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S6-83 Ordinance No. S6- 83 An Ordinance authorizing the issuance of $3 , 500,000 aggre- gate principal amount Economic Development Revenue Bonds, Series 1983 (Slade Avenue Partnership Project) , the lending of the proceeds of said Bonds to Slade Avenue Partnership and the execution and delivery of a Loan Agreement, a Trust Indenture and a Bond Purchase Agreement; ratifying the distribution of a Preliminary Official Statement; authoriz- ing the distribution of a Final Official Statement; approving the sale of said Bonds; and prescribing other matters relat- ing thereto. WHEREAS the City of Elgin, Illinois (the "Issuer" ) is a home rule unit of local government authorized under the provisions of Article VII, Section 6(a) of the 1970 Illinois Constitution and Ordinance No. S2-80, adopted on February 13, 1980 (the "Enabling Ordinance" ) , to acquire, construct and finance economic development projects, to lease, sell or finance the same to or for any person, and to provide for the issuance of revenue bonds in connection therewith; and WHEREAS the Issuer proposes to issue $3, 500, 000 aggregate principal amount Economic Development Revenue Bonds, Series 1983 (Slade Avenue Partnership Project) (the "Series 1983 Bonds" ) , pursuant to a Trust Indenture (the "Indenture" ) , by and between the Issuer and Continental Illinois National Bank and Trust Company of Chicago, Chicago, Illinois, as Trustee (the "Trustee" ) ; and WHEREAS pursuant to a Loan Agreement (the "Loan Agreement" ) , by and between the Issuer and Slade Avenue Partnership, an Illinois general partnership (the "Borrower" ) , the Issuer proposes to lend the net proceeds from the sale of the Series 1983 Bonds to the Borrower in order to provide funds to finance a portion of the costs of constructing a medical office building (the "Project" ) , to pay interest on the Series 1983 Bonds during the construction of the Project, to fund a Debt Service Reserve Fund created pursuant to the Indenture in an amount equal to the Maximum Annual Debt Service on the Series 1983 Bonds (as such term is defined in the Indenture) , and to pay costs incidental thereto and to the issuance of the Series 1983 Bonds; and WHEREAS pursuant to the Indenture, as security for the Series 1983 Bonds, the Issuer will assign to the Trustee all of the Issuer's right, title and interest in, under and to the Loan Agreement (except the rights of the Issuer to issue Additional Bonds under the Indenture, to execute and deliver supplements or amendments to the Loan Agreement and to be held harmless, reimbursed and indemnified, which rights are herein collectively referred to as the "Unassigned Rights" ) ; and WHEREAS the Project will be located at 934 Center Street, Elgin, Illinois, and said land will be leased by Sherman Hospital Association, an Illinois not-for-profit corporation, to the Borrower; and WHEREAS the Borrower will be the operator and manager of the Project and will lease the offices therein to members of the medical staff of Sherman Hospital Association; and WHEREAS the Series 1983 Bonds will be sold to Kidder, Peabody & Co. , Incorporated (the "Underwriter" ) , pursuant to a Bond Purchase Agreement by and among the Issuer, the Borrower and the Underwriter; and WHEREAS forms of the Loan Agreement, the Indenture and the Bond Purchase Agreement, the Preliminary Official Statement, relating to the Series 1983 Bonds (the "Preliminary Official Statement" ) and the form of the Final Official Statement relating to the Series 1983 Bonds (the "Final Official Statement" ) have been prepared and presented to this meeting; NOW THEREFORE, Be It Ordained By the City Council of the City of Elgin, Illinois, as follows: Section 1 . The construction of the Project, the payment of interest on the Series 1983 Bonds during the construction of the Project, the funding of the Debt Service Reserve Fund and the payment of costs incidental thereto and to the issuance of the Series 1983 Bonds, all as aforesaid, are hereby authorized and determined to be in the public interest and in furtherance of the public purposes contemplated by the Enabling Ordinance. Section 2. (a) In order to provide funds to carry out the public purposes set forth in Section 1. hereof, there are hereby authorized to be issued the revenue bonds of the Issuer in the maximum, aggregate principal sum of $3, 500, 000, which bonds shall be designated Economic Development Revenue Bonds, Series 1983 (Slade Avenue Partnership Project) (the "Series 1983 Bonds" ) . (b) The Series 1983 Bonds shall be issuable as fully registered bonds without coupons in the denomination of $5, 000 or any integral multiple thereof and shall be dated, authenticated and executed in the manner set forth in the Indenture. .. (c) The Series 1983 Bonds shall bear interest at the rate of ten and one-half per cent (10-1/2%) per annum and shall be issued as term bonds stated to mature on November 1, 2014, subject to mandatory redemption in accordance with sinking fund requirements on November 1 of each of the years and in the princi- pal amounts set forth below, at a redemption price of 100% of the principal amount thereof plus accrued interest to the redemption date: Principal Year Amount 1985 $ 20, 000 1986 20,000 1987 25,000 1988 25, 000 1989 30, 000 1990 30, 000 1991 35,000 1992 40, 000 1993 45,000 1994 50,000 1995 55, 000 1996 60, 000 1997 65, 000 1998 70, 000 1999 80,000 2000 85,000 2001 95,000 2002 105, 000 2003 115, 000 2004 130,000 2005 145, 000 2006 155, 000 2007 175,000 2008 190, 000 2009 210, 000 2010 235, 000 2011 260, 000 2012 285, 000 2013 315,000 2014 350, 000 (final maturity) (d) The Series 1983 Bonds and the interest thereon shall be limited obligations of the Issuer, payable from the income and revenues to be derived by the Issuer from the" Project pursuant to the Loan Agreement (except such income and revenues as may be derived by the Issuer pursuant to the Unassigned Rights) . The Series 1983 Bonds and the interest thereon shall never consti- tute an obligation or commitment by the Issuer to expend any of its funds other than (i) the proceeds of the sale of the Series 1983 Bonds, (ii) the income and revenues derived by the Issuer from the Project pursuant to the Loan Agreement, and (iii) any money arising out of the investment or reinvestment of said proceeds, income, revenues or receipts. Section 3 . The Series 1983 Bonds shall be issued pursuant to and in compliance with the provisions of the Enabling Ordinance, this Ordinance and the Indenture and the foregoing shall be stated on the face of the Series 1983 Bonds. Section 4. The forms, terms and provisions of the proposed Loan Agreement, Indenture and Bond Purchase Agreement (collectively, the "Instruments" ) are hereby in all respects approved, and the Mayor and City Clerk are hereby authorized, empowered and directed to execute and deliver the Instruments in the name and on behalf of the Issuer. The Instruments, as executed and delivered, shall be in substantially the forms now before this meeting and hereby approved or with such changes therein as shall be approved by the officers of the Issuer executing the same, their execution thereof to constitute conclusive evidence of their approval of any and all changes or revisions therein from the forms of the Instruments now before this meeting; and from and after the execution and delivery of the Instruments the officers, agents and employees of the Issuer are hereby-authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out the intent and accomplish the purposes of this Ordinance and to comply with and make effective the provisions of the Instruments as executed. Section 5. The prior distribution of the Preliminary Official Statement by the Underwriter is hereby authorized, ratified and approved in all respects. The form of the Final Official Statement is hereby approved and the Mayor is hereby authorized and directed to execute and deliver the Final Official Statement with such changes therein as shall be approved by him, his execution of the Final Official Statement to constitute conclusive evidence of his approval of such changes. The printing and distribution of the Final Official Statement are hereby approved and authorized. Section 6. The sale of the Series 1983 Bonds to Kidder, Peabody & Co. , Incorporated pursuant to the Bond Purchase Agreement, at a price of 98% of the principal amount thereof plus accrued interest to the date of delivery, is hereby approved. Section 7. The Issuer hereby elects to have the provi- sions as to the $10, 000, 000 limit in Section 103(b) (6) (D) of the Internal Revenue Code of 1954, as amended, applied to the Series 1983 Bonds; and the Mayor and City Clerk of the Issuer are hereby authorized, empowered and directed to take any and all further action which may be required to implement and effectuate such election, including, without limitation, the preparation and filing of such statement or statements or other document or documents as may be deemed by them to be necessary or advisable in order to comply with the procedure set forth in Section • 1.103-10(b) (2 ) (vi) of the Income Tax Regulations (26 CFR Part 1) under Section 103 of the Internal Revenue Code of 1954, as amended; and all acts heretofore taken by them in this connection are hereby ratified and confirmed. Section 8. Pursuant to Section 103(k) of the Internal Revenue Code of 1954, as amended, this City Council, as an "appli- cable elected representative" of the Issuer within the meaning of said Section, hereby approves the issuance of the Series 1983 Bonds. Section 9. The provisions of this Ordinance are hereby declared to be separable and if any section, phrase or provision shall for any reason be declared by a court of competent juris- diction to be invalid or unenforceable, such declaration shall not affect the validity or enforceability of the remainder of the sections, phrases and provisions hereof. Section 10. All ordinances, orders and resolutions and parts thereof in conflict herewith are to the extent of such conflict hereby repealed, and this Ordinance shall take effect and be in full force immediately upon its adoption. Adopted October 31 , 1983 . Approved October 31 , 1983 . s/ Richard L. Verbic Mayor (SEAL) Attest: s/ Marie Yearman City Clerk *** *** *** $3 ,500,000 CITY OF ELGIN, ILLINOIS Economic Development Revenue Bonds, Series 1983 (Slade Avenue Partnership Project) CONTRACT OF PURCHASE October 31 , 1983 City of Elgin, Illinois 150 Dexter Court Elgin, Illinois 60120 Attention: Mayor Ladies and Gentlemen: We, Kidder Peabody & Co. Incorporated (the "Under- writer" ) , hereby offer to enter into this Contract of Purchase with you (the "City") for the sale by you and the purchase by the Underwriter of the revenue bonds described below. Upon your acceptance of this offer, your execution and delivery of this Contract of Purchase and the written approvals of this Contract of Purchase by Slade Avenue Partnership (the "Partnership") and Sherman Hospital Asso- ciation (the "Corporation" ) , this Contract of Purchase shall be binding upon you, the Partnership, the Corporation, and the Underwriter. This offer is made subject to your accept- ance, evidenced by your execution and delivery of this Contract of Purchase to the Underwriter, and the written approvals of the Partnership and the Corporation, at or prior to o'clock P.M. , Elgin, Illinois time, on the date hereof, and, if not so accepted will be subject to withdrawal by the Underwriter upon written notice delivered to you at any time thereafter prior to acceptance hereof by you. 1 . Purchase and Sale of Bonds. (a) Subject to the terms and conditions and upon the basis of the repre- sentations, warranties and covenants hereinafter set forth, the Underwriter hereby agrees to purchase from you, and you hereby agree to sell to the Underwriter, all (but not less than all) of the $3,500,000 aggregate principal amount of City of Elgin, Illinois Economic Development Revenue Bonds, ,s. Series 1983 (Slade Avenue Partnership Project) (the "Bonds" ) , at the aggregate purchase price set forth in Item 1 of Exhibit A hereto, plus accrued interest on the Bonds from their dated date to the Closing Date (as defined in Section 2 hereof) . The date of the Bonds, the date on which the Bonds mature, the principal amount of the Bonds, the inter- est rate for the Bonds, and the dates on which interest on the Bonds is to be paid are set forth in Item 2 of Exhibit A hereto. The Bonds shall be subject to redemption as provided in the Official Statement (hereinafter defined) . (b) The Bonds shall be described in, and shall be issued and secured under and pursuant to, a Trust Indenture described in Item 3(a) of Exhibit A hereto (the 'Indenture" ) . (c) Upon your acceptance, execution, and delivery of this Contract of Purchase, you shall deliver or cause to be delivered to us two copies of the Official Statement described in Item 3(b) of Exhibit A hereto, substantially in the form of the Preliminary Official Statement described in Item 3(c) of Exhibit A hereto (the "Preliminary Official Statement" ) with only such changes as have been approved in writing by the Underwriter, which approval shall not be unreasonably withheld, signed on your behalf by the M�ayor of the City (such Official Statement, including the cover page and all appendices attached thereto being herein called the "Official Statement," except that if the Official Statement has been amended with our approval between the date thereof and the date upon which the Bonds are delivered to us, the term "Official Statement" shall refer to the Official Statement as so amended) . The Underwriter may use, in accordance with applicable law, copies of the Official Statement and the information contained therein and copies of the Indenture, the Loan Agreement described in Item 3(d) of Exhibit A hereto (the "Loan Agreement") , the Guaranty Agreement described in Item 3(e) of Exhibit A hereto (the "Guaranty Agreement" ) , the Ground Lease described in Item 3(f) of Exhibit A hereto (the "Ground Lease" ) , and the Bond Ordinance described in Item 3(g) of Exhibit A hereto (the "Bond Ordinance" ) in connection with the public offering and sale of the Bonds. The City shall not supplement or amend the Official Statement or cause the Official Statement to be supplemented or amended without the prior written approval of the Underwriter, which approval shall not be unreason- ably withheld. The City ratifies and confirms the use by the Underwriter, prior to the date hereof, of the Prelimi- nary Official Statement in accordance with applicable law. (d) The Underwriter agrees to make a public offering of the Bonds at the initial offering price or yield set 2. forth in the Official Statement, except that the Underwriter may offer and sell the Series 1983 Bonds to certain dealers (including dealers depositing Series 1983 Bonds into invest- ment trusts) and others at prices lower than the offering prices set forth on the cover page. We also reserve the right to effect transactions that stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in the open market and to discontinue such stabilizing, if commenced, at any time. (e) If between the date hereof and the Closing Date any event known to the City, the Corporation or the Partner- ship occurs or any fact becomes known to any of such parties that might affect the correctness or completeness of any statement of a material fact contained in the Official Statement, the party to whom such fact or event is known shall promptly notify the Underwriter in writing of the circumstances and details of such event. If, as a result of such event or any other event, it is necessary, in the opinion of the Underwriter, to amend or supplement the Official Statement to make the statements therein, in the light of the circumstances under which they were made, not misleading, and the Underwriter shall have so advised the City, the City shall, subject to Section 1 (c) hereof, forth- with prepare and furnish to the Underwriter (at the expense of the Corporation) a reasonable number of copies of an amendment of or a supplement to such Official Statement that will amend or supplement such Official Statement so that, as amended or supplemented, it will not contain any untrue statement of a material fact or omit to state a material fact that should be stated therein for the purposes for which the Official Statement is to be used or that is necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 2. Closing. At the time and on the date set forth in Item 4 of Exhibit A hereto or at such other time or on such earlier or later date as shall have been mutually agreed upon by the City and the Underwriter (the "Closing Date") , the City shall deliver, or cause to be delivered, the Bonds to us at the offices of Kidder, Peabody & Co. Incorporated, 125 South Wacker Drive, Chicago, Illinois, and the other documents hereinafter mentioned to us at the offices of Borge and Pitt, Chicago, Illinois, or at such other place or places upon which we may mutually agree. The Underwriter shall accept such delivery and pay the purchase price of the Bonds as set forth in Section 1 hereof on such Date by certified or official bank check or draft payable in Illinois Clearing House funds. Such payment and delivery is herein called the "Closing. " The Bonds shall be in 3. definitive form, duly executed on behalf of the City, in denominations of $5,000 or any integral multiple thereof, and fully registered in such names and in such amounts as the Underwriter may request in writing at least five busi- ness days prior to Closing. The City shall make the Bonds available to the Underwriter for checking and packaging not less than 24 hours prior to the Closing at the offices of Ridder, -Peabody & Co. Incorporated, in Chicago, Illinois or such other place that is agreed upon by the City and the Underwriter. 3. Representations, Warranties and Covenants of the City. The City, by its acceptance hereof, represents, warrants and covenants to the Underwriter that: (a) the City was duly organized and is validly existing under the laws of the State of Illinois (the "State" ) and is a home rule unit of local government within the meaning of Article VII, Section 6(a) of the 1970 Illinois Constitution (the "Constitution" ) , with powers and authority as are set forth in the Constitution and in Ordinance No. S2-80 of the City (the "Enabling Ordinance" ) ; (b) the City has full legal right, power and authority ( i) to issue and secure the Bonds in the manner contemplated by the Indenture, the Bond Ordi- nance and the Official Statement, (ii) to sell (or cause to be sold) and deliver (or cause to be deliv- ered) the Bonds to the Underwriter as provided in this Contract of Purchase, and ( iii) to carry out and consummate all transactions contemplated by the Inden- ture, the Bond Ordinance, the Loan Agreement,Athe Official Statement, and this Contract of Purchase to be performed by the City, and the City has complied with all provisions of applicable law in all matters relating to such transactions; (c) the City has full legal right, power and authority ( i) to pass the Bond Ordinance, and ( ii) to execute and deliver the Indenture, the Loan Agreement,/ and this Contract of Purchase; (d) the City has duly (i) authorized the execu- tion, delivery and performance of this Contract of Purchase, the Indenture, the Loan Agreement,^and the Bonds, ( ii) ratified the distribution and use of the Preliminary Official Statement and authorized the execution, delivery, and distribution of the Official 4. Statement, and ( iii) authorized the taking of any and all such lawful action as may be required on the part of the City to carry out, give effect to and consummate the transactions contemplated by this Contract of Pur- chase, the Indenture, the Loan Agreement and the Official Statement; (e) the Bond Ordinance has been duly passed by the City and is in full force and effect; (f) when delivered to the Underwriter against payment therefor, in accordance with the provisions of this Contract of Purchase, the Bonds will be duly authorized, executed, issued, and delivered and will - constitute legal, valid and binding obligations of the City in accordance with their terms payable solely out of funds pledged by the City for the payment thereof in the Indenture; (g ) prior to the Closing, the City will obtain all approvals, consents and orders (other than state Blue Sky or security law clearances) of any government authority or agency having jurisdiction in the matter that would constitute a condition precedent to the performance by the City of its obligations under this Contract of Purchase, the Indenture, the Loan Agree- mentAand the Bond Ordinance and to the performance by the City of the obligations imposed by the Bonds; (h) the passing of the Bond Ordinance by the City and the authorization, execution, delivery and perfor- mance by the City of this Contract of Purchase, the Indenture, the Loan Agreement,nthe Bonds, and compliance with the provisions of the same will not conflict with, or constitute or result in a breach of or a default under, any agreement or other instrument to which the City is subject or by which it is or may be bound or violate any law, rule, regulation, decree or order to which the City is subject or by which it is bound which breach or default would materially affect the binding effect of the Bonds or the ability of the City to make payment therefor; ( i) the material in the Official Statement relat- ing to the City does not contain any untrue statement of a material fact or omit to state a material fact that is necessary to make the statements made, in the light of the circumstances under which they were made, not misleading taking into account the purposes for which the Official Statement is used; 5. (j ) between the time of your acceptance hereof and the Closing, the City will not have executed or issued any bonds or notes or incurred any other obligations for borrowed money payable from the funds pledged under the Indenture for the payment of the Bonds, and there will not have been any adverse change of a material nature in the financial position or method of operation of the City; (k) the City will cooperate with the Underwriter in the qualification of the Bonds for offering and sale and the determination of their eligibility for invest- ment under the laws of such jurisdictions as the Underwriter shall designate, provided that the City is not required to consent to any general or special service of process in any jurisdiction; (1 ) there is no action, suit, hearing, proceed- ing, inquiry or investigation, at law or in equity, or before or by any court, public board, agency or body, pending or, to the best knowledge of the City, threat- ened against or affecting the City (or to the best knowledge of the City any basis therefor) or any of the City' s officials in their respective capacities as such, wherein an unfavorable decision, ruling or finding would, in any way, adversely affect ( i ) the transactions contemplated by this Contract of Purchase, the Loan Agreement, the Indenture, or the Official Statement or ( ii) to validity or enforceability of the Bonds, the Bond Ordinance, the Official Statement, this Contract of Purchase, the Loan Agreement,^,the Indenture, or any other agreement or instrument to which the City is a party and that is used or contemplated for use in consummation of the transactions contemplated thereby, or ( iii) the exemption from federal income taxation of the interest on the Bonds; (m) except as required by law the City will not take or omit to take any action if such action or omission would under currently existing statutes and regulations adversely affect the exemption from federal income taxation of the interest on the Bonds under the Internal Revenue Code of 1954, as amended; (n) when issued and sold to the Underwriter in accordance with this Contract of Purchase, the Bonds will not be subject to any State issuance, transfer or other documentary stamp taxes; 6. (o) any certificate signed by any official of the City and delivered to the Underwriter in connection with the delivery of the Bonds shall be deemed to be a repre- sentation and warranty by the City to the Underwriter as to the statements made therein; and (p) the City is not in default in the payment of principal of, premium, if any, or interest on the Bo p and, other than the Indenture, the City has not entered into any contract or arrangement that might give rise to any lien or encumbrance on the revenues or other assets, properties, funds or interests pledged pursuant to the Indenture. 