular in shape and consists of approximately 190 acres or 8,276,400 square -feet. Kendall Marketplace-is the commercial component of the Project that will contain an approximately 822,000 square -foot regional shopping center, which is part of the larger mixed -use commercial and residential site. The residential portion of the proposed development will consist of single family homes and town homes on approximately 47 acres of land. Overall, the topography of the subject property is level and at grade with the surrounding roadways. The soil is or will be of sufficient load bearing capacity to 'support the proposed structures. Existing drainage of the site is to the east and currently no public utilities are available to the site. The Illinois Department of Transportation has announced plans to construct the Prairie Parkway —a state highway connecting I -88 to I -80. The Prairie Parkway will have a future interchange west of the Marketplace at Route 34. Traffic patterns suggest that the intersection of Route 34 and Route 47 is the busiest intersection in Kendall County with 64,850 vehicles per day. As a result, access is considered good. Site Improvements Kendall Marketplace shopping center is expected to accommodate more than 60 commercial users including fashion retailers, specialty shops, a bookstore, an electronics store, and a sporting goods store, in addition to three national anchors. The shopping center will also offer a variety of fast -food and sit -down restaurants. Site improvements will include the re- construction and widening of Cannonball Trail to include turning lanes and deceleration lanes; the widening of Route US 34, new traffic signalization, the relocation of water and sanitary and storm sewers; the construction of Beecher Road, including grading, paving, striping, new traffic signalization and the relocation of water, storm and sanitary sewers and electrical service. Land will, also be developed for civic and park use, water and fire protection services for the shopping center, and detention, including retaining walls and railings. Kendall Marketplace will also include approximately 3,650 parking spaces, excluding spaces included on the outlots, with a combination of in -line, lifestyle center and outlot retail properties. Outlot space will include both fast -food and sit -down restaurants located along Route 34 and Cannonball Trail and a variety of retail and service uses. The Developer is currently in negotiations with two sit -down restaurants for two of the outlots. Significant interest has been received from other restaurants and banks for the outlot space and from a number of retailers for the inline space. 18 Business District Improvements The Developer will be paid from the amounts deposited into the Improvements Fund under the Indenture from the proceeds of the Series 2007 Bonds for the construction certain costs benefiting the Business District, including: (i) the land to be dedicated to the City for civic and recreational use; (ii) a portion of the land underlying the detention pond and a portion of the detention pond and retaining wall servicing a portion of the Project; (iii) the construction of an on -site water system; (iv) the construction of an on -site fire protection system; and (v) the general contractor fees, design fees, and builder's risk insurance costs associated with such improvements (the "Improvements "). Zoning On October 24, 2006, the Village adopted Ordinance No. 2006 -_ granting approval of the PUD Plan, special use, site plan, and appearance approval for the development of the Project and surrounding retail uses. The underlying new zoning is B -3, Business District. Construction Construction of the Kendall Marketplace began in October 2006 with Kohl's projected to open in November 2007. Most retailers project an opening in the spring or fall of 2008 and restaurant facilities anticipate openings between the spring 2008 and the fall of 2009. The fagade of the center will be constructed of masonry and exterior finish system. The average building height will be one story. The main center will have concrete footings and steel joist beams. The marketplace buildings will have steel columns. Floors will be concrete. The exterior walls will be masonry an d exterior finish system. The buildings that make up Kendall Marketplace will have a flat membrane roof system. The window system will be an aluminum window wall system. The Developer will sell and deliver anchor pads and some outlot pads. It is anticipated that outlot parcels will be both sold and/or leased. Mechanical i The Kendall Marketplace will have a roof top air handling unit systems. Electrical service will be provided by Commonwealth Edison and is assumed to be adequate. There will be hardwired smoke detectors in the buildings. The Marketplace will be fully sprinklered. Emergency lighting will be located throughout the Project. Interior The Kendall Marketplace buildings will have concrete flooring. As proposed, the ceilings will be drywall or lay -in ceiling tiles. It is anticipated that there will be a combination of lighting throughout the Kendall Marketplace. I i i I, II I 19 i Retail Inline Properties Kendall Marketplace will be anchored by Super Target, Home Depot, and a Kohl's store. These anchors will comprise approximately 367,000 square -feet. Several mid -size retailers, such as Michaels, Petsmart, T.J. Maxx and Linens N' Things, are expected to be tenants of the shopping center. Additional retail tenants will include an office supply store, fashion retailers, specialty shops, a bookstore, an electronics store, a sporting goods store and several restaurants. Building plans have not yet been completed, but the facades will be more decorative than a typical community or neighborhood shopping center. Each retail building will be constructed to the anchor specifications. For in -line space, construction will range from 60 to 250 feet in depth and width, per end - users' needs. Beecher Road, Route 34, and Cannonball Trail will provide access to Kendall Marketplace and the outlots. Land Sales Land sales will be made to the three large anchors: SuperTarget, Home Depot, and Kohl's. These land sales will occur in early 2007, with these anchors projected to open in fall 2007 and spring 2008. The Developer has entered in signed letters of intent with each of SuperTarget, Home Depot and Kohl's and is negotiating definitive sale agreements with each. SuperTarget will occupy an approximately 178,000 square -foot store within Kendall Marketplace. Target Corporation operates more than 1,300 Target stores in 47 states, including over 140 SuperTarget stores that include an upscale grocery shopping experience. In addition to the photo processing, pharmacy and restaurants found in almost every Target, SuperTarget includes in -store bakery, deli, meat and produce sections. Home Depot will occupy an approximately 103,000 square -foot store within Kendall Marketplace. Today, on average, Home Depot offers 40,000 home and industrial improvement products and is a nationally recognized retailer with more than 2,000 stores throughout the United States, Canada and Mexico. Home Depot also owns EXPO Design Center, an upscale home remodeling supply and design store, and The Home Depot Supply, which provides services for commercial use. Kohl's will occupy an approximately 86,000 square -foot store within Kendall Marketplace. Kohl's is a retail department store that sells apparel, shoes & accessories for women, children and men, plus home products such as small appliances, bedding, luggage and more. Kohl's Department Stores operate over 800 stores throughout the United States. Lease Tenants The base lease term varies by tenant with mid -size retailers generally signing initial leases for ten years (typically with two -four 5 year extension options), smaller retailers generally signing leases for 5 years, and restaurant leases generally lasting between 15 and 20 years. The annual rent would remain the same for five to ten years and would escalate 5% to 10% every 5 years as extension options are exercised. The Developer has signed letters of intent with a number of prospective tenants for leased space. These include: I Linens n' Things will occupy an approximately 28,000 square -foot store within Kendall Marketplace. Linens 'n Things, Inc. is one of the leading, national large- format retailers of home 20 textiles, housewares and decorative home accessories. Linens n' Things operate over 500 stores in 47 states. Petsmart will occupy an approximately 20,000 square -foot store within Kendall Marketplace. Petsmart, Inc. is the largest specialty retailer of services and solutions for the lifetime needs of pets. The company operates more than 860 pet stores in the United States and Canada. Payless ShoeSource will occupy an approximately 3,000 square -foot store within Kendall Marketplace. Payless ShoeSource is the largest specialty family footwear retailer in the Western Hemisphere. The Company sold more than 182 million pairs of shoes in fiscal 2005, generating $2.7 billion in net sales. Payless ShoeSource operates stores in all 50 U.S. states and has stores in Asia and across South America. The Developer expects to attract a variety of other potential retailers to Kendall Marketplace, including craft supply stores, cosmetic stores, shoe stores, salons, fashion retailers, and fast food outlets. t Potential retailers range in size from 1,200 square -feet to approximately 22,000 square -feet per store. Small-shop Boutique Boulevard s The small -shop boutique boulevard portion of Kendall Marketplace will resemble a lifestyle € center and include approximately 165,000 square -feet of retail, electronics, bookstore and restaurant space. The retail spaces range in size from 6,000 square -feet to 30,000 square -feet. Approximately three sit -down restaurants will be located in the lifestyle portion with each approximately 6,000 square -feet in size. In addition, proposed stores include a sporting goods store of 15,000 square -feet, an electronics store of approximately 30,000 square -feet, a bookstore of approximately 20,000 square -feet, and various retail, cafe and spa vendors. The boutique boulevard will also include a water feature, grassy promenade, and an appropriate number of parking spaces. Potential tenants of Kendall Marketplace's lifestyle center include national electronic and media retailers as well as a coffee chain, spa, and jewelry store. Potential retailers range in size from 1,200 square -feet to approximately 30,000 square -feet per store. The lifestyle center will also include various fast food restaurants and casual, sit down dining restaurants, which will offer a variety of family oriented menus and atmospheres, and. Outlot Properties There are 17 outlots proposed for Kendall Marketplace totaling approximately 87,000 square -feet of developable building area. The lots range in size from 1 acre to 2.65 acres with proposed users developing 3,000 to 6,500 square foot buildings per lot. Up to three of the outlots will be developed into 5,000 square -foot sites for bank use. Approximately 50,000 square -feet will be developed for sit -down and fast food restaurants that will cater to retail shoppers and the surrounding community. 