4. Conditions of Sale and Purchase. The obligation of the City to sell the Bonds to the Underwriter and the obligation of the Underwriter to purchase the Bonds from the City shall be subject to the following conditions: (a) on the date of this Contract of Purchase the Partnership shall deliver to the City and the Underwriter, the Letter of Representation, addressed to the City and the Underwriter, dated the date of this Contract of Purchase and substantially in the form attached hereto as Exhibit B (the 'Partnership Letter" ) ; (b) on the date of this Contract of Purchase the Corporation shall deliver or cause to be delivered to the Underwriter the Letter of Representation, addressed to the City and the Underwriter, dated the date of this Contract of Purchase and substantially in the form attached hereto as Exhibit C (the "Corporation Letter" ) ; and (c) on the date of this Contract of Purchase the Corporation and the Partnership shall deliver or cause to be delivered to the Underwriter ( 1 ) a letter from Hutton, Nelson & McDonald, dated the date hereof, addressed to the City and the Underwriter and substan- tially in the form attached hereto as Exhibit D and (2) a letter from Hutton, Nelson & McDonald, dated the date hereof and addressed to the City and the Under- writer, consenting to the use of their report on the Corporation's audited financial statements in the Preliminary Official Statement and the Official State- ment and to references to them in the Preliminary Official Statement and the Official Statement. 5. Conditions of Closing. The obligations of the Underwriter hereunder shall be subject to the performance 7. s by the City of its obligations to be performed hereunder at or prior to the Closing, to the accuracy of and compliance with the representations, warranties and covenants of the City herein, in each case as of the time of delivery of this Contract of Purchase and as of the Closing, and are also subject to the following further conditions: (a) at the Closing (i) the Bond Ordinance shall be in full force and effect and shall not have been amended, modified or supplemented, except as may have been agreed to in writing by the Underwriter, and the City shall have adopted and there shall be in full force and effect such resolutions And ordinances, and there shall have been taken in connection teh re- with and in connection with the issuance of the Bonds all such action, as in the opinion of Bond Counsel and the Underwriter, are necessary in connection with the trans- actions contemplated hereby, (ii) the Bonds shall have been duly authorized, executed and delivered, (iii) the Official Statement shall not have been amended, modified or supplemented, except as may have been approved in writing by the Underwriter, and ( iv) the City shall perform or have performed all of its obligations under or specified in this Contract of Purchase, a licable law, the Enabling Ordinance, and the Bond r finance to 5' performed at or prior to the Closing; and (b) at the Closing, the Underwriter shall receive the following documents: (1 ) the final approving opinion of Bond Counsel, dated the Closing Date, .n substantially the form attached hereto as Exh_th[--E.t (2) a supplementary opinion of Bond Counsel, dated the Closing Date and addressed to the Under- writer, in substantially the form attached hereto as Exhibit F; (3) an opinion of Corporation Counsel to the City, dated the Closing Date, and addressed to the Underwriter, to the effect that (A) to the best of his knowledge there is no action, suit, proceeding or investigation, at law or in equity, before or by any court, any governmental agency, or any pub- lic board or body, pending or threatened, against or affecting the City, challenging the validity of the transactions contemplated by the Official Statement or the validity of the Bonds, the Bond Ordinance, the Indenture, the Loan Agreement, the Guaranty 8. Agreement, or this Contract of Purchase, (B) the statements in the Official Statement under the heading "The Issuer" are true and correct in all material respects, (C) the fulfillment of the terms and conditions of, and the carrying out of the transactions contemplated by, the Bonds, the Inden- ture,ft he Loan Agreement, the Bond Ordinance, and this ontract of Purchase do not and will not conflict with or constitute on the part of the City, a breach of, or a default under any agreement or other instrument known to them to which the City is subject or by which it is or may be bound or violate any decree or order known to them and by which the City is bound, (D) the City is a municipal corpora- tion duly organized and validly existing under the laws of the State of Illinois and is a home rule unit of government under the 1970 Illinois Consti- tution, (E) the Loan Agreement, the Indenture, the Bonds, this Contract of Purchaser and the Official Statement have each been duly executed and deliv- ered by authorized officers of the City, and (F) the Resolution of the City Council of the Issuer adopted on August 8, 1983 (pursuant to which the City Council of the City authorized the execution and delivery of a Memorandum of Intent by and between the City and the Corporation) and the Bond Ordinance have been duly and validly adopted in compliance wiith any and all applicable procedural • requirements of the City; (4) the opinion of Scheflow, Rydell, Travis & Kirkland, Elgin, Illinois, counsel to the Corpo- ration and the Partnership, dated the Closing Date, and addressed to the Underwriter, to the effect that (A) the Corporation was duly incorpo- rated, is validly existing as a not-for-profit corporation under the laws of the State, and has all corporate power necessary to own and lease the properties and conduct the operations described in the Official Statement; (B) the Partnership is a general partnership duly organized and validly existing as a general partnership under the laws of the State, and has all power necessary to conduct the operations described in the Official Statement; (C) the Corporation is an organization described in Section 501 (c) (3) of the Internal Revenue Code of 1954, as amended, and is exempt from federal income taxation, except taxation of unrelated business income under Section 511 of the 9. .a Internal Revenue Code of 1954, as amended; (D) the Loan Agreement,nthe Ground Lease and the Partnership Letter have been duly authorized, executed and delivered by the Partnership and constitute valid and binding agreements of the Partnership enforce- able in accordance with their terms; (E) the Guar- anty Agreement, the Ground Lease and the Corporation Letter have been duly authorized, executed and delivered by the Corporation and constitute valid and binding agreements of the Corporation enforce- able in accordance with their terms; (F) the Cor- poration and the Partnership have duly ratified the distribution and use of the Preliminary Official Statement and have duly approved the Official Statement and this Contract of Purchase; (G) the legal information in the Official Statement with respect to the Corporation, the Partnership, the Loan Agreement, the Guaranty Agreement, the Ground Lease, and the Hospital is true and correct in all material respects and does not omit any matter of a material nature that is necessary to make the Statements made, in light of the circumstances under which they were made, not misleading; (H) to the best of their knowledge, there in no,action, suit, proceeding or investigation, at law or in equity, before or by any court, or any govern- mental agency, or any public board or body, pending or threatened against or affecting the Corporation or the Partnership challenging the validity of the transactions contemplated by the Official Statement or the validity of the Guaranty Agreement, the Ground Lease, the Loan Agreement, A the Partnership Letter, the Corporation Letter or this Contract of Purchase or the organization or existence of the Corporation or the Partnership or the title of any member of the Corporation's board to his or her respective office or the ability of any partner of the Partnership to act in such capacity or the execution and delivery by the Corporation of the Guaranty Agreement or the Ground Lease or the Partnership of the Loan Agreement or the Ground Lease or by the Corporation or the Partnership of this Contract of Purchase, and compliance with the provisions of the foregoing, under the circumstances contemplated thereby and hereby, do not and will not in any material respect conflict with or constitute on the part of the Corporation or the Partnership a breach of or default under any agreement or other instrument of which such counsel has knowledge and to which either 10. the Corporation or the Partnership is a party, and do not and will not violate any existing court order, consent decree, law, or regulation to which either the Corporation or the Partnership is sub- ject; (I) the Corporation is a corporation ( i) organized and operated exclusively for educational or charitable purposes and not for pecuniary profit and ( ii) no part of the net earnings of which inures to the benefit of any person or private individual, all within the meaning, respectively, of Subsection 3(a) (4) of the Securities Act of 1933, as amended, and of Subsection 12(g) (2) (D) of the Securities Exchange Act of 1934, as amendedA(J) the Hospital is qualified to conduct its business as it is presently being conducted, and to be reimbursed (to the extent such reimbursement is available under the applicable statutes, regulations and administrative practices) for its costs and expenses under all third party payor programs accounting for a significant portion of the Hospital 's patient service revenues in its 1983 fiscal year, includ- ing, without limitation, Medicare and Medicaid; (K) the Hospital has obtained Certificates of Need, and has obtained or will obtain all required approvals under applicable zoning ordinances and all building permits and easements or licenses, for the acquisition and construction of the capital expenditures which constitute the Project, to the extent and as such Project is described in the Official Statement, and such Certificates of Need, required approvals under applicable zoning ordinances, building permits, easements and licenses constitute all approvals required for construction of the Project, except as provided in the Official Statement, and such counsel is aware of no reason such approvals should not be granted or should be subject to change by an administra- tive or judicial body so as to materially adversely affect such construction; in addition, such coun- sel shall state that, based upon the examination that they have made as counsel for the Corporation and the Partnership, and without having undertaken to determine independently the accuracy or com- pleteness of the statements contained in the Official Statement other than the statements referred to in clause (G) above, nothing has come to their attention that would lead them to believe that the Official Statement (excluding financial statements, other financial, statistical, or quantitative information, projections, and esti- mates, as to which no view need be expressed) 11 . contains an untrue statement of a material fact or omits to state a material fact that is necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; such opinion may state that the enforce- ability of the Corporation Letter and the Partner- ship Letter may be limited by applicable securities laws, and bankruptcy, insolvency, and other laws affecting the enforcement of creditors' rights generally and, to the extent that the Corporation Letter and the Partnership Letter may require enforcement by a court of equity, by such principles of equity as the court having jurisdiction may impose, or may be held to be against public policy, and that the enforceability of the the Loan Agree- ment, the Guaranty Agreement and the Ground Lease may be limited by bankruptcy, insolvency and other laws affecting the enforcement of creditors' rights generally and, to the extent that certain remedies in such instruments require, or may require, enforcement by a court of equity, by such principles of equity as the court having jurisdic- tion may impose; (5) a certificate of the City, dated as of the Closing Date, signed on its behalf by the Mayor, to the effect that (A) no litigation or offer judicial proceedings are pending or, to the best of their knowledge, threatened ( i ) restraining or enjoining or seeking to restrain or enjoin the issuance, sale, execution or delivery of any of the Bonds, or ( ii) in any way questioning or affecting the validity of any provision of the Bonds, the Indenture, the Loan Agreement,hor this Contract of Purchase, or ( iii) in any way questioning or affecting the validity of any of the proceedings or authority for the authorization, sale, execution or delivery of the Bonds, or the pledge or application of any money or security provided for the payment of the Bonds, or ( iv) questioning or affecting the organization or existence of the City or the title of any official of the City to his or her respective office; (B) the representations and warranties of the City herein contained are true and correct as of the Closing Date; (C) the State has complied with all agreements and satisfied all conditions on its part to be observed or satisfied hereunder and under the Indenture and the Loan Agreement at or prior to the Closing; (D) since the respective dates as of which information is given in the 12. Official Statement and except as set forth therein, there has not been any material adverse change in the condition, financial or otherwise, of the City; and (E) such person has no knowledge or reason to believe that the Official Statement as of the Closing contains any untrue statement of a material fact or omits to state a material fact that is necessary to make the statements made, in light of the circumstances under which they were made, not misleading, taking into account the purposes for which the Official Statement is used; (6) a certificate, dated Closing Date, signed by the yzesident or my Vice_Pre_silent of the Corporation or other officer or employee of the Corporation satisfactory to us, and in form and substance satisfactory to us, to the effect that (A) to the best of his or her knowledge no action, suit, proceeding, or investigation, at law or in equity, before or by any court, any governmental agency, or any public board or body is pending or threatened, contesting or affecting the validity of the Bonds, the Indenture, the Loan Agreement, the Guaranty Agreement or the Ground Lease, or Vontesting the corporate existence or powers of the Corporation or the titles of its officers to their respective offices; (B) to the best of his or her knowledge, no event affecting the Corporation has occurred since the date of the Official Statement that is necessary to disclose therein to make the statements and information therein, in light of the circumstances under which they were made, not misleading; and (C) the representations and warranties of the Corpora- tion contained in the Corporation Letter are true and correct in all material respects as of the Closing Date (for purposes of this certificate, representations and warranties in respect of the "Official Statement" shall be deemed to be in respect of the Official Statement as defined herein) ; (7) a certificate, dated the Closing Date, signed by a general partner of the Partnership or other officer or employee of the Partnership satisfactory to us, and in form and substance satisfactory to us, to the effect that (A) to the best of his or her knowledge no action, suit, proceeding, or investigation, at law or in equity, before or by any court, any governmental agency, or any public board or body is pending or threat- ened, contesting or affecting the validity of the Loan Agreementlor the Ground Lease or contesting 13. • the existence or powers of the Partnership or the ability of any of its partners to act in such capacity; (B) to the best of his knowledge no event affecting the Partnership has occurred since the date of the Official Statement that is necessary to disclose therein to make the statements therein, in light of the circumstances under which they were made, not misleading; and (C) the representations and warranties of the Partnership contained in the Partnership Letter are true and correct in all material respects as of the Closing Date (for purposes of this certificate representations and warranties in respect of the "Official Statement" shall be deemed to be in respect of the Official Statement as defined herein) ; (8) a letter from Hutton, Nelson & McDonald, dated the date of Closing, to the effect that such accountants reaffirm, based on a reading of the latest available interim unaudited financial statements of the Corporation as of a date not more than five days prior to the Closing Date, the statements made in the letter furnished by such accountants pursuant to paragraph 4(c) (1 ) hereof; (9) a letter, dated the Closing Date and addressed to the Underwriter, from Hutton, Nelson & McDonald, consenting to the use of their report on the Corporation's audited financial statements in the Official Statement and to references to them therein; ( 10) two copies of the Bond Ordinance, duly certified, and two copies of the Indenture, the Loan Agreement, the Guaranty Agreement and the Ground Lease duly executed by the parties thereto; ( 11 ) two certified copies of resolutions of (a) the Corporation consenting to the distribution and use of the Preliminary Official Statement, approving the Official Statement and this Contract of Purchase and approving and authorizing the execu- tion and delivery of the Guaranty Agreement, the Ground Lease and the Corporation Letter and (b) of the Partnership, approving and authorizing the execution and delivery of the Loan Agreement,ithe Ground Lease and the Partnership Letter; ( 12) two copies of the Articles of Incorpo- ration of the Corporation, as amended, certified 14. by the proper State authorities, and two certified copies of the by-laws of the Corporation; (13) two certified copies of the Partner- ship's Agreement of Partnership; ( 14) evidence to the effect that the Corpo- ration is an organization described in Section 501 (c) (3) of the Internal Revenue Code; lb (lal such additional legal opinions, certi- ficates and other evidence as the Underwriter or Bond Counsel may deem necessary to evidence the truth and accuracy as of the Closing of the representations and warranties of the City, the Partnership, and the Corporation herein contained and of the Official Statement and the due perfor- mance and satisfaction by the City, the Corporation and the Partnership at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by them. The opinions and certificates and other evidence referred to above shall be in form and substance satisfac- tory to the Underwriter. If the City is unable to satisfy the conditions to the obligations of the Underwriter contained in this Contract of Purchase, or if the obligations of the Underwriter are terminated for any reason permitted by this Contract of Purchase, this Contract of Purchase shall terminate and the Underwriter shall not be under any further obligation here- under, except as provided in Sections 1 and 7 hereof. 6. Termination of Agreement. The Underwriter may terminate this Contract of Purchase, without liability therefor subject to Section 7 hereof, by notification to the City if at any time prior to the Closing: (a) legislation is enacted by the Congress of the United States or a bill is introduced (by amendment or otherwise) in the House of Representatives or the Senate of the Congress of the United States, or a decision by a court of the United States or the Tax Court of the United States is rendered, or a ruling or regulation is issued or proposed by or on behalf of the Treasury Department of the United States, the Internal Revenue Service or other governmental agency having the purpose or effect of imposing federal taxation upon 15. • I, • 1. interest received on bonds of the general character of the Bonds, which., in the reasonable opinion of the Underwriter, adversely affects the market for the Bonds or the sale, at the contemplated offering price, by the Underwriter of the Bonds; (b) any legislation, ordinance, rule or regula- tion is introduced in, or enacted by, any governmental body, department or agency of the State, or a decision by any court of competent jurisdiction within the State is rendered, that, in the reasonable opinion of the Underwriter, adversely affects the market price of the Bonds or the sale, at the contemplated offering price, by the Underwriter of the Bonds; (c) any fact exists or any event occurs that, in the reasonable opinion of the Underwriter, makes the Official Statement contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (d) in the reasonable judgment of the Under- writer, the market for the Bonds or the ability of the Underwriter to sell the Bonds at the contemplated offering prices shall have been materially and adversely affected by an amendment of or supplement to the Official Statement, notwithstanding the Underwriter' s approval of such supplement or amendment prior to its distribution; (e) there shall have occurred any new outbreak of hostilities or other national or international calamity or crisis, the effect of which, in the reason- able opinion of the Underwriter, materially affects the market for the Bonds or the sale, at the contemplated offering price, by the Underwriter of the Bonds; (f) federal legislation is enacted or any action is taken by, or on behalf of, the Securities and Exchange Commission, that, in the opinion of the Underwriter, has the effect of requiring the contem- plated distribution of the Bonds, the Loan Agreement or the Guaranty Agreement to be registered under the Securities Act of 1933, as amended, or the Indenture or the Bond Ordinance to be qualified under the Trust Indenture Act of 1939, as amended, or any laws analo- gous thereto relating to governmental bodies, and compliance therewith cannot be accomplished prior to the Closing Date; 16. i (g) there shall have occurred a general suspensi of trading on the New York Stock Exchange, or a genera banking moratorium is declared by the United States, New York or State authorities, that, in the reasonable opinion of the Underwriter, materially affects the 41/ market for the Bonds or the sale, at the contemplated offering price, by the Underwriter of the Bonds; or (h) the rating on the Bonds shall have been down- graded or withdrawn by a national rating service, the effect of which, in the reasonable opinion of the Underwriter, adversely affects the market for the Bonds or the sale, at the contemplated offering price, by the Underwriter of the Bonds. 7. Expenses. (a) The City agrees to pay, to the extent money is available therefor from Bond proceeds or from the Partnership or the Corporation, all expenses incident to the performance of its obligations hereunder, including but not limited to ( i) the cost of the preparation, printing or other reproduction (for distribution prior to, on, or after the date of acceptance of this Contract of Purchase) of the Bond Ordinance, the Preliminary Official Statement, the Official Statement, the Indenture and the Loan Agreement, in reasonable quantities for distribution, ( ii) charges made by rating agencies for the rating of the Bonds , (iii) the cost of engraving, reproducing and signing the definitive Bonds, ( iv) the fees and disbursements of Bond Counsel and any other experts, advisors, or consul- tants retained by the City, (v) the costs of all paying agents, transfer agents, and bond registrars, and (vi) the fees and expenses, including travel expenses, incurred by representatives of the City in connection with the issuance, sale, and delivery of the Bonds. (b) The Underwriter shall pay ( i) the cost of printing or other reproduction of this Contract of Purchase, ( ii) the cost of qualifying Bonds for sale in various states chosen by the Underwriter and ( iii) all other expenses incurred by them or any of them in connection with their offering and distribution of the Bonds. 8. Miscellaneous. (a) All notices, demands, and formal actions hereunder shall be in writing and mailed, telegraphed or delivered to the following address or such other address as either of the parties shall specify: 17. J The Underwriter: Ridder Peabody & Co. Incorporated 10 Hanover Square New York, New York 10005 Attention: The City: (b) This Contract of Purchase shall inure to the benefit of and be binding upon the parties hereto and their successors and assigns and will not confer any rights upon any other person. The terms "successors" and "assigns" shall not include any purchaser of any of the Bonds from the Underwriter merely because of such purchase. (c) All representations and warranties of the City in this Agreement shall remain operative and in full force and effect regardless of ( i) any investigation made by or on behalf of the Underwriter, (ii) delivery of and payment for the Bonds hereunder, and ( iii) termination or cancella- tion of this Contract of Purchase provided such representa- tions and warranties need be true only on the date made. (d) This Contract of Purchase shall not be assigned by the City or the Underwriter. (e) If any provision of this Contract of Purchase is held or deemed to be or is, in fact, inoperative, invalid or unenforceable as applied in any particular case in any jurisdiction or jurisdictions, or in all jurisdictions because it conflicts with any provisions of any Constitu- tion, statute, rule of public policy, or any other reason, such circumstances shall not have the effect of rendering the provision in question inoperable or unenforceable in any other case or circumstance, or of rendering any other provision or provisions of this Contract of Purchase invalid, inoperative or unenforceable to any extent whatever. (f) This Contract of Purchase shall be governed by and construed in accordance with the laws of the State. 18. (g) This Contract of Purchase may be executed in several counterparts, each of which shall be regarded as an original and all of which shall constitute one and the same document. KIDDER, PEABODY & CO. INCORPORATED By Accepted: CITY OF ELGIN, ILLINOIS By By our approval of this Contract of Purchase, given this date, we agree to be bound to such provi- sions of this Contract of Purchase as relate to us. SHERMAN HOSPITAL ASSOCIATION By 1 Attest: SLADE AVENUE PARTNERSHIP By 19. EXHIBIT A Item 1 . Purchase Price of the Bonds: $ ( % ) 2. (a) Date of the Bonds upon issuance: October 15, 1983 (b) Date of maturity: November 1 , 2014 (c) Principal amount: $3,500,000 (d) Interest rate: % (e) Dates on which interest on the Bonds is to be paid: May 1 , 1984 and each November 1 and May 1 there- after. 3. (a) Trust Indenture, dated as of November 1 , 1983, between the City and Continental Illinois National Bank and Trust Company of Chicago, Chicago, Illinois (the "Trustee") . (b) Official Statement of the City relating to the Bonds, which Official Statement is dated November _, 1983. (c) Preliminary Official Statement of the City relating to the Bonds, which Preliminary Official Statement is dated October 27, 1983. (d) Loan Agreement, dated as of November 1 , 1983, between the City and the Partnership. (e) Guaranty Agreement, dated as of November 1 , 1983, between the Corporation and the Trustee. ( f) Ground Lease, dated as of November 1 , 1983, between the Corporation and the Partnership. (g) Bond Ordinance, entitled Ordinance No. , adopted by the City on October 31 , 1983 . 4. Time of Closing: a.m. , Chicago, Illinois time. Date of Closing: November _, 1983. A-1 EXHIBIT B LETTER OF REPRESENTATION (from the Partnership) • October 31 , 1983 City of Elgin Elgin, Illinois Kidder, Peabody & Co. Incorporated Ladies and Gentlemen: Pursuant to a contract of purchase, dated October_31 . 1983 (the "Contract of Purchase" ) , between Kidder, Peabody & Co. Incorporated (the "Underwriter" ) and the City of Elgin, Illinois (the "City" ) , which Sherman Hospital Association (the "Corporation" ) and Slade Avenue Partnership (the "Partnership" ) have approved, the City proposes to sell $3 ,500,000 principal amount of its Economic Development Revenue scnas, series 1983 (Slade Avenue Partnership Project) (the "Bonds" ) . The City proposes to lend a substantial portion of the proceeds of the Bonds to the Partnership pursuant to the loan agreement, dated as of November 1 , 1983 , between the City and the Partnership (the "Loan Agreement") . Payment of the principal of, premium, if any, and interest on the Bonds will be guaranteed by the 'C po ration pursuant to a guaranty agreement (the "Guaranty t" ) , dated as of November 1 , 1983, between the Corpora- ion and Continental Illinois National Bank and Trust Company of Chicago, Chicago, Illinois, as trustee (the "Trustee") . As consideration for the issuance and sale of the Bonds by the City and the City' s payment of the proceeds thereof to the Partnership pursuant to the Loan Agreement, the Partnership hereby represents, warrants and agrees with you as follows: (a) The statements and information in the Official Statement, dated , 1983 (the "Official State- ment") , under the headings "The Partnership, " "The Project, " and "Estimated Sources and Uses of Funds," "Litigation- B-1 Affecting the Partnership, " and the statements or informa- tion contained elsewhere in the Official Statement concern- ing the Partnership, the Loan Agreement or the ground lease, dated as of November 1 , 1983, between the Partnership and the Corporation (the "Ground Lease" ) are, as of the date thereof, true, correct and complete in all material respects. With respect to such matters, the Official Statement does not omit to state any information that is necessary to make the statements and information relating thereto not mislead- ing in any material respect. We consent to the use of such statements and information in the Official Statement. (b) The Partnership is duly organized and validly existing in good standing as a general partnership under the laws of the State of Illinois with power and authority to own the properties and to conduct its business as described in the Official Statement and to consummate the transactions contemplated by the Loan Agreement, the Ground Lease and the Official Statement. (c) The Partnership has received and there are currently in full force and effect all permits, licenses, accreditations and certificates necessary to conduct its business as it is presently being conducted and as it is contemplated to be conducted by the Official Statement. (d) The Partnership has received and there remain currently in full force and effect, or will receive prior to the delivery of the Bonds, all governmental consents and approvals that could have been received as of the date hereof or can be received prior to the, date of delivery of the Bonds and that would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the Partnership of its obliga- tions hereunder and under the Loan Agreement and the Ground Lease. (e) Pursuant to a resolution adopted at a meeting of the general partners of the Partnership that was duly called and at which a quorum was present and acting throughout, the Partnership ( i ) approved the Contract of Purchase and the Official Statement and authorized a general partner to evi- dence such approval by executing the same, (ii) approved the Loan Agreement,nthe Ground Lease and this Letter of Represent- ation, and authorized the execution and delivery of the same, ( iii) approved the trust indenture, dated as of November 1 , B-2 1983, between the City and_Ihe Trustee, ( iv) ratified the distribution of the Preliminary Official Statement, dated Qctober 27, 1983 (the 'Preliminary Official Statement') and (v) approved the use of the Official Statement, the Loan Agreement and the Ground Lease, in connection with the offering and sale of the Bonds. Such resolution remains in full force and effect and has not been revoked or modified in any respect. (f) The approval of the Purchase Agreement and the execution and delivery of the Loan Agreement,^the Ground Lease and this Letter of Representation, and compliance with the provisions thereof and hereof, under the circumstances contemplated thereby and hereby, do not and will not con- flict with the Partnership' s Agreement of Partnership and do not and will not in any material respect conflict with, or constitute on the part of the Partnership a breach of or default under, any indenture, deed of trust, mortgage, agreement, or other instrument to which the Partnership is a party, or conflict with or violate any existing law, public rule or regulation, judgment, order, or decree to which the Partnership is subject. (g) The Partnership will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regula- tions of such states and other jurisdictions of the United States as the Underwriter may designate and to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions and will use its best efforts to continue such qualifications in effect so long as required for the distribution of the Bonds. (h) There is no claim, action, suit, proceeding, or investigation, at law or in equity, before or by any court, governmental agency, or public board of body, pending or, to the best of its knowledge, threatened ( i) contesting the existence or powers of the Partnership or the ability of any of its general partners to act in such capacity, or ( ii) seeking to prohibit, restrain or enjoin (A) the col- lection of revenues by the Partnership from which the Partnership is obligated to make payments under the Loan Agreement or (B) the application of the proceeds of the Bonds, wherein an unfavorable decision, ruling or finding would materially adversely affect the financial position of the Partnership or the operation of the Partnership's facilities or the validity or enforceability of the Bonds, the Purchase Agreement, or this Letter of Representation, or ( iii) contesting or affecting the validity of the Loan B-3 Agreement, the Ground Lease or this Letter of Representation, or contes ng the power of the Partnership to execute and deliver the same or to consummate the transactions con- templated in such documents or the Official Statement, or ( iv) contesting in any material way the completeness or accuracy of the Preliminary Official Statement or the Official Statement. (i) The Partnership has authorized the use of the Official Statement, including all amendments and supplements thereto, by the Underwriter in connection with the public offering and sale of the Bonds and consented to the use by the Underwriter prior to the date hereof of the Preliminary Official Statement in connection with the public offering and sale of the Bonds. (j ) If, within 90 days after the delivery of the Bonds or such shorter period of time as constitutes the initial offering period for the Bonds, any event occurs as a result of which it is necessary, in the opinion of the Underwriter, to amend or supplement the Official Statement to make the Official Statement not misleading in any material respect in the light of the circumstances existing at the time it is delivered to a purchaser, the Partnership shall forthwith prepare and furnish or request the City to prepare and furnish to the Underwriter (at the expense of the Corporation for 90 days from the date of delivery of the Bonds, and thereafter at the expense of the Underwriter) a reasonable number of copies of an amendment of or supplement to the Official Statement ( in form and substance satisfactory to the Underwriter) that will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact that is necessary to make the state- ments therein, in the light of the circumstances existing at the time the Official Statement is delivered to a purchaser, not misleading. The Partnership shall notify the City upon the occurrence of any material event affecting the Partner- ship, its operations and facilities, the documents and agreements to which it is a party, its contribution to the financing, or the Project (as defined in the Official Statement) , and for purposes of the section shall furnish to the City such information as may be necessary to amend the Official Statement. (k) The Partnership hereby agrees to pay the expenses described in Paragraph 7(a) of the Contract of Purchase to the extent that the proceeds of the Bonds is insufficient or unavailable to pay the same. B-4 (1 ) The Partnership agrees to indemnify and hold harmless the City and any member, officer, employee, or agent thereof and the Underwriter and each person, if any, who controls (as such term is defined in Section 15 of the Securities Act of 1933, as amended) the Underwriter against any and all judgments, losses, claims, damages and liabilities (i) arising out of any statement or information in the Official Statement relating to the Partnership, its present or proposed facilities, the Project, the Loan Agreement,Aor the Ground Lease that is untrue or incorrect in any material respect or the omission therefrom of any statement or information that is necessary to make the statements therein not misleading; and ( ii) to the extent of the aggregate amount paid in settlement of any litigation commenced or threatened arising from a claim based upon any such untrue statement or omission, if such settlement is effected with the written consent of the Partnership. If any claim is made or action is brought against the City or any official, officer, employee or agent thereof based upon the Official Statement for which indemnity may be sought against the Partnership, the City shall promptly notify the Partner- ship in writing setting forth the particulars of such claim or action. Failure to so notify the Partnership shall not relieve it from any liability that it may have otherwise than on account of this indemnity agreement. The Partnership shall have the right to assume the investigation and defense of such action including the employment of counsel chosen by it, which counsel shall be satisfactory to the indemnified parties, and the payment of all fees and expenses associated therewith. Regardless of the assumption of the investigation and defense by the Partnership and the Partnership's employ- ment of counsel in connection therewith, the City and any member, officer, employee, or agent thereof shall have the right to retain separate counsel in any such action and to participate in the investigation and defense thereof, and the Partnership shall pay the fees and expenses of such counsel in a reasonable and appropriate amount, considering the time devoted to the matter by such counsel and the responsibili- ties assumed by such counsel, to the extent that provision for such payment is not otherwise provided for by applicable state law. If any claim is made or action is brought against the Underwriter or any controlling person based upon the Official Statement for which indemnity may be sought against the Partnership, as provided above, the Underwriter shall promptly notify the Partnership in writing setting forth the B-5 particulars of such claim or action. Failure to so notify the Partnership shall not relieve it from any liability that it may have otherwise than on account of this indemnity agreement. The Partnership may participate at its own expense in defense of such action, if it so elects within a reasonable time after receipt of such notice, and the Partnership may assume the defense of such action with counsel chosen by it and approved by the indemnified parties defended in such action, unless such indemnified parties reasonably object on the ground that there may be legal defenses available to them that are different from or in addition to those available to the Partnership, in which case the indemnified parties shall have the right to designate and retain separate counsel in such action and the fees and expenses of such counsel (but not more than one) so designated and retained shall be paid by the Part- nership. If, however, no reasonable objection is made by the indemnified parties and the Partnership assumes the defense of such action, the Partnership shall not be liable for the fees and expenses of any counsel for the indemnified parties incurred thereafter in connection with such action. In no event shall the Partnership be liable for the fees and expenses of more than one counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, unless the retaining of additional counsel has been specifically authorized by the Partnership. The representations, warranties, agreements and indemnities contained herein shall survive the Closing under the Contract of Purchase and any investigation made by or on behalf of the City or any member, officer, employee, or agent thereof. This Letter of Representation shall be binding upon and inure solely to the benefit of the City, the Partnership, the Underwriter and to the extent set forth herein, persons controlling the Underwriter and, to the extent set forth herein, any member, officer, employee, or agent of the City, and their respective personal representatives, successors and assigns, and no other person or firm or entity shall acquire or have any right under or by virtue of this Letter of Representation. If the foregoing is in accordance with your under- standing of the agreement between us , kindly sign and return B-6 to the Partnership the enclosed duplicate of this Letter of Representation, whereupon this will constitute a binding agreement between us in accordance with the terms hereof. Very truly yours, SLADE AVENUE PARTNERESHIP By General Partner Accepted and confirmed as of the date first above written: CITY OF ELGIN, ILLINOIS By Mayor KIDDER, PEABODY & CO. INCORPORATED By Vice President B-7 EXHIBIT C LETTER OF REPRESENTATION (from the Corporation) October 31 , 1983 City of Elgin Elgin, Illinois Kidder, Peabody & Co. Incorporated Ladies and Gentlemen: Pursuant to aPpontract of purchase, dated October 3 4 1983 (the "Contract of Purchase" ) between Ridder, Peabody & Co. Incorporated (the "Underwriter" ) and the City of Elgin, Illinois which Sherman Hospital Association (the "Corpora- tion" ) and Slade Avenue Partnership (the "Partnership") have approved, the City proposes to sell $ principal amount of its Economic Development Revenue Bonds, Series 1983 (Slade Avenue Partnership) (the "Bonds") . The City proposes to lend a substantial portion of the proceeds of the Bonds to the Partnership pursuant to the loan agreement, dated as of November 1 , 1983 , between the City and the Partnership (the "Loan Agreement") . Paymentf the •rinc' ay, and iattEtal_2n_lls_kaali:Pin be guaranteed by the Cor- poration pursuant to a guaranty agreement (the "Guaranty Agreement" ) , dated as of November 1 , 1983, between the Cor- poration and Continental Illinois National Bank and Trust Company of Chicago, Chicago, Illinois, as trustee (the "Trustee") . As consideration for the issuance and sale of the Bonds by the City and the payment of the proceeds thereof by the City to the Partnership pursuant to the Loan Agreement, the Corporation hereby represents, warrants and agrees with you as follows: (a) The statements and information in the Official Statement, dated _, 1983 (the "Official State- C-1 ment") , under the headings 'The Project," "Medical Malprac- tice Considerations, " "Other Pending Litigation," "Illinois Health Facilities Planning Act, " "Bondholder's Risks" and in Appendix A and the statements or information contained elsewhere in the Official Statement concerning the Corpo- ration, the Guaranty Agreement, the ground lease, dated as of November 1 , 1983 , between the Corporation and the Part- nership (the "Ground Lease") , or the Hospital (as defined in the Official Statement) are, as of the date thereof, true, correct and complete in all material respects. With respect to such matters, the Official Statement does not omit to state any information that is necessary to make the statements and information relating thereto not misleading in any material respect. We consent to the use of such statements and information in the Official Statement. (b) The Corporation is duly organized and validly existing in good standing as a not-for-profit corporation under the laws of the State of Illinois with power and authority to conduct its business as described in the Official Statement and to consummate the transactions contemplated by the Guaranty Agreement, the Ground Lease and the Official Statement. (c) The Corporation has received and there are currently in full force and effect all permits, licenses, accreditations and certifications necessary to conduct its business as it is presently being conducted and all neces- sary approvals for the Project, including Certificates of Need, have been obtained. (d ) The Corporation has received and there remain currently in full force and effect, or will receive prior to the delivery of the Bonds, all governmental consents and approvals that could have been received as of the date hereof or can be received prior to the date of delivery of the Bonds and that would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the Corporation of its obliga- tions hereunder and under the Guaranty Agreement and the Ground Lease. (e) Pursuant to a resolution adopted at a meeting of the Board of Managers of the Corporation that was duly called and at which a quorum was present and acting through- out, the Corporation ( i) approved the Contract of Purchase and the Official Statement and authorized an appropriate member of said Board to evidence such approval by executing the same, ( ii) approved the Guaranty Agreement, the Ground Lease and this Letter of Representation, and authorized the execution and delivery of the same, ( iii) approved the trust indenture, dated as of November 1 , 1983, between the City C-2 • and the Trustee, (iv) ratified the distribution of the Preliminary Official Statement, dated October 