21 Construction Manager J The Developer will be the construction manager for the Project. The Developer expects to retain one or more qualified construction contractors to construct the Improvements. Additional construction contractors will be engage to provide other construction services with respect to various aspects of the Project. Property Management The Harlem Irving Companies, Inc, will be the property manager for the Project. Harlem Irving currently manages 19 properties, encompassing more than 2.5 million square feet of retail space. In addition to Kendall Marketplace, the company is currently developing approximately 400,000 square feet of retail space, which it intends to manage upon completion of construction. The company consists of a seasoned team of professionals with more than 200 years of combined experience in developing, leasing, managing and marketing properties. See "THE DEVELOPER." • I Environmental Site Assessment i A Phase I Environmental Site Assessment dated December 7, 2005 for the area comprising the Business District was prepared for The Harlem Irving Companies, Inc., by Pioneer Engineering & Environmental Services, Inc. No recognized environmental conditions were identified in the report in connection with the subject property. Project Financing The total cost of the Project is estimated to be approximately $132 million. The Developer will enter in a three -year loan agreement with one or more lenders for up to approximately $69.1 million in loans to fund the construction and development of the Project. The construction and development loans will be used primarily to acquire land and construct the Project. The Developer will obtain additional funding for the Project from the sale of outlots, land sales to anchor tenants and the residential developer and site work reimbursement from anchor tenants and the residential developer. i 22 Site Plan [TO BE INSERTED] I i i I I i 23 THE DEVELOPER Cannonball LLC ( "Cannonball ") is an Illinois limited liability company established for the purpose of developing and owning Kendall Marketplace. Cannonball has three managers: MidAm Yorkville LLC, which is managed by principals of Mid- America Development Partners, LLC; The Harlem Irving Companies, Inc., of which Michael Marchese is President; and NF6 LLC, which is managed by New Frontier Developments Co. Mid 4m Yorkville LLC managed by Mid- America Development Partners LLC MidAm Yorkville LLC, is managed by Mid- America Development Partners, LLC ("Mid - America"). Mid - America is a real estate development firm headquartered in Oak Brook, Illinois employing 25 real estate professionals. The firm was founded in 2001 by David P. Bossy and Michael D. Firsel. The firm is committed to creating functional, attractive developments that enhance their communities and deliver an exceptional level of tangible value to both the partners and municipalities they serve. Currently, Mid -Am has more than 30 projects in various stages of development, including retail, hospitality and mixed -use projects that span more than seven million combined square -feet. Mid - Am generally is involved in the complete development of a project, beginning with the acquisition of land through the entitlement process and completion of construction. David Bossy was the President and co- founded Mid- America Real Estate Corporation in 1984. Since 1977, he has provided leadership and strategic direction for .commercial/retail brokerage and asset management operations as well as the acquisition, development and construction of approximately 35 million square -feet of shopping centers throughout the Midwest. In 1997 The Chicago Sun -Times named Mr. Bossy its Retail Broker of the Year. He has also assisted third party retail clients in developing and executing expansion plans of several nation chains such as Office Max, Comp USA, Old Country Buffet, Famous Footwear and Golfsmith. Additionally, he has been involved in the marketing and property disposition for several national retail chains including the Home Depot, TJX and New York Carpet World. Michael Firsel was a practicing attorney from 1973 to 1999, having formed his own firm in 1982. During that time, he concentrated on all types of real estate transactions, representing numerous developers in varying capacities and becoming especially familiar with tax increment financing issues and other areas of municipal finance. He acted as special counsel to several municipalities including the Village of Palatine, and the Village of La Grange during their respective redevelopment projects. In 1999, he left the full time practice of law to become a developer, founding Firson Investment and Development Company, LLC with Gerald W. Fogelson. From 1999 to 2001, Firson worked on the development of several projects including the Central Station project in downtown Chicago, Illinois as well as co- developing the LaGrange Triangle redevelopment project. Additionally, Mr. Firsel previously acted as Special Consultant in Downtown Redevelopment for the Village of Palatine. In 2001, Mr. Firsel came together with David Bossy to form Mid - America Development Partners, LLC which is currently involved in numerous developments. The Harlem Irving Companies, Inc. The Harlem Irving Companies, Inc. ( "Harlem Irving") brings more than 50 years of Chicago -area retail development, management and leasing experience to the proposed Kendall Marketplace. Harlem Irving is the 79 member of the International Council of Shopping Centers, established in 1957, which currently has over 61,000 members. Harlem Irving's experience in facility planning and market repositioning is best illustrated by its completed retail and residential projects including Harlem Irving Plaza shopping center, one of Chicago's first major shopping centers. 24 The Harlem Irving Companies' keen vision and effective management has enabled Harlem Irving Plaza to be developed into over 650,000 square -feet of gross leasable facilities consisting of approximately 125 tenants on its 21 -acre site. Other Chicago area developments Harlem Irving lists to its credit are as follows: Mixed Use Lincoln Park Commons Chicago, IL University Village * Chicago, IL The Emerald** Chicago, IL Residential The Cascades Condominiums Norridge, IL Glenlake Condominiums Chicago, IL Merrimac Square Condominiums Chicago, IL River's Edge Condominiums Chicago, IL Retail — Shonnina Centers i Dunning Square Chicago, IL Ninth & North Avenue Melrose Park, IL Twin Ponds Crystal Lake, IL Northlake Commons Northlake, IL Washington Square Chicago, IL Patriot Marketplace Glenview, IL Sutton Park Streamwood, IL Charter Oaks Peoria, IL Deerfield Depot Deerfield, IL Hickory Creek Marketplace Frankfort, It Willowbrook Town Center ** Willowbrook, IL 119' & Cicero ** Alsip, IL * In 2002, the Chicago Sun Times honored University Village with the "City Development of the Year" award. ** Currently being developed. Harlem Irving currently manages 16 properties, including stand -alone outparcels, that encompass approximately than 2.5 million square -feet of retail space. In addition to Kendall Marketplace, the Company is currently developing approximately 400,000 square -feet of retail space in several other shopping center developments, which it intends to manage upon completion of construction. Harlem Irving has forged relationships with national and regional retailers such as Home Depot, Jewel/Osco, Target, Kohl's, The Limited, Carson Pirie Scott, T.J. Maxx and Best Buy. Michael Marchese is the Chief Executive Officer and President of The Harlem Irving Companies, Inc., a company his father founded in 1954, which remains wholly owned by Mr. Marchese's family today. In Mr. Marchese's 36 years of dedication to Harlem Irving, he has been instrumental in formulating and implementing the company's growth and holdings. Current responsibilities as President include actively managing' all financial, leasing, development, marketing and operations efforts. Mr. Marchese's involvement in various projects has been vital to the growth of Harlem Irving and the overall success of the company. Rick Filler is the Executive Vice President and Chief Operating Officer of the Harlem Irving Companies. In this role, Mr. Filler oversees the entire development process and its staff. His scope of 25 responsibility includes land purchase, negotiations of anchor tenant leases, financing and construction. Over the past 23 years, Mr. Filler has cultivated a solid real estate background through his involvement in various aspects of development including office space, enclosed retail centers, strip shopping centers, i high -end residential developments and golf course communities. Before arriving at The Harlem Irving Companies, Mr. Filler held the title of Property Manager for RKKK Management, Lowry Development Company and HSW Investments, Inc. i NF6 LLC managed by New Frontier Developments Co. NF6 LLC is managed by New Frontier Developments Co. ( "New Frontier"). New Frontier is a co- developer of retail centers in the Chicago area with The Harlem Irving Companies. Founded in 1975 by William F. Cellini and Lawrence Haddad, New Frontier plans and develops residential and commercial real estate projects. New Frontier - related companies have constructed and currently manage approximately two million square -feet of single and multi -tenant commercial properties for nationally recognized businesses, agencies and institutions, including Ameritech and PacificCorp. The New Frontier group of companies has twenty years of experience managing a portfolio of 17,500 residential units, such as multi - family developments, luxury high -rise condominiums, and conventionally financed housing, located throughout the United States. William F. Cellini, head of the New Frontier group of companies, offers a business perspective for the analysis of planning and management issues and will contribute keen and invaluable insight to any development project. Mr. Cellini has served as Commissioner of Streets and Public Buildings for Springfield, Illinois; Illinois Director of Public Works and Buildings; and as the State's first Secretary of Transportation. In these positions, Mr. Cellini administered a budget of $1.5 billion for construction of buildings, highways and other transportation facilities. Mr. Cellini subsequently gained extensive public - sector transportation expertise and was appointed by President Ford to serve on the National Highway Traffic Safety Advisory Committee. THE CITY The United City of Yorkville (the "City") was established in 1834, and has been the county seat of Kendall County since 1859. It is located in northeastern Illinois on -the Fox River approximately 45 miles southwest of Chicago. Nearby communities include Oswego, Bristol, Plano, Millbrook, Helmar, Newark, Plattville, Montgomery, Sugar Grove and Plainfield. According to the 2000 Census, the City had a population of 6,189. A special census in December of 2003 resulted in a population total of more than 8,500. Subsequently, a special census completed in May of 2006 showed an increase in that total of 31.8% when the population increased to 11,204. City Government and Services The City follows a Mayor /City Council form of government in which the Mayor, Aldermen, City Clerk and City Treasurer are each elected to a four -year term. The City Council is comprised of the Mayor and eight Alderman (two Alderman elected from each of the City's four wards). The City is served by the Bristol/Kendall Fire Protection District which carries a Protection Class 6. It maintains a 24 hour paramedics unit and is a member of the Mutual Aid Box Alarm System. The Police Department employs twenty full -time officers, and emergency medical service is available 24 hours a day. 26 Transportation The City is approximately 15 miles west of Interstate 55 (I -55); almost 20 miles north of Interstate 80 (1 -80); and nearly 12 miles south of Interstate 88 (1 -88). Illinois Routes 47 and 34 intersect the City. O'Hare International Airport is approximately 40 miles northeast of the City and Midway Airport is about 40 miles to the east in Chicago. Aurora Municipal Airport, approximately ten miles to the north provides lighted runways and aircraft tiedowns, hangar, power plant repair, air frame repair and navigator aids. Additionally it offers freight, charter and helicopter services. The Burlington Northern Sante Fe Railroad in nearby Aurora provides commuter rail service. Yorkville Public Library I Yorkville Public Library (the "Library") serves the residents of the City and is a member of the Heritage Trail Library System. The Library began as a "Reading Room" in the 1800's and was actively used by the Yorkville Women's Club who in 1915 formally established it as a library. In 1965, the Library was turned over to the City of Yorkville. Over the years, it has occupied three locations and has had its growth funded through state programs, monetary gifts from businesses as well as individuals, and volunteer labor. It has recently undergone improvements with the addition of a CD -ROM full -text magazine index, and a referendum was passed in 2004 to authorize the sale of bonds to expand the facility. In addition to its extensive collection of books, Library resources include dial-a -story, local history, newspapers, sheet music, audio books, large print books, paperbacks, magazines, and videos and DVD's. Services available to the community are homebound service, interlibrary loan, kit for brothers and sisters of new babies, kits for sick kids, loft meeting area, photocopier, computers, tax forms, talking books, typewriter and voter registration. The Library offers the following online resources: animals and the environment; arts and crafts; children's book and screen characters; children's books and stories online; educational resources; exploration and museums; history and geography; holidays and celebrations; literature online; math and science; music and poetry; reference tools and homework help; space; and sports and recreation. Community Life The City contains approximately 60 acres of parks with picnic areas, a gazebo and recreational fields. Programs offered include aerobics, basketball, bus trips, bowling, Country/Western dance, crafts, dance, fishing, golf, soccer, sports club, street hockey, tee ball, tennis and tumbling. Residents also enjoy a golf course and forest preserves which are nearby but outside the City boundaries. Medical services are available at Rush/Copley Medical Center and Provena -Mercy Center, both located in Aurora. Additional facilities are provided by Sandwich Community Hospital in Sandwich, Illinois. These institutions are about fifteen miles from the City. Education Community Unit School District Number 115 (the "District") meets the elementary and secondary educational requirements of the City with two elementary schools, one junior high school and one high school. The District has a staff of approximately 200 teachers and administrators and approximately 3,200 students. The District has implemented a new computer curriculum, innovative interdisciplinary projects and advanced team building and support programs for students and staff. 27 Higher education opportunities are offered by Aurora University in nearby Aurora and Northern Illinois j University in DeKalb. In addition, Waubonsee Community College District No. 516 (the "College ") offers a wide variety of transfer, vocational, continuing and community education, children's and corporate development and training classes. It has 24 programs designed for transfer to senior institutions, and also offers occupational- oriented programs ranging in length from one semester to two years. The College recently opened a state -of -the -art academic computing center that houses eight classrooms and a 120 personal computer work station open lab. Socioeconomic Information Following are lists of large employers located in the City and in the surrounding area. Major City Employers(I) Approximate Name Product/Service Emplovment Wrigley Manufacturing Co., LLC Sugar Confections, Bubble Gum, & Candy 400 XPAC Tractor Radiators and Engines 150 Newly Weds Foods Food Seasonings, Cures and Binders 115 Brenart Eye Clinic Eyeglasses 50 Cascade Water Works Mfg. Co., Inc. Sewer &Piping Systems Repair Products 40 C.J. Insulation, Inc. Insulation Installation 40 Alpha Precision, Inc. Photographic Equipment & Supplies 28 G. H. Haws & Assocs. Plastic Molding Parts 25 Meadowvale, Inc. Ice Cream, Custard, Soft Serve and Shake Mixes 20 Note: (1) Source: 2006 Illinois Manufacturers Directory, 2006 Illinois Services Directory and a selective telephone survey. Major Area Employers(1) Aroximate Location Name Business or Product Emnlovment Sugar Grove Waubonsee Community College #516 Education 750 Oswego Coldwell Banker Primus Realty Residential Real Estate 550 Montgomery Lyons Workspace Products, LLC Steel Storage Equipment 400 Plainfield CB &I Constructors, Inc. Elevated Water Storage Tanks, Pressure Vessels 400 Montgomery Eby -Brown Co. Wholesale Tobacco & Confectionery 400 Montgomery The Dial Corp. Soap, Glycerin, & Fatty Acids 400 Montgomery Fox River Foods Inc. Wholesale Food 340 Plainfield CB &I Constructors, Inc. Storage Tank Insulation Equipment 300 Montgomery Processed Plastic Co. Plastic Toys 300 Plainfield Van Drunen & Sons Inc. R.J. Corporate Headquarter, Freeze -Dried Herbs 200 Plainfield Diageo North American, Inc. Gin & Vodka Distilling 200 Plainfield R.A. Bright Construction, Inc. Concrete, Excavating, Underground Utilities 200 Plainfield Flexi -Mat Corp. Foam Rubber & Sponge Pillows 180 Plainfield Fox Valley Press Newspaper Printing 170 Plano Fox Valley Molding, Inc. Compression Transfer & Injection Molding 150 Plano Plano Molding Co. Plastic Injection Molding Headquarters 150 Oswego Radiac Abrasives, Inc. Diamond Grinding Wheels 150 Montgomery Weyerhaeuser Co. Corrugated Cartons 150 Note: (1) Source: 2006 Illinois Manufacturers Directory, 2006 Illinois Services D and a selective telephone survey. The following tables show employment by industry and by occupation for the City, Kendall County (the "County") and the State of Illinois (the "State ") as reported by the 2000 Census. 28 Employment By Industry(1) The Citv The Countv - The State Classification Number Percent Number Percent Number Percent Agriculture, Forestry, Fishing, Hunting, and Mining........... 47 1.45% 380 1.32% 66,481 1.14% Construction .......................................... ............................... 332 10.23% 2,586 8.97% 334,176 5.73% Manufacturing ....................................... ............................... 564 17.38% 5,337 18.50% 931,162 15.96% Wholesale Trade .................................... ............................... 145 4.47% 1,187 4.12% 222,990 3.82% Retail Trade ........................................... ............................... 434 13.37% 3,416 11.84% 643,472 11.03% Transportation and Warehousing, and Utilities .................... 201 6.19% 1,657 5.75% 352,193 6.04% Information ............................................ ............................... 67 2.06% 774 2.68% 172,629 2.96% Finance, Insurance, Real Estate, and Rental and Leasing .... 216 6.65% 2,463 8.54% 462,169 7.92% Professional, Scientific, Management, Administrative, and Waste Management Services ......... ............................... 287 8.84% 2,369 821% 590,913 10.13% Educational, Health and Social Services .. ............................ 443 13.65% 4,691 16.26% 1,131,987 19.41% Entertainment and Recreation Services, Accommodation and Food Services ................................ ............................... 244 7.52% 1,740 6.03% 417,406 7.16% Other Services (except Public Administration) .................... 118 3.64% 1,246 4.32% 275,901 4.73% Public Administration ............................ ............................... 148 4.56% 996 3.45% 231.706 3.97% Total .......................... ............................... ..........................3,246 100.00% 28,842 100.00% 5,833,185 100.00% Note: (1) Source: U. S. Bureau of the Census. Employment By Occupation(1) The Citv The Countv The State Classification Number Percent Number Percent Number Percent Management and Professional .................... ..........................1,140 35.12% 9,817 34.04% 1,993,671 34.18% Service Occupations .............................. ............................... 416 12.82% 3,216 11.15% 813,479 13.95% Sales and Office Occupations ................ ..................... ........... 858 26.43% 8,310 28.81% 1,609,939 27.60% Farming, Forestry and Fishing .............. ............................... 0 0.00% 66 0.23% 17,862 0.31% Construction, Extraction, and Maintenance .......................... 