27, 1983 (the "Preliminary Official Statement" ) and (v) approve a use of the Official Statement, the Guaranty Agreement and the Ground Lease in connection with the offering and sale of the Bonds. Such resolution remains in full force and effect and has not been revoked or modified in any respect. (f) The approval of the Contract of Purchase, and the execution and delivery of the Guaranty Agreement, the Ground Lease and this Letter of Representation, and compliance with the provisions thereof and hereof, under the circumstances contemplated thereby and hereby, do not and will not conflict with the Corporation's Articles of Incorporation or bylaws, and do not and will not in any material respect conflict with, or constitute on the part of the Corporation a breach of or default under, any indenture, deed of trust, mortgage, agreement, or other instrument to which the Corporation is a party, or conflict with or violate any existing law, public rule or regulation, judgment, order, or decree to which the Corporation is subject. (g) Subsequent to the date of the financial state- ments of the Corporation included in the Official Statement, the Corporation has not incurred any material liabilities, direct or contingent, nor has there been any material adverse change in the financial position, results of opera- tions or condition, financial or otherwise, of the Corpora- tion that is not described in the Official Statement, whether or not arising from transactions in the ordinary course of business. (h) The Corporation will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regula- tions of such states and other jurisdictions of the United States as the Underwriter may designate and to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions and will use its best efforts to continue such qualifications in effect so long as required for the distribution of the Bonds. (i ) Except as disclosed in the Official Statement, there is no claim, action, suit, proceeding, or investiga- tion, at law or in equity, before or by any court, govern- mental agency, or public board or body, pending or, to the best of its knowledge, threatened ( i ) contesting the corporate existence or powers of the Corporation or the C-3 titles of its officers to their respective offices, or ( ii) seeking to prohibit, restrain or enjoin (A) the collection of revenues by the Corporation or the Partnership or (B) the application of the proceeds of the Bonds, wherein an unfavor- able decision, ruling or finding would materially adversely affect the financial position of the Corporation or the Partnership or the operation of the Corporation's or the Partnership' s facilities or the validity or enforceability of the Bonds, the Contract of Purchase, the Loan Agreement,/ the Guaranty Agreement, the Ground Lease or this Letter of Representation, or ( iii) contesting or affecting the validity of the Loan Agreement4the the Guaranty Agreement, the Ground Lease, or this Letter of Representation, or contesting the power of the Corporation or the Partnership, as the case may be, to execute and deliver the same or to consummate the transactions contemplated in such documents or the Official Statement, or ( iv) contesting in any material way the com- pleteness or accuracy of the Preliminary Official Statement or the Official Statement, or (v) challenging the right of the Corporation to operate the Hospital (as defined in the Official Statement) or the Partnership to operate the Project (as defined in the Official Statement) . (j ) The Corporation has authorized the use of the Official Statement, including all amendments and supple- ments thereto, by the Underwriter in connection with the public offering and sale of the Bonds and consented to the use by the Underwriter prior to the date hereof of the Preliminary Official Statement in connection with the public offering and sale of the Bonds. (k) If, within 90 days after the delivery of the Bonds or such shorter period of time as constitutes the initial offering period for the Bonds, any event shall occur as a result of which it is necessary, in the opinion of the Underwriter, to amend or supplement the Official Statement to make the Official Statement not misleading in any material respect in the light of the circumstances existing at the time it is delivered to a purchaser, the Corporation shall forthwith prepare and furnish or request the City to prepare and furnish to the Underwriter (at the expense of the Corporation for 90 days from the date of delivery of the Bonds, and thereafter at the expense of the Underwriter) a reasonable number of copies of an amendment of or supplement to the Official Statement (in form and substance satisfactory to counsel for the Underwriters) that will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact that is necessary to make the C-4 statements therein, in the light of the circumstances existing at the time the Official Statement is delivered to a purchaser, not misleading. The Corporation shall notify the City upon the occurrence of any material event affecting the Corporation, its operations and facilities, the docu- ments and agreements to which it is a party, its contribu- tion to the financing, and the Project (as defined in the Official Statement ) , and for purposes of the section shall furnish to the City such information as may be necessary to amend the Official Statement. (1 ) The Corporation hereby agrees to pay the expenses described in Paragraph 7(a) of the Contract of Purchase to the extent that the proceeds of the Bonds is insufficient or unavailable to pay the same, and, for the period of time set forth herein and in the Contract of Purchase, to pay any expenses incurred in amending or supplementing the Official Statement. (m) The Corporation agrees to indemnify and hold harm- less the City and any member, officer, employee or agent thereof and the Underwriter and each person, if any, who controls (as such term is defined in Section 15 of the Securities Act of 1933, as amended) , against any and all judgments, losses, claims, damages and liabilities ( i) arising out of any statement or information in the Official Statement relating to the Corporation, its operations and facilities, the Bonds, the Project„(as ciel n d _ in the Offi- cial Statement) i. the Loan Agreement, the Guaranty Agreemen£', EETiTE6E0 Lease or the Hospital (as defined in the Offi- cial Statement) that is untrue or incorrect in any material respect or the omission therefrom of any statement or infor- mation that is necessary to make the statements therein not misleading in any material respect, and ( ii) to the extent of the aggregate amount paid in settlement of any litigation commenced or threatened arising from a claim based upon any such untrue statement or omission, if such settlement is effected with the written consent of the Corporation. If any claim made or action is brought against the City or any official, officer, employee or agent thereof based upon the Official Statement for which indemnity may be sought against the Corporation, the City shall promptly notify the Corpora- tion in writing setting forth the particulars of such claim or action. Failure to so notify the Corporation shall not relieve it from any liability that it may have otherwise than on account of this indemnity agreement. The Corporation shall have the right to assume the investigation and defense of such action including the employment of counsel chosen by it, which counsel shall be satisfactory to the indemnified parties, and the payment of all fees and expenses associated C-5 therewith. Regardless of the assumption of the investiga- tion and defense by the Corporation and the Corporation's employment of counsel in connection therewith, the City and any official, officer, employee, or agent thereof shall have the right to retain separate counsel in any such action and to participate in the investigation and defense thereof, and the Corporation shall pay the fees and expenses of such counsel in a reasonable and appropriate amount, considering the time devoted to the matter by such counsel and the responsibilities assumed by such counsel, to the extent that provision for such payment is not otherwise provided for by applicable state law. If any claim is made or action is brought against the Underwriter or any controlling person based upon the Official Statement for which indemnity may be sought against the Corporation, as provided above, you shall promptly notify the Corporation in writing setting forth the particulars of such claim or action. Failure to so notify the Corporation shall not relieve it from any liability that it may have otherwise than on account of this indemnity agreement. The Corporation may participate at its own expense in defense of such action or, if it so elects within a reasonable time after receipt of such notice, the Corpo- ration may assume the defense of such action with counsel chosen by it and approved by the indemnified parties de- fended in such action, unless such indemnified parties reasonably object on the ground that there may be legal defenses available to them that are different from or in addition to those available to the Corporation, in which case the indemnified parties shall have the right to desig- nate and retain separate counsel in such action and the fees and expenses of such counsel (but not more than one) so designated and retained shall be paid by the Corporation. If, however, no reasonable objection is made by the indem- nified parties and the Corporation assumes the defense of such action, the Corporation shall not be liable for the fees and expenses of any counsel for the indemnified parties incurred thereafter in connection with such action. In no event shall the Corporation be liable for the fees and expenses of more than one counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, unless the retaining of additional counsel have been specifically authorized by the Corporation. The representations, warranties, agreements and indem- nities contained herein shall survive the Closing under the Contract of Purchase and any investigation made by or on behalf of the City or any member, officer, employee, or agent thereof. C-6 This Letter of Representation shall be binding upon and inure solely to the benefit of the City, the Corpora- tion, the Underwriter and to the extent set forth herein persons controlling the Underwriter and, to the extent set forth herein, any member, officer, employee, or agent of the City and their respective personal representatives, succes- sors and assigns, and no other person or firm or entity shall acquire or have any right under or by virtue of this Letter of Representation. If the foregoing is in accordance with your understanding of the agreement between us, kindly sign and return to the Corporation the enclosed duplicate of this Letter of Repre- sentation, whereupon this will constitute a binding agreement between us in accordance with the terms hereof. Very truly yours, SHERMAN HOSPITAL ASSOCIATION By Authorized Officer Attest: 1) Accepted and confirmed as of the date first above written. CITY OF ELGIN, ILLINOIS By Mayor KIDDER, PEABODY & CO. INCORPORATED By Vice President C-7 . EXHIBIT D [Letterhead of Accountant) _, 1983 KIDDER, PEABODY & CO. INCORPORATED Ladies and Gentlemen: We have examined the consolidated financial statements of Sherman Hospital Association (the "Corporation" ) as of April 30, 1983 , 1982 , 1981 , 1980 and 1979 and the related statements of revenues and expenses, changes in fund bal- ances, and changes in financial position of unrestricted funds for each of the years then ended, included in the Pre- liminary Official Statement dated October 27, 1983, relating to the $3500,000 principal amount of City of Elgin, Illinois Economic Development Revenue Bonds, Series 1983 (Slade Avenue Partnership Project) (the "Bonds" ) . Our report with respect thereto is also included in such Preliminary Official State- ment. Such Preliminary Official Statement is herein referred to as the "Official Statement. " In connection with the Official Statement: 1 . We are independent certified public accountants with respect to the Corporation within the meaning of Rule 101 of the Rules of Conduct of the American Institute of Certified Public Accountants. 2. We have not examined any financial statements of the Corporation as of any date or for any period sub- sequent to April 30, 1983 . Although we have made an exami- nation for the year ended April 30, 1983, the purpose (and therefore the scope) of such examination was to enable us to express our opinion on the consolidated financial statements of the Corporation as of April 30, 1983, and for the year then ended, but not on the consolidated financial statements of the Corporation for any interim period within such year. Therefore, we are unable to and do not express any opinion D-1 on consolidated financial statements of the Corporation as of any date or for any period subsequent to April 30, 1983. 3. For purposes of this letter, we have read the minutes of the Board of Managers of the Corporation as set forth in the minute books at , 1983 (a date within five days of the date of the Contract of Purchase for purposes of the letter delivered on the date of the Contract of Purchase and a date within five days of the date of delivery of the Bonds for purposes of the letter delivered on such date) , officials of the Corporation having advised us that the minutes of all such meetings through that date were set forth therein, and have carried out other procedures to , 1983 (a date within five days of the date of the Contract of Purchase for purposes of the letter delivered on the date of the Contract of Purchase and a date within five days of the date of the delivery of the Bonds for purposes of the letter delivered on such date) as follows: With respect to the four-month periods ending August 31 , 1982 and August 31 , 1983, we have: (a) read ( i) the unaudited balance sheet of the Corporation as of August 31 , 1983, and (ii) the unaudited statement of revenues and expenses for the four months ended August 31 , 1982 and August 31 , 1983; and (b) made inquiries of certain officials and employees of the Corporation who have responsibility for financial and accounting matters as to whether the unaudited finan- cial statements to which reference is made under ( a) above are fairly presented, and the summary of revenues and expenses to which reference is made under (a) above is fairly summarized, in conformity with generally accepted accounting principles applied on a basis substantially consistent with that of the audited financial statements contained in the Official Statement. The foregoing procedures do not constitute an examina- tion made in accordance with generally accepted auditing standards. Also, they would not necessarily reveal matters of significance with respect to the comments in the following paragraph. Accordingly, we make no representation as to the sufficiency of the foregoing procedures for your purposes. 4. Nothing came to our attention as a result of the foregoing procedures, however, that caused us to believe that: (a) the unaudited statements of revenues and expenses and summary of revenues and expenses to which reference D-2 is made in 3(a) above are not fairly presented in accordance with generally accepted accounting principles applied on a basis substantially consistent with that of the audited financial statements contained in the Official Statement or (b) there was any change at August 31 , 1983 in the unrestric- ted fund balance, the excess of total current assets over total current liabilities, or the long-term debt of the Corporation, as compared with the April 30, 1983 balance sheet included in the Official Statement or (c) for the four-month period ended August 31 , 1983, there were any decreases in amount of total revenues or excess of revenues over expenses as compared with the corresponding period for the preceding year, except in all instances for changes or decreases which the Official Statement discloses have occurred or may occur. 5. Corporation officials have advised us that no financial statements as of any date or for any period subsequent to August 31 , 1983, are available; accordingly, the procedures carried out by us with respect to changes in financial statement items after August 31 , 1983, have of necessity been even more limited than those with respect to the period referred to in paragraph 3. We have made inquiries of certain officials of the Corporation who have responsibility for financial and accounting matters as to whether (a) there was any change at , (insert date within five days of the date of the Contract of Purchase for purposes of the letter delivered on the date of the Contract of Purchase and a date within five days of the date of delivery of the Bonds for purposes of the letter delivered on such date) , in the unrestricted fund balance, the excess of total current assets over total current liabilities, or the long-term debt of the Corporation as compared with amounts shown in the August 31 , 1983, balance sheet included in the Official Statement; or (b) for the period from September 1 , 1983, to (insert date within five days of the date of the Contract of Purchase for purposes of the letter delivered on the date of the Contract of Purchase and a date within five days of the date of delivery of the Bonds for purposes of the letter delivered on such date) , there were any decreases, as compared with the corresponding period in the preceding year in patient service revenue, total operating revenue, or in the excess of operating revenues over expenses. On the basis of these inquiries and our reading of the minutes as described in paragraph 3, nothing came to our attention that caused us to believe that there was any such change or decrease, except in all instances for changes or decreases which the Official Statement discloses have occurred or may occur. D-3 6. For the purposes of this letter, we have also read the following information and have performed the additional procedures stated below with respect to such information. Item Page Description "Appendix A-Summary Statement of Revenues and Expenses" The table. "Appendix A-Historical Coverage of Fixed Payment Requirements" The information contained in the table. "Appendix A-Capitalization" The information contained in the table under the heading "April 30, 1983-Actual". "Appendix A-Historical Analysis of Allowances and Uncollectible Accounts" The information contained in the table. "Appendix A-Sources of Revenue" The information contained in the table. Our examination of the financial statements for the period referred to in the introductory paragraph of this letter comprised audit tests and procedures deemed necessary for the purpose of expressing an opinion on such financial statements taken as a whole. For neither the period referred to therein nor any other period did we perform audit tests for the purpose of expressing an opinion on individual balances of accounts or summaries of selected transactions such as those enumerated above and, accordingly, we express no opinion thereon. This letter is solely for the information of, and assistance to, the Underwriter in conducting and document- ing their investigation of the affairs of the Corporation in connection with the bond offering covered by the Official D-4 - r I Statement, and is not to be used, circulated, quoted or otherwise referred to for any other purpose, including but not limited to the registration, purchase or sale of securities, nor is it to be filed with or referred to as a whole or in part in the Official Statement or any other document , except that reference may be made to it in the Contract of Purchase or in any list of closing documents pertaining to the offering of bonds covered by the Official Statement. Very truly yours, D-5 rr . B13369-A 10/26/83 TNH: sp LOAN AGREEMENT Dated as of November 1, 1983 By and Between CITY OF ELGIN, ILLINOIS and SLADE AVENUE PARTNERSHIP The amounts payable to the City of Elgin, Illinois (other than pursuant to Unassigned Rights, as defined herein) , and certain other rights of the Issuer under this Loan Agreement have been pledged and assigned to Continental Illinois National Bank and Trust Company of Chicago, Chicago, Illinois, as Trustee under the Trust Indenture, dated as of November 1, 1983 , by and between the City of Elgin, and said Trustee. 4, LOAN AGREEMENT TABLE OF CONTENTS (This Table of Contents is not a part of this Loan Agreement and is only for convenience of reference. ) Page Parties 1 Preambles 1 ARTICLE I Definitions 2 ARTICLE II Representations Section 2 .1. Representations by the Issuer 5 Section 2 .2 . Representations by the Borrower 6 ARTICLE III Construction of the Project; Issuance of the Bonds Section 3 .1. Agreement to Construct the Project. . . . 8 Section 3 .2 . Agreement to Issue Series 1983 Bonds; Application of Series 1983 Bond • Proceeds; Additional Bonds 8 Section 3 .3 . Disbursements from the Construction Fund9 Section 3 .4. Establishment of Completion Date 12 Section 3 .5 . Borrower Required to Pay Costs in Event Construction Fund Insufficient 12 Section 3 .6 . Authorized Borrower and Issuer Represen- • tatives and Successors 13 Section 3 .7 . Investment of Moneys in the Construction Fund, the Bond Fund, the Debt Service Reserve Fund and Other Trust Funds Permitted 14 Section 3 .8. Arbitrage Covenants 15 ARTICLE IV Loan and Provisions for Payment Section 4. 1. Loan 15 Section 4.2 . Loan Payments and Other Amounts Payable 15 Section 4.3 . Credits 16 Section 4.4. Obligations of Borrower hereunder Uncon- ditional 17 Section 4.5. Payments Pledged and Assigned 18 Section 4. 6. Payment of Trustee' s and Co-Trustee' s Fees 18 (i) Page ARTICLE V Special Covenants Section 5 .1 . No Liability of Issuer 19 Section 5 .2 . Issuer' s and Trustee' s Right of Access to the Project 19 Section 5 .3 . Borrower to Maintain its Partnership Existence; Conditions Under Which Excep- tions Permitted 20 Section 5 .4. Release and Indemnification Covenants . 20 Section 5 .5. Records and Financial Statements 21 Section 5 .6. Tax-Exempt Status of the Series 1983 Bonds 22 Section 5 .7. Operation of Project 24 Section 5 .8. Redemption of Bonds 24 Section 5 . 9. Taxes and Governmental Charges 24 ARTICLE VI Events of Default and Remedies Section 6.1. Events of Default Defined 24 Section 6.2 . Remedies on Default 26 Section 6 .3 . No Remedy Exclusive 27 Section 6 .4. Agreement to Pay Attorneys' Fees and Expenses 27 Section 6 .5. No Additional Waiver Implied by One Waiver; Consents to Waivers 28 ARTICLE VII Prepayment Section 7 .1 . Option to Prepay Number 1 28 Section 7 .2 . Option to Prepay Number 2 29 Section 7 .3 . Determination and Event of Taxability . 30 Section 7.4. Manner of Prepayment 31 Section 7.5. Redemption of Bonds with Prepayment Moneys 32 ARTICLE VIII Miscellaneous Section 8 .1 . Binding Effect 32 Section 8.2 . Execution Counterparts 32 Section 8.3 . Amendments, Changes and Modifications . 32 Section 8 .4. Severability 33 Section 8.5. Partners and Employees Exempt from Personal Liability 33 Section 8.6. Amounts Remaining in Indenture Funds . . 