300 9.24% 2,997 10.39% 480,418 8.24% Production, Transportation, and Material Moving ............... 532 16.39% 4.436 15.38% 917.816 15.73% Total .......................... ............................... ..........................3,246 100.00% 28,842 100.00% 5,833,185 100.00% Note: (1) Source: U.S. Bureau of the Census. Annual Average Unemployment Rates(1) Calendar The The The Year C� Coun State 1996 .....................5.9% 3.9% 5.3% 1997 .....................4.7% 3.1% 4.7% 1998 .....................4.3% 2.9% 4.5% 1999 .....................4.1% 2.8% 4.3% 2000 .....................2.1% 2.8% 4.4% 2001 .....................2.8% 4.0% 5.4% 2002 .....................3.6% 5.6% 7.1% 2003 .....................3.6% 6.0% 6.7% 2004 .....................3.4% 5.0% 6.2% 2005 .....................3.2% 5.2% 5.7% 2006(2) ................ N/A 4.1% 5.0% Notes: (1) Illinois Department of Employment Security. (2) Preliminary rates for the month of April 2006. Housing The 2000 Census reported that the median value of the City's owner- occupied homes was 29 $157,700, which compares with $154,900 for the County and $130,800 for the State. The 2000 market value of specified owner- occupied units for the City, the County and the State was as follows: Specified Owner- Occupied Units(]) The Citv The Countv The State Value Number Percent Number Percent Number Percent Less than $50,000 ............. 0 0.00% 93 0.65% 230,049 9.31% $50,000 to $99,999 ........... 150 9.35% 1,137 7.90% 651,605 26.38% $100,000 to $149,999 ....... 520 32.40% 5,485 38.12% 583,409 23.62% $150,000 to $199,999 ....... 657 40.93% 4,168 28.97% 429,311 17.38% $200,000 to $299,999 ....... 260 16.20% 2,873 19.97% 344,651 13.95% $300,000 to $499,999 ....... 18 1.12% 492 3.42% 163,254 6.61% $500,000 to $999,999 ....... 0 0.00% 128 0.89% 55,673 2.25% $1,000,000 or more........... 0 0.00% 12 0.08% 12.386 0.50% Total ...... ..........................1,605 100.00% 14,388 100.00% 2,470,338 100.00% Note: (1) Source: U.S. Bureau of the Census. I Income Per Capita Personal Income � for the Ten Highest Income Counties in the State(]) Rank 2000 1 ........................ ...........................Lake County ......................... $32,102 2 .......................... .........................DuPage County.................... 31,315 3 .......................... .........................McHenry County ................. 26,476 4 ........................... ........................Kendall County.................. 25,188 5 .................... ............................... Will County .......................... 24,613 6 ........................ ...........................Kane County ........................ 24,315 7 ........................ ...........................Cook County........................ 23,227 8 ............................ .......................Sangamon County................ 23,173 9 .......................... .........................Monroe County.................... 22,954 10 ........................ .........................Grundy County .................... 22,591 Note: (1) Source: U.S. Bureau of the Census. 30 The following shows a ranking of median family income for the Chicago metropolitan area among 102 Illinois counties from the 2000 Census. Ranking of Median Family Income(1) M. Family M. coun Income Rank DuPage County ................ $79,314 1 Lake County ..................... 76,424 2 McHenry County .............. 71,553 3 Will County ...................... 69,608 4 Kendall County .............. 69,383 5 Kane County .................... 66,558 6 Cook County .................... 53,784 14 Note: (1) Source: U.S. Bureau of the Census. i According to the 2000 Census, the City had a median family income of $67,521. This compares to $69,383 for the County and $55,545 for the State. The following table represents the distribution of family incomes for the City, the County and the State at the time of the 2000 Census. i I Median Family Income(1) i i The City The Countv The State Income Number Percent Number Percent Number Percent Under $10,000 .................. 7 0.42% 117 0.78% 156,205 5.00% $10,000 to $14,999 ........... 0 0.00% 169 1.13% 105,747 3.38% $15,000 to $24,999 ........... 79 4.79% 609 4.07% 273,712 8.76% $25,000 to $34,999 ........... 131 7.94% 966 6.45% 331,907 10.62% $35,000 to $49,999 ........... 284 17.21% 2,226 14.86% 506,429 16.20% $50,000 to $74,999 ........... 536 32.48% 4,492 29.99% 736,897 23.58% $75,000 to $99,999 ........... 328 19.88% 3,215 21.46% 445,390 14.25% $100,000 to $149,999 ....... 206 12.48% 2,372 15.84% 356,068 11.39% $150,000 to $199,999....... 35 2.12% 506 3.38% 101,955 3.26% $200,000 or more .............. 44 2.67% 306 2.04% 111.008 3.55% Total . ............................... 1,650 100.00% 14,978 100.00% 3,125,318 100.00% Note: (1) Source: U.S. Bureau of the Census. I I 31 According to the 2000 Census, the City had a median household income of $60,391. This compares to $64,625 for the County and $46,590 for the State. The following table represents the distribution of household incomes for the City, the County and the State at the time of the 2000 Census. I Median Household Income(1) The ON The Countv The State Income Number Percent Number Percent Number Percent Under $10,000 .................. 70 3.10% 435 2.32% 383,299 8.35% $10,000 to $14,999 ........... 54 2.39% 378 2.01% 252,485 5.50% $15,000 to $24,999 ........... 175 7.76% 1,308 6.96% 517,812 11.27% $25,000 to $34,999 ........... 193 8.55% 1,553 8.27% 545,962 11.89% $35,000 to $49,999 ........... 405 17.95% 2,771 14.75% 745,180 16.23% $50,000 to $74,999 ........... 652 28.90% 5,234 27.86% 952,940 20.75% $75,000 to $99,999 ........... 382 16.93% 3,635 19.35% 531,760 11.58% $100,000 to $149,999 ....... 246 10.90% 2,567 13.66% 415,348 9.04% $150,000 to $199,999 ....... 35 1.55% 563 3.00% 119,056 2.59% $200,000 or more .............. 44 1.95% 345 1.84% 128.898 2.81% Total ...... ..........................2,256 100.00% 18,789 100.00% 4,592,740 100.00% Note: (1) Source: U.S. Bureau of the Census. Wealth Indicators The private publication "Sales & Marketing Management' ' has developed a wealth indicator termed "effective buying income" (EBI) defined as money income less personal tax and non -tax payments, which is considered by the publication to be a bulk measurement of market potential. At December 31, 2004 (the latest data available), the County reportedly had a total EBI of $1,603,723,000 and a median household EBI of $55,275. The trend in median household EBI relative to the State and Kendall County, is shown below. Data for the City is not available. Effective Buying Income(1) 2000 2001 2002 2003 2004 Kendall County $53,508 $52,516 $55,183 $55,290 $55,275 State of Illinois 45,381 41.976 40,780 41,216 42,182 County as Percent of State 117.91% 125.11% 135.32% 134.15% 131.04% Note: (1) Source: "Sales & Marketing Management". 32 Retail Activity Following is a summary of the City's sales tax receipts as collected and disbursed by the State. Retailers' Occupation, Service Occupation and Use Tax(1) State Fiscal Year State Sales Tax Annual Percent Endina June 30 Distributions(2) Chance + ( -) 1996 $ 472,289 6.58 %(3) 1997 453,818 (3.91 %) 1998 850,072 87.32% 1999 936,217 10.13% 2000 1,024,813 9.46% 2001 1,003,021 (2.13 %) 2002 1,203,279 19.98% 2003 1,558,831 29.55% 2004 1,982,218 27.16% 2005 2,320,546 17.07% Growth from 1996 to 2005 423.66% Notes: (1) Source: Illinois Department of Revenue. (2) Tax distributions are based on records of the Illinois Department of Revenue relating to the 1% municipal portion of the Retailers' Occupation, Service Occupation and Use Tax, collected on behalf of the City, less a State administration fee. The municipal 1% includes tax receipts from the sale of food and drugs which are not taxed by the State. (3) The 1996 percentage is based on a 1995 sales tax of $443,140. I i I 33 i THE BUSINESS DISTRICT AND BUSINESS DISTRICT SALES TAXES The Business District Act i The Illinois Business District Act, 65 ILCS 5/11- 74.3 -1 et seq., permits an Illinois municipality to create and maintain business districts to provide opportunities for development or redevelopment and to attract sound and stable commercial development. The corporate authorities of a municipality may designate an area of the municipality as a business district. The business district should conform with a comprehensive plan of he municipality and a specific plan for business districts officially approved by the corporate authorities of the municipality after public hearings. In carrying out a business district development or redevelopment plan, the corporate authorities of a municipality has the power, among other things, to borrow funds as it may be deemed necessary for the purpose of business district development and redevelopment, and issue such obligation or revenue bonds as it deems necessary, such to applicable statutory limitations. A municipality may issue obligations in one or more series bearing interest at rates determined by the corporate authorities of the municipality by ordinance and secured by the business district tax allocation fund created under the Business District Act for the business district to provide for the payment of business district project costs. A municipality also has the power to impose a retailers' occupation tax and a service occupation tax, as well as a hotel operators occupation tax, in the business district for the planning, execution and implementation of business district plans and to pay for the business district project costs as set forth in the business district plan approved by the municipality. If the corporate authorities of a municipality desire to impose a tax by ordinance pursuant to the I Business District Act: i (a) The corporate authorities of the municipality must hold public hearings at least one week prior to designation of the business district and approval of the business district development or redevelopment plan. (b) The area proposed to be designated as a business district must be contiguous and must include only parcels of real property directly and substantially benefited by the proposed business district development or redevelopment plan. (c) The corporate authorities of the municipality shall make a formal finding of the following: (i) the business district is a blighted area that, by reason of the predominance of defective or inadequate street layout, unsanitary or unsafe conditions, deterioration of site improvements, improper subdivision or obsolete platting, or the existence of conditions which endanger life or property by fire or other causes, or any combination of those factors, retards the provision of housing accommodations or constitutes an economic or social liability or a menace to the public health, safety, morals, or welfare in its present condition and use; and (ii) the business district on the whole has not been subject to growth and development through investment by private enterprises or would not reasonably be anticipated to be developed or redeveloped without the adoption of the business district development or redevelopment plan. (d) The proposed business district development or redevelopment plan shall set forth in writing: (i) a specific description of the proposed boundaries of the district, including a map illustrating the boundaries; (ii) a general description of each project proposed to be undertaken within the business district, including a description of the approximate location of each project; (iii) the name of the proposed business district; (iv) the estimated business district project costs; (v) the anticipated source of funds to pay business district project costs; (vi) the anticipated type and terms of any obligations to be issued; and 34 (vii) the rate of any tax to be imposed pursuant to the Business District Act and the period of time for which the tax shall be imposed. If the corporate authorities of a municipality have approved a business district development or redevelopment plan and have elected to impose a tax by ordinance pursuant to the Business District Act, each year after the date of the approval of the ordinance and until all business district project costs and all municipal obligations financing the business district project costs, if any, have been paid in accordance with the business district development or redevelopment plan, but in no event longer than 23 years after the date of adoption of the ordinance approving the business district development or redevelopment plan, all amounts generated by the retailers' occupation tax and service occupation tax shall be collected and the tax shall be enforced by the Department of Revenue in the same manner as all retailers' occupation taxes and service occupation taxes imposed in the municipality imposing the tax and all amounts generated by the hotel operators' occupation tax shall be collected and the tax shall be enforced by the municipality in the same manner as all hotel operators' occupation taxes imposed in the municipality imposing the tax. The corporate authorities of the municipality shall deposit the proceeds of the taxes imposed into a special fund held by the corporate authorities of the municipality called the Business District Tax Allocation Fund for the purpose of paying business district project costs and obligations incurred in the payment of those costs. i Business District Sales Taxes The corporate authorities of a municipality that has established a business district under the Business District Act may, by ordinance or resolution, impose a Business District Retailers' Occupation Tax upon all persons engaged in the business of selling tangible personal property, other than an item of tangible personal property titled or registered with an agency of this State's government, at retail in the business district at a rate not to exceed 1% of the gross receipts from the sales made in the course of such business, to be imposed only in 0.25% increments. If a Business District Retailers' Occupation Tax has been imposed, a Business District Service Occupation Tax shall also be imposed upon all persons engaged, in the business district, in the business of making sales of service, who, as an incident to making those sales of service, transfer tangible personal property within the business district, either in the form of tangible personal property or in the form of real estate as an incident to a sale of service. The tax shall be imposed at the same rate as the Business District Retailers' Occupation Tax and shall not exceed 1% of the selling price of tangible personal property so transferred within the business district, to be imposed only in 0.25% increments. I The Business District Retailers' Occupation Tax and the Business District Service Occupation Tax may not be imposed on food for human consumption that is to be consumed off the premises where it is sold (other than alcoholic beverages, soft drinks, and food that has been prepared for immediate consumption), prescription and nonprescription medicines, drugs, medical appliances, modifications to a motor vehicle for the purpose of rendering it usable by a disabled person, and insulin, urine testing materials, syringes, and needles used by diabetics, for human use. A municipality that has established a business district may also impose an occupation tax upon all persons engaged in the business district in the business of renting, leasing, or letting rooms in a hotel, as defined in the Hotel Operators' Occupation Tax Act 35 ILCS 145/1 et seq., at a rate not to exceed 1% of the gross rental receipts from the renting, leasing, or letting of hotel rooms within the business district, to be imposed only in 0.25% increments, excluding, however, from gross rental receipts the proceeds of renting, leasing, or letting to permanent residents of a hotel, as defined in the Hotel Operators' Occupation Tax Act, and proceeds from the tax imposed under subsection (c) of Section 13 of the Metropolitan Pier and Exposition Authority Act 70 ILCS 210/13. 35 Collection of Taxes The Business District Retailers' Occupation Tax and the Business District Service Occupation Tax and all civil penalties that may be assessed as an incident thereof shall be collected and enforced by the Illinois Department of Revenue. The Department of Revenue shall have full power to collect all taxes and penalties due under the Business District. The Department shall immediately pay over to the State Treasurer, ex officio, as trustee, all taxes, penalties, and interest collected under the Business District Act for deposit into the business district retailers' occupation tax fund. On or before the 25th day of each calendar month, the Department shall prepare and certify to the Comptroller the disbursement of stated sums of money to named municipalities from the business district retailers' occupation tax fund, the municipalities to be those from which retailers have paid taxes or penalties under the Business District Act to the Department during the second preceding calendar month. The amount to be paid to each municipality shall be the amount (not including credit memoranda) collected under the Business District Act during the second preceding calendar month by the Department less 2% of that amount, which shall be deposited into the Tax Compliance and Administration Fund and shall be used by the Department, subject to appropriation, to cover the costs of the Department in administering and enforcing the provisions of the Business District Act on behalf of such municipality. The proceeds of the tax paid to municipalities under the Business District Act shall be deposited into the Business District Tax Allocation Fund by the municipality. I Obligations issued pursuant to the Business District Act shall be retired in the manner provided in the ordinance authorizing the issuance of those obligations by the receipts of taxes levied as authorized in of the Business District Act. The ordinance shall pledge all of the amounts in and to be deposited in the Business District Tax Allocation Fund to the payment of business district project costs and obligations. Obligations issued pursuant to the Business District Act may be sold at public or private sale at a price j determined by the corporate authorities of the municipality and no referendum approval of the electors shall be required as a condition to the issuance of those obligations. The corporate authorities of the municipality may also issue its obligations to refund, in whole or in part, obligations previously issued by the municipality, whether at or prior to maturity. All obligations issued pursuant to the Business District Act shall not be regarded as indebtedness of the municipality issuing the obligations for the purpose of any limitation imposed by law. When business district costs have been paid, any surplus funds then remaining in the Business District Tax Allocation Fund shall be distributed to the municipal treasurer for deposit into the municipal general corporate fund. Upon payment of all business district project costs and retirement of obligations, but in no event more than 23 years after the date of adoption of the ordinance approving the business district development or redevelopment plan, the municipality shall adopt an ordinance immediately rescinding the taxes imposed under the Business District Act. Establishment of the Business District Pursuant to a notice published in the Aurora Beacon News and the Kendall Countv Record on September 30, 2006, and October 5, 2006, respectively, public hearings were held on October 17, 2006, and October 24, 2006 to consider the designation of the Business District. On 2006, the City Board adopted Ordinance No. 2006 -_ (the "Designating Ordinance "), which designated the Business District, approved the plan for the development of the Business District prepared by Elhers & Associates, Inc., and authorized the City to impose a retailers' occupation tax and a service occupation tax in the Business District for the planning, execution and implementation of the business district plan and the payment of obligations of the City issued to provide for the payment of Business District project costs. The City will file the Designating Ordinance with the Illinois Department of Revenue on or before April 1, 2007. i • � 36 RISK FACTORS Investment in the Series 2007 Bonds involves risks which may not be appropriate for certain investors. The following is a discussion of certain risk factors which should be considered, in addition to other matters set forth in this Limited Offering Memorandum, in evaluating the Series 2007 Bonds which are not rated by a recognized rating agency. This discussion does not purport to be comprehensive or definitive. The occurrence of one or more of the events discussed herein could adversely affect the ability to generate sufficient Business District Sales Tax revenues to make full and punctual payments of debt service on the Series 2007 Bonds. In addition, the occurrence of one or more of the events discussed herein could adversely affect the value of the property in the Business District. Limited Source of Funds The Series 2007 Bonds, together with the interest thereon, are limited obligations of the City, payable solely from the Revenues and the