33 Section 8.7. Notices 33 Section 8.8 . Further Assurances 34 (ii) Page Section 8 .9. Applicable Law 34 Section 8 .10 . Term of the Agreement 34 Signatures and Seals 35 Acknowledgements 36-37 EXHIBIT A -- Project Description 38 • (iii) THIS LOAN AGREEMENT, dated as of -November 1, 1983 , by and between the CITY OF ELGIN, ILLINOIS, a home rule municipality in Kane and Cook Counties, duly organized and validly existing under the Constitution and laws of the State of Illinois, as lender (the "Issuer" ) , and SLADE AVENUE PARTNERSHIP, an Illinois general partnership, as borrower (the "Borrower" ) ; WITNESSET H: WHEREAS, the Issuer is authorized and empowered by Article VII , Section 6 of the 1970 Constitution of the State of Illinois and Ordinance No. S2-80 adopted by the Issuer on February 13, 1980 (the "Enabling Ordinance" ) , as from time to - time supple- mented and amended; and WHEREAS, the Issuer is further authorized by the Enabling Ordinance to issue its revenue bonds, payable solely and only from the revenues and receipts to be derived by the Issuer from the renting, leasing, financing or sale of "economic development projects, " to provide funds to pay in whole or in part the costs of the acquisition, construction, reconstruction, repair, altera- tion, improvement, and extension of such economic development projects; and WHEREAS, the Enabling Ordinance provides that such bonds shall be secured by a pledge of, and have a lien upon, the revenues and receipts derived pursuant to this Agreement, except the Unassigned Rights, as hereinafter defined; and WHEREAS, pursuant to and in accordance with the provi- sions of the Enabling Ordinance and by subsequent ordinance, the Issuer has authorized and undertaken to issue its Bonds to provide funds to pay the cost of financing a certain economic development project which will be constructed by the Borrower; and WHEREAS, the Borrower has agreed to make payments pursuant to this Agreement sufficient in the aggregate to fully pay when due the principal of, premium, if any, and interest on the Bonds, and related expenses; and WHEREAS, the Issuer has made the necessary arrangements with the Borrower for the construction of a medical office building, constituting an "economic development project" within the meaning of the Enabling Ordinance (the "Project" ) , to be located in within the boundaries of the Issuer, the financing of which by the Issuer will result in the creation of of approximately 30 new jobs; and by this Agreement the Issuer and the Borrower have further specified the terms and conditions of the construction of the Project, and the financing of the same by the Issuer; and WHEREAS, the Issuer hereby finds and determines that the financing of the construction of the Project will further the purposes and policies of the Enabling Ordinance; and • WHEREAS, the execution and delivery of a certain Trust Indenture dated as of November 1, 1983, from the Issuer to Conti- nental Illinois National Bank and Trust Company of Chicago, Chicago, Illinois (the "Indenture" ) was authorized by an ordinance of the City Council of the Issuer, duly adopted and approved; and WHEREAS, the execution and delivery of this Loan Agree- ment, and the issuance of $3 , 500, 000 aggregate principal amount of the Issuer' s Economic Development Revenue Bonds, Series 1983 (Slade Avenue Partnership Project) , (the "Series 1983 Bonds" ) under the Enabling Ordinance have been in all respects duly and validly authorized by an ordinance of the City Council of the Issuer, duly adopted and approved; NOW, THEREFORE, in consideration of the respective re- presentations and agreements herein contained, the parties hereto agree as follows, provided that any obligation of the Issuer created by or arising out of this Agreement shall not impose a debt or pecuniary liability upon the Issuer, the State of Illinois or any political subdivision thereof, or a charge upon the general credit or taxing powers of such bodies, but shall be payable solely out of the revenues and receipts derived hereunder (except as provided in the Indenture and in this Agreement, to the extent paid out of moneys attributable to the proceeds derived from the sale of the Bonds referred to herein, or the income derived from the temporary investment thereof) by the Issuer; ARTICLE I Definitions The following terms shall have the meanings specified in this Article unless the context clearly requires otherwise. The singular shall include the plural, and the masculine shall include the feminine. All other terms used herein which are defined in the Indenture shall have the same meanings assigned to them in the Indenture, unless the context clearly otherwise requires. "Additional Bonds" means the additional parity Bonds authorized to be issued by the Issuer pursuant to the terms and conditions of Section 302 of the Indenture. "Agreement" or "Loan Agreement" means the within-con- tained Loan Agreement by and between the Issuer and the Borrower, dated as of November 1, 1983 , as the same may be amended from time to time in accordance with the provisions hereof. "Authorized Borrower Representative" means the person at the time designated to act on behalf of the Borrower by written certificate furnished to the Issuer and the Trustee containing the specimen signature of such person, and signed on behalf of -2- the Borrower by one of its general partners . Such certificate or any subsequent or supplemental certificate so executed may desig- nate an alternate or alternates . "Authorized Issuer Representative" means the person at the time designated to act on behalf of the Issuer by written certificate furnished to the Borrower and the Trustee containing the specimen signature of such person, and signed on behalf of the Issuer by its Mayor or City Clerk. Such certificate or any subsequent or supplemental certificate so executed may designate an alternate or alternates . "Bond" or "Bonds" means, collectively, the Series 1983 Bonds and any Additional Bonds . "Bond Counsel" means an attorney at law or a firm of attorneys at law (who or which is of nationally recognized stand- ing in matters pertaining to the tax-exempt nature of interest on bonds issued by states and their political subdivisions ) duly ad- mitted to the practice of law before the highest court of any state of the United States of America or of the District of Columbia. "Bond Fund" means the trust fund created in Section 402 of the Indenture and referred to herein. "Bond Ordinance" means Ordinance Number of the City Council of the Issuer adopted on , 1983 , which Or- dinance Authorizes the issuance and sale of the Series 1983 Bonds . "Bond Year" means the 12-month period beginning with November 2 of each calendar year and ending on November 1 of the next succeeding calendar year. "Borrower" means (i ) Slade Avenue Partnership, and (ii ) any successor entity thereto, as provided in Section 5 .3 hereof. • "Business Day" means a business day at the principal corporate trust office of the Trustee. "Code" means the Internal Revenue Code of 1954, as amended, and all regulations proposed or promulgated thereunder. "Completion Date" means the date of completion of the construction of the Project, as that date shall be certified as provided in Section 3 .4 hereof. "Construction Fund" means the trust fund created in Section 406 of the Indenture and referred to herein. "Constru-ction Period" means the period between the beginning of construction of the Project or the date on which Bonds are first delivered to the purchasers thereof, whichever is earlier, and the Completion Date. -3- "Cost" or "Costs" means any cost incurred with respect to the Project as permitted in Section 3 .3 hereof. "Counsel" means an attorney at law or a firm of attor- neys at law (who or which may be an employee of, or counsel to, the Issuer or the Borrower) duly admitted to the practice of law before the highest court of any state of the United States of America or of the District of Columbia. "Debt Service Reserve Fund" means the trust fund created by Section 407 of the Indenture and referred to herein. "Enabling Ordinance" means Ordinance No. S2-80 duly adopted by the Issuer on February 13 , 1980, as from time to time supplemented and amended. "General Contract" means the Agreement dated August 24, 1983 , by and between the Guarantor and the General Contractor. "General Contractor" means American Medical Buildings , Inc. "Guarantor" means Sherman Hospital Association, an Illinois not for profit corporation, as guarantor under the Guaranty. "Guaranty" means the Guaranty Agreement dated as of November 1, 1983 by and between the Guarantor and the Trustee. "Indenture" means the Trust Indenture by and between the Issuer and Continental Illinois National Bank and Trust Company of Chicago, Chicago, Illinois, as Trustee, of even date herewith, providing the terms and conditions under which the Bonds will be issued, and pursuant to which the Issuer' s interest in this Agreement, and the revenues and receipts received by the Issuer from the Project (except pursuant to the Issuer' s Unassigned Rights)-, are pledged as security for the payment of the principal of, premium, if any, and interest on the Bonds, including any indenture supplemental thereto. "Independent Architect" means an architect or firm of architects registered and qualified to practice the profession of architecture under the laws of the State and who or which is not a full time employee of either the Issuer or the Borrower and who or which is satisfactory to the Trustee. "Issuer" means the City of Elgin, an Illinois home rule municipality and its successors and assigns . "Lease" means the Ground Lease dated as of November 1, 1983 , by and between Sherman Hospital Association, an Illinois not for profit corporation, as lessor, and the Borrower. "Maximum Annual Debt Service" means, with respect to the Bonds as to which the computation is made, at any time, the -4- • maximum amount of principal and interest which will be payable on such Bonds in the then current Bond Year or any succeeding Bond Year whether, in the case of principal, at maturity' or by manda- tory redemption or prepayment, assuming all such Bonds which are subject to mandatory redemption or prepayment are duly redeemed or prepaid in accordance with the requirements of the Indenture, and assuming that no such Bond is otherwise redeemed or prepaid prior to its maturity. "Plans and Specifications" means the plans and specifi- cations describing the Project, as amended by the Borrower from time to time, as duly certified by the Authorized Borrower Repre- sentative and furnished to the Trustee. "Principal Installment Date" means any date on which the principal of any Bonds shall become due, whether by maturity, redemption or acceleration, or any date on which amounts are required to be deposited in any sinking fund established under the Indenture. "Project" means the buildings, structures., facilities, systems, fixtures and improvements described in Exhibit A attached hereto, as said Exhibit A may from time to time be amended or supplemented. "Series 1983 Bonds" means the Issuer' s $3 , 500, 000 aggregate principal amount of Economic Development Revenue Bonds, Series 1983 (Slade Avenue Partnership Project) issued pursuant to the Indenture. "Unassigned Rights" means the rights of the Issuer to issue Additional Bonds, to execute and deliver supplements or amendments to this Agreement, and all of the rights of the Issuer to be held harmless, to be reimbursed for its expenses and to be indemnified hereunder. The words "hereof, " "herein, " "hereunder" and other words of similar import refer to this Agreement as a whole. ARTICLE II Representations Section 2 .1. Representations ba the Issuer. The Issuer makes the following representations as the basis for the undertakings on its part herein contained: (a) The Issuer is a a home rule municipality in Kane and Cook Counties, duly organized and validly existing under the Constitution and laws of the State of Illinois , is authorized and empowered by the provisions of the Enabling Ordinance and Ordinance No. duly adopted by the Issuer on , 1983, to enter into the transactions -5- contemplated by this Agreement and the Indenture and to carry out its obligations hereunder and thereunder, and by proper action of its City Council has been duly authorized to execute and deliver this Agreement and the Indenture. This Agreement and the Indenture constitute legal, valid, binding and enforceable obligations of the Issuer. (b) The Bonds are to be issued under and secured by the Indenture, pursuant to which certain of the Issuer' s interests in this Agreement and the revenues and receipts to be derived by the Issuer pursuant to this Agreement will be pledged and assigned to the Trustee as security for payment of the principal of, premium, if any, and interest on the Bonds. The Issuer covenants that it has not and will not pledge or assign its interest in this Agreement or the revenues and receipts derived pursuant to this Agreement, excepting Unassigned Rights, other than to the Trustee under the Indenture to secure the Bonds . (c) Neither the execution and delivery of this Agree- ment, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement conflicts with or results in a breach of the terms , conditions or provisions of any restriction or any agreement or instrument to which the Issuer is a party, or by which it or any of its property is bound, or constitutes a default under any of the foregoing. Section 2 .2 . Representations la the Borrower. The Borrower makes the following representations as the basis for the undertakings on its part herein contained: (a) The Borrower is a general partnership, duly orga- nized and validly existing under the laws of the State of Illinois and has all necessary power to enter into and perform its obligations under this Agreement. (b) Neither the execution and delivery of this Agree- ment, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement will result in a breach of, or constitute a default under, any of the terms, conditions or provisions of the partnership agreement under which the Borrower was formed, any restriction or any agreement or instrument to which the Borrower is now a party or by which it is bound, or constitute a default under any of the fore- going, or result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Borrower prohibited under the terms of any instrument or agreement. (c) The financing of the construction of the Project by the Issuer through the issuance of the Series 1983 Bonds will result in the creation of approximately 30 new jobs in the City of Elgin, Illinois. -6- (d) The Borrower intends to operate or cause the Proj- ect to be operated as a medical office building and an "eco- nomic development project, " within the meaning of the Enabl- ing Ordinance, from the Completion Date to the expiration or earlier termination of the term of this Agreement as provided herein. (e) The Project constitutes and will constitute property of a character subject to the allowance for depreciation under Section 167 of the Code, and all expenditures for and costs of the Project may be charged to a capital account for Federal income tax purposes. (f) In estimating the costs of the Project, no amount has been included which, under the Federal income tax laws, must be deducted by the Borrower in the year in which paid or incurred, except through an allowance for depreciation. (g) No substantial part ( as defined in the Code) of the proceeds of the Bonds will be used to provide working capital for the Borrower within the meaning of Section 103 (b) of the Code. (h) The Project, as designed, will comply with all presently applicable rules, regulations, resolutions and laws of the local, State of Illinois and Federal governments. (i) During the term of this Agreement, the Borrower will pay directly to the Issuer an amount sufficient in the aggregate to reimburse the Issuer for all expenses reasonably incurred by the Issuer hereunder at the request of the Borrower in connection with the Project, to the extent such expenses are not paid out of Bond proceeds. (j ) Construction or acquisition (within the meaning of the Code) of any portion of the Project was not commenced prior to August 8, 1983, the date of the taking of official action by the Issuer with respect thereto. (k) The Borrower has not taken, will not take and will not permit to be taken any action which would cause the aver- age maturity of the Series 1983 Bonds to exceed one hundred twenty percent (120%) of the average reasonably expected eco- nomic life of the Project, in violation of Section 103 (b) (14) of the Code. (1) The Project is to be located within the corporate boundaries of the Issuer. -7- ARTICLE III Construction of the Project; Issuance of the Bonds Section 3 .1. Agreement to Construct the Project. The Borrower covenants and agrees to construct the Project entirely within the corporate limits of the Issuer in accordance with the Plans and Specifications . Upon written request of the Trustee, the Borrower agrees to make available to the Trustee for review and copying, all then current Plans and Specifications for the Project. The Plans and Specifications shall be submitted by the Borrower to the Issuer for review and approval in accordance with applicable statutes and ordinances . The Borrower may supplement or amend the description of the Project or the Plans and Specifi- cations (including additions thereto or omissions therefrom) by written notice furnished to the Issuer and the Trustee, provided that no such supplement or amendment shall cause the Project, as described in Exhibit A hereto, to no longer be classifiable as an "economic development project" within the meaning of the Enabling Ordinance, or materially change the function of any principal component described in the Plans and Specifications, unless the Issuer shall have consented to any amendment of Exhibit A hereto in writing, and there shall be filed with the Issuer and the Trustee the written approving opinion of Bond Counsel to the effect that such supplement or amendment will not result in the inclusion of interest on any Bond in the gross income of the owner thereof for Federal income tax purposes. In the event of a supplement or amendment to the description of the Project, the Issuer and the Borrower shall amend Exhibit A to this Agreement to reflect such supplement or amendment. The Borrower may iden- tify any proprietary information in the Plans and Specifications, and the Issuer agrees, to the extent permitted by law, to keep such information confidential . Subject to the force majeure provisions of Section 6.1 hereof, the Borrower agrees to cause the construction of the Project to be completed as soon as may be practicable. For such construction which commences prior to the receipt of the proceeds to be derived from the sale of the Series 1983 Bonds, the Borrower agrees to advance all funds necessary for such purpose, which advances may be reimbursed from the Construction Fund to the extent permitted by Section 3 .3 hereof. Nothing contained in this Section shall relieve the Borrower of the obligation on its part to make the payments required to be paid pursuant to Section 4.2 hereof. Section 3 .2 . Agreement to Issue Series 1983 Bonds; Application of Series 1983 Bond Proceeds; Additional nance a portion of the costs of the construction of the Project as provided for in Section 3 .3 hereof, (ii) pay the interest on the Series 1983 Bonds through December 1, 1984, (iii) fund the Debt Service Reserve Fund in an amount equal to the Maximum Annual Debt Service on the Series -8- 1983 Bonds, and (iv) pay costs incidental thereto and to the issuance of the Series 1983 Bonds, the Issuer agrees that it will sell and cause to be delivered to the purchasers thereof $3, 500, 000 aggregate principal amount of its Series 1983 Bonds having the terms specified in the Indenture. Upon receipt of the proceeds to be derived from the sale of the Series 1983 Bonds , the Issuer will (a) deposit in the Bond Fund a sum equal to the amount required to be so deposited pursuant to Section 403 of the Indenture, (b) deposit in the Debt Service Reserve Fund a sum equal to the amount required to be so deposited pursuant to Section 407 of the Indenture and (c) deposit in the Construction Fund the balance of the proceeds derived from said sale. Upon the written request of the Borrower, the Issuer may, in its sole discretion, authorize the issuance of Additional Bonds upon the terms and conditions provided in Section 302 of the Indenture. If authorized by the Issuer, Additional Bonds shall be issued to provide funds to pay any one or more of the following: (i) the costs of completing the Project, or (ii) the costs of refunding, to the extent permitted by law and the Inden- ture, all or any Bonds, including in each case the costs of the issuance and sale of Additional Bonds and interest for such period, any deposit into the Debt Service Reserve Fund required in connection with the issuance of such Additional Bonds and other costs reasonably related to the financing as shall be agreed upon by the Borrower and the Issuer. If the Borrower is not in default hereunder, the Issuer may, in its sole discretion and on request of the Borrower, from time to time, issue the amount of Additional Bonds requested by the Borrower; provided that the terms of such Additional Bonds, the purchase price to be paid therefor and the manner in which the proceeds therefrom are to be disbursed shall have been ap- proved in writing by the Borrower and the Issuer; and provided further that the Borrower and the Issuer shall have entered into an amendment to this Agreement to provide for additional payments in an amount at least sufficient in the aggregate to pay the principal of, premium, if any, and interest on the Additional Bonds when due, and the Issuer and the Borrower shall have other- wise complied with the provisions hereof and of the Indenture with respect to the issuance of such Additional Bonds . Section 3 .3 . Disbursements from the Construction Fund. Pursuant to the Indenture, the Issuer shall authorize and direct the Trustee to use moneys deposited in the Construction Fund for the purposes set forth in the Enabling Ordinance to pay the Cost of the Project (but, subject to the provisions of Section 3 .8 hereof) , namely: the sum total of all reasonable or necessary costs incidental to the construction of the Project in accordance with the Plans and Specifications including without limitation, the cost of studies and surveys ; plans, specifications, architec- tural and engineering services; legal, marketing or other special services; and financing, acquisition, construction and site development of the Project and interest on the Series 1983 Bonds -9- to a date six 16 ) months subsequent to the date of completion (collectively the "Cost of the Project" ) . Notwithstanding the provisions of the foregoing sentence no payments of any portion of the Issuer' s Public Benefit Fee described in Section 13 of the Enabling Ordinance may be made (regardless of the source of payment, including but not limited to proceeds of the Series 1983 Bonds or the Borrower' s or Guaran- tor's funds ) and no reimbursement to the Borrower, the Guarantor or any other Person may be made from the proceeds of the Series 1983 Bonds unless, prior to each such payment or reimbursement, as the case may be, the Borrower shall provide the Trustee an opinion of Bond Counsel to the effect that the amount of such payment or reimbursement is permitted under Section 1.103-13(c) (5) of the Regulations . All proceeds of the Series 1983 Bonds, including moneys earned pursuant to the provisions of Section 3 .7 hereof, remain- ing in the Construction Fund on the Completion Date, established pursuant to Section 3 .4 hereof, and after payment of all other items provided for in the preceding paragraph, then due and pay- able shall at the direction of the Authorized Borrower Represen- tative be, to the extent permitted by law, used by the Trustee: (i ) first, for the payment or reserve for payment of any Cost of the Project not then due and payable; and (ii ) second, for such other purposes (including, but not limited to, the payment of other Costs of the Project and the principal of and interest on the Series 1983 Bonds) as in the opinion of Bond Counsel are permitted hereunder and under the Enabling Ordinance and will not under app- licable statutes and regulations impair the exemption from Federal income tax of the interest on the Series 1983 Bonds . Each of the payments referred to in this Section 3 .3 (except payments of interest on the Series 1983 Bonds ) shall be- made only upon receipt by the Trustee of a completed Application and Certificate for Payment, American Institute of Architects Document G702, April, 1978 edition, signed by the General Contrac- tor. Payments of interest on the Series 1983 Bonds shall be made only upon receipt by the Trustee of a written requisition signed by the Authorized Borrower Representative certifying the amount of such interest and naming the Trustee, as payee. Each such requisition may state that it is given without prejudice to any rights against third parties which exist at the date of such certificate or which may subsequently come into being. Each requisition will be consecutively numbered and ac- companied by copies of invoices or other appropriate documentation supporting the payments or reimbursements therein requested. In the case of any contract providing for the retention of a portion of the contract price, there shall be paid from the -10- Construction Fund prior to the Completion Date only the net amount remaining after deduction of any such portion until such retention is payable, in which event payment may be made therefor from the Construction Fund. In addition to any other requirements set forth in this Loan Agreement, the receipt by the Trustee of the following shall be deemed conditions precedent to the first and/or each and every disbursement from the Construction Fund, as set forth below: A. Prior to the first disbursement: 1. Copies of the Plans and Specifications . 