amounts on deposit in the various funds and accounts established and maintained under the Trust Indenture, all as more fully set forth therein. The Series 2007 Bonds are not general obligations of the City and do not constitute an indebtedness of the City within the meaning of any constitutional or statutory limitation. No holder of the Series 2007 Bonds shall have the right to compel the exercise of any taxing power of the City for payment of principal thereof or interest or premium, if any, thereon (other than the pledge of the Business District Sales Taxes and as provided in the Bond Ordinance and the Trust Indenture). See "SECURITY AND SOURCE OF PAYMENT FOR THE SERIES 2007 BONDS— General" herein. Failure to Sell or Lease Property to Retailers The Developer currently intends to develop the Project as set forth in this Limited Offering Memorandum and expects to enter into land sales or leases with a variety of retailers prior to completion of the Project. A slowdown or stoppage in the continued development and sale or leasing of the Project by the Developer could reduce the amount of Business District Sales Tax generated in the Business. Such reduction could result in the reduction of Revenues, leading to a default in payments of the principal of, and interest on, the Series 2007 Bonds. See "THE PROJECT." Information Not Verified Information concerning the Project and the proposed development has been obtained from the City, the Developer and other sources believed to be reliable, but much of that information involves predictions of future events, such as leasing and development activity; such information is, by its nature, not subject to verification. Failure to Develop Properties Development of land is subject to economic considerations affecting the Developer and prospective purchasers of developed property including interest rates and the general economic climate of the region surrounding the Business District. The failure to complete development of the required infrastructure or substantial delays in the completion of the Project due to litigation or the inability to obtain required funding may affect the completion of the Project. See "SUMMARY OF THE SALES TAX AREA." The City may terminate the Development Agreement if the Developer does not comply with its terms and provisions. There can be no assurance that the Developer will comply with the terms of the Development Agreement or that the City will not terminate such agreement if the Developer fails to comply with its terms. See "SUMMARY OF THE DEVELOPMENT AGREEMENT". 37 Risk of Construction The generation of Business District Sales Taxes is dependant upon the completion of the Project. Delays in the construction of the retail stores and the delay in opening the retail stores could adversely affect the generation of Business District Sales Taxes. Construction delays could occur for reasons outside the control of the Developer such as material or labor shortages. Risk of Occupancy There is no assurance that sale or leasing of the retail space within the Business District will achieve or maintain the projected occupancy as set forth in the Business District Sales Tax Revenue Projections included as APPENDIX C. There are anticipated to be numerous small tenants in the Business District with various lease terms and various provisions in their leases, and there can be no assurance that, when a lease expires or is terminated for any reason, the lease will be extended or that the tenant's space will be re- leased. A failure to re -lease space could adversely affect the Business District Sales Taxes generated from the Business District. Risk of Changes in Market Conditions, Changes in General Economic Conditions and Future Competition Sales by the stores in the Business District, and the subsequent generation of Business District Sales Taxes, could be significantly impaired as a result of changes in market conditions, changes in general economic conditions and competition from existing facilities or facilities developed in the future. Risk of Natural Disaster In the event of a natural disaster severely damaging the facilities in the Business District, there can be no assurance that such facilities will be rebuilt. In such case, generation of Business District Sales Taxes would be adversely affected. Risk of Anchor Purchase Agreement Terminations or Discontinued Operations The generation of Business District Sales Taxes could be significantly impaired if any one or more of the anchor tenants within the Business District terminates its purchase agreement and is not replaced by a comparable tenant. Certain leases grant certain mid -size retail tenants the right to terminate their respective leases under a number of different conditions. In addition, tenants may have the right to terminate their respective leases in the event of fire or other casualty,. condemnation, a breach by the landlord of its obligations under the lease, or the existence of hazardous wastes not caused by the tenant. The bankruptcy or insolvency of any tenant may also result in the termination of such tenant's lease. There can be no assurance that any of the circumstances under which any one or more of the leases will or may be terminated will not occur. No assurance can be given that Target, Home Depot, and Kohl's or other owners of retail property within the Business District will open or continue to operate viable retail stores in the Business District or be viable businesses. In such case, the availability of Business District Sales Taxes could be negatively affected. Failure to Achieve Business District Sales Tax Projections The Business District Sales Tax Projections prepared by Ehlers & Associates, Inc, attached as APPENDIX C, are based upon certain information provided by the Developer and market trends in the 38 area around the City. While Ehlers & Associates believed that the assumptions with respect to market conditions were accurate, there can be no assurances that such a level of performance can be obtained. No representation or warranty is or can be made about the amount or timing of any future income, loss, occupancy, valuation, increased assessment or revenues, or that actual results will be consistent with the Ehlers & Associates' report or with the forecasts contained therein. There is no assurance that actual events will correspond with the projections or the assumptions, estimates and/or the opinions on which they are based. See "PROJECTIONS" and "APPENDIX C— Business District Sales Tax Revenue Projections— Conditions of Findings & Potential Risks." Local, State and Federal Land Use Regulations There can be no assurance that land development operations within the Business District will not be adversely affected by future government policies, including, but not limited to, governmental policies which directly or indirectly restrict or control development. The Development Agreement cannot limit the application of state or federal laws and regulations which have preemptive effect on local land use regulations. During the past several years, state and federal regulatory agencies have significantly expanded their involvement in local land use matters through increased regulatory enforcement of various environmental laws, including the Endangered Species Act, the Clean Water Act and the Clean Air Act, among others. Such regulations can substantially impair the rate and amount of development without requiring just compensation unless the effect of the regulation is to deny all economic use of the affected property. Bond owners should assume that any event that significantly impairs the ability to develop land in the Business District could cause a substantial reduction in the amount of the Pledged Home Rule Business District Sales Tax generated within the Business District and could reduce the Revenues available to pay principal and interest on the Series 2007 Bonds. See "RISK FACTORS - Failure to Develop Properties" herein. I Land Development Costs Development of land within the Business District is contingent upon construction or acquisition of major special services such as arterial streets, water distribution facilities, sewage collection and transmission facilities, drainage and flood protection facilities, gas, telephone, other communication and electrical facilities, and lighting, as well as local in -tract improvements and on -site grading and related improvements. There can be no assurance that the Special Services will be constructed or will be constructed in time for development to proceed as currently expected. See "SUMMARY OF THE PROJECT." Zoning Approvals and Building Permits Pursuant to the City Zoning Ordinance, any outstanding approvals within the Business District involve, to a certain degree, the exercise of discretion on the part of the City. The Developer has not received or applied for all building permits necessary to construct the Project. Failure to obtain the necessary permits on a timely basis could adversely affect the completion of the Project. For example, the Developer has not received approval from the Illinois Department of Transportation ( "IDOT") to develop the proposed access roads to the Project. Failure to receive IDOT approval on timely basis, if at all, could adversely effect traffic flow to the Project and negatively impact the success of the retail operations within the Project. 39 Tax Revenues Business District Sales Taxes are contingent upon and the amount generated will be affected by a variety of factors, including the following: economic conditions within the Chicago metropolitan area; suitability of the Project for the local market; completion of the Project; availability of access to roadway transportation; and interruption or termination of operation of the Project as a result of fire, natural disaster, strikes or similar events, among many other factors. As a result, it is not possible to predict with any amount of certainty the amount of Revenues which will be available in each Bond Year to pay the scheduled principal and interest on the Series 2007 Bonds and for any optional or mandatory redemption. The retail sales industry is highly competitive. Retail business outside of the Project, which is currently existing or which is developed after the date of this Limited Offering Memorandum will be competitive with business in the Project and could have an adverse impact on the available amount of Revenues generated within the Project. Bankruptcy The various legal opinions to be delivered concurrently with the delivery of the Series 2007 Bonds (including Bond Counsel's approving legal opinion) will be qualified, as to the enforceability of the various legal instruments, by moratorium, bankruptcy, reorganization, insolvency, fraudulent transfer or conveyance, or other similar laws affecting the rights of creditors generally. Limitation on Remedies; No Acceleration Remedies available to holders of the Series 2007 Bonds may be limited by a variety of factors and may be inadequate to assure the timely payment of principal of and interest on the Series 2007 Bonds, or to preserve the tax - exempt status of the Series 2007 Bonds. Bond Counsel has limited its opinions to the extent that enforceability may be limited by moratorium, bankruptcy, reorganization, insolvency, fraudulent transfer and conveyance, or other similar laws affecting the rights of creditors generally. Additionally, the Series 2007 Bonds are not subject to acceleration in the event of the breach of any covenant or duty under the Trust Indenture, including payment default. Lack of remedies may entail risks of delay, limitation, or modification of the rights of the holders of the Series 2007 Bonds. Judicial remedies, such as foreclosure and enforcement of covenants, are subject to exercise of judicial discretion. Limited Secondary Market There can be no guarantee that there will be a secondary market for the Series 2007 Bonds or, if a secondary market exists, that such Series 2007 Bonds can be sold for any particular price. The City and the Developer have committed to provide limited financial and/or operating information on a going forward basis other than as described under "CONTINUING INFORMATION." Occasionally, because of general market conditions, lack of current information, the absence of a credit rating for the Series 2007 Bonds or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. In addition, prices of issues for which a market is being made will depend on then prevailing circumstances. Such prices could be substantially different from the original purchase price. Secondary Market and Prices The Underwriter presently does not intend to engage in secondary market trading of the Series 2007 Bonds. The Underwriter is not obligated to engage in secondary trading or to repurchase any of the Series 2007 Bonds at the request of the owners thereof. No assurance can be given that a secondary 40 market for any of the Series 2007 Bonds will be available and no assurance can be given that the initial offering prices for the Series 2007 Bonds will continue for any period of time. Loss of Tag Exemption Interest on the Series 2007 Bonds could become includible in gross income for federal income tax purposes retroactive to the date of issuance of the Series 2007 Bonds as a result of a failure of the City to comply with certain provisions of the Code. Should such an event of taxability occur, the Series 2007 Bonds are not subject to early redemption and will remain outstanding to maturity or until redeemed under the optional redemption or mandatory redemption provisions of the Trust Indenture. Risk of Legislative and Judicial Changes Future legislation, regulations, governmental or judicial interpretation of regulations or legislation or practices and procedures related to sales tax assessment, application, collections, reporting or distribution could have a material effect on the calculation or availability of the Business District Sales Tax. There is no assurance that legislation will not be considered or enacted in the future that may repeal or otherwise adversely affect the Business District Sales Taxes received by the City, and unless provision is made in such legislation, the generation of the Business District Sales Tax could be materially adversely affected. There can be no assurance that the current system of reporting, collection and distribution of sales tax will not be changed by any competent authority having jurisdiction to do so, including, without limitation, the State, the City, the courts or the voters. Reporting Requirements The collection of the Business District Sales Taxes is dependent upon reports from third parties, such as businesses within the Business District and the Department of Revenue of the State of Illinois. While the City and the Developer have undertaken certain reporting requirements pursuant to the Development Agreement, no assurances can be made that third parties will provide sales tax reports to the City in an accurate and timely manner. PROJECTIONS The Business District Sales Tax Revenue Projections prepared with respect to the Project by Ehlers & Associates, Inc., are attached to this Limited Offering Memorandum as APPENDIX C. The report sets forth Ehlers' projections of the Business District Sales Taxes to be available for payment of principal of and interest on the Bonds, as well as the assumptions upon which the projections are based. The report also includes a number of limiting conditions and potential risks associated with those projections. No assurance can be given that the projections, or the assumptions upon which they are base, will be prove accurate. The projections included in the Ehlers' report are forward - looking statements and predictions and are not guarantees of result or performance. These statements are based on beliefs and assumptions, which in turn are based on currently available information. These beliefs and assumptions could prove inaccurate. Accordingly, actual outcomes could differ materially from those contained in Ehlers' report. None of the Village, the Developer or the Underwriter has independently verified the projections or tested the assumptions contained in Ehlers' report. 41 UNDERWRITING I The Underwriter has agreed, subject to certain customary conditions precedent to closing, to use its best efforts to offer for sale and to sell at par all, but not less than all, of the Series 2007 Bonds. The Underwriter will receive an Underwriter's discount equal to _% of the issued amount of the Series 2007 Bonds ($ ) in consideration of their services. The Series 2007 Bonds may be offered and sold to certain dealers and others at prices lower than the initial public offering price, and such public offering price may be changed, from time to time, without notice by the Underwriters. LEWrED OFFERING The Bonds are being offered only to a limited number (35 or less) of sophisticated investors. Each prospective purchaser of the Bonds is being furnished a copy of this Limited Offering Memorandum, together with any supplements to this Limited Offering Memorandum. In addition, each prospective purchaser is hereby offered the opportunity, prior to purchasing any Bonds and at any time the Bonds are outstanding, to ask questions of, and receive answers from the Underwriter, the City and the Developer concerning the terms and conditions of the offering, and to obtain any additional relevant information, to the extent either possesses the same or can acquire it without unreasonable effort or expense. Inquiries concerning additional information should be directed in writing to the Underwriter at William Blair & Company, L.L.C., 222 W. Adams St., Chicago, Illinois 60606, Attention: Municipal Bond Department. LEGAL OPINIONS Legal matters incident to the authorization, issuance and sale of the Series 2007 Bonds are subject to the approving legal opinion of Foley & Lardner LLP, Chicago, Illinois, Bond Counsel. The proposed form of the opinion of Bond Counsel is included herein as Appendix D. Certain legal matters will be passed upon for the Underwriter by its counsel, Sonnenschein Nath & Rosenthal LLP, Chicago, Illinois; for the City, by its counsel, John Wyeth Esq., Yorkville, Illinois, and for the Developer by their special counsel, Polsky & Associates Ltd., Chicago, Illinois. TAX EXEMPTION In the opinion of Foley & Lardner LLP, Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, compliance with certain covenants, interest on the Series 2007 Bonds is excluded from gross income for federal income tax purposes under the Code and is not a specific preference item for purposes of determining an individual's or corporation's federal alternative minimum taxable income. However, Bond Counsel observes that interest on the Series 2007 Bonds is included in adjusted current earnings in calculating federal corporate alternative minimum taxable income. Interest on the Series 2007 Bonds is not exempt from State of Illinois income taxes. Series 2007 Bonds purchased, whether at original issuance or otherwise, for an amount greater than their principal amount payable at maturity (or, in some cases, at their earlier call date) ("Premium Bonds ") will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax exempt 42 i interest received, and a purchaser's basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such purchaser. Thus, the amortization of Bond premium may have an effect on a bondholder's recognition of gain or loss when a Premium Bond is sold or paid off. Beneficial Owners of-Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances. To the extent the issue price of any maturity of the Series 2007 Bonds is less than the amount to be paid at maturity of such Series 2007 Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Series 2007 Bonds), the difference constitutes "original issue discount," the accrual of which, to the extent properly allocable to each Bondholder, is treated as interest on the Series 2007 Bonds which is excluded from gross income for federal income tax purposes. For this purpose, the issue price of a particular maturity of the Series 2007 Bonds is the first price at which a substantial amount of such maturity of the Series 2007 Bonds is .sold to the public (excluding bond houses, brokers, or persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the Series 2007 Bonds accrues 9 daily over the term to maturity of such Series 2007 Bond on the basis of a constant interest rate ! compounded semiannually (with straight -line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Series 2007 Bond to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of Series 2007 Bonds. Beneficial Owners of the Series 2007 Bonds should consult their own tax advisors with respect to the tax consequence of ownership of Series 2007 Bonds with original issue discount, including the treatment of purchasers who do not purchase such Series 2007 Bonds in the original offering to the public at the first price at which a substantial amount of such Series 2007 Bond was sold to the public. Section 103 of the Code imposes various restrictions, conditions and requirements relating to exclusion from gross income for federal income tax purposes of interest on obligations such as the Series 2007 Bonds. The City has covenanted to comply with certain