2 . A survey of the Project Real Estate, prepared by a registered Illinois land surveyor, showing all recorded utility, access and other easements and rights-of-way. 3 . A copy of the General Contract. 4. Executed counterparts of the Indenture, the Lease and the Bond Ordinance. 5 . A bond in the amount of 100% of the contract sum covering the faithful performance of work and the payment of all obligations under the General Contract. 6. A building permit for the Project issued by the Issuer and any other assurances, licenses, approvals, and permits relating to the construction of the Project from any and all applicable Governmental Authorities and utilities as the Guarantor may reasonably require. B. Prior to each and every disbursement: 1. Written advice from the General Contractor and any Independent Architect acceptable to the Guarantor that the Project complies with all laws, statutes, ordinances, rules and regulations of any Governmental Authority; that the Plans and Specifications have been approved by them and by all applicable Governmental Authorities; that the General Contract is acceptable to them and satisfactory to provide for the construction of the Project; that the installed or proposed roads are or shall be sufficient for the full utilization of the Project for the intended purpose, and the extent of completion thereof; and that the amounts set forth for the Project as set forth on the cost analysis provided the Trustee by the Borrower will be sufficient to complete the construction of the Project. 2 . Partial waiver from the General Contractor in the amount of the draw. -11- 3 . At the time of the final payment, which shall be at least in the amount of ten percent (10%) of the Contract Price under the General Contract, there shall be presented a contractor' s affidavit and a complete release of all liens arising out of the General Contract or receipts in full covering all labor and materials for which a lien could be filed or a bond providing indemnification against any such lien. 4. Prior to final pay-out, the Trustee shall receive a certification of occupancy issued by the Issuer. 5. A certificate signed by the Authorized Borrower Representative that all of the funds being requisitioned are being used in compliance with Section 103(b) of the Code and the Regulations thereunder and that "substantially all" (i.e. , 90%) of the funds requisitioned thereby, plus any other funds previously disbursed from the Construction Fund plus any future disbursements from the Construction Fund are being or will be used for the acquisition, construction, reconstruction or improvement of property of a character subject to allowance for depreciation as prescribed by Section 103 (b) (6) (A) of the Code and Regulations thereunder. In making any such payments from the Construction Fund, the Trustee may rely on any such requisitions delivered to it pursuant to this Section 3 .3 . Section 3 .4. Establishment of Completion Date. The Completion Date shall be established by the date of issuance of a certificate of occupancy by the Issuer and shall be further evidenced to the Trustee and the Issuer by a certificate signed by the Authorized Borrower Representative stating that, except for amounts retained by the Trustee for Costs not then due and payable, or the liability for which the Borrower is in good faith contesting or disputing, (i ) construction of the Project has been completed to the satisfaction of the Borrower in accordance with the Plans and Specifications, and all labor, services, materials and supplies used in such construction have been paid for, (ii ) the Project as so constructed is suitable and sufficient for the efficient operation of the Project as an "economic development project, " as defined in the Enabling Ordinance, and (iii) substan- tially all (i .e. , at least 90%) of the proceeds derived from the sale of the Ser es 1983 Bonds have been used to provide land or property of a character subject to the allowance for depreciation under Section 167 of the Code. Section 3 . 5 . Borrower Required to Pay Costs in Event Construction Fund Insufficient. In the event the moneys in the Construction Fund available for payment of the Costs of the Project should not be sufficient to make such payments in full, the Borrower agrees to pay directly, or to deposit moneys in the Construction Fund for the payment of, such Costs of completing the Project as may be in excess of the moneys available therefor -12- in the Construction Fund. THE ISSUER DOES NOT MAKE ANY WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, THAT THE MONEYS WHICH WILL BE DEPOSITED INTO THE CONSTRUCTION FUND AND WHICH, UNDER THE PROVISIONS OF THIS AGREEMENT, WILL BE AVAILABLE FOR PAYMENT OF THE COSTS OF THE PROJECT, WILL BE SUFFICIENT TO PAY ALL OF THE COSTS WHICH WILL BE INCURRED IN THAT CONNECTION. The Borrower agrees that if after exhaustion of the moneys in the Construction Fund the Borrower should pay, or deposit moneys in the Construction Fund for the payment of, any portion of the said Costs of the Project pursuant to the provisions of this Section, it shall not be entitled to any reimbursement therefor from the Issuer, except from the proceeds of Additional Bonds issued pur- suant to Section 302 of the Indenture, if any, from the Trustee, or from the owners of any of the Bonds, nor shall it be entitled to any diminution of the amounts payable under Section 4.2 hereof. Section 3 .6. Authorized Borrower and Issuer Representa- tives and Successors . Prior to the in—it a sale of the Series 1983 Bonds, the Borrower and the Issuer shall appoint an Authorized Borrower Representative and an Authorized Issuer Representative, respectively, for the purpose of taking all actions and making all certificates required to be taken and made by the Authorized Borrower Representative and the Authorized Issuer Representative under the provisions of this Agreement, and shall appoint alternate Authorized Borrower Representatives and alternate Authorized Issuer Representatives to take any such action or make any such certificate if the same is not taken or made by the Authorized Borrower Representative or the Authorized Issuer Representative. In the event any of said persons, or any successor appointed pur- suant to the provisions of this Section, should resign or become unavailable or unable to take any action or make any certificate provided for in this Agreement, another Authorized Borrower Representative or alternate Authorized Borrower Representative, or another Authorized Issuer Representative or alternate Autho- rized Issuer Representative, shall thereupon be appointed by the Borrower or the Issuer, respectively. If the Borrower or the Issuer fails to make such designation within ten (10 ) business days following the date when the then incumbent Authorized Borrower Representative or Authorized Issuer Representative resigns or becomes unavailable or unable to take any of the said actions, or any general partner of the Borrower, or the Mayor or the Clerk of the Issuer, shall serve as the Authorized Borrower Representative or the Authorized Issuer Representative, respectively. Whenever under the provisions of this Agreement the approval of the Borrower is required, or the Issuer is required to take some action at the request of the Borrower, such approval or such request shall be made by the Authorized Borrower Represen- tative unless otherwise specified in this Agreement, and the Issuer or, subject to Section 1001(j ) of the Indenture, the Trustee shall be authorized to act on any such approval or request, and the Borrower shall have no complaint against the Issuer or the Trustee as a result of any action so taken. -13- Section 3 .7 . Investment of Moneys in the Construction Fund, the Bond Fund, the Debt Service Reserve Fund and Other Trust Funds Permitted. Any moneys held as a part of the Construc- tion Fund, the Bond Fund and any other Trust Fund (except the Debt Service Reserve Fund) established by the Trustee under the Indenture shall , at the written request and direction of the Authorized Borrower Representative (as described in Section 601 of the Indenture) , be invested or reinvested by the Trustee, to the extent permitted by the Enabling Ordinance and law, in any of the following, or any combination thereof: (a) any bonds or other obligations which as to principal and interest constitute direct obligations of, or the full and timely payment of which are unconditionally guaranteed by, the United States of America, (b) obligations of the Federal National Mortgage Association, (c) obligations of the Federal Intermediate Credit Corporation, (d) obligations of Federal Banks for Cooperatives, (e) obligations of Federal Land Banks, (f) obligations of Federal Home Loan Banks and (g) certificates of deposit, time deposits or other similar banking arrangements issued by any bank organized under the laws of the United States of America or any state thereof and having a combined capital surplus and undivided profits of not less than $50, 000, 000 (i ) which bank (which may include the Trustee) is rated by Standard & Poor' s Corporation not lower than the rating on the Series 1983 Bonds or (ii ) the deposits of which bank (which may include the Trustee) are insured by the Federal Deposit Insurance Corporation, provided that, to the extent not so insured, such certificates, deposits or other banking arrangements are fully secured by investments described in (a) through (f) above. Any moneys held as a part of the Debt Service Reserve Fund estab- lished .by the Trustee under the Indenture shall, at the written request and direction of the Authorized Borrower Representative, be invested or reinvested by the Trustee, to the extent permitted by the Enabling Ordinance and law in only those bonds, obligations or certificates of deposit described in clauses (a) and (g) of this Section 3 . 7 . Any such securities may be purchased at the offering or market price thereof at the time of such purchase. Such invest- ments shall mature in such amounts and at such times , or shall be readily marketable prior to their maturities, as the Authorized Borrower Representative may direct. The Trustee may make any and all such investments through its own bond department. Prior to the Completion Date any interest accruing on or profit realized from the investment of any moneys held as a part of the Debt Service Reserve Fund or the Bond Fund shall be credited to the Construction Fund, and after the Completion Date, any interest accruing on or profit realized from the investment of any moneys held as a part of the Construction Fund or Debt Service Reserve Fund shall be credited to the Bond Fund, except that, so long as there is a deficiency in the Debt Service Reserve Fund, all interest accruing on or profit realized from the investment of any moneys held as a part of the Debt Service Reserve Fund shall be retained in the Debt Service Reserve Fund. Any loss resulting from any investment -14- made pursuant to this Section shall be charged to the appropriate fund and reimbursed by the Borrower from its own moneys . For the purposes of this Section, any interest bearing deposits, including certificates of deposit, issued by or on deposit with the Trustee shall be deemed to be investments and not deposits . Section 3 .8 . Arbitrage Covenants . The Borrower cove- nants with the Issuer and with the owners of the Bonds from time to time outstanding that, as long as any of the Bonds remain outstanding, moneys on deposit in any fund maintained in connec- tion with the Bonds , whether or not such moneys were derived from the proceeds of the sale of the Bonds or from any other source, will not be used in any manner which will cause the Bonds to be deemed to be "arbitrage bonds" within the meaning of Section 103 (c) of the Code. The Borrower reserves the right, however, to make any investment of such moneys permitted by the Enabling Ordinance and the laws of the State of Illinois if, when and to the extent that said Section 103 (c) or the regulations promulgated or proposed thereunder shall be repealed, relaxed or held void by final judg- ment of a court of competent jurisdiction, but only if any invest- ment made by virtue of such repeal, relaxation or decision would not, in the written opinion of Bond Counsel, result in making the interest on any Bonds subject to Federal income taxation. ARTICLE IV Loan and Provisions for Payment Section 4. 1 . Loan. In order to finance the Project, the Issuer hereby loans to the Borrower, and the Borrower hereby borrows, the proceeds to be derived from the sale of the Bonds . Such proceeds shall be disbursed and applied in accordance with Article III hereof. Section 4.2 . Loan Payments and Other Amounts Payable. The Borrower hereby covenants and agrees to pay to the Trustee for the account of the Issuer as repayment of the loan of the proceeds of the Series 1983 Bonds the following amounts on the following dates : (a) Interest: On December 1, 1983 (or on the first Business Day thereafter if such date is not a Business Day) an amount equal to one-third (1/3 ) of the interest to become due on the Series 1983 Bonds on May 1, 1984; and on the first (1st) day of each month of each year thereafter (or on the first Business Day thereafter if any of such dates is not a Business Day) commencing with January, 1984, an amount which will not be less than one-sixth (1/6 ) of the amount of interest to become due on the Series 1983 Bonds on the next succeeding semi-annual interest payment date of the Series 1983 Bonds; provided, however, that the Borrower may be entitled to certain credits on such payments as permitted under Section 4.3 hereof. -15- (b) Principal : On November 1, 1984, and on the first (1st) day of each month of each year thereafter (or on the first Business Day thereafter if any of such dates is not a Business Day) an amount equal to not less than one-twelfth (1/12 ) of the next installment of principal becoming due on the Series 1983 Bonds by maturity or by mandatory redemption pursuant to sinking fund requirements under the Indenture; provided, however, that the Borrower may be entitled to certain credits on such payments as permitted under Section 4.3 hereof. (c) Debt Service Reserve Fund Deposits : In the event that moneys are transferred by the Trustee from the Debt Service Reserve Fund to the Bond Fund pursuant to Section 407 of the Indenture, then the Borrower will (unless otherwise directed in writing by the holders of not less than fifty-one percent (51%) in principal amount of the Series 1983 Bonds then outstanding) pay the Trustee for deposit into the Debt Service Reserve Fund the amount of any such transfer in 12 substantially equal monthly installments on the first day of each of the next succeeding 12 months . In the event that any annual valuation provided for by Section 407 of the Indenture shall demonstrate that the amount then on deposit in the Debt Service Reserve Fund is less than the Maximum Annual Debt Service of the Series 1983 Bonds, then the Borrower will (unless otherwise directed in writing by the holders of not less than fifty-one percent (51%) principal amount of the Series 1983 Bonds then outstanding) pay to the Trustee for deposit in the Debt Service Reserve Fund no later than the next succeeding April 1 an amount or amounts sufficient to cause the amount in the Debt Service Reserve Fund to be equal to the Maximum Annual Debt Service of the Series 1983 Bonds . Upon a declaration of acceleration by the Trustee under Section 902 of the Indenture, an amount equal to the aggregate principal amount of all then Outstanding Bonds, together with the redemption premium, if any, and the interest accrued thereon, shall become immediately due and payable. In the event that the Borrower shall fail to make any of the payments required of it in this Section 4.2 to be made with respect to the Bonds, the payment so in default shall con- tinue as an obligation of the Borrower until the amount in default shall have been fully paid, and the Borrower will pay on demand interest on any overdue principal and, to the extent permitted by law, on any overdue interest at the rate per annum which is equal to the rate per annum borne by the Bonds in respect of which such default shall have occurred. Section 4.3 . Credits. Notwithstanding any provision contained in this Loan Agreement or the Indenture to the contrary: (a) The accrued interest on the Series 1983 Bonds and the amount of one year' s capitalized interest deposited by -16- the Trustee in the Bond Fund pursuant to Section 403 of the Indenture at the time of the delivery of the Series 1983 Bonds shall be credited against the obligation of the Bor- rower to pay interest on the loan of the proceeds of the Series 1983 Bonds made hereunder as the same becomes due; (b) The principal amount of Series 1983 Bonds delivered to the Trustee or previously redeemed or purchased (otherwise than through the operation of the sinking fund described in Section 702 of the Indenture) shall be credited against the obligation of the Borrower to pay the principal of the loan of the proceeds of the Series 1983 Bonds hereunder; provided, however, that the deposit of a Series 1983 Bond of one maturity may not be credited against a payment of the prin- cipal of the loan of the proceeds of the Series 1983 Bonds made hereunder which would be used, in the normal course, to retire a Series 1983 Bond of another maturity; and (c) The amount of any moneys transferred by the Trustee from the Debt Service Reserve Fund to the Bond Fund shall be credited against the obligation of the Borrower to pay the principal of or the interest on the loan of the proceeds of the Series 1983 Bonds made hereunder as the same become due. Section 4.4. Obligations of Borrower hereunder Uncondi- tional . The obligations of the Borrower to make the payments required in Section 4.2 hereof, and to perform and observe the other obligations on its part contained herein, shall be absolute and unconditional; and failure of the Borrower to observe or perform any such obligation shall not be subject to any defense (other than payment) or any right of set-off, counterclaim or abatement. Until such time as the principal of, premium, if any, and interest on the Bonds shall have been fully paid, or provision for the payment thereof shall have been made in accordance with the Indenture, the Borrower (i) will not suspend or discontinue, or permit the suspension or discontinuance of, any payments due hereunder, (ii) will perform and observe all of its other obliga- tions contained in this Agreement, and (iii ) will not suspend the performance of such obligations for any cause, including, without limiting the generality of the foregoing, failure to complete the Project, any act or circumstance that may constitute failure of consideration, failure of, or a defect in, title to the Project or any part thereof, eviction or constructive eviction, destruc- tion of or damage to or taking in condemnation of the Project, commercial frustration of purpose, any change in the tax or other laws or administrative rulings of, or administrative actions by, the United States of America or the State of Illinois, or any political subdivision of either, or any failure of the Issuer to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with this Agreement. Nothing contained in this Section shall be construed to release the Issuer from the performance of any of the agreements on its part herein contained, and in the event the Issuer shall fail to perform any such agreement on its part herein contained, the Borrower may institute such action against -17- the Issuer as the Borrower may deem necessary to compel perfor- mance or recover damages for nonperformance thereof, provided that no such action shall (i) violate the agreements on the part of the Borrower contained in the foregoing provisions of this Section 4.3 , or (ii) diminish the amounts required to be paid by the Borrower pursuant to Section 4.2 hereof. The Borrower may, however, at its own cost and expense, and in its own name or in the name of the Issuer (provided the Issuer is a necessary party) , prosecute or defend any action or proceeding, or take any other action, involving third persons which the Borrower deems reason- ably necessary in order to secure or protect its rights hereunder, and in such event the Issuer will, and hereby agrees to, cooperate fully with the Borrower and to take all actions necessary to effect the substitution of the Borrower for the Issuer in any such action or proceeding, if the Borrower shall so request. The Borrower hereby waives, to the extent permitted by law, any and all rights which it may now have or which at any time hereafter may be conferred upon it, by statute or otherwise, to terminate or cancel, or to limit its liability under, this Agreement, except in accordance with the express terms hereof. Section 4. 5 . Payments Pledged and Assigned. It is understood and agreed that all payments to be made by the Borrower pursuant to Section 4.2 hereof, and all rights of the Issuer hereunder, except for Unassigned Rights, are pledged and assigned to the Trustee pursuant to the Indenture. The Borrower hereby assents to such pledge and assignment. The Issuer hereby directs the Borrower, and the Borrower hereby agrees, to pay directly to the Trustee for the account of the Issuer all amounts payable by the Borrower hereunder (except those amounts payable to the Issuer pursuant to its Unassigned Rights ) , in particular, but not limited to, those amounts payable by the Borrower pursuant to Section 4.2 hereof. Section 4 .6 . Payment of Trustee' s and Co-Trustee' s Fees . The Borrower agrees to pay to the Trustee and any Co- Trustee for their own account, until the principal of, premium, if any, and interest on the Bonds shall have been fully paid, or provision for the payment thereof shall have been made in accor- dance with the provisions of the Indenture, (i ) an amount equal to the annual fee of the Trustee and any Co-Trustee for the Ordinary Services rendered by them, and the Ordinary Expenses incurred by them, under the Indenture, as and when the same shall become due, (ii ) the reasonable fees, charges and expenses of the Trustee and any Co-Trustee as bond registrar and paying agent for acting as bond registrar and paying agent as provided in the Indenture, and of any other paying agent for the Bonds for acting as paying agent as provided in the Indenture, as and when the same shall become due, and (iii ) the reasonable fees, charges and expenses of the Trustee and any Co-Trustee for the necessary Extraordinary Services rendered by them, and the necessary Extra- ordinary Expenses incurred by them, under the Indenture, as and when the same shall become due. -18- ARTICLE V Special Covenants Section 5. 1. No Liability of Issuer. Any obligation of the Issuer created by or arising out of—this Agreement, includ- ing the Bonds, shall not impose a debt or pecuniary liability upon the Issuer, the State of Illinois or any political subdivi- sion thereof, or constitute a charge upon the general credit or taxing powers of any of the foregoing, but shall be payable solely out of the revenues and receipts derived hereunder, except (as provided in• the Indenture and in this Agreement) to the extent paid out of moneys attributable to the proceeds derived from the sale of the Bonds, or the income from the temporary investment thereof. Neither the issuance of the Bonds nor the delivery of this Agreement shall directly, indirectly or contingently obligate the Issuer, the State of Illinois or any political subdivision thereof to levy any form of taxation therefor, or to make any appropriation for their payment. Nothing in the Bonds, the In- denture, this Agreement, the proceedings of the Issuer authoriz- ing the Bonds or the Enabling Ordinance shall be construed to to create a debt of the Issuer, the State of Illinois or any politi- cal subdivision thereof within the meaning of any constitutional or statutory provision of the State of Illinois . The principal of, premium, if any, and interest on the Bonds shall be payable solely from the funds pledged for their payment in accordance with the Indenture. Neither the State of Illinois nor any poli- tical subdivision thereof shall in any event be liable for the payment of the principal of, premium, if any, or interest on the Bonds, or for the performance of any pledge, obligation or agree- ment of any kind whatsoever which may be undertaken by the Issuer. No breach of such pledge, obligation or agreement may impose any pecuniary liability upon the State of Illinois or any political subdivision thereof, or constitute a charge upon the general credit or against the taxing power of the State of Illinois or any political subdivision thereof. Section 5.2 . Issuer' s and Trustee' s Right of Access to the Project. The Borrower agrees that during the term off thh sisi Agreement the Issuer and the Trustee and their duly authorized agents shall have the right at reasonable times to enter upon and examine and inspect the Project, including such rights of access to the Project as may be reasonably necessary to determine whether the Borrower is diligently pursuing the completion of the Project or has completed the Project, in accordance with the provisions of Article III hereof, and to determine whether the Borrower is using the Project or causing the Project to be used for the purposes set forth in Section 2.2(d) hereof. The foregoing shall not be construed in any manner to limit the Issuer' s continuing authority under the police powers to make inspections to determine compliance with applicable statutes and ordinances . Nothing -19- contained in this Loan Agreement shall be construed to entitle the Issuer or the Trustee to access to any confidential materials of the Borrower or any of its partners . Section 5 .3 . Borrower to Maintain its Partnership Existence; Conditions Under Which Excepts ns Permitted. The Borrower agrees that during the term of this Agreement it will maintain its partnership existence, will not dissolve or other- wise dispose of all or substantially all of its assets, either in a single transaction or in a series of related transactions; provided, however, that the Borrower may, without violating the agreement contained in this Section, sell or otherwise transfer to another domestic entity all or substantially all of its assets as an entirety and thereafter dissolve, provided that the result- ing, surviving orr transferee entity, as the case may be, has a net worth (computed in accordance with generally accepted accoun- ting principles ) , after giving effect to such sale or transfer, equal to or greater than the net worth (computed in accordance with generally accepted accounting principles) of the Borrower immediately preceding such sale or transfer; and irrevocably and unconditionally assumes in writing, by means of an instrument which is satisfactory and delivered (prior to any such sale or transfer of assets ) to the Issuer and the Trustee, and agrees to perform, all of the obligations of the Borrower herein contained and the Issuer and the Trustee shall thereby release the Borrower from all of its obligations herein contained; and further provided that no "Event of Taxability" (as defined in Section 7.3 hereof) has theretofore occurred, or will occur or result from such sale or transfer; and further provided that no event of default has occurred and is occurring hereunder. Prior to any such merger .or sale or transfer of assets, an opinion of Bond Counsel (which opinion may be based upon published or private letter rulings of the Internal Revenue Service) , a private letter ruling of the Internal Revenue Service or a certificate of a firm of independent certified public accountants satisfactory to the Trustee (who may be the Borrower' s regular accountants ) shall be delivered to the Trustee stating that such merger, sale or transfer of assets will not cause interest on the Outstanding Bonds to become includable in the gross income of the recipients thereof for Federal income tax purposes, provided that the Borrower shall not have violated this covenant if the interest on any Outstanding Bonds becomes taxable to a person who is a substantial user of the Project, or a related person, pursuant to the provisions of Section 103(b) (13 ) of the Code. At least thirty (30 ) days before any sale or transfer of assets becomes effective, the Borrower shall give the Issuer and the Trustee written notice of the proposed transaction. Any technical dissolution of the Borrower under local law caused by the death or incompetency of one of its partners shall not consti- tute a violation of this covenant if the Borrower is promptly reconstituted and continues to be bound by the terms of this Agreement. Section 5.4. Release and Indemnification Covenants. The Borrower releases the Issuer (including any person at any time serving as a member, officer or employee of the Issuer) and -20- the Trustee from, agrees that the Issuer and the Trustee shall not be liable for, and agrees to indemnify and hold the Issuer and the Trustee harmless from, to the fullest extent permitted by law, (i) any liability for any loss or damage to property, or any injury to or death of any person, that may be occasioned by any cause whatsoever pertaining to the Project, and (ii ) any liabili- ties, losses or damages, or claims therefor, arising out of the failure, or claimed failure, of the Borrower to comply with its covenants contained in this Agreement, including, in each such case, any attorneys' fees. The Borrower agrees to indemnify and hold the Issuer (including any person at any time serving as a member, officer or employee of the Issuer) harmless to the fullest extent permitted by law from any losses, costs, charges, expenses (including attorneys' fees) , judgments and liabilities incurred by it or them, as the case may be, in connection with any action, suit or proceeding instituted or threatened in connection with the transactions contemplated by this Agreement. If any such claim is asserted, the Issuer, the Trustee or any individual indemnified herein, as the case may be, shall give prompt notice to the Borrower. The Borrower will assume the defense of any • such claim and retain counsel who shall be reasonably satisfactory to the Issuer, the Trustee or any individual indemnified herein, as the case may be. Notwithstanding the provisons of the fore- going sentence, the Issuer, the Trustee or any individual indemni- fied herein, as the case may be, shall also have the right to defend any such claim and retain counsel of its own choice, and the Borrower hereby covenants and agrees to pay all fees and expenses (including attorneys ' fees) so incurred by the Issuer, the Trustee or any such indemnified individual . No settlement of any such claim shall be made without prior approval of the Issuer, the Trustee or any such indemnified individual affected by such claim. The obligation of the parties under this Section 5 .4 shall survive the termination of this Agreement. The Borrower agrees to pay to the Issuer for its own account such reasonable costs and expenses, including legal fees, as may be incurred by the Issuer in performing its obligations under this Agreement and under the Indenture, to the extent such are not paid from the proceeds derived from the sale of any Bonds. Section 5.5 . Financial Statements. So long as any Bonds remain O sut tanding under the Indenture, the Borrower shall furnish to the Trustee or cause to be furnished to the Trustee the following financial statements, prepared in accordance with generally accepted accounting principles : (a) Within 120 days after the end of each fiscal year of the Guarantor, the audited financial statements of the Guarantor for such fiscal year; (b) Within 60 days after the end of each fiscal quarter of the Guarantor, its unaudited financial statements for such quarter; and -21- (c) Within 120 days after the end of each fiscal year of the Borrower, the unaudited financial statements of the Borrower for such fiscal year. Section 5 .6 . Tax-Exempt Status of the Series 1983 Bonds. The Borrower covenants and agrees that it has not taken or permitted or omitted, and will not take or permit to be taken or omit to take, and the Issuer covenants and agrees that it has not taken or permitted or omitted, and will not take or permit to be taken, any action which would result in interest paid on the Series 1983 Bonds being included in the gross income of the owners of the Series 1983 Bonds for purposes of Federal income taxation, provided that the Borrower and the Issuer shall not have violated this covenant if the interest on any of the Series 1983 Bonds becomes taxable to a person who is a substantial user of the Project, or a related person, pursuant to the provision of Section 103(b) (13 ) of the Code; provided, however, that such covenant and agreement shall not require either the Borrower or the Issuer to enter an appearance in or intervene in any adminis- trative, legislative or judicial proceeding in connection with any changes in applicable laws, rules, regulations or decisions of any court, administrative agency or other governmental body affecting the taxation of interest on the Series 1983 Bonds . The Borrower covenants and agrees to notify the Trustee and the Issuer of the occurrence of any event of which the Borrower has knowledge, which would require the Borrower to prepay the indebtedness hereunder in accordance with Section 706 of the Indenture. The Issuer covenants that it shall, prior to the issu- ance of the Series 1983 Bonds, duly elect to have the provisions of Section 103 (b) (6 ) (D) of the Code apply to such issue, and such election shall be made in accordance with the procedure set forth in Section 1.103-10(b) (2 ) (vi ) of the regulations promulgated thereunder. In order to effectuate such election and to continue the same in full force and effect as long as any of the Series 1983 Bonds shall remain outstanding, the Borrower agrees to: (1) attach a copy of the Issuer' s statement of election to the Bor- rower's income tax return for the taxable year during which the election is made, in accordance with Section 1.103-10(b) (2 ) (vi) (a) of the regulations promulgated under the Code; (2 ) file or cause to be filed the supplemental statements required by Section 1 .103-10(b) (2 ) (vi) (C) of the regulations promulgated under the Code; and (3 ) take such further action and file or cause to be filed such further instruments, documents, statements or reports with the United States Treasury Department - Internal Revenue Service or other authorized governmental agencies, and at such office or offices, as may from time to time be required by appli- cable law or regulation in connection therewith. The Borrower understands that the term "capital expendi- tures" as used in this Agreement and in the Indenture, as of the date of the execution of this Agreement, means any expenditure -22- made by any person which, under any rule or election under the Code, may be treated as a capital expenditure (whether or not such expenditure is so treated) , and determined without regard to any rule of the Code which permits expenditures properly charge- able to a capital account to be treated as current expenses, un- less such expenditure is an "excluded expenditure" under Section 1.103-10 of the regulations promulgated under the Code. If, at any time before the third anniversary of the date of issuance of the Series 1983 Bonds, the Borrower or any "related person" (as defined in Section 103(b) (6 ) (C) of the Code and Section 1.103-10(e) of the regulations promulgated thereunder) proposes to (a) pay or incur any "section 103(b) (6) (D) capital expenditure" (as defined in Section 1.103-10(b) (2 ) (ii ) of the regulations promulgated under the Code) which will cause the total capital expenditures made by the Borrower, during the three-year period beginning with the issuance of the Series 1983 Bonds, to exceed $5, 500, 000 with respect to the Project or any other property or facilities located or treated as being located in the City of Elgin, Illinois, or (b) be the principal user (or a principal user) of any property or facilities located or treated as being located in the City of Elgin, Illinois, with respect to which any capital expenditure is paid or incurred, or to be paid or incurred, by others, the Borrower will, prior to the payment or incurrence of such capital expenditure, or the commencement of such principal use, file with the Trustee and the Issuer an opinion of Bond Counsel (which opinion may be based upon published or private letter rulings of the Internal Revenue Service) , a private letter ruling of the Internal Revenue Service or a certifi- cate of a firm of independent certified public accountants satis- factory to the Trustee (who may be the Borrower' s regular accoun- tant) to the effect that such capital expenditure or such princi- pal use, as the case may be, would not have the effect of causing the interest on the Series 1983 Bonds (other than those held or owned by a substantial user of the Project or any related person, within the meaning of Section 103(b) (13 ) of the Code) to be included in the gross income of the recipient thereof for Federal income tax purposes . The Borrower covenants that (a) the proceeds of the Series 1983 Bonds are to be used primarily with respect to facil- ities to be located in the City of Elgin, Illinois; (b) that the Borrower will be the principal user of the facilities to be constructed with the proceeds of the Series 1983 Bonds, within the meaning of Section 103(b) (6) of the Code; and (c) that there are no outstanding obligations which are classified as "exempt small issues" under Section 103 (b) (6 ) of the Code, and any regula- tions promulgated with respect to Section 103(b) (6) of the Code, issued subsequent to April 30, 1968, of any state, territory or possession of the United States of America, or any political subdivision of the foregoing or of the District of Columbia, the proceeds of which have been or are to be issued primarily with respect to facilities located or treated as being located in the City of Elgin, Illinois, and which are to be used primarily by -23- • the Borrower (including any person related to the Borrower, within the meaning of Section 103(b) (13 ) of the Code) other than the Series 1983 bonds . Section 5 .7. Operation of Project. The Borrower agrees that, st,b�ect to the force eajeure provisions of Section 6.1 hereof, it will commence operation of the Project promptly after its completion, as certified in accordance with Section 3 .4 hereof. The Borrower shall operate the Project or cause the Project to be operated for the term of this Agreement as an "eco- nomic development project, " within the meaning of the Enabling Ordinance, except that, in the case of emergency or need for repairs or maintenance, the Borrower may temporarily discontinue operation of the affected portions of the Project for the purpose of making necessary repairs or maintenance, which repairs or maintenance shall be diligently effected. Section 5 .8 . Redemption of Bonds . If the Borrower is not in default n the payments to be made under Section 4.2 hereof, the Issuer, upon reasonable assurance from the Borrower that the Borrowershall make sufficient funds available, at the request at any time of the Borrower and if the same are then callable, shall forthwith take all steps that may be necessary under the provisions of the Indenture to effect redemption of all or any part of the then Outstanding Bonds, as may be specified by the Borrower, on the earliest redemption date on which redemption may be made under such applicable provisions; all subject to, and in accordance with, the terms and provisions of the Indenture. Section 5 .9. Taxes and Governmental Charges. The Borrower will pay, as the same become due, all taxes and govern- mental charges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to the Project or any machinery, equipment or other property installed by the Borrower thereon (including, without limiting the generality of the foregoing, any taxes levied upon or with respect to the in- come and revenues of the Issuer pursuant to this Loan Agreement) , all utility and other charges incurred in the operation, mainte- nance, use, occupancy and upkeep of the Project and all assessments and charges lawfully made by any governmental body for public improvements that may be secured by a lien on the Project; pro- vided, that with respect to special assessments or other govern- mental charges that may lawfully be paid in installments over a period of years, the Borrower shall be obligated to pay only such installments as are required to be paid during the term of this Loan Agreement. ARTICLE VI Events of Default and Remedies Section 6.1. Events of Default Defined. The following shall be "events of default" under thi Agreement, and the term _)d_ "event of default" shall mean, whenever it is used in this Agree- ment, any one or more of the following: (a) Failure of the Borrower to pay any installments of interest or principal, or any premium, on the indebtedness hereunder or any other installment required by Section 4 .2 hereof when the same shall become due and payable, whether at maturity, upon any date fixed for prepayment or by accel- eration or otherwise, but subject to any credits to which the Borrower may be entitled pursuant to Section 4.3 hereof. (b) Any material breach by the Borrower of any repre- sentation or warranty made in this Agreement, or any failure by the Borrower to observe and perform any covenant, condi- tion or agreement -on its part to be observed or performed, other than as referred to in subsection (a) of this Section, for a period of thirty (30 ) days after receipt of written notice specifying such failure and requesting that it be remedied, given to the Borrower by the Trustee or the Issuer, unless (i) the Trustee and the Issuer shall agree in writing to an extension of such time prior to its expiration, or (ii) if the default be such that it cannot be corrected within said thirty (30 ) day period, but can be corrected with due diligence, corrective action is instituted by the Borrower within the applicable period and diligently pursued until the default is corrected. (c) The dissolution or liquidation of the Borrower; the filing by the Borrower of a voluntary petition in bank- ruptcy; failure by the Borrower promptly to lift any execu- tion, garnishment or attachment of such consequence as will impair its ability to carry out its obligations hereunder; adjudication of the Borrower as a bankrupt, or if a petition or answer proposing the adjudication of the Borrower as a bankrupt or its reorganization under any present or future federal bankruptcy act, or any similar Federal or state law, shall be filed in any court, and such petition or answer shall not be discharged or denied within ninety (90) days after the filing thereof; if the Borrower shall commit any act of bankruptcy, or shall generally fail to pay its debts as they become due; if a receiver, trustee, conservator or liquidator of the Borrower shall be appointed in any proceed- ing brought against the Borrower, and shall not be discharged within ninety (90) days after such appointment, or if the Borrower shall consent to or acquiesce in such appointment; assignment by the Borrower for the benefit of its creditors; or entry by the Borrower into an agreement of composition, arrangement or debt adjustment with its creditors. The term "dissolution or liquidation of the Borrower, " as used in this subsection, shall not be construed to include the cessation of the existence of the Borrower resulting either from a dissolution or liquidation of the Borrower following a transfer of all or substantially all of its assets as an entirety to another, under the conditions permitting such actions contained in Section 5 .3 hereof. -25- The foregoing provisions of Section 6 .1(b) are subject to the following limitations : If by reason of force majeure the Borrower is unable in whole or in part to carry out the agreements on its part herein contained, other than the obligations on the part of the Borrower contained in Article IV and Sections 5.4 and 5 .6 hereof, the Borrower shall not be deemed in default during the continuance of such inability. The term "force majeure" as used herein shall mean, without limitation, the following: acts of God; strikes, lockouts or other industrial disturbances; acts of public enemies; orders of any kind of the government of the United States of America or of the State of Illinois, or of any of their departments, agencies or officials, or of any civil or military authority; insurrections; riots; epidemics ; landslides; lightning; earthquake; fire; tornadoes; storms; floods; washouts; droughts; arrests; restraint of government and people; civil disturbances; explosions; breakage or accident to machinery, transmission lines, pipes or canals; partial or entire failure of utilities; failure of suppliers; or any other cause or event not reasonably within the control of the Borrower. The Borrower agrees, however, to remedy with all reasonable dispatch the cause or causes preventing the Borrower from carrying out its agree- ments; provided that the settlement of strikes, lockouts and other industrial disturbances shall be entirely within the discre- tion of the Borrower, and the Borrower shall not be required to make settlement of strikes, lockouts and other industrial distur- bances by acceding to the demands of the opposing party or parties when such course is, in the judgment of the Borrower, unfavorable to the Borrower. Section 6 .2 . Remedies on Default. Whenever any event of default referred to ill-Tea-Ea 6 .1 hereof shall have happened and be continuing, the Trustee or the Issuer, as the case may be, may take any one or more of the following remedial steps : (a) Whenever the Trustee shall have declared the prin- cipal of all Bonds then outstanding to be due and payable pursuant to Section 902 of the Indenture, the Issuer shall, by prior written notice, declare all unpaid indebtedness hereunder to be immediately due and payable. The term "all unpaid indebtedness" shall mean an amount equal to the prin- cipal of and premium, if any, on all Bonds then outstanding, and interest accrued thereon and to accrue thereon to the date of receipt by the Trustee of such moneys, and other payments due or to become due hereunder, including, without limitation, any unpaid fees, charges and expenses of the Trustee and other paying agents, if any, of the Bonds , or of the Issuer, which are then or will become due prior to the time that the Bonds are paid in full . In the event of any such declaration, the Trustee may pursue any available remedy to collect the payments then due thereafter to become due hereunder, or to enforce performance and observance of any obligation, agreement or covenant of the Borrower under this Agreement. If the Bonds shall become due and payable under this Section after an "Event of Taxability" shall have • occurred, as provided in Section 7.3 hereof, the amount due and payable hereunder shall be the amount set forth in Section 7.3 hereof; and this covenant shall survive this Agreement. (b) In the event that any of the Bonds shall at the time be outstanding and unpaid, the Issuer and the Trustee may have access to and inspect, examine and make copies of the books and records, and any and all accounts, data and income tax and other tax returns, of the Borrower, as the Issuer or the Trustee may reasonably request, but only, however, insofar as they pertain to the Project. (c) The Issuer, with the prior written consent of the Trustee, or the Trustee may take whatever action as at law or in equity may appear necessary or desirable to collect the amounts then due and thereafter to become due, or enforce performance and observance of any obligation, agreement or covenant of the Borrower set forth herein. Any amounts collected pursuant to .action taken under this Section shall be paid into the Bond Fund and applied in accordance with the provisions of the Indenture, or if the Bonds shall have been fully paid (or provision for the payment thereof shall have been made in accordance with the provisions of the Indenture) , to the Borrower. Section 6 .3 . No Remedy Exclusive. No remedy herein conferred upon or reserved to the Issuer or the Trustee is inten- ded to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law, in equity or by statute. No delay or omission to exercise any right or power accruing upon any event of default shall impair any such right or power, or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Issuer or the Trustee to exercise any remedy reserved to either of them in this Article, it shall not be necessary to give any notice, other than such notice as may be herein expressly required. Such rights and remedies as are given the Issuer hereunder shall also extend to the Trustee, and the Trustee and the owners of the Bonds, subject to the provisions of the Indenture, are intended by the parties hereto to be third-party beneficiaries of this Agreement, and, as such, shall be entitled to the benefit of all covenants, represen- tations, warranties and agreements herein contained. Except as provided in the Indenture, the Trustee may exercise any available remedy, at law or in equity, in the case of a default in the performance or observance of such covenants and agreements, whether or not such default constitutes an event of default. Section 6.4. Agreement to Pay Attorneys ' Fees and Expenses. If an event of default should have occurred under the provisions of this Agreement, and the Issuer or the Trustee should employ attorneys or incur other expenses for the collection of the indebtedness incurred hereunder, or for the enforcement of performance or observance of any obligation or agreement on the part of the Borrower herein contained, the Borrower agrees that it will on demand therefor pay to the Trustee, the Issuer or, if so directed by the Issuer or the Trustee, to the attorneys for the Issuer or the Trustee the reasonable fees of such attorneys, and such other expenses so incurred by or on behalf of the Issuer or the Trustee. Section 6.5 . No Additional Waiver Implied by One Waiver; Consents to Waivers . In the event that any covenant, agreement representation o warranty contained in this Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived, and shall not be deemed to waive any other breach hereunder. No waiver shall be effective unless it shall be made in writing, signed by the party making the waiver and mention with specificity the breach being waived. The Issuer shall have no power to waive any event of default hereunder by the Borrower without the written consent of the Trustee to such waiver. Notwithstanding the foregoing, if, after the accelera- tion of the maturity of the Outstanding Bonds by the Trustee, any event of default under the Indenture shall be waived pursuant to Section 902 or Section 909 of the Indenture, then any event of default hereunder which may have resulted in such event of default shall be deemed to have been waived by the Issuer and the Trustee. ARTICLE VII Prepayment • Section 7. 1. Option to Prepay Number 1 . The Borrower shall have, and is hereby granted, the option to prepay the indebtedness hereunder in whole but not in part at any time within one year after the occurrence of any one of the following events: (a) The Project has been damaged or destroyed to such an extent that, as evidenced by a written certificate of the Authorized Borrower Representative filed with the Issuer and the Trustee, it is not practicable or desirable to rebuild, repair or restore the Project within the six month period following such damage or destruction and the Borrower is or will be thereby prevented from carrying out its normal operations at the Project Real Estate for a six month period; or (b) Title to or the temporary or permanent use of all or substantially all of the Project is taken under the exercise of the power of eminent domain to the extent that, -28- as evidenced by the written certificate of the Authorized Borrower Representative filed with the Issuer and the Trustee, such taking has resulted or is likely to result in the Borro- wer being thereby prevented from carrying on its normal opera- tions at the Project Real Estate for a six month period; or (c) Any court or administrative body shall enter a judgment, order or decree requiring the Borrower to cease all or any substantial part of its operations at the Project to such an extent that, as evidenced by the written certifi- cate of the Authorized Borrower Representative filed with the Issuer and the Trustee, the Borrower is or will be thereby prevented from carrying on its normal operations at the Project for a six month period. Such option shall be exercisable in the manner provided in Section 7 .4 hereof. The amount payable by the Borrower in the event of its exercise of the option granted in this Section shall be the sum of the following: (1 ) An amount of money which will be sufficient to redeem all of the then Outstanding Series 1983 Bonds on the redemption date at a redemption price of 100% of the princi- pal amount thereof plus accrued interest to the redemption date and without premium, and (2 ) An amount of money sufficient to pay the expenses incurred or to be incurred by the Issuer and the Trustee in connection with the prepayment of the indebtedness hereunder and the redemption of the Series 1983 Bonds and to discharge all other liabilities of the Borrower under this Agreement. Section 7 .2 . Option to Prepay Number 2 . The Borrower shall have, and is hereby granted, the option to prepay the indebtedness hereunder on any interest payment date of the Series 1983 Bonds on or after November 1, 1993 in whole or in part in multiples of $5, 000, at theprices (expressed as percentages of the principal amount of the indebtedness hereunder being prepaid and the corresponding Series 1983 Bonds to be redeemed) set forth in the table below plus accrued interest to the redemption date of the Series 1983 Bonds to be redeemed: Redemption Dates Redemption Price November 1, 1993 and May 1, 1994 102% November 1, 1994 and May 1, 1995 101 November 1, 1995 and thereafter 100 In addition to amounts described above, if the Borrower shall exercise its option to prepay the indebtedness hereunder in -29- • accordance with the provisions of this Section, the Borrower shall also pay amount of money sufficient to pay the expenses incurred or to be incurred by the Issuer and the Trustee in connection with the portion of the indebtedness hereunder to be prepaid and the redemption of the Series 1983 Bonds to be redeemed, and if all of the then Outstanding Series 1983 Bonds are to be redeemed, the Borrower shall also pay an amount of money suffi- cient to discharge all other liabilities of the Borrower under this Agreement. Such option shall be exercisable in the manner provided in Section 7 .4 hereof. Any partial prepayment of the indebtedness hereunder pursuant to this Section shall be made in inverse order of the principal installments thereof. Section 7 .3 . Determination and Event of Taxability. Should there occur a Determination of Taxability, the Borrower shall be obligated, and hereby covenants and agrees, to prepay the indebtedness hereunder in whole but not in part in the manner provided in Section 7.4 hereof. The amount payable by the Borrower upon the occurrence of a Determination of Taxability shall be the sum of the following: (1) The principal amount of all Series 1983 Bonds then outstanding, plus accrued interest to the date of redemption, plus a premium equal to the interest borne by such Series 1983 Bonds for the period elapsed between the "Event of Taxability, " as such term is hereinafter defined, and the date of redemption. If upon the date of redemption there shall be on deposit in the Bond Fund the total amount required by this paragraph (1 ) of Section 7 .3 , such amount shall constitute total compensation due the owners of the Series 1983 Bonds then outstanding as a result of the occurrence of an Event of Taxability; and (2 ) An amount equal to the interest borne by each Series 1983 Bond not then outstanding, but which was outstand- ing at the time of the occurrence of the Event of Taxability, for the period elapsed between the occurrence of the Event of Taxability and the date that such Series 1983 Bond was paid or redeemed. Such amount shall be held and disbursed by the Trustee, and shall constitute total compensation due such Bond and the owners of the Series 1983 Bonds not then outstanding but which were outstanding at the time of the occurrence of the Event of Taxability as a result of the occurrence of an Event of Taxability and in satisfaction of the Borrower's obligation to make payments hereunder. (3 ) An amount sufficient to pay the expenses incurred or to be incurred by the Issuer and the Trustee in connection with the prepayment of the indebtedness hereunder and the -30- redemption of the Series 1983 Bonds and to discharge all other liabilities of the Borrower under this Agreement. An "Event of Taxability" shall mean the occurrence of the circumstances described in Section 103 (b) (6 ) (D) of the Code, which circumstances the Determination of Taxability shall have found to have occurred, with the result that the interest payable on any of the Series 1983 Bonds becomes includible in the gross income of a holder thereof for Federal income tax purposes (other than a holder who is a "substantial user" of the Project or "related person, " as such terms are defined in the Code) . A "Determination of Taxability" shall mean (a) the issuance of a statutory notice of deficiency by the Internal Revenue Service, or a ruling of the National Office or any Dis- trict Office of the Internal Revenue Service, or a final decision of court of competent jurisdiction which holds in effect that the interest payable on any of the Series 1983 Bonds is includible in the gross income of a holder thereof for Federal income tax purposes (other than a holder who is a "substantial user" of the Project or a "related person, " as such terms are defined in the Code) as a result of the limitations prescribed in Section 103 (b) (6 ) of the Code having been exceeded, if the period, if any, of contest or appeal of such action, ruling or decision by the Borrower or the holder of any of the Series 1983 Bonds has expired without any such contest or appeal having been properly instituted by such holder or the Borrower or (b) the delivery by the Borrower to the Trustee of a certificate of its Authorized Borrower Repre- sentative or an opinion of Bond Counsel to the effect that an Event of Taxability has occurred or will occur, and setting forth such date. Such a Determination of Taxability shall be deemed, for all purposes of this Agreement, to have occurred on the date borne by said statutory notice of deficiency, ruling, opinion or certificate. The covenants made by the Borrower in this Section, and the Borrower' s obligations hereunder, shall survive the termina- tion of this Agreement and the payment or redemption of the Bonds . Section 7 .4. Manner of Prepayment. To prepay the indebtedness hereunder pursuant to Sections 7 . 1, 7 .2 or 7 .3 hereof, the Borrower shall give written notice to the Issuer and the Trustee within 30 days after the event or determination authorizing or requiring the prepayment, and shall specify there- in the date of redemption, which date shall be not less than 30 days nor more than 180 days from the date the notice is mailed. In the event of the Borrower' s failure to give the notice within such 30 day period with respect to an obligation to prepay the indebtedness hereunder pursuant to Section 7.3 hereof, the Trustee shall give written notice to the Issuer and the Borrower specify- ing a date of redemption not less than 180 days nor more than 30 days from the date the notice is mailed. On the date of any partial prepayment of the indebted- ness hereunder, the Borrower shall deliver to the Issuer and the -31- Trustee a copy of an amortization schedule setting forth the amounts of the installments of principal and interest to be paid hereunder after the date of such partial prepayment. Section 7 .5 . Redemption of Bonds with Prepayment Moneys . By virtue of the assignment of the rights of the Issuer under this Loan Agreement to the Trustee as provided in Section 4.4 hereof, the Borrower shall pay any amount required to be paid by it under this Article VII for the payment of the principal of, premium, if any, and the interest on the indebtedness hereunder directly to the Trustee. The Trustee shall use the moneys so paid to it by the Borrower to redeem the Series 1983 Bonds in whole or in part, as the case may be, on the redemption date. If on the redemption date any portion of the Series 1983 Bonds to be redeemed shall then be unpaid or provision for payment thereof shall not have been made in accordance with the provisions of the Indenture, the Borrower shall pay to the Trustee such additional moneys as shall be required to pay or redeem Series 1983 Bonds or portions thereof to be redeemed in accordance with the provision of the Indenture. The Issuer, at the request at any time of the Borrower and if the same are then callable, shall forthwith take all steps that may be necessary under the applicable redemption provisions of the Indenture to effect redemption of the Series 1983 Bonds in whole or in part, as the case may be, on the earliest redemption date on which such redemption may be made under such applicable provisions . ARTICLE VIII Miscellaneous Section 8. 1. Binding Effect. This Agreement shall inure to the benefit of, and shall be binding upon, the Issuer, the Borrower and their respective successors and assigns, subject, however, to the limitations contained in Section 5 .3 and Section 5. 9 hereof. Section 8 .2 . Execution Counterparts . This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 8.3 . Amendments, Changes and Modifications. Subsequent to the initial issuance of the Bonds, and prior to payment or provision for the payment of the Bonds in full (includ- ing interest and premium, if any, thereon) in accordance with the provisions of the Indenture, this Agreement may not be amended, changed, modified, altered or terminated, except as provided in Article XII of the Indenture. -32- Section 8.4. Severability. All rights, remedies and powers provided by this Agreement may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law in the premises and all the provisions of this Agreement are intended to be subject to all applicable mandatory provisions of law which may be controlling in the premises and to be limited to the extent necessary so that they will not render this Agreement invalid or unenforceable under the provisions of any applicable law. In the event any provision of this Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unen- forceable any other provision hereof. Section 8 . 5 . Partners and Employees Exempt from Personal Liability. To the extentpermitted by the laws in force at the time, no recourse under or upon any obligation, covenant or agreement in this Agreement contained, or for any claim based thereon or otherwise in respect thereof, shall be had against any partner or employee, as such, past, present or future, of the Borrower or of any predecessor or successor entity, either directly or through the Borrower, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise; it being expressly understood that this Agreement is solely a partnership obligation, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the partners or employees, as such, of the Borrower or of any predecessor or successor entity, or any of them, under or by reason of the obligations, covenants or agreements contained in this Agreement or to be implied herefrom; and any and all such personal liability, either at common law, in equity, by constitu- tion or statute of, and any and all such rights and claims against, every partner or employee, as such, under or by reason of the obligations, covenants or agreements contained in this Agreement, or to be implied herefrom, are to the extent permitted by the laws in force on the date of the execution of this Agreement, hereby expressly waived and released as a condition of, and as consideration for, the execution of this Agreement. Section 8 .6. Amounts Remaining in Indenture Funds . Any amounts remain ni g in the various funds established under the Indenture after payment in full of the Bonds (or provision for payment thereof having been made in accordance with the provisions of the Indenture) , and of the fees, charges and expenses of the Issuer, the Trustee and any other paying agent, and all other amounts required to be paid under this Agreement and the Inden- ture, shall be paid to the Borrower by the Trustee. Section 8.7 . Notices. All notices, certificates or other communications shall be sufficiently given and shall be deemed to have been given on the second day following the day on which the same have been mailed by registered or certified mail, postage prepaid, addressed as follows : -33- If to the Issuer: City of Elgin, Illinois 150 Dexter Court Elgin, Illinois 60120 Attention: City Clerk If to the Borrower: Slade Avenue Partnership c/o Sherman Hospital Association 934 Center Street Elgin, Illinois 60120 If to the Trustee: Continental Illinois National Bank and Trust Company of Chicago 30 North LaSalle Street Chicago, Illinois 60697 Attention: Corporate Trust Department If to the Guarantor: Sherman Hospital Association 934 Center Street Elgin, Illinois 60120 Attention: President A duplicate copy of each notice, certificate or other communi- cation given hereunder by either the Issuer or the Borrower to the other shall also be given to the Trustee and the Guarantor. The Issuer, the Borrower, the Trustee and the Guarantor may, by notice given hereunder, designate any further or different addres- ses to which subsequent notices, certificates or other communica- tions shall be sent. Section 8 .8 . Further Assurances . The Borrower agrees and undertakes to perform any and all obligations of the Issuer under and pursuant to Section 804 of the Indenture, and the Issuer agrees to cooperate with the Borrower, to execute any documents and to take any other action reasonably requested by the Borrower in order to enable the Borrower to perform such obligations. Section 8 .9 . Applicable Law. This Agreement shall be governed exclusively by, and be construed in accordance with, the laws of the State of Illinois . Section 8.10. Term of the Agreement. Except as other- wise provided herein, this Agreement shall be in full force and effect from its date to and including the date upon which the principal of, premium, if any, and interest on the Bonds shall have been paid in full, or provision for payment thereof shall have been duly made, and the Indenture shall have been discharged in accordance with its terms . -34- • IN WITNESS WHEREOF, the Issuer has caused this Agreement to be executed in its corporate names, and its corporate seals to be hereunto affixed and attested, by its duly authorized officers, and the Borrower has caused this Agreement to be executed in its name by one of its general partners all as of the date first above written. CITY OF ELGIN, ILLINOIS By Mayor (SEAL) Attest: City Clerk SLADE AVENUE PARTNERSHIP By: Sherman Hospital Association, a general partner By Title: nr STATE OF ILLINOIS ) ss: COUNTY OF ) The foregoing instrument was acknowledged before me this day of November, 1983 , by and , who are Mayor and City Clerk, respectively, of the City of Elgin, Illinois, an Illinois municipal corporation, on behalf of said municipal corporation. Notary Public in and for County, Illinois (SEAL) My commission expires: -36- STATE OF ILLINOIS ) ) ss : COUNTY OF ) The foregoing instrument was acknowledged before me this day of November, 1983 , by who is of Sherman Hospital Association, a general partner of Slade Avenue Partnership, an Illinois general partner- ship, on behalf of said partnership. Notary Public in and for County, Illinois (SEAL) My commission expires : EXHIBIT A Exhibit A to the Loan Agreement, dated as of November 1, 1983, by and between the City of Elgin, and Slade Avenue Partnership. PROJECT DESCRIPTION • -38-