restrictions designed to insure that interest on the Series 2007 Bonds will not be included in a bondholder's gross income for federal income tax purposes. Failure to comply with these covenants may result in interest on the Series 2007 Bonds being included in gross income for federal income tax purposes, possibly from the original issue date of the Series 2007 Bonds. The opinion of Foley & Lardner LLP assumes compliance with these covenants. Foley & Lardner LLP has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Series 2007 Bonds may adversely affect the value of or the tax- exempt status of interest on the Series 2007 Bonds. Further, Foley & Lardner LLP does not give assurance that pending or further legislation or amendments to the Code, if enacted into law, will not adversely affect the value of or the tax exempt status of interest on the Series 2007 Bonds. Beneficial Owners are encouraged to consult their own tax advisors with respect to proposals to restructure the federal income tax. i Certain requirements and procedures contained or referred to in the Indenture, the Bond Ordinance, the Tax Agreement and other relevant documents may be changed and certain actions (including, without limitation, defeasance of the Series 2007 Bonds) may be taken or omitted under the circumstance subject to the terms and conditions set forth in such documents. Foley & Lardner LLP expresses no opinion as to any Series 2007 Bond or the interest thereon if any such change occurs or action is taken or omitted upon advice or approval of bond counsel other than Foley & Lardner LLP. Although Foley & Lardner LLP is of the opinion that interest on the Series 2007 Bonds is excluded from gross income for federal income tax purposes, the ownership or disposition of, or the accrual or receipt of interest on, the Series 2007 Bonds may otherwise affect a Beneficial Owner's federal or state tax liability. The nature and extent of these other tax consequences will depend upon the 43 I particular tax status of the Beneficial Owner or the Beneficial Owner's other items of income or deduction. Foley & Lardner LLP expresses no opinion regarding any such other tax consequences. No assurance can be given that any future legislation or clarifications or amendments to the Code, jif enacted into law, will not cause the interest on the Series 2007 Bonds to be subject, directly or indirectly, to federal or state income taxation, or otherwise prevent the Bondholders from realizing the full current benefit of the tax status of the interest thereon. Further, no assurance can be given that any such future legislation, or any actions of the IRS, including, but not limited to, selection of the Series 2007 Bonds for audit examination, or the course or result of any examination of the Series 2007 Bonds, or other bonds which present similar tax issues, will not affect the market price for the Series 2007 Bonds. CONTINUING INFORMATION The Series 2007 Bonds are being initially issued in authorized denominations of $100,000 and integral multiples of $5,000 in excess thereof and are being offered to less than thirty -five (35) institutional investors. Accordingly, the Series 2007 Bonds will be exempt from the continuing disclosure requirements of Rule 15c2 12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. Notwithstanding the City and the Developer have agreed to provide certain continuing information described below. j The City The City has covenanted in the Indenture to furnish to the Trustee and Underwriter, within ten (10) days of receipt by the City, a copy of each annual audit of the City, the schedule of tenants and lease expiration dates therefor provided to the City by the Developer, and any information received from the Illinois Department of Revenue of the Business District Sales Taxes. The City agrees that for so long as the Series 2007 Bonds and the Business District Bonds are outstanding it shall request from the Illinois Department of Revenue such information of the Business District Sales Taxes as may be deemed necessary by the Trustee and the Underwriter and that, within ten (10) days of receiving such information, it shall deliver the same to the Trustee and the Underwriter. The City agrees that as a condition of issuing a business license to any business proposing to operate within the Business District, it shall use its best efforts to require said business to deliver to the City a completed Authorization To Release Sales Tax Information ( "Reporting Form "), which completed form the City agrees to file within seven (7) days after receipt thereof with the Illinois Department of Revenue. The Developer At the time of delivery of and payment for the Series 2007 Bonds, the Developer will certify that there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, pending or threatened by or against the Developer: (i) in any way questioning the due formation and valid existence of the Developer, (ii) in any way questioning or affecting the validity of the Development Agreement or the consummation of the transactions contemplated thereby; (iii) in any way questioning or contesting the validity of any governmental approval of the Project or any aspect thereof; or (iv) which would have a material adverse effect upon the financial condition of the Developer or the ability of the Developer to develop the Project. 44 I i FINANCIAL ADVISOR Speer Financial, Inc., Chicago, Illinois ( "Speer Financial "), is serving as financial advisor to the Issuer with respect to the sale of the Series 2007 Bonds. Speer Financial provides certain other financial and economic development consulting services to the City. LDIMD OFFERING The Series 2007 Bonds are being offered only to sophisticated investors. Each prospective purchaser of the Series 2007 Bonds is being furnished a copy of this Limited Offering Memorandum, together with any supplements to this Limited Offering Memorandum. In addition, each prospective purchaser is hereby offered the opportunity, prior to purchasing any Series 2007 Bonds and at any time j the Series 2007 Bonds are outstanding, to ask questions of, and receive answers from the Underwriter, the j City and the Developer concerning the terms and conditions of the offering, and to obtain any additional relevant information, to the extent either possesses the same or can acquire it without unreasonable effort or expense. Inquiries concerning additional information should be directed in writing to the Underwriter at William Blair & Company, 222 West Adams Street, Chicago, Illinois 60606, Attention: Municipal Bond Department. i NO LITIGATION The City At the time of delivery of and payment for the Series 2007 Bonds, the City will certify that there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body, pending with respect to which'the City has been served with process or is otherwise aware, or, to the knowledge of the officer of the City executing such certificate, threatened against the City affecting the existence of the City, the Business District or the titles of its officers to their respective offices or seeking to restrain or to enjoin the sale or delivery of the Series 2007 Bonds, the application of the proceeds thereof in accordance with the Bond Ordinance and/or the Trust Indenture, or the collection or application of the Business District Sales Tax, or in any way contesting or affecting the validity or enforceability of the Series 2007 Bonds, the Bond Ordinance, the Trust Indenture, the Development Agreement, or any action of the City contemplated by any of the said documents, or the collection or application of the Business District Sales Tax, or in any way contesting the completeness or accuracy of the Bond Ordinance, the Trust Indenture or any amendments or supplements hereto, or contesting the powers of the City contemplated by any of said documents, nor, to the knowledge of the officer of the City executing such certificate, is there any basis therefor. The Developer At the time of delivery of and payment for the Series 2007 Bonds, the Developer will certify that there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, pending or threatened by or against the Developer: (i) in any way questioning the due formation and valid existence of the Developer, (ii) in any way questioning or affecting the validity of the Development Agreement or the consummation of the transactions contemplated thereby; (iii) in any way questioning or contesting the validity of any governmental approval of the Project or any aspect thereof; or (iv) which would have a material adverse effect upon the financial condition of the Developer or the ability of the Developer to develop the Project. 45 I i NO RATING The City has not made, and does not currently contemplate making, an application to any rating agency for the assignment of a rating to the Bonds. MISCELLANEOUS I The references, excerpts, and summaries of documents and statutes contained in this Limited Offering Memorandum do not purport to be complete statements of the provisions of such documents and statutes, and reference is made to all such documents and statutes for full and complete statements of their terms and provisions. The estimates, assumptions, statistical and financial information, and all other information contained in this Limited Offering Memorandum have been compiled from official and other sources believed by the underwriter to be reliable; however, none of such estimates, assumptions, or information is guaranteed by the City, the Developer or the Underwriter as to completeness or accuracy. Any statement made in this Limited Offering Memorandum involving matters of opinion or of estimates, whether or not so expressly stated, is set forth as such and not as a representation of fact; no representation is made that any of the estimates contained herein will be realized. The information and expressions of opinion contained herein are subject to change without notice, and neither the delivery of this Limited Offering Memorandum nor any offer or sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City or the Project since the date hereof. I i IC I II 46 AUTHORIZATION Both the City and the Developer have authorized the execution and distribution of this Limited Offering Memorandum. UNITED CITY OF YORKVILLE, an Illinois municipal corporation By: Arthur Prochaska, Mayor i THE HARLEM IRVING COMPANIES, INC. i By: Michael Marchese, President MIDAMERICA DEVELOPMENT PARTNERS LLC I I I By: � Michael D. Firsel, President I i I 47 APPENDIX A Trust Indenture I i I i 48 f APPENDIX B Development Agreement I i , 1 a a I 1 { i i I I 14516318 \V -3 i APPENDIX C Bond Opinion i 14516